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Business Strategy Insights
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 …
Valuing Personal Goodwill
January 17, 2022 / in Business Strategy, Business Valuation / by Victor Vazquez
What is personal goodwill? Before starting our discussion about personal goodwill, it is necessary to establish a common ground to understand the concept. First, it is an identifiable intangible asset that will generate future economic benefits to the asset owner. While there is no standard definition. Adam Mason and David Wood searched various textbooks, articles, and leading court cases[1]that define this term. From that exercise, we chose to utilize the following definitions for our discussion; …
Buyer’s top focus is employee team
November 2, 2021 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
Employees. Finding them. Keeping them. It’s on everyone’s mind right now. And for the company or person who buys your business, it just may be their number one concern. In the latest IBBA and M&A Source Market Pulse Report, a quarterly survey of M&A advisors, respondents indicated that employees were buyers number one due diligence concern so far this year. Employee issues, specifically longevity, loyalty and work ethic, ranked ahead of other due diligence priorities …
M&A Advisor Tip: Take a vacation to grow your value
September 23, 2021 / in Business Strategy, Exit Planning / by Al Statz
Build a strong management team and work on transitioning yourself out of the business. Buyers want to see that the business can run—and run well—without your constant attention. What would happen if you took the summer off? What would you come back to? If the answer is locked doors, then you’ve got some work to do. If your team might call you and have a meeting once a week, you’re moving in the right direction. …
Keep widening your moat
September 10, 2021 / in Business Strategy, Exit Planning / by Al Statz
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 protected by unbreachable moats,” he says. “If you have an economic castle, people are going to come and want to …
7 Keys to Making Your Business Sellable
April 27, 2021 / in Business Strategy, Sell a Business / by Roy Martinez
A business owner recently asked me what she could do to increase the value of her business. She wants to sell and retire in a few years. My advice was: It is easier to sell big businesses than small businesses. The magic number is $1 million in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). When a business has more than $1 million EBITDA, it becomes attractive to all buyer types: individuals, strategic buyers, …
Biden tax plan driving business owners to market
March 17, 2021 / in Business Strategy, News, Sell a Business / by Al Statz
During his campaign, President Biden proposed tax changes that could have a significant impact on business owners. Any business owner contemplating an exit in the next few years should consider how potential tax changes could reduce their net proceeds from a sale. If Biden’s tax plans come to fruition, the capital gains tax rate could effectively double, from 20% to 39.6% for income exceeding $1 million. Right now, that means business owners need to shift …
SBA Covers 3 Months of Payments on New Loans
March 4, 2021 / in Business Strategy, Business Valuation, News / by Al Statz
As part of the Economic Aid Act that passed in December, the Small Business Administration will make borrowers’ payments for three months on new SBA 7(a) and 504 real estate and micro-loan programs. These incentives were available last summer under a stimulus program that expired in September 2020. Now the program has been revived and enhanced. The SBA will make the first three months of payments (principal and interest) on new loans approved between Feb. 1 and Sept. 30, 2021. To be clear, these payments …
Six Benefits of Monitoring Company Value
January 4, 2021 / 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. …
Plan Your 2021 Comeback with a Strategic Acquisition
November 3, 2020 / in Acquire a Business, Business Strategy / by Al Statz
Business owners tend to think more seriously about selling when things aren’t as much fun as they used to be. Running a business in the COVID era is anything but fun, and owners are being particularly responsive to acquisition inquiries right now. Proactive Acquisition Searches When growing through acquisition, companies can be reactive or proactive. In a reactive strategy, the buyer takes phone calls and watches open market listings for appropriate opportunities to appear. This …
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