Exit Strategies Insights

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

Sell a Business Insights

Valuing a Business in Bankruptcy

According to data collected by the U.S. Bankruptcy Courts, business bankruptcies declined from 60,750 (or 4% of total filings) in 2009, just after the 2008 financial meltdown to approximately 22,750 in 2019 (or approximately 3%).[1]  With overwhelming challenges ahead as a result of the Coronavirus Pandemic, the question is not if these filings will go up over the next 12 months but by how much. Before I dig into valuing a business in bankruptcy, let’s …

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Market Pulse: Selling Price vs Asking Price

How much do businesses actually sell for as a percentage of asking price?  The following chart shows the results of this survey question from the latest Market Pulse Survey. Presented by IBBA and M&A Source in Partnership with Pepperdine University The groupings in the chart are selling price ranges for deals, in US dollars.  It should be noted that most $5-50 million enterprise value companies go to market without a price. Each quarter, the M&A …

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M&A Advisor Tip: Know when it is time to sell.

When you no longer have the fight, get out of the ring. Burnout is the second leading reason business owners sell, after retirement. Many business owners hold on too long, long after their drive has gone. When that happens, the business stops growing or even starts going backward – and the value of the business declines. The best time to sell is when you’re energized and motivated by your work. If you see burnout on …

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Selling Your Business to a Family Office

Business owners looking to sell their business, or attract an investment partner, may want to add family offices to their outreach strategy. These private family firms, established by high net worth families to manage their wealth, can offer unique advantages. While family offices aren’t new, they have become more active in M&A in the last decade. In the past, family offices may have looked to private equity firms as a resource to grow their wealth, …

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The Four P’s of Selling a Business

Marketers sometimes talk about the four p’s (product, placement, price, promotion) of marketing. Known as the “marketing mix,” the emphasis a company puts in each area can have a direct impact on sales and profits. And while selling a business is not like selling a product, we can use this idea to think about how certain factors impact a company’s value and sale readiness. The right mix will make your company more desirable to buyers …

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M&A Advisor Tip: Drive Cash to the Bottom Line

We all like to save money on our taxes. But hiding personal expenses in your tax return can do more harm than good. Most businesses are purchased as a multiple of cash flow (roughly EBITDA less capital expenditure needs, less increases in working capital as the company grows). If buyers and lenders can’t find your personal expenses in the financials or if the adjustments are so severe they border on tax evasion, they’ll be suspicious …

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M&A Advisor Tip: When the Kids Don’t Want the Business

Many business owners are surprised to find out their kids don’t want to take over. Maybe the kids never wanted it. Or maybe they changed their mind after working in the business for a while. Either way, some business owners get caught having to make quick decisions about transferring their company to a third party. Our advice: Talk to an M&A advisor, EVEN IF you plan to sell to your kids. It can take years …

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M&A Advisor Tip: What Does It Feel Like When You Sell?

“Immense satisfaction tinged with loss.” That’s how one business owner described selling his business. After putting years of hard work into building a business, many owners have a hard time letting go. Emotions run high, and those emotions can lead to some regrettable decisions. As advisors, part of our role is to help you make sound choices when it comes to selling your business. We can help you sort through your emotions and your goals …

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Building Value Means Building Leaders

It’s the New Year, that time when many business owners make a fresh resolve to develop their business. For some, that means updating equipment and driving sales. But others will focus on something more personal and possibly more pivotal: developing their leaders. GF Data shows that a solid management team will increase the valuation multiple. For smaller businesses, the quality of your management team can be an even bigger factor, influencing whether your business sells …

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M&A Advisor Tip: Earnouts Break Valuation Deadlocks

Earnouts are often used to bridge a valuation gap between a buyer and a seller. It’s a compromise, of sorts, to break a purchase-price deadlock when the seller wants more than the buyer is willing (or able) to pay. In an earnout, a portion of the purchase price is paid out later, based on the company’s financial performance over time. Earnouts typically last from 1 to 3 years, subject to negotiation. Some earnouts include acceleration …

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