Tag Archives: Goals & Expectations

Be Prepared!

It is impossible to list all the issues and decision points that may arise in the course of selling or preparing your business for sale. Every Merger & Acquisition transaction is different. A successful sale requires early preparation from the seller to optimize the sales value of their business and minimize the risk of a […]

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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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Taking Chips Off The Table

The thought of “cashing out” lingers in the back of every business owners’ mind. Confronted daily with time constraints, market volatility, hawkish competition, profitability and growth objectives, and employee satisfaction, owners often neglect taking the necessary actions to establish a viable exit strategy. There are simply not enough hours in the day. However, business owners […]

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Do Taxes Matter?

Mergers and Acquisitions (“M&A”) are complex, multilayered, excitingly negotiable with endless options. M&A transactions present numerous tax planning and compliance issues. Below are tax considerations that appear repeatedly in middle market deals and only serve as a starting point for delving into more intricate and tedious tax issues: Structure – most commonly used structures are asset or stock purchases Reorganizations – tax-free reorganizations are subject to a myriad of IRS requirements Purchase price […]

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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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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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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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The Confidential Information Memorandum

The mergers and acquisitions (M&A) sales process begins with the preparation of a thorough Confidential Information Memorandum (CIM). This critical document provides the framework for profiling a company and positioning it for sale.   An effective CIM requires collaboration between the Sellers and the M&A Advisor to capture the essence of the business. These conversations will include:   Company overview – history, who we are, what we do   Define the core business – processes, technologies   Strengths and weaknesses – success factors, […]

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Value Proposition

The value of a company is in the eye of the buyer; therefore, sellers of lower middle market companies should position their businesses to drive the strategic value and attractiveness before a possible sale transaction. Enhancing the value of a company is an ongoing process, and sellers should begin preparing their company for sale 18 to 24 months before marketing […]

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Crystal Balls, Bubbles, Cycles, Roll-ups and Business Values

Recently, I was discussing with a good friend and long-time client the past financial successes of her company. Its continued annual growth in revenues, net income, and earnings before interest taxes depreciation and amortization (EBITDA) was extraordinary. Should she continue with the Company’s compounding growth and ride it to the glass ceiling of mid-size companies […]

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Double Down!!

Most private companies have an opportunity to double their value over a 3 – 5 year period by adopting a disciplined approach to reducing risk and increasing quality. A preliminary valuation performed by an experienced M&A professional will identify many of these “risk areas,” and may be used as a road-map to strengthen the business, […]

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How Do I Create Value?

For business owners, there is a subtle balance between making the necessary decisions to successfully run their business day-to-day and focusing on the long-term value of their business. The actual realization of that value, an eventual exit, should always be present in the owner’s current strategies. The objective is for owners to make decisions that […]

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Hire an M&A Advisor?

Upon engaging an M&A Advisor to sell their business, a seller can expect an Advisor to find a buyer for the business at the highest possible price with the most advantageous terms. An M&A Advisor would provide the following services to accomplish this goal: Provide the seller with a preliminary business valuation; confirming the expectations […]

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Valuations: To Sell or To Grow?

The uses of business valuations are almost unlimited: buy/sell agreements, fairness opinions, purchase price allocations, estate planning, gift taxes, charitable contributions, shareholder transactions, Employee Stock Option Plans (ESOPs), solvency and insolvency opinions, collateral valuations, litigation support, etc. In the context of selling one’s business, clarifying the seller’s goals, and measuring those goals’ financial needs with […]

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First Date

In Merger & Acquisition activity, the anticipation of the first meeting with a potential Buyer may be very intimidating for the Seller. The Seller must be relaxed, open, honest and friendly; however, the Seller must be prepared and rehearsed to answer several questions: Why are you selling? What are you going to do after the […]

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Cashing Out!!

Sellers of middle market companies rarely receive all cash offers for their companies, and therefore, must compare multiple offers by weighing each component of consideration in accordance with its cash equivalency as a baseline. The two most common standards for weighing the components of consideration include: the time value of money and the probability of […]

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Communicate To Close!!

Successful transactions of lower middle market businesses have open, honest communication between the buyers and sellers. Business owners tend to be the greatest resource for information concerning the day-to-day operations of their company, and this information is ‘mission critical’ for serious, qualified buyers. Therefore, sellers should not hesitate to disclose on the front-end of the […]

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I Don’t Know. Maybe?

Lackadaisical buyers waste everyone’s time and money and should be avoided whenever possible. These casual buyers may be curious but lack the commitment to close, lack the resources to make an acquisition, have the resources but are unsure of the type of business, looking for a deal but far below market value, or just plain […]

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Transactions Structured for Success!

Transactions between buyers and sellers of middle market businesses are often complicated. Driven by opposing motivations and interests, both parties want the most advantageous deal for their side. Sellers must be sure to consider every offer, especially offers that are less than the asking price of their business. A “lesser” offer in hand will not […]

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