Tag Archives: EBITDA

Integration: The “Real Work” Begins…

Leading up to a transaction, buyers and sellers of companies can’t help but be enthusiastic about the endless opportunities that lie ahead. With all the synergies, growth possibilities and efficiencies to be realized; what’s not to be excited about!? This Honeymoon phase may continue post-transaction, but as integration becomes a reality, the excitement dissipates and […]

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Delta Services, LLC has been acquired by The State Group, Inc.

ABOUT THE DEAL: Delta Services, LLC has been acquired by The State Group Inc. Established in 2004 and headquartered  in Louisville, Kentucky, Delta Services is a privately-owned, bonded and fully-insured electrical contractor specializing in various types of electrical construction, communications systems, fire and security systems, safety services, utility distribution services, and PLC controls. Headquartered in […]

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Net Working Capital: A Negotiated Target

In addition to the future earnings of a business, mergers and acquisitions require the delivery of the ordinary and necessary balance sheet of the business to the buyer. The balance sheet should be adequate for the continued operation of the business and exclude cash and long-term debt. Due to the varying nature of the balance […]

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The PE Alternative

Owners and stakeholders of companies with strong cash flows, defendable market positions, products and services in expanding markets and a management team capable of driving the business forward must consider private equity (PE) groups, or financial buyers, as a viable alternative to exiting their business. Although these groups vary in size and focus, most PE […]

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Intellectual Property Rights: Don’t Forget?

Intellectual capital is often the key objective in mergers and acquisitions.  Despite the importance of intellectual property rights (IPRs), intangible assets and goodwill, the assets are routinely misunderstood and are often under-valued, under-managed or under-exploited. “The cardinal rule of commercial valuations is that the value of something cannot be stated in the abstract; all that […]

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Know Your Options – PEGs

There are a host of prospective buyers for lower middle market companies (less than $75 million in revenues), and every possibility should be explored, vetted and considered. One buyer-type that must be on every business owners’ radar are Private Equity Groups (PEGs). PEGs provide access to capital, offer insights and expertise, assist with improving market share and operating efficiencies, and have […]

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Comstock Brothers Electric Company, LLC has been acquired by The State Group Inc.

ABOUT THE DEAL: Comstock Brothers Electric Company, LLC has been acquired by The State Group Inc. Established in 1999 and headquartered  in Louisville, Kentucky, Comstock is a privately-owned, bonded and fully-licensed electrical contractor specializing in various types of power distribution, electrical construction, process controls, conveyors, package handling, automotive, design-build and electrical testing. Headquartered in Toronto, […]

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Positioning, A New Year’s Resolution?

Whether a sale is in the imminent future or not, business owners who run their companies with a “for sale” attitude keep their companies tuned up, generating increased profits and boosting enterprise value. Fundamentals for positioning your company “for sale” value include: Have a plan, align organizational objectives, focus on what creates value, i.e. profitable […]

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A Business Colonoscopy

The due diligence process in an M&A transaction involves a legal, financial, and operational review of all the seller’s documents, including contractual relationships, operating history, and organizational structure. Due diligence is a process and a test of the value proposition underlying the transaction to ensure that the seller’s company meets the expectations created before the […]

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“BS Earnings”

Earnings Before Interest, Taxes, Depreciation, and Amortization, or EBITDA, is one indicator of a company’s financial performance, and is often used to calculate the earnings potential of a business. Earnings are measured in terms of the approximate cash flow of the business to the owner(s) before income taxes and interest expense. Eliminating the tax effects […]

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CIMs: A New Pair of Glasses

Detailed Confidential Information Memorandums (CIMs) require collaboration between Sellers and their Investment Banker(s), and will provide prospective Buyers with enough information to make purchasing decisions. Highly effective CIMs consider the Buyers’ perspective throughout the preparation process; accordingly, CIMs must emphasize the value drivers of businesses and all decision-critical content and data. Motivated prospective Buyers expect […]

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Did You Get What You Paid For?

Generally Accepted Accounting Principles (GAAP) are a framework of accounting standards, rules and procedures defined by the professional accounting industry. No single reference source exists for all of GAAP; briefly, the sources of GAAP are: Accounting principles promulgated by the American Institute of Certified Public Accountants (“AICPA”) including Financial Accounting Standards of the Financial Accounting […]

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Normalizing Adjustments & The True Company Value

Although a detailed analysis of the financial statements reveals pertinent financial data, the true value of a Company requires that normalizing adjustments be made to the financial statements. Normalizing adjustments reflect a more accurate financial performance, both historically and projected. Normalized financial statements also help determine the Company’s future cash flows, and assess its financial […]

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Know When To Hold ‘Em

Exiting a business at its highest value requires business owners to have a deep understanding of their business, their industry, and the marketplace at large. As the publisher and businessman Malcolm S. Forbes said, “the best vision is insight.” Timing the market necessitates a business owner’s ability to recognize the not-to-often phenomena of “in the […]

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Looking Back to Move Forward

The Alliance of Merger & Acquisition Advisors (AM&AA) is the premier international organization serving the educational and resource needs of middle-market M&A professionals. AM&AA surveys its membership annually to provide insights into sell-side transaction multiples of earnings before interest, taxes, depreciation, and amortization (EBITDA) and sell volumes completed in the second half of 2014; generating […]

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Understanding CAPEX & Multiples?

Currently, in the M&A community, discussions regarding the purchase price of a target company are most often expressed as a multiple of EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization). If EBITDA is the benchmark, what is the justification for such a wide range of transaction multiples from 3-4-5 to 8-9-10 in the same or […]

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Avoiding expensive mistakes by understanding multiples of EBITDA

A multiple of EBITDA (earnings before interest, taxes, depreciation and amortization) is a means to reflect the economic value of an operating business and is a significant driver of sale price discussions in M&A transactions. EBITDA represents the earnings stream (free cash flow) produced by a company available for distribution to the investor. Multiples are […]

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Do ‘Rules of Thumb’ Work for Business Valuations?

Rules of Thumb are used every day to help business owners place a sales value on their business. These “rules” are quick, simple and easy to apply; however, they are only the beginning in the process of determining a business value. Many of these rules belong in one of two categories: A multiple of gross […]

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If I am selling my company, what’s the importance of a Growth Vision for my company?

A vision for Growth Strategy is a practical approach to achieving top-line revenue growth and bottom-line profit results. Company growth strategies are critically important whether the seller is a start-up business or has been in business for years. In today’s economic recovery many CEOs and business owners have become strategic buyers turning to acquisitions in […]

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