Entries by Al Statz

Keep widening your moat

When buying a business, one of the qualities buyers look for is barriers to entry. The harder it is for someone to get started in your business or take away your customers, the bigger the barrier. When investing in businesses, Warren Buffet talks a lot about moats. “In business, I look for an economic castle […]

M&A Advisor Tip: Stay Bonuses Add Value

Confidentiality is important in a sale. But what do you do when critical employees must be informed? We recommend stay bonuses. A stay bonus provides an incentive for key employees to cooperate and assist with a sale. We see stay bonuses ranging from 20% to 100% or more of an employee’s salary. It’s common to allocate around […]

How three private equity firms valued the same company

As part of our annual State of the Market M&A conference, held virtually this winter, we invited three private equity (PE) firms to review and submit an offer on a hypothetical company. They revealed their offers at the conference, and we held a panel discussion on why they valued the company the way they did. We keep the invited PE firms confidential. […]

M&A Advisor Tip: Fix Gas Guzzler Before a Sale

Working capital is like gas in a car—it makes your business go. So when buyers acquire a company, they expect some “fuel” to be included in the tank. But when business owners get successful and comfortable, they get lax about working capital. They establish a habit of fast payment, slow collections, and excess inventory, and they turn […]

Burnout drives business owners to sell their companies

Business owners are burned out, worn out, and getting out. More than 1 in 4 business owners who put their business on the market this spring did so because of burnout. That’s according to a first quarter survey of business brokers and M&A advisors conducted by IBBA and M&A Source. Retirement still leads as the […]

M&A Advisor Tip: Be ready when you are ready

When a business owner says it’s time to sell, I ask, “How fast do you want to be out?” The answer I hear most is, “Yesterday.” But sellers underestimate how long the process takes. Once we sign our engagement agreement with the business owner, it takes about 9 to 12 months to sell. After that, […]

Know the 3 types of business buyers and what motivates them

When selling your business, you may receive offers from three kinds of buyers: Individual, financial, and strategic. Here’s a look at the most common buyers and where their motivations lie. Individual buyer: A first time buyer looks at the business to get out of corporate America and control their own destiny. Some of these buyers […]

Seller’s Market Sentiment Back to Pre-Covid Levels

What a difference a year makes! Sellers of $1M+ enterprise value businesses have an advantage, with roughly 2/3 of M&A advisors and business brokers calling it a seller’s market for these larger businesses. Confidence is rising across all sectors. Market Pulse Survey – Quarter 1, 2021 Presented by IBBA & M&A Source Al Statz is […]

M&A Advisor Tip: Expand the moat, reshape the hourglass

Acquisitions work best when they accomplish one of two goals: expand the moat or reshape the hourglass. Expanding the moat means leveraging your core advantage. The more you can strengthen that advantage, the wider the moat around your company, protecting it from competitive forces. As for the hourglass, its narrowest point is your company’s primary […]