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Sell a Business Insights
Marketing a Business: The Need for Confidentiality
August 20, 2015 / in Acquire a Business, Sell a Business / by Don Ross
Maintaining confidentiality during the M&A sale process is a critical factor in successful business transactions. At the onset, during the marketing phase of a business sale, you are walking a tightrope between those you want to inform and those you don’t. Confidential information is shared only with qualified buyers who have evidenced professional and financial capacity. Information is withheld from those, who by virtue of their relationship with the seller’s business, could prove detrimental …
What is a Recapitalization Exit Strategy?
August 14, 2015 / in Exit Planning, Sell a Business / by Al Statz
One of the exit strategies available to company owners is called a recapitalization, or “recap”. In a recapitalization, an investor (usually a private equity firm) purchases an equity interest in your company using a combination of cash and debt financing. They expect to grow the company and earn an attractive return on their cash investment when they sell the company at a higher price in 3-7 years. Their value creation strategy usually involves initiatives to …
How Well Do You Know Your Exit Options?
July 26, 2015 / in Exit Planning, Sell a Business / by Exit Strategies
You have built a business that provides a strong income and comfortable lifestyle. However, if you are like most business owners you haven’t made the time to know the range of options you have to successfully exit the business and transfer your wealth. The tax, legal, valuation, deal structure, and insurance considerations are many. Even if you had the time, where do you begin? Before you can evaluate any of these options, you must first …
Asset Appraisals May be Needed to Support a Business Valuation
July 26, 2015 / in Business Valuation, Sell a Business / by Jim Leonhard
I recently valued a number businesses that required the appraisal of certain tangible assets, such as real estate and equipment – in one case its was an extensive library of manuals and maintenance specifications for a service business. At what point do we look for a appraisal specialist with particular expertise to value such assets? The simple answer is, it depends on materiality. If it is clear that the business enterprise value is well …
A Pyrrhic Victory
July 4, 2015 / in Sell a Business / by Don Ross
A Pyrrhic Victory is defined as a victory that is offset by staggering losses, to the extent that the victor incurs losses that are equal to or greater than those of the adversary. Its origin dates back to Pyrrhus, the king of Epirus (now part of present day Greece) who defeated Roman armies at Asculum in 280 B.C. and suffered such heavy losses of troops and commanders that he was unable to amass new officers …
Avoid Seller Let Down
May 27, 2015 / in Sell a Business / by Don Ross
The “Let Down” is commonly a reflexive response to imminent success of a stated objective. Recently, in an NBA playoff series between the Los Angeles Clippers and the Houston Rockets , Houston defied the odds by winning the last three games to take the series 4 games to 3. The pivotal game was game 6 when Houston, down by 19 points with 14:30 remaining, outscored Los Angeles 49 – 18. The final and deciding game …
Business Acquisition Financing: What Lenders Want
May 12, 2015 / in Sell a Business / by Al Statz
In 13 years of selling private businesses, financial leverage has been a consistent success factor for us in expanding the pool of buyers and closing deals. Fortunately for business owners, the Small Business Administration’s (SBA’s) loan guaranty program is an excellent funding source for deals up to about $5 million. Today’s interest rates are low, and lenders are lending now. Here are ten things lenders look for when evaluating a loan request for a small …
Business Valuation: Step one in the sale process.
May 5, 2015 / in Business Valuation, Exit Planning, Sell a Business / by Louis Cionci
If you are considering selling your business, I would like to let you in on an M&A (merger and acquisition) professional’s insight. I have been involved in initiating and managing M&A transactions for over 15 years and have handled deals representing over $250 million in transaction value. Those transactions ranged from $2.6 mm to $90 mm. In addition, I was on a team that helped an international client acquire a $2.6 billion industry rival back in …
How to Sell Your Business for More Than Fair Market Value
February 11, 2015 / in Exit Planning, Sell a Business / by Louis Cionci
If you are selling your business and you want the highest possible price, here is one way to get a premium over its Fair Market Value. First, consider that the value or price an owner can expect to receive for their business is generally a function of: 1) free cash flow generated, 2) growth expectations, and 3) the risk involved in receiving the cash flows. These factors combine to determine the value for the business entity. Expressed …
Exit Planning: A New Year’s Resolution
January 13, 2015 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
“Expect the best, plan for the worst, and prepare to be surprised.” – Dennis Waitley This is the time of year when many of us decide that we need to change things or accomplish new things, and we set goals at the beginning of the New Year. Quit smoking; lose weight; make more money? How about taking a look at your business this year and begin to prepare it for your exit, which will ultimately …