Tag Archives: Valuation

COVID-19 Impact on Merger & Acquisition Transactions

Many acquisition processes are being put on hold pending further clarity on the broader health and economic consequences of COVID-19.  In the future, the impact of the pandemic on buyers and sellers will be seen in a wide range of implications, including a “new” focus on: Preparing for sale – is it the right time; […]

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The Doomsday Ratio

Is your company prepared to survive a Doomsday scenario? Without quantifiable measurements in place, it may difficult to know how your business is actually performing. Financial ratios or benchmarks are used to assess the financial health of a company. The company’s financial statements, primarily the income statement and balance sheet, are converted to a standardized […]

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Balance Sheet Analysis

In most merger & acquisition (M&A) transactions, valuations are determined based on the income and cash flow of the company. Furthermore, the character and makeup of the balance sheet must also be assessed when evaluating a company for a transaction. Negotiating balance sheet target values should be an early and meaningful part of Middle Market […]

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Quality of Data Drives Deals

The quality of data is the most commonly overlooked risk factor of business owners pursuing a sale of their business in the marketplace. Owners must be able to provide prospective buyers with evidence to support their earnings and their adjustments to earnings. Poor data quality is usually linked to: Antiquated accounting systems Incorrect revenue recognition […]

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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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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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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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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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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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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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Pedia Research, LLC has been acquired by Qualmedica Research, LLC

ABOUT THE DEAL: Pedia Research, LLC (also referred to as the “Company,” “Pedia,” or “Sellers”) has been acquired by Qualmedica Research, LLC (“Qualmedica” or the “Buyers”). Headquartered in Evansville, Indiana, Pedia is a focused team of health professionals that are dedicated solely to “Improving Health Through Research.” The Company’s team includes study coordinators, physicians, scientists, […]

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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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Kentucky Bourbon Barrel has been acquired by Independent Stave Company

ABOUT THE DEAL: Kentucky Bourbon Barrel (the “Company” and “Sellers”) has been acquired by Independent Stave Company (“ISC” and “Buyers”). Headquartered in Louisville, Kentucky, an important crossroads for the bourbon industry, the Company is a family-owned business selling high-quality, ready-for-filling used barrels to distilleries, wineries, and breweries around the world. The Company has become well-known […]

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Brand Recognition Enhances Value?

Early orchestration of a strategy for your business’ brand will create additional value at the time your business is sold. A brand represents the face of the business; a unique and recognizable design, sign, symbol, or slogan employed to create an image that identifies a product and differentiates it from its competitors. Aside from generating […]

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U.S. Nut and Bolts has been acquired by Nebraska Heavy Industries

ABOUT THE DEAL: U.S. Nut and Bolts (the “Company” and “Sellers”) has been acquired by Nebraska Heavy Industries (“NHI” or the “Buyers”). Headquartered in Louisville, Kentucky, the Company, a full service fastener distributor, has served the commercial, industrial and manufacturer sectors for nearly ten years. Nebraska Heavy Industries, a Lincoln, Nebraska-based conglomerate, has interests in […]

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Know the Exit Channel!!

Most business valuations calculate the value of a private company using fair market value, and this value is rarely suitable for making investment and financing decisions. Fair market value, although compliance-oriented and theory-based, fails to consider a business owner’s objectives or reasons for a transaction. The type of transaction will determine the owner’s exit channel, […]

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Leaving It To Chance?

Since a company owner never knows for sure what exit strategy may be successful, they should always consider decisions based on maximizing company value no matter what strategy is ultimately followed. Company owners should focus on the qualitative factors that drive quantitative results that align and strengthen the organization, improve profitability, enhance access to capital, […]

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Private Markets: Stop the Clock!!

According to Robert T. Slee, an investment banker and influential author of Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests, US private markets operate on a 10-year transfer cycle, and mid-market companies are currently in the midst of unprecedentedly high valuations and a pre-recession earnings boom (Seller’s Market). Slee’s corroborated data suggest […]

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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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