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Does My Buy-Sell Agreement Establish Value for Estate Purposes?
December 20, 2017 / in Business Valuation, Buy-Sell Agreements, Exit Planning / by Al Statz
Buy-sell agreements that contain a clause that values stock at less than fair market value can be disregarded for tax purposes. It is important to consider the requirements of Internal Revenue Code (IRC) Section 2703 when developing an estate plan involving business interests in which 50% or more of the stock is family owned. Section 2703(a) states that a shareholder agreement (entered into after October 8, 1990) that allows for the acquisition or transfer of …
Current Market Multiples for Main Street Business Sales
December 6, 2017 / in Acquire a Business, News, Sell a Business / by Louis Cionci
Each quarter, The International Business Brokers Association (IBBA) and M&A Source together with Pepperdine Private Capital Markets Project and the Graziadio School of Business and Management at Pepperdine University publish a quarterly national survey of business brokers and M&A advisors called the Market Pulse Survey. Price multiples and other key metrics in the Main Street Market section of the Q3 2017 survey are presented below. Main Street businesses are defined as those with enterprise values …
Help! I Need a Broker to Sell My Company
November 15, 2017 / in Sell a Business / by Exit Strategies
I was recently talking with a business owner who is considering selling his California company. He had found my contact information online, and while he was interested in getting started, he really didn’t know how to evaluate a business broker’s credentials for a sale engagement. Sellers are often unsure what questions to ask. For this reason, I like to spend 15 minutes to share my relevant M&A experience, my career history, our firm’s processes and …
How Would Your Company Survive Without You?
November 1, 2017 / in Business Valuation, Exit Planning / by Exit Strategies
If you are like many business owners, you tend to get caught up in the daily demands of your business: managing sales and production, costs, and the bottom line. What about preservation and protection? Perish the thought, but what would happen to your company if it was unable to carry on due to your death or disability? These concerns may seem like, and may in fact be, remote possibilities. However, by putting them off, you …
First Steps to Buying a Business
October 25, 2017 / in Acquire a Business / by Don Ross
I work with a lot of sellers and buyers of small to medium sized businesses in the North San Francisco Bay Area. Most potential buyers do not succeed in buying a business, largely because they lack a systematic approach. A few weeks ago a high-net-worth individual asked for my advice on acquiring a business, and my reply was along the lines of the following. A simple five step plan that can help you target and …
When is the Right Time to Sell My Business?
October 11, 2017 / in Exit Planning, Sell a Business / by Al Statz
BOOK REVIEW — I don’t recall the last time I recommended a book, but today I feel compelled to tell business owners about an excellent new book titled, “When is the Right Time to Sell My Business?” This book not only helps you decide when to sell your business, but will also help you understand its value from the perspective of willing buyers, increase its value and marketability, and choose and plan your best exit …
California Loan Guarantee Program: A viable financing option for small business acquisitions
October 6, 2017 / in Acquire a Business / by Adam Wiskind
Banks often use the Small Business Administration 7a program to guarantee acquisition loans for small businesses. Because small business ventures face unique risks, most do not qualify for conventional bank financing. In most states, the SBA program is the only option; however, here in California a less well known alternative called the California Loan Guarantee Program is also available. California’s program is not new. Our state has been offering loan guarantees since 1968. It is administered …
Forbes Article: Which Is Better, A Financial Buyer Or A Strategic Buyer?
October 4, 2017 / in Exit Planning, Sell a Business / by Al Statz
I thought would share this brief Forbes article that came across my transom early this morning. I generally agree with author John Warrillow’s comments on Strategic versus Financial buyers. If your goal is to maximize value and liquidity today, and you’re not looking for an equity partner to help you build longer term enterprise value, a strategic buyer generally produces the best outcome. Having multiple strategic buyers at the negotiating table as a result of …
Exit Planning: Meaning and purpose drives sustainable business growth
September 26, 2017 / in Business Strategy, Exit Planning / by Al Statz
Several years ago I had the opportunity to work on an acquisition assignment for Mitsubishi Electric, one of the multinational business units of the Mitsubishi group of companies. While doing research to better understand my client’s organization, I found an inspiring article that quoted Tachi Kiuchi, Mitsubishi Electric’s managing director at that time… “Are the needs of the corporation and the world in conflict? In the long run, they can’t be. Today, 600 million of the Earth’s …
Preparing to sell? Why clean financial records are important.
September 20, 2017 / in Exit Planning / by Exit Strategies
Most business owners don’t like to spend any more time on financial statements than they have to. Trust me, I was one of them! But, when it comes time to prepare a business for a potential sale, owners need to get serious because having clean financial records is one of the most important factors in concluding a successful business sale or merger. What do I mean by clean financial statements? First, all relevant business transactions …
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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