Exit Strategies Insights

Industry insights, knowledge base and announcements for business owners and professional advisors

M&A Financing During the Pandemic

The pandemic has put lower middle market business sales and acquisitions on somewhat of a roller coaster ride. Deal volume declined sharply in Q2-Q3 and came back strong in Q4. Valuations have remained strong throughout the pandemic, at least for COVID-resistant businesses. Though there was a slight Covid-effect in Q2-3. In terms of M&A financing, capital structures shifted to slightly more less debt during 2020, before edging back up to pre-pandemic levels in Q4. To …

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Market Pulse Survey: Still a Seller’s Market

Despite the effects of the pandemic, we continued to experience a seller’s market in the fourth quarter of 2020, for businesses with enterprise values over $2 million. Presented by IBBA & M&A Source For further information on M&A market conditions, or to discuss a current business sale, acquisition or valuation need, contact Al Statz, 707-781-8580 or alstatz@exitstrategiesgroup.com.

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M&A ADVISOR TIP: Cybersecurity is a Buyer Priority

New research from Datasite reveals that cybersecurity is the #1 cause of buyers withdrawing from a merger or acquisition during due diligence. Deal makers said about 1 in 10 deals fell through during due diligence. Cybersecurity issues was the cause in 36% of these failed deals, followed by financial weakness, excessive valuation, financial irregularities, and leadership issues. To ensure that your data security practices will not be a concern for prospective buyers of your company, …

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Exit Strategies Group Advises on the Sale of Poly Seal Industries

Exit Strategies Group recently advised the owner of Poly Seal Industries on a sale to Goodyear Rubber Company. Founded in 1974, Poly Seal Industries is a Berkeley, California based manufacturer of molded rubber products for customers in the biopharmaceutical, water & wastewater treatment, chemical, healthcare, food & beverage, and consumer electronics industries. In addition to producing quality custom products, Poly Seal helps customers succeed by providing manufacturing engineering and material science expertise. Goodyear Rubber Company …

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Tax changes could accelerate business sales in 2021

To complete deals in 2021, ahead of possible tax changes, owners and deal teams need to act fast. With the Democrats in the White House and having the tie-breaking vote in the senate, it is likely that taxes on corporations and wealthy individuals will increase during this administration. When and how much are unknown. With COVID recovery as the administration’s immediate priority, many think we will have until 2022. Biden has proposed raising long-term capital …

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M&A Advisor Tip: ESG Diligence on the Rise in M&A

Companies that are able to showcase their Environmental, Social and corporate Governance (ESG) capabilities stand to gain a competitive advantage and make themselves more attractive to potential acquirers. ESG issues cover a wide range of corporate practices that could include everything from environmental stewardship, health and safety policies, employee well-being, community support, to corporate culture issues. In recent research from Datasite, 84% of dealmakers rated ESG as an “important/very important” M&A due diligence consideration. And 78% …

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Exit Strategies Group Represents Shareholders in the Sale of Gibson Engineering

Exit Strategies Group is pleased to announce that Applied Industrial Technologies has acquired Gibson Engineering Company, a value-added distributor and system integrator of industrial automation technologies. Exit Strategies Group served as the exclusive M&A advisor to Gibson shareholders. Gibson Engineering, based in Norwood, MA,  distributes advanced robotics, vision systems, sensors, motion and machine controls, material handling and other industrial automation products, and integrates mixed technology systems. For over 40 years, Gibson has been a trusted …

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Six Benefits of Monitoring Company Value

Even if your business is not for sale, monitoring its market value can be incredibly helpful. This article describes six ways that understanding value over the life of a closely held business benefits shareholders, directors and managers. 1. Value Report Card Like financial statements, an annual independent business valuation is a type of report card on company health. CEO’s can use this report card to educate, align and focus executive teams on maximizing enterprise value. …

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Due Diligence: Essential Step in Every Successful Business Acquisition

When purchasing a business the due diligence stage allows the buyer to verify  information pertaining to the business in order to determine whether to proceed with the purchase. The due diligence period also permits the buyer to determine if there are any barriers or risks associated with the transaction. Accordingly, the transaction closing is usually conditioned upon the due diligence stage being completed successfully. While there are many operational, legal and financial components of due …

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Key Deal Terms – Fall 2020

GF Data collects and publishes proprietary business valuation, volume, leverage and key deal term data contributed by over 200 lower-middle market private equity groups and other M&A deal sponsors.  Two of the acquisition deal terms that they monitor are the survival period¹ on general reps and warranties and the cap on indemnification² against breaches of general reps and warranties.   The following table shows these limits for deals in the $10 million to $25 million enterprise …

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