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Exit Planning Insights
Valuation: Theory, Practice and Reality
March 11, 2015 / in Business Valuation, Exit Planning / by Exit Strategies
I attended a luncheon last week where a private equity firm’s panelist claimed that business valuation is too theoretical and inappropriate in the transactional world. I instinctively question broad-based statements like this, when I hear them; however I listened attentively. The panelist correctly asserted that most valuation firms focus on compliance and litigation work as opposed to transactions. However, his criticism of valuation work was illogical and inconsistent, and offered no better alternative. To make …
How to Sell Your Business for More Than Fair Market Value
February 11, 2015 / in Exit Planning, Sell a Business / by Louis Cionci
If you are selling your business and you want the highest possible price, here is one way to get a premium over its Fair Market Value. First, consider that the value or price an owner can expect to receive for their business is generally a function of: 1) free cash flow generated, 2) growth expectations, and 3) the risk involved in receiving the cash flows. These factors combine to determine the value for the business entity. Expressed …
The Dismal D’s of Buy-Sell Agreements
January 28, 2015 / in Business Strategy, Buy-Sell Agreements, Exit Planning / by Al Statz
Well-written Buy-Sell Agreements (BSA’s) enable orderly share transfers upon the occurrence of certain events during the life of a business. Buy-Sell Agreements also prevent litigation that can quickly create a lose-lose situation for business owners. This article presents a list of 27 trigger events and common issues to be addressed in Buy-Sell Agreements. And, just for fun, each item on the list begins with “D”. Buy-sell issues are unpleasant to think about; which is why …
Exit Planning: A New Year’s Resolution
January 13, 2015 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
“Expect the best, plan for the worst, and prepare to be surprised.” – Dennis Waitley This is the time of year when many of us decide that we need to change things or accomplish new things, and we set goals at the beginning of the New Year. Quit smoking; lose weight; make more money? How about taking a look at your business this year and begin to prepare it for your exit, which will ultimately …
February Seminars: Maximize the Value of Your Business
January 7, 2015 / in Exit Planning, News, Sell a Business / by Al Statz
Now in its 9th year, Exit Strategies’ Maximizing the Value of Your Business seminar delivers essential and practical information to business owners who would like to sell for top dollar in the next 1-5 years. It is not too early to plan the successful exit you deserve! In this fast-paced workshop, business owners learn … The elements of an effective exit strategy Types of buyers and what they value Business valuation nuts and bolts How …
Your December Checklist for a 2015 Business Sale
December 3, 2014 / in Exit Planning, Sell a Business / by Don Ross
Thinking of selling in 2015? Here are ten actions you can take this month to achieve a higher price in the New Year. Finish 2014 strong. Buyers and their lenders will want to see your last full fiscal year profits on an uptick. Ship and invoice everything you should this month. Resist artificially pushing income into next year to reduce your tax bill. Don’t go nuts prepaying expenses like monthly service contracts, retainers or rent. Review the functional …
Your Buy-Sell Agreement – Keep It Current Before It Costs You Money and Grief!
November 26, 2014 / in Buy-Sell Agreements, Exit Planning, Sell a Business / by Exit Strategies
Buy-Sell agreements (BSA’s) are an essential, and often overlooked, element in allowing shareholders to realize the value of their investment in a privately held company. The BSA’s purpose is to a) provide a market for ownership interests, b) establish the price and terms for these interests, c) specify a buy-sell process that is orderly and reasonable, and d) specify financing should a “trigger” event occur. There are several reasons this contract among owners can fail. …
Don’t be a Victim of Seller’s Remorse
November 22, 2014 / in Exit Planning, Sell a Business / by Jim Leonhard
More business owners than you’d think second-guess themselves within a year of selling the business. In my experience as an M&A advisor and business valuation expert, the main reason for the failure of business exits is the seller’s lack of planning on how and when to exit. Too many owners never plan and simply wait until something happens that essentially forces them to sell, such as health issues, marital stresses, poor business conditions, or when “burnout” becomes …
Ingredients of a Successful Business Sale
November 10, 2014 / in Exit Planning, Sell a Business / by Al Statz
Going to market when you and your business are ready to sell and market conditions are right provides the best opportunity to maximize results. Let’s look at how these three ingredients combine: You, the Owner The Business itself The Market Having these ingredients come together at the same time requires planning. You can prepare personally and you can prepare your company for sale. You can’t control the market, but you can choose market timing. So, basically, it’s up to …
Is your company an add-on candidate?
November 3, 2014 / in Exit Planning, Sell a Business / by Al Statz
Most business acquisitions by private equity firms have been “add-on” deals lately. In private equity jargon, a large company acquisition is usually a platform acquisition, and a smaller company acquistion is most often an add-on (or “bolt-on”, or “tuck-in”) acquisition. Add-on acquisitions are complementary to and synergistic with an existing platform company held by a private equity firm. Platform acquisitions dominate the headlines and represent most of the dollar volume, but add-ons now represent the majority of …
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