For What It's Worth: The Exit Strategies Blog

Insights, news and announcements for private business owners and their professional advisors

FOR WHAT IT’S WORTH: The Exit Strategies Blog

California Loan Guarantee Program: A viable financing option for small business acquisitions

Banks often use the Small Business Administration 7a program to guarantee acquisition loans for small businesses.  Because small business ventures face unique risks, most do not qualify for conventional bank financing.  In most states, the SBA program is the only option; however, here in California a less well known alternative called the California Loan Guarantee […]

Forbes Article: Which Is Better, A Financial Buyer Or A Strategic Buyer?

I thought would share this brief Forbes article that came across my transom early this morning. I generally agree with author John Warrillow’s comments on Strategic versus Financial buyers. If your goal is to maximize value and liquidity today, and you’re not looking for an equity partner to help you build longer term enterprise value, […]

Exit Planning: Meaning and purpose drives sustainable business growth

Several years ago I had the opportunity to work on an acquisition assignment for Mitsubishi Electric, one of the multinational business units of the Mitsubishi group of companies. While doing research to better understand my client’s organization, I found an inspiring article that quoted Tachi Kiuchi, Mitsubishi Electric’s managing director at that time… “Are the needs of […]

Preparing to sell? Why clean financial records are important.

Most business owners don’t like to spend any more time on financial statements than they have to. Trust me, I was one of them!  But, when it comes time to prepare a business for a potential sale, owners need to get serious because having clean financial records is one of the most important factors in […]

Is Private Equity the Right Solution for Your Exit?

Is Private Equity the Right Solution for Your Exit? Private Equity Groups (PEGs) are disciplined buyers of lower middle-market companies. Most have funds and lenders in place for the right acquisition opportunities. PEGs can also recapitalize a company, giving the owner partial liquidity now―and growth capital and business acumen to unleash its full potential―and a […]

Targeting Strategic Buyers for Your Company

One aspect that separates M&A advisors from business brokers is the approach used to identify and target buyer candidates. The typical business brokerage approach is largely advertising based. They place a description of the seller’s business on several websites (BizBuySell and others) and then simply await inquiries. Business listing websites are effective for “main street” businesses […]

EBITDA – What’s it all about?

EBITDA may seem to be the holy grail of business assessment in the M&A world. Almost every potential buyer starts by asking what is the selling company’s EBITDA; and almost every seller wants to know at what multiple of EBITDA his or her business will sell for. From an accounting standpoint, EBITDA is a simple […]

Six Reasons NOT to Skim

Pulling unreported cash receipts out of a business is indefensible and unwise under any circumstances, but particularly if the owner expects to exit in the next 3-5 years. All of us during our childhood were offered the parental edict: “Don’t do it, you are only hurting yourself.” So “why”, you may ask . . . now […]

Proposed IRC Section 2704 Regulations – What’s all the fuss about?

Long-awaited proposed regulations under section 2704 of the Internal Revenue Code, released on August 2, 2016, would make sweeping and very significant changes to the valuation of interests in many family-controlled entities for estate, gift, and generation-skipping transfer tax purposes. For decades, the IRS definition of Fair Market Value (FMV), which is based on the […]

Show Me the Money: Financing Strategies for Small Business Acquisitions

Of the many considerations when purchasing a small business, one of the most important is how to finance it.  Even if you have all of the cash you need to buy a business, as a smart investor you will consider whether you are better off borrowing some of the money or bringing in an equity partner […]