Exit Strategies Insights

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

Private Equity is Open for Business

We stay in regular contact with  private equity groups from around the country to monitor M&A market activity. Currently, the message we are hearing is that these firms are “open for business.” Private equity firms are in the business of buying, building and selling businesses. It’s how they deliver investor returns. They don’t have time to sit back and wait things out. The clock is ticking as they work to meet investor expectations within fund …

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Gifting Window for 2020 May Be Closing

With a Global pandemic and prospects of a sustained recession with double digit unemployment coupled with West Coast wildfires and East Coast hurricanes, I would say that everyone in these United States is looking forward to ringing in the New Year on January 1st. But before the ball drops on a socially distanced crowd in Time Square, you should think about other changes that may occur as we put 2020 in our rear-view mirrors. Specifically …

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Assignment for the Benefit of Creditors: Alternative to a Bankruptcy Sale

When the goal of a financially distressed business owner is to sell with minimum publicity, free of unsecured debt and potential liability for directors and management, the most advantageous exit path may be an Assignment for the Benefit of Creditors (ABC). Most buyers won’t acquire the assets of an insolvent entity unless the assets are “cleansed” through an ABC or bankruptcy process. Typically, the board of the troubled entity has decided that a rapid sale …

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M&A Advisor Tip: COVID-19 Era Due Diligence, Part 4

M&A buyers are still active in the midst of this uncertain business environment. However, they are mindful of added risks caused by COVID-19. These are some financial questions that are likely to come up in future due diligence in light of COVID-19: Did the business utilize any government relief, debt deferrals, or rent reductions? In terms of government relief, was the business accurately entitled to that relief and did they meet requirements for debt forgiveness? …

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Recapitalization Pros and Cons

When we talk about recapitalization, we’re talking about a partial sale of a company that allows the owner to liquidate some of the value they have in their business. Typically, this involves selling a part of your equity (usually 70-80%) to a third-party, however some business owners do sell just a minority stake. Recapitalizations are a standard investment tool for private equity firms. They have investor dollars they need to put to work and a …

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M&A Advisor Tip: COVID-19 Era Due Diligence, Part 3

M&A buyers are still active in the midst of this uncertain business environment. However, they are mindful of added risks caused by COVID-19. These are some contract-related questions that are likely to come up in future due diligence in light of COVID-19: Did the business default on any third-party agreements? What are the termination rights on key contracts? Are counterparties adhering to their contract obligationss? Were terms modified or waived in a way that would …

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Winery Valuation 101

It was either Churchill or Napoleon who said that “in victory you deserve champagne, in defeat you need it.” In a post-COVID world, consumers certainly haven’t admitted defeat but they’ve taken to wine to deal with the “next” normal. Case in point; wine sales (along with beer, hard seltzer and distilled spirits) are up…big. Whether you are a producer making an Estate Pinot Noir from grapes on your Russian River vineyard or a consumer searching …

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Exit Strategies Adds Machinery & Equipment Appraisal Services

Exit Strategies Group, Inc. (ESGI) is pleased to announce that we are expanding our valuation services offering to include Machinery and Equipment Appraisals, also referred to as asset appraisals. Asset appraisals can be an adjunct to a business valuation, or provided as a stand-alone service. Adam Wiskind, CBI, CMEA will be leading this practice out of our San Francisco Bay Area (Sonoma County) office. Our appraisers are Certified Machinery & Equipment Appraisers (CMEA) through the …

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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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