Exit Strategies Insights

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

Role of Business Appraisers and M&A Advisors in Estates and Trusts

I was recently asked about Exit Strategies’ role as business appraisers and M&A advisors in estates, estate planning and trust administration.  Here was my answer … Business Valuation (a.k.a. Appraisal) As business valuation experts, we provide fair market value appraisals of closely-held corporations, FLPs and LLCs for estate planning, gifting, estate tax, charitable donations, buy-sell transactions and succession planning. We value fractional interests in operating companies and asset holding companies using appropriate discounts. Our appraisers …

Read more »

Do Strategic Buyers Share Synergies with Sellers?

In successful M&A deals involving substantial synergies, the deal price usually falls in the range between the standalone fair market value of the target business and that value plus the full value of potential synergies. Value of potential synergies? Increased value (over and above fair market value) to a strategic buyer, involves synergies between the acquired and acquiring firm and the additional financial returns and therefore value created by those synergies . There is a “1+1=3” …

Read more »

KONE buys Empire Elevator, strengthening its position in San Francisco Bay Area, California

Excerpted from KONE Corporation press release, July 2013: KONE has acquired the San Francisco-based business of Empire Elevator Co., Inc., an independent elevator company. Empire has operated in the attractive Bay Area market since 1978 under the capable leadership of President Bruce Moore, who will join the combined KONE team in a key role. “The Empire and KONE operations will fit well together and we are thrilled to be adding great new customers in the …

Read more »

Exit Fundamentals: Two ways to Sell a Business

This article introduces the two fundamental methods of transferring a 100% interest in a private business, a) an “Asset Sale” and b) a “Stock Sale”. Asset Sales account for more than 90% of small business transactions. By small I am thinking of businesses with up to $10 million in revenue. Asset Sales In an Asset Sale the seller sells all of the tangible and intangible assets of the business, and ends up retaining the legal …

Read more »

“If you don’t know where you are going, any road will get you there.”

I’m amazed at how many business owners think about exiting all the time but never do any real exit planning. The most successful business owners I know have an exit plan on the day they open their doors. Their business decisions are synonymous with the plan. To navigate without a destination is like “trying to hold the wind up with the sail,” as Willie Nelson once sang. As you go through the years in your business, …

Read more »

Transaction brokers create competition. Why is this so important?

The critical first step in selling a business is to properly analyze and value it to establish a price. In the case of an undervaluation, when the business is sold the result is obvious; the owner receives less. Conversely, businesses that are overvalued and overpriced usually do not sell. The reason for this is because of the principle of alternative investments, which states that rational buyers will act on some alternative business investment where they expect …

Read more »

News of a Recent Event

On March 23, 2013, Al Statz of Exit Strategies presented an advanced workshop – Valuation of Lower Middle Market Companies – at the California Associate of Business Brokers (CABB) annual productivity conference. The workshop focused on … How finance theory relates to M&A transactions Appropriate benefit streams, normalization adjustments, valuation methods, rate of return Transaction databases and industry research Strategic buyer valuation CapEx and working capital treatment Common mistakes and how to avoid them. Thank …

Read more »

Goodwill Part II: Goodwill vs. Goodwill Value

All businesses have goodwill; however, not all businesses have goodwill value! Goodwill, which is usually the largest portion of the purchase price of a business, is the sum of intangibles such as having a good location and trade dress, a negotiated lease in place, trained employees, a website, customers, etc. Not all businesses have goodwill value, which is measured by the amount of earnings the business produces adjusted for the risk of earnings continuing to …

Read more »

Goodwill Part I: Personal versus Enterprise Goodwill

Goodwill can exist in two different forms: Personal Goodwill, which is defined as an intangible asset that is attached to a person; and enterprise Goodwill, also an intangible asset that is attached to the business enterprise. If goodwill is attached to an individual, it is non-severable since the person to which it is attached is not being sold. This also implies that the asset is non-transferrable. Of course brokers often make contractual arrangements between the …

Read more »

Independent Valuation Litigation Support

This week I was asked to value a medical practice, relating to a dispute between shareholders. Before I head off to my secret fishing spot for the weekend, I want to share these thoughts about how independent valuation experts assist in the litigation or dispute resolution process. Business valuation and transaction professionals are frequently engaged as independent financial experts for purposes of assisting in dispute resolution, litigation, or potential litigation. Litigation support services include any professional …

Read more »

Request a Call
close slider
Request a Call and we will get in touch with you
  • This field is for validation purposes and should be left unchanged.