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‘No Shop’ Protects Buyer Investment in M&A
January 17, 2020 / in Acquire a Business, Sell a Business / by Exit Strategies
A no shop provision is an important part of M&A transactions. Also known as an exclusivity clause, a no shop clause prohibits the seller from sharing information or negotiating with other would-be buyers for a specified time frame. Prior to this, the seller is negotiating with several buyers. The goal is to entertain multiple offers and figure out which buyer will ultimately provide the best deal for the seller. Once the seller has identified their …
How Key Employees Factor into a Business Sale
January 15, 2020 / in Exit Planning, Sell a Business / by Al Statz
One of the negotiations we get involved with as M&A advisors is retention of key employees. Nearly every private business in every industry has a few “indispensable” employees. Before taking a company to market, we work with clients to evaluate key-person dependence and develop strategies for retaining key employees. This article offers help in identifying key employees in your business. On one hand, having key employees is a selling feature of a business. But, when …
Secrets to Business Valuation – a Lesson from Curly
January 8, 2020 / in Business Valuation, Exit Planning / by Al Statz
Remember that scene from the 1991 movie City Slickers where Curly (Jack Palance) shares the secret to life with Mitch (Billy Crystal) shortly before he dies? Curly holds up his index finger and says to Mitch that the secret to life is to figure out his one thing and then stay with it. Channeling Curly today, I will share with you the three things that determine the value of any operating company, with rare exception. …
Corporate Social Responsibility in Mergers and Acquisitions
January 2, 2020 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
Like it or not, and irrespective of our personal political ideologies, corporate social responsibility has gained in popularity in the past decade. In this article, we’ll discuss what Corporate Social Responsibility (CSR) is and what it means for private business owners from an exit strategy perspective. The Four Pillars of CSR CSR is often thought of as having four pillars: the community, the environment, the marketplace and the workplace. Community. This pillar refers to the …
Consider Your Options When Selling a Business with Real Estate
December 18, 2019 / in Exit Planning, Sell a Business / by Al Statz
We often get asked how owning a facility (versus leasing one) affects the sale of a company, so I dug through our 17 years of business sale transactions involving seller-owned real estate to look for patterns. And the archives didn’t disappoint. I found five common deal scenarios that shed light on this question. But first, here’s the short answer. Owning your real property is likely to increase the demand, transferability and selling price of your …
Exit Strategies Group Joins Cornerstone International Alliance
December 15, 2019 / in News / by Al Statz
Exit Strategies is pleased to announce that we have combined resources with some of the best independent M&A firms to deliver more value to lower middle market business owner clients. Cornerstone International Alliance (CIA) is a global alliance of independent M&A firms. Formed in early 2019, it is the world’s only such alliance focused exclusively on the lower middle market. Member firms are selected for their extremely high integrity, extraordinary ethics and extensive mergers and …
Why Business Owners Should Prepare to Sell Now
December 7, 2019 / in Exit Planning, Sell a Business / by Al Statz
Reason 1: Concentration of Wealth A typical business owner has 70-80% of their wealth tied up in their business. That’s a lot of eggs to carry in one basket. On top of that, private businesses are less liquid and more risky than stocks, bonds and real estate investments. Fortunately owners can control the value and sell-ability of their businesses. Now, whether they exercise that control is another matter! Reason 2: Many Sales Are Unplanned …
Nine Warning Signs Your Buyer Can’t Close the Deal
December 4, 2019 / in Acquire a Business, Sell a Business / by Exit Strategies
The proof is in the pudding. It ain’t over ’til it’s over. Don’t count your chickens before they’ve hatched. Pick your cliché. Just because someone makes an offer to buy your business doesn’t mean they will close the deal. As a seller, you need to look at more than dollar signs on a purchase offer. Make sure your advisors are researching and asking questions to figure out which buyers are for real, and which ones …
M&A Advisor Tip: What Buy-and-Build Means for You
December 4, 2019 / in Acquire a Business, Business Strategy / by Exit Strategies
Private equity firms have increased their use of buy-and-build investment strategies. A buy-and-build strategy involves bolting together several smaller companies into a larger business enterprise that will likely sell at a higher multiple. See our post on the size effect. This trend is affecting many industries, from healthcare clinics to niche business service companies. The uptick in buy-and-build acquisitions could mean more buyers and more competition for your business than you expect. Contact Al Statz …
How Discounts for Lack of Control are Determined
November 27, 2019 / in Business Valuation / by Joe Orlando
I recently penned a summary on valuation discounts for lack of marketability. As a follow-up, this post is about the other common valuation discount, the discount for lack of control (DLOC), which is often used when valuing minority interests in operating businesses. In the business valuation context, control refers to the ability to manage or control a business. A controlling shareholder enjoys many benefits that are not enjoyed by minority interest holders. Minority interests are …