Tag Archives: Value Drivers

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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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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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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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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Express Waste Removal has been acquired by a Private Investment Group

ABOUT THE DEAL: Express Waste Removal and Recycling (also referred to as the “Company” and/or “Sellers”) has been acquired by a Private Investment Group (the “Buyers”). Headquartered in Ellettsville, Indiana, the Company has provided cost-effectivve, reliable waste collection for over a decade to individuals and businesses throughout Bloomington, Ellettsville, and various other parts of Monroe […]

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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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“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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Reverse LOI

Executing a Letter of Intent (LOI) constitutes a critical juncture in merger and acquisition (M&A) activity, so why is an LOI for the most part nonbinding? A seller simply cannot afford the distraction, time and expense involved in having multiple prospective buyers simultaneously reviewing the seller’s confidential documents and performing due diligence. The fact that […]

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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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“True-Up Payments” May Be Expensive

In merger & acquisition (M&A) transactions, the valuation and purchase price of a company normally assumes a going concern business which implies that the company will have an appropriate level of working capital to continue operations and support future growth. A purchase price adjustment is often used to assure both buyer and seller that a […]

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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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Show Me the Cash in Private Company Stock

In company sell transactions, secured and unsecured promissory notes, public and private company stock, short and long term earn-outs, all consideration has to be measured to its equivalent value in cash. Equivalent cash measurements allow for the meaningful comparison of offers by Sellers, and it is necessary to enable Sellers to make rational and informed […]

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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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Appearance Matters?

The physical appearance of a business’ equipment and facilities, including office, manufacturing, and warehousing space, weighs heavily with prospective buyers and must be consistent with the purchase price. Business owners who are determined to receive a premium for their business have to consider the inherent value of a fresh coat of paint, clean workspaces, an organized […]

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Barriers to Entry: Build a Wall!!!

Business owners must “build a wall” around their businesses to avoid advances from would-be competitors, and reinforce their position in the market. Barriers to entry deter new competitors from entering a market, secure the revenues and profitability of established companies, and increase the value of protected businesses. Consequently, businesses with high barriers to entry reduce […]

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