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Exit Planning Insights
Private Equity Fact and Fiction
May 20, 2014 / in Exit Planning, Sell a Business / by Al Statz
Private equity groups are active acquirers of closely-held lower middle market companies here in California. Private equity consists of individuals, families and institutional investors that make passive minority investments in partnerships that invest in, provide debt financing for, and operate private companies. Republican presidential candidate Mitt Romney’s run for the presidency in 2012 brought sudden attention to the private equity world. Romney, who had been the founder and CEO of private equity firm Bain Capital, didn’t go …
Is it Better to Own or Lease your Business Facility?
May 5, 2014 / in Exit Planning, Sell a Business / by Bob Altieri
For some businesses, specialized building construction is required — hotels, car washes, wineries, some food processing facilities, etc. — making the business and real estate nearly inseparable, and making owning the real estate almost mandatory. However most enterprises need a more generic commercial, industrial or retail property to support business operations, and the decision to own or lease real property is more elective. Companies that lease their facilities avoid the sizable cash investment associated with …
Increase Business Value with Agreements
February 19, 2014 / in Business Valuation, Exit Planning / by Jim Leonhard
I recently completed an exit planning valuation of a business that enjoyed a very favorable discount on purchases of a key component used in the assembly of its products. The discount, negotiated many years ago, was a handshake deal between the founder of the company and his former employer who manufactured the component. This large discount enables the business to be significantly more profitable that it would be otherwise. Any investor or buyer for this business …
Tip for Maximizing Business Value: Diversify Your Customer Base
February 5, 2014 / in Business Valuation, Exit Planning / by Al Statz
Our seller and business valuation clients are usually proud of their company’s long-term relationships with major clients, and with good reason. Having a high percentage of business with a few customers can be a very profitable and personally satisfying way to run a business. It allows management to focus its attention and fine tune company operations to deliver exceptional service in a very cost-efficient manner. Customer acquisition expenses (marketing, sales, estimating, etc.) can be greatly …
Tip for Maximizing Business Value: Build for the Future
December 20, 2013 / in Business Valuation, Exit Planning / by Al Statz
Is your business built for the future? Consumer behaviors, markets, regulations and technology are changing so fast these days that many business owners are having trouble keeping up. And if the business doesn’t have a strong future, it simply won’t trade at a high valuation, or many not have any value at all. Private business owners must constantly monitor changes in their industry and marketplace, and make appropriate investments and take appropriate steps to insure the …
Why Should I Bother Valuing My Business?
December 13, 2013 / in Business Strategy, Business Valuation, Exit Planning / by Al Statz
A new article at Forbes.com addresses a question in the minds of many small business owners, “Why Should I Bother Valuing My Business?” The author explains several of the common reasons small business owners have their businesses appraised by an independent business valuation expert, as they prepare for a sale, buy-out, contingencies, retirement, or passing the business on to children.
Importance of a Proper Valuation before Offering a Business for Sale
November 9, 2013 / in Business Valuation, Exit Planning, Sell a Business / by Bob Altieri
Lately I’ve been spending a lot of time working on an acquisition search for a client, and in this process I found many business offerings that were priced far too high and several that were under-priced. From a buyer and seller perspective, overpricing is a massive waste of time. At the other extreme, when price is set too low, seller’s leave hard-earned money on the table. Both situations can easily be avoided by obtaining a proper business …
Thinking of Selling Your Business? Don’t Let Built-In Gains Tax Surprise You.
September 10, 2013 / in Exit Planning, Sell a Business / by Al Statz
I was recently asked by “Chester” to help him sell the $10 million service company he founded 24 years ago. Chester, who is 65 years old, has had some health concerns and wants to travel the world with his wife Margie. Two of his competitors have been acquired in the past 3 years by strategic buyers. His business is doing well and he thinks the time is right to sell. In Chester’s industry, almost all …
Role of Business Appraisers and M&A Advisors in Estates and Trusts
August 8, 2013 / in Business Valuation, Exit Planning / by Al Statz
I was recently asked about Exit Strategies’ role as business appraisers and M&A advisors in estates, estate planning and trust administration. Here was my answer … Business Valuation (a.k.a. Appraisal) As business valuation experts, we provide fair market value appraisals of closely-held corporations, FLPs and LLCs for estate planning, gifting, estate tax, charitable donations, buy-sell transactions and succession planning. We value fractional interests in operating companies and asset holding companies using appropriate discounts. Our appraisers …
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” …
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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