Exit Strategies Insights

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

M&A Advisor Tip: COVID-19 Era Due Diligence, Part 2

M&A buyers are still looking in the midst of uncertainty. However, buyers will be mindful of added risks caused by COVID-19. These are some technology-related questions that may come up in future due diligence: 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 measures sufficient in a time of …

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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. These are some talent-related questions that may come up in future due diligence: 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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Why Your Business Needs Google Reviews

For many businesses today, online reviews are a differentiator. In the past, people asked for references to vet a product or service. Today, they are more likely to conduct their own research and read online reviews. Google reviews can give businesses a credibility boost, for free. Let’s look at some of the key benefits. Increased Credibility & Trust According to statistics, approximately 91% of consumers read reviews to determine credibility of a local business, and …

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Use Equity Incentive Plans to Boost Exit Value

Closely-held business owners often use equity and equity-like programs to attract, retain and incentivize key employees to boost profits and build enterprise value. These plans provide value to the employees through current profit sharing and/or future equity appreciation. I am a big believer in utilizing these types of incentives as part of an exit strategy. Let’s break this down. Why profit sharing for key contributors? Sharing company profits with key employees incentivizes them to put …

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Methods of Selling Distressed Businesses

As most companies transition from survival to rebuild mode in the second half of this year, some will become financially distressed and the owners will want to move on. Fortunately, for the shareholders and creditors of these companies, there is an active market for distressed business assets. Distressed businesses can be attractive acquisition targets for strategic buyers, and sellers can optimize financial outcomes through a proactive M&A sale process. Financial distress is a term in …

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M&A Advisor Tip: M&A in a Virtual Environment

Due to ongoing concerns over coronavirus, virtual meetings will continue to replace most of the in-person meetings typically held between a buyer and a seller at some stage in the business sale/acquisition process. When selecting an M&A advisor, be sure that they can help you best present your business in a virtual environment and run effective remote team meetings. And ask about their investment in virtual deal room technology. Virtual deal rooms store sensitive information, …

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Selling to Competitor Not Only Option

Many business owners have preconceived ideas about who will buy their business. A lot of owners think their most likely buyer is the competitor down the street. Maybe that was true, once upon a time. But the M&A world has changed dramatically-and continues to evolve. Today, when we talk about selling your business, we’re really talking about a wide breadth of options. This is not an all or nothing scenario — you can sell all …

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Business Values May Not Decline

A recent survey of M&A advisors and business brokers showed that of all small and medium businesses on the market at the end of Q1, about 35% had closed (temporarily at least), 40% were operating at partial capacity, 4% had benefited, and 21% remained unaffected by COVID-19. Not surprisingly, advisors indicated that 46% of lower middle market deals were delayed at the end of Q1 and 11% had been cancelled altogether. For deal cancellations, 25% …

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M&A Advisor Tip: Management Cross-Training

Management Cross-training and Succession Planning  A strong and committed management team has long been one of the attributes buyers look for in a business. And now, in the era of COVID-19, buyers will be increasingly interested in issues of cross-training, management succession, and leadership development. Buyers will be looking at how the business could be impacted if health issues or quarantine requirements prevent certain team members from working. Review your management succession plans, leadership development …

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M&A Advisor Tip: SBA debt relief incentivizes buyers

SBA debt relief is is a big incentive for buyers to move ahead with small business acquisitions right now. The SBA will pay six months of principal, interest, and any associated fees that borrowers owe for all current … as well as new 7(a), 504, and microloans disbursed prior to September 27, 2020. As an added incentive, SBA lenders have the authority to defer loan payments for six months. That means some buyers could acquire …

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