Exit Strategies Insights

Industry insights, knowledge base and announcements for business owners and professional advisors

Exit Planning Insights

M&A Advisor Tip: COVID-19 Era Due Diligence, Part 2

M&A buyers are still active in the midst of our uncertain environment. However, they are mindful of added risks caused by COVID-19. These are some technology-related questions that are likely to come up in future due diligence due to COVID-19: Do employees have the ability to work remotely – without frustrating workarounds? Does the IT system have sufficient capacity to support remote operations? Are further developments necessary to sustain a long-term virtual environment? Are security …

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M&A Advisor Tip: COVID-19 Era Due Diligence, Part 1

M&A buyers are still active in the midst of uncertainty. However, as you would expect, they are mindful of added risks caused by COVID-19. Talent-related questions that may come up in future due diligence due to COVID-19: Did layoffs or other cuts impact the business’s ability to retain key employees? Did the business comply with state and federal laws related to layoffs and furloughs? How is employee health and well-being managed? Are policies and practices …

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Use Equity Incentive Plans to Boost Exit Value

Closely-held business owners often use equity and equity-like programs to attract, retain and incentivize key employees to boost profits and build enterprise value. These plans provide value to the employees through current profit sharing and/or future equity appreciation. I am a big believer in utilizing these types of incentives as part of an exit strategy. Let’s break this down. Why profit sharing for key contributors? Sharing company profits with key employees incentivizes them to put …

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Selling to Competitor Not Only Option

Many business owners have preconceived ideas about who will buy their business. A lot of owners think their most likely buyer is the competitor down the street. Maybe that was true, once upon a time. But the M&A world has changed dramatically-and continues to evolve. Today, when we talk about selling your business, we’re really talking about a wide breadth of options. This is not an all or nothing scenario — you can sell all …

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M&A Advisor Tip: Management Cross-Training

Management Cross-training and Succession Planning  A strong and committed management team has long been one of the attributes buyers look for in a business. And now, in the era of COVID-19, buyers will be increasingly interested in issues of cross-training, management succession, and leadership development. Buyers will be looking at how the business could be impacted if health issues or quarantine requirements prevent certain team members from working. Review your management succession plans, leadership development …

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Is COVID-19 the ultimate cure for one-more-year-itis?

I was talking to a business owner who shared how her teenage kids remember the Great Recession and the financial impact it had on their household. Now they’re seeing their own economic upheaval, in the form of lost summer job (income) opportunities. In good times and lean, money issues have always weighed heavily on her mind. So, she can’t help but wonder how this will impact her children’s financial mindset. I have similar thoughts, but …

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M&A Advisor Tip: Planning for Death or Disability

The Wall Street Journal recently ran an article about CEOs accelerating succession plans and backup management strategies in the wake of COVID-19. It’s a question every owner should be asking (now and always): What happens if you are unable to manage your company? No one likes to think about all the what-if scenarios in life. Most business owners have no plan for exiting their business at all, much less exiting in the face of conflict …

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Controlled Private Short Sale using UCC Article 9: a Winning Alternative to Bankruptcy

As a business sale advisor with Exit Strategies Group, I help business owners obtain the best price and terms available in the market during a sale process. We sometimes encounter situations where the owner would like to sell the business, but the business is in a distressed position with the following characteristics: the fair market value of a business is less than the outstanding debt on the business, the business cash flow does not support …

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Can you sell a distressed business?

We’ve been getting this question from more business owners over the last few weeks. As with many important questions, the answer is, “it depends”. Financial distress occurs when a firm can’t generate enough profit to meet its immediate or long-term financial obligations. If your business is consistently accumulating debt, has unseasonable and sustained increase to accounts payable, or is falling behind on payroll taxes, it is likely distressed. Buyer’s Perspective The potential to sell a …

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M&A Advisor Tip: You are Not Stuck with Your Business

Worried about a recession? Burned out? No energy to do this all again? You are not stuck. Businesses sell in all market conditions, including in uncertain times like these. Yes, we’re coming off a period of peak demand in M&A. Buyers were lined up for quality opportunities. And they stretched their target parameters in order to find something that would fit. But many of those buyers are still active. There are buyers out there who …

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