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Exit Strategies Group Advises Custom Ag Formulators in Strategic Sale
August 15, 2024 / in Acquire a Business, Sell a Business / by Al Statz
Exit Strategies Group is pleased to announce that we recently served as financial advisors to the owners of Custom Ag Formulators (CAF), a North American provider of customized agriculture formulations and products for growers, in the sale of CAF to ICL, a leading global specialty minerals company. Founded in 1998 in Fresno, California, CAF offers a diverse assortment of liquid adjuvants and enhanced nutrients, as well as various other specialty products. CAF operates two U.S.-based …
Is a Quality of Earnings (QoE) Analysis the Same as an Audit?
March 17, 2024 / in Acquire a Business, Exit Planning, Sell a Business / by Al Statz
Not exactly. A Quality of Earnings (commonly called a “QoE”) analysis used in mergers and acquisitions due diligence and a financial Audit serve distinct purposes. Here’s how they differ in terms of purpose, scope of work, timing and reporting: Purpose: QoE: The primary purpose of a QoE analysis is to assess the sustainability and reliability of a company’s earnings and cash flows. It aims to identify potential risks and irregularities in a company’s earnings that …
M&A Glossary: Quality of Earnings (QofE) Report
February 21, 2024 / in Acquire a Business, Exit Planning, Sell a Business / by Exit Strategies
A Quality of Earnings (a.k.a. “QoE” and”QofE”) report is prepared by a CPA firm to provide a detailed analysis of a target company’s revenue, expenses, working capital, EBITDA adjustments, etc. While not an Audit, a QoE provides buyers with important assurances on cash flows and risk. When buyers do this work internally its often just called “financial due diligence”, and when they outsource it, it’s called Quality of Earnings. See this post comparing a QoE …
Seller Sentiment Declined in 2023
January 17, 2024 / in Acquire a Business, Exit Planning, Sell a Business / by Exit Strategies
A seller’s market is when sellers feel they have an advantage or it’s a good time to sell, for instance when demand exceeds supply and there are more interested, active buyers than there are quality deals on the market. In a seller’s market, buyers compete in order to win deals. This typically translates to increased values and more favorable deal terms for the seller. The results of the latest Market Pulse Survey (Q3 2023) show …
Representation and Warranty Insurance in M&A
June 6, 2023 / in Acquire a Business, Exit Planning, Sell a Business / by Exit Strategies
When selling your business, you make a set of promises to the buyer. You “represent and warrant” certain facts about the business. Essentially, you’re certifying that you provided accurate information and there are no known issues pending (e.g., financial, legal, tax, compliance, etc.). If it turns out those promises are false, the buyer has the right to recoup a percentage of the purchase price. Non-fundamental reps and warranties (typically all items aside from key …
Rep and Warranty Insurance Now Available for Deals Under $10 Million
February 24, 2022 / in Acquire a Business, Sell a Business / by Exit Strategies
By Patrick Stroth In recent years, Representations and Warranty (R&W) insurance has become available to smaller and smaller deals. The eligible deal size dropped to under $20M… then under $15M. This is already quite a feat when you consider that the average transaction value (TV) for deals with R&W coverage in place is $500M. And to be honest, most insurers won’t go lower than $100M—Underwriters are already backed up on processing policies and insurance companies …
How Supply Chain Issues are Complicating M&A Dealmaking
February 2, 2022 / in Acquire a Business, Business Strategy, Sell a Business / by Al Statz
Many businesses are struggling with supply chain issues right now. After vaccine programs and government stimulus monies kicked in and economies roared back to life this past year, global supply chains came under immense strain as weaknesses were exposed. Though conditions have improved slightly in just the past few months, experts in most industries are forecasting that supply chain troubles will persist well into 2023. This article discusses some of the ways that supply chain …
M&A Advisor Tip – Know Your Priorities
October 26, 2021 / in Acquire a Business, Sell a Business / by Al Statz
The market is still strong, and sellers are receiving multiple offers, but the buyers they choose aren’t always the ones with the biggest checks. Would you take a lower price to ensure that the buyer’s culture fits yours? How about a million-dollar price cut if it meant getting all cash at close and avoiding years of seller financing? Or trading $100,000 in salary to for an extra $1 million in sale price? Sellers face these …
M&A Deal Terms: Fall 2021
September 21, 2021 / in Acquire a Business, Sell a Business / by Al Statz
You may have heard – it’s a bifurcated market. Declining caps on general indemnification against breaches of representations & warranties [1] had been a feature of the seller’s market for lower middle market businesses, going back well before the pandemic. Average caps have remained in the range of 15-16% of Total Enterprise Value (TEV) since the fall of 2020, according to GF Data’s semi-annual report on key deal terms, covering transactions by 243 active private …
M&A Advisor Tip: Expand the moat, reshape the hourglass
July 6, 2021 / in Acquire a Business / by Al Statz
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 weakness or limiting factor. If you can find a company that does that thing well, and acquire and integrate it …
Exit Strategies Group, Inc. is a leading provider of business sales and acquisitions, business valuations, and exit planning services for family owned and closely-held companies since 2002.
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