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Business Strategy Insights
A Student of Business
July 18, 2023 / in Business Strategy, Business Valuation / by Joe Orlando
A Key Performance Indicator to Improve the Results of your Testing Lab Exit
May 22, 2023 / in Business Strategy, Sell a Business / by Adam Wiskind
When preparing to sell your Testing Laboratory using Key Performance Indicators (KPIs) can help to focus your efforts and resources in the right areas. While numerous KPIs exist, one metric that should be on the radar of all business owners in the testing laboratory industry is the Sales/Employee Ratio. Labor costs make up the largest single expense for Laboratory Testing businesses, accounting for an estimated 38.4% of industry revenue in 2022 (IBIS WORLD July 2022). …
Instead of selling, they’re growing
April 4, 2023 / in Business Strategy, Exit Planning / by Al Statz
If it’s a bad time to sell your business, consider growing instead. That’s the takeaway from one contractor whose plans to sell their business got squashed by inflation and supply chain issues in 2022. Pre-pandemic the business had been doing about $50 million in sales with $6 million in EBITDA (earnings before interest, taxes, and depreciation). In most markets, that would have made this business a highly attractive acquisition target. But problems started when the …
How to Divest Part of a Company
March 7, 2023 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
Selling a division or line of business is often more complex than selling an entire company. If you’re like most private business owners, you have never sold a business, let alone carved out and divested part of one. This article shares some of what I’ve learned about planning and executing a successful divestiture during my 20+ years of investment banking. In my experience, most divestitures are intentional efforts to generate liquidity or streamline and strengthen …
Why boomer business owners should watch M&A cycles
August 18, 2022 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
Approximately 20% of private business owners are over the age of 65. Another 30% are between the ages of 55 and 64, according to estimates from the Census Bureau Annual Business Survey. If we’re going by age trends alone, that suggests roughly half of America’s businesses will transition ownership in the next five to 10 years. This will be the largest transfer of wealth the nation has ever seen in such a short period of …
M&A Advisor Tip: Niche companies can bring top dollar
August 18, 2022 / in Business Strategy, Sell a Business / by Al Statz
It’s often better to be #1 or #2 in a smaller/narrower market than a minor player in a larger/broader market. By targeting and dominating a distinct segment of a market, you help ensure that potential customers think of you first (brand recognition) and continually choose you, again and again. Dominant players usually have lower cost of customer acquisition, first call/last look with customers, and other advantages that drive profit margins up and accelerate growth. Niche …
M&A Advisor Tip: Employee retention adds business value
June 28, 2022 / in Business Strategy, Sell a Business / by Al Statz
“To win in the marketplace, you must first win in the workplace.” Those words of Doug Conant, former CEO of Campbell Soup Company, ring particularly true today. The talent market was tight before the pandemic, but now we’re in a critical state. Finding employees is a challenge for every company. And if you’re selling your business, it might be the buyer’s top concern. Employee issues buyers care about right now: turnover, training, cross-coverage, salary/wage increases, …
Market Pulse – Quarter 4, 2021
May 6, 2022 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
Seller’s Market Presented by IBBA & M&A Source A seller’s market occurs when demand exceeds supply. There are more interested, active buyers than there are quality deals on the market. In a seller’s market, buyer’s compete in order to win deals. This typically translates to increased values and more favorable deal terms for the seller. In Q4 2021, seller market sentiment rebounded, setting a new peak in all but the $5M-$50M sector. “Business confidence, and …
Small business values up in 2021
May 6, 2022 / in Business Strategy, Sell a Business / by Al Statz
Business values increased in 2021, despite ongoing challenges from the pandemic, talent shortages, and supply chain disruption. Deal activity continued at an intense pace, with advisors across the country reporting increases in both incoming deal flow and completed engagements. More advisors characterized this as a seller’s market than nearly any other time in the last decade, according to the year-end Market Pulse report from IBBA and the M&A Source. Buyer confidence is high, as is …
Six Benefits of Monitoring Company Value
April 21, 2022 / in Business Strategy, Business Valuation / by Al Statz
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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