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Reducing Cost of Capital in a Small Business Acquisition
August 27, 2013 / in Acquire a Business / by Bob Altieri
Small Business Administration (SBA) guaranteed loans are widely recognized as one of the only reliable sources of third-party funding for small privately-held business acquisitions (up to $5 million), but do you know how this benefits the borrower’s cost of capital? Very few small business transactions are completed in which the buyer pays all cash. This is not just because most people don’t have a big pile of cash lying around; it’s also because financial leverage …
Do Strategic Buyers Share Synergies with Sellers?
August 1, 2013 / in Acquire a Business, Exit Planning, Sell a Business / by Al Statz
In successful M&A deals involving substantial synergies, the deal price usually falls in the range between the standalone fair market value of the target business and that value plus the full value of potential synergies. Value of potential synergies? Increased value (over and above fair market value) to a strategic buyer, involves synergies between the acquired and acquiring firm and the additional financial returns and therefore value created by those synergies . There is a “1+1=3” …
Goodwill Part II: Goodwill vs. Goodwill Value
March 22, 2013 / in Acquire a Business, Business Valuation, Sell a Business / by Bob Altieri
All businesses have goodwill; however, not all businesses have goodwill value! Goodwill, which is usually the largest portion of the purchase price of a business, is the sum of intangibles such as having a good location and trade dress, a negotiated lease in place, trained employees, a website, customers, etc. Not all businesses have goodwill value, which is measured by the amount of earnings the business produces adjusted for the risk of earnings continuing to …
Personal versus Enterprise Goodwill in a Business Sale
February 22, 2013 / in Acquire a Business, Business Valuation, Sell a Business / by Bob Altieri
Goodwill can exist in two different forms: Personal Goodwill, which is defined as an intangible asset that is attached to a person; and Enterprise Goodwill, also an intangible asset that is attached to a business enterprise. If goodwill is attached to an individual, it is non-severable since the person to which it is attached is not being sold. This also implies that the asset is non-transferable. Of course we often establish contractual arrangements between the …
Should we use a business sale escrow? What does an escrow holder do?
June 1, 2011 / in Acquire a Business / by Al Statz
A client recently asked me these questions, and I thought the answers would make a good blog post … A business sale/purchase escrow holder protects the interests of buyers and sellers of small businesses by acting as a neutral independent fiduciary, communications link and closing facilitator. Escrows are used extensively by business transaction attorneys and intermediaries throughout California since regulatory compliance, routine closing documents and administrative details are handled in an efficient, cost-effective manner. Business …
See You on the Other Side
April 27, 2011 / in Acquire a Business, News, Sell a Business / by Al Statz
Is a smooth transition possible when acquiring a business? I was was recently interviewed on this subject for the May 2011 issue of Entrepreneur Magazine … Q: I’ve started talks with a company’s owner to acquire her business. How do I make sure my first days as the new owner go … well, is smoothly asking too much? A: Ah, the first-time buyer. After talks get going, there’s always that day when you wake up and …
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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