M&A Glossary: Virtual Deal Room

A deal room is a secure, virtual space where buyers and sellers can share and exchange confidential information related to a potential transaction. Information is typically stored and accessed through a secure online platform that allows users to view, download, and upload documents and other information as needed.  


The use of a deal room is essential in M&A transactions because it allows buyers to perform their due diligence in a secure and confidential manner. By limiting access to sensitive information and tracking who has viewed or downloaded content, deal rooms help to minimize the risk of information leaks or other security breaches.  

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.comExit Strategies Group is a partner in the Cornerstone International Alliance.

Questions to ask when hiring an M&A advisor

When it comes time to sell your company, the right M&A firm or investment bank can make all the difference. From preparing a stellar offering memorandum, to running a well-organized process, to generating multiple offers, to negotiating the best possible deal for you, your advisor needs to bring the right mix of transactional skill, processes, resources, and chemistry to the table. This article presents several questions that you should be asking as you search for the right M&A advisor.  

Why do you want to represent my business?

  • In today’s market, a successful investment banker will turn away more opportunities than they accept. They need to know they’re a good fit for you and your business. And they need to be confident that they can successfully sell your business and meet your goals.  

What’s your fee structure?

  • M&A advisor fees usually vary with the size and complexity of the transaction. The 2022-2023 M&A Fee Guide from FIRMEX helps pull the curtain back on M&A fees, revealing what’s normal and customary for the industry.  
  • The bulk of the advisor’s fee should be earned as a success fee, when a deal closes. The most common success fee structure, used by 40% of survey respondents, was the Lehman formula in which the fee percentage decreases as the deal gets bigger. Roughly a third charge a fixed percentage, and 18% used an accelerator formula which gives the advisor a higher percentage on deals that exceed a benchmark price. According to the FIRMEX report, the most common fee for a $5 million deal is between 6.1 to 8%. For deals over $150 million, the most common fee is between 1.1% and 2%. 
  • Most investment bankers (81%) also charge an upfront retainer. According to the FIRMEX report, lump-sum retainer fees generally fall in the $26,000 to $50,000 range, while monthly fees fall between $5,000 to $10,000 a month.  
  • When evaluating advisors, consider whether their fees are similar to the above. If fees are significantly higher or lower, proceed with caution. The right fee arrangement aligns the advisor’s incentives with your own.  

What is your experience in selling businesses like mine?

  • Consider deal size and industry experience. Do they work on deals of similar size to yours?  Also, no advisor can be well-versed in every industry, but they may have partners with strong experience in your space. 

Who have you worked with in the past?

  • Ask to speak with a few past clients directly. Do they feel they got good value in exchange for the advisor’s fee? Was the advisor transparent and forthcoming with status updates? Did they do what they said they’d do? 

How many people will work on my deal?

  • An investment bank will typically have a team of people assisting with marketing, research, and managing the details of due diligence. Expect a mix of senior advisors with experience and contacts as well as more junior analysts to help manage the workload.  

How many other deals will you be representing?

  • Arguably, a lead advisor with a full team behind them could successfully represent four or five engagements at a time. Advisors with less junior staff generally handle two or three. Much beyond that, and they could lose focus or be unavailable to you at critical times.  

What is your success rate and why have deals failed in the past?

  • No investment bank closes every one of their transactions. There are many reasons deals fall apart, including unforeseen market changes, inaccurate business records, and shareholder conflicts, just to name a few. A successful advisor will be able to identify a lot of pitfalls ahead of time and may not take on higher risk deals. Asking this question can help you get a sense of how confident they are in their ability to sell your business, as well as how they handle bumps in the road.   

On average, how many offers do you get per deal?

  • You’re looking for an investment bank who can bring multiple buyers to the table at the same time. This creates an auction-like environment and gives you options to choose a buyer that’s the best fit for your goals. 

What’s your average over benchmark?

  • In the lower middle market, deals are marketed without a published asking price so as not to create an artificial ceiling on deal value. A benchmark is a private target price set between the seller and the advisor based on an objective assessment of the business and the market. An advisor who outperforms benchmark is doing the necessary work to obtain the maximum value the market will bear.  

How will you ensure the confidentiality of my business information?

  • Ask if you’ll be able to review marketing materials and buyer lists before information is released. Talk about other steps, including non-disclosure agreements, secure online deal rooms, buyer financial disclosures, and other tools that will be used to protect confidentiality and vet buyer inquiries throughout the sale process.  

Asking the above questions will help you gain a better understanding of an advisor’s qualifications, experience, and approach, and determine if they are the right fit for you. 

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.comExit Strategies Group is a partner in the Cornerstone International Alliance.

Market Pulse – Seller Market Sentiment

Lower middle market M&A is experiencing a dip in seller market sentiment, marking the lowest levels seen since early in the pandemic and resembling figures observed during the recovery from the Great Recession.

In a seller’s market, buyers typically compete for deals, leading to increased values and more favorable deal terms for sellers. However, this recent slide in sentiment signifies a change in market dynamics, where sellers may still receive strong valuations, but buyers may look to shift more risk to the seller through earnouts, seller’s notes, and rollover equity.

About the Market Pulse Survey: Each quarter, the M&A Source and IBBA, in partnership with Pepperdine University’s Private Capital Markets Project, publish the results of a survey of North American lower middle market M&A advisors and business brokers, called the Market Pulse Survey.  For further information on market conditions or to discuss an M&A, exit planning or valuation question or need, Email Al Statz or call him at 707-781-8580. 

Representation and Warranty Insurance in M&A

When selling your business, you make a set of promises to the buyer. You “represent and warrant” certain facts about the business. Essentially, you’re certifying that you provided accurate information and there are no known issues pending (e.g., financial, legal, tax, compliance, etc.).


If it turns out those promises are false, the buyer has the right to recoup a percentage of the purchase price. Non-fundamental reps and warranties (typically all items aside from key ownership, legal, and tax items) typically allows the buyer to recoup up to 10-50% (a “cap”) of the transaction if there is a material breach.


At current trends, businesses over $20-$25 million often require an escrow to help fund any breaches in reps & warranties. Smaller transactions, however, will often offset against a seller note or earnout.


On a $20-25 million deal, escrow amounts can commonly be 10-20% of the purchase price, held for a period of 18 – 24 months. On a $30 million deal, for example, the seller might have to delay receiving $3-$6 million of the purchase price until the reps and warranty period has expired.


Representation and warranty insurance offers an alternative to seller escrow. This insurance product is designed to isolate risk and the resulting claims between buyer and seller in the event of a non-fundamental breach in reps and warranties. (Note: Reps and warranty insurance will not cover fraud and intentional misrepresentation.)


Pros and cons of reps and warranty insurance 

For the seller, the advantage of reps and warranty insurance is that they can realize the full value of their purchase price, without holding money in escrow. For many sellers, the holding cost of that money is enough to justify the cost. It also reduces seller risk, for inadvertent, unknown mistakes.


For the buyer, reps and warranty insurance offers a way to collect a claim without jeopardizing their relationship with the seller. Consider a buyer who wants to do multiple deals in the industry. They want the seller to provide a positive referral in the future, encouraging other sellers to work with them.


Similarly, consider a buyer who has retained the seller in a leadership position. They don’t really want to make an expensive claim against their new CEO or sales director. Having reps and warranty insurance protects any ongoing buyer/seller relationship.


Reps and warranty insurance can also expedite the sale process and drive down your legal fees. When sellers know they’re indemnified against certain risks, they don’t have to lobby as hard to protect themselves. To put it simply, negotiations are easier with insurance in place. Conversely, this insurance product requires third party due diligence which can slow the overall process.


What does it cost and who pays?  

Reps and warranty insurance can be purchased by the buyer or seller. Minimum fees are typically $250,000, which makes this product cost prohibitive on smaller transactions. In a competitive market, some buyers will offer to pay or split the cost of reps and warranty insurance with the seller as a way to sweeten their offer.


Sellers need to have adequate representation looking out for their interests. Watch out for exclusions that are overly broad (e.g., an ‘impact of covid’ exclusion) or non-standard for the market.


Be aware that the policy will have a retention figure (like a deductible) – often around 1% of enterprise value. Who covers that retention is another point that needs to be negotiated in your deal terms. Again, we might see a 50/50 split here. So on a $30 million deal, the seller may have to escrow 0.5% or $150,000 (far less than the $3-$6 million escrow estimated above.)


Considerations and alternatives  

Reps and warranty insurance is a newer product on lower middle market deals in the US. Since it’s a relatively young offering, it’s harder for buyers to vet insurance brokers as the track record for payout is not well established. (In other words, the buyer may have a policy, but can they actually collect on it? And what legal fees will they incur in order to collect?)


In cases where buyers are looking for a mechanism to collect without the overhead cost, other options may be more appropriate. For example, if the deal terms include a sellers note, the buyer may prefer to offset a sellers note proportionally to any breach.


Again, sellers should consider that reps and warranty insurance reduces their risk. They may wish to consider that when evaluating buyers and may give some preference to buyers who accept a lower cap (the max amount they can come back for in the event of a breach) or who are willing to cover all or a portion of reps and warranty costs.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.comExit Strategies Group is a partner in the Cornerstone International Alliance.

M&A Glossary: Confidential Information Memorandum

A Confidential Information Memorandum (CIM) is a summary of your business used to help pre-screened buyers determine their interest. A CIM contains overview information about your operations, financials, industry trends, and growth prospects.

As your investment bank, we’ll prepare the CIM for you, with your cooperation and review. You approve all material before it’s presented to a buyer. The CIM is only distributed to a select group of vetted, qualified buyers who have signed a nondisclosure agreement.

It is a critical component of the M&A process as it shares your growth story and helps potential buyers see the value in your business.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.comExit Strategies Group is a partner in the Cornerstone International Alliance.

Selling your business should not be a 50/50 coin flip

So, you’re ready to sell your business. You have an M&A advisor helping you, your numbers are in order, and you’re feeling confident. But did you know that only half of businesses will successfully sell—and that’s with a qualified advisor?

For years, member advisors of the International Business Brokers Association and the M&A Source have been reporting their quarterly closing rates in the Market Pulse Report. Every quarter, roughly 50% of deals terminate without a successful sale. And these are professionals who invest in their craft and their career.

In fact, analysts estimate the actual closing rate for small and medium businesses is closer to 25-30%. That number includes business owners who try to sell on their own as well as those who list with real estate agents, lawyers, and other “hobbyist” M&A advisors.

What makes the failure rate so high? Advisors in the Q4 2022 Market Pulse Report were asked to share why their deals failed. Here’s a breakdown by sector:


Main Street failures due to financials and financing  

In the Main Street market, that is businesses valued at less than $2 million, poor financials and financing problems were the leading reasons companies didn’t sell.

There are any number of reasons a business isn’t performing well, and many factors (like economic swings, bubbles, and pandemics) are outside an owner’s control. But some sellers hold on too long, waiting until they’re burned out or the business has evolved past their skill set.

Generally, you’ll get the best value for your business when you go out on a growth trend. Once a business is on a downward slide, it gets harder (and sometimes impossible) to sell.

As for financing the Main Street market, banks generally prefer to lend off hard assets, not cash flow, and individual buyers can struggle to raise the capital they need. That can leave a bit of a no man’s land at the upper end of the market, unless the deal qualifies for an SBA loan.

A small business is a lifestyle operation for many owners, generating a sufficient income. Meanwhile, many buyers in this market are looking to “buy a job.” But at a certain scale, the business doesn’t generate enough profit for the buyer to both earn a living and pay debt service. These deals are tough to get done.


Unrealistic expectations plague lower middle market  

In the lower middle market, where businesses are valued between $2 million and $50 million, seller expectations become the bigger concern. In these situations, the seller believes their business is worth more than the market will bear. When the advisor can’t deliver on those lofty goals, the engagement terminates.

In an ideal world, advisors wouldn’t even take these deals. You can do a lot of harm by testing the market with unrealistic expectations. You can burn through buyers, risk confidentiality, and weaken your own drive to keep the business performing.

The market ultimately determines the value, not what you want or need out of the business. It’s important to trust your advisor and the process they’re running. If they’re reaching a large pool of capable buyers, then you probably have a true reflection of the demand for, and value of, your business.


Economic uncertainty played a role 

For Main Street and the lower middle market together, advisors reported that economic uncertainty was the second leading cause of deal failure. Just five or six months ago inflation was rising, and economists were warning of a recession in 2023. (Now they’re predicting a “shallow” downturn in 2024.)

When there’s uncertainty in the market, deals get shaky. If it’s a perfect business, the transaction still gets done. But if there’s any hair on it, lending can be a problem. Equity shortfalls can trigger a price adjustment and bad feelings follow. Other times, buyers simply hit the pause button while they wait to see what the economy will do.


Plan ahead to avoid pitfalls 

It’s important to understand why businesses fail to sell. Poor financials, financing, risk conditions, delays, and unrealistic expectations all play a role.

Business owners should get a regular estimate of value so they know what their business is worth and how to increase that value in a future sale. Advance planning can help you make informed decisions and put your business in the best position for success.

Remember, deals can fall apart for any number of reasons, and market conditions can change rapidly. But with the right mindset, preparation, and advisor, you can find yourself on the right side of that 50/50 statistic.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.comExit Strategies Group is a partner in the Cornerstone International Alliance.

M&A Glossary: SDE vs. Normalized EBITDA

M&A Glossary: SDE vs. Normalized EBITDA 

Seller discretionary earnings (SDE) and normalized EBITDA are two common measures used to assess the profitability of a business. While they are both used to determine a business’s value, they differ in the expenses and adjustments made in their calculations.

Seller discretionary earnings (SDE) is a measure of the business’s cash flow that includes the owner’s compensation and benefits, as well as perks and discretionary expenses that are not directly related business operations. Normalized EBITDA, on the other hand, is a measure of the business’s earnings before interest, taxes, depreciation, and amortization, adjusted for unusual or non-recurring items.

The main difference between SDE and normalized EBITDA is in the adjustments made for owner compensation and benefits. This means that SDE provides a more comprehensive view of the cash flow available to the owner, while normalized EBITDA provides a clearer view of the business’s underlying profitability.

SDE is commonly used in Main Street and small business transactions, while buyers in the lower middle market will be looking at normalized EBITDA.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.comExit Strategies Group is a partner in the Cornerstone International Alliance.

Instead of selling, they’re growing

If it’s a bad time to sell your business, consider growing instead. That’s the takeaway from one contractor whose plans to sell their business got squashed by inflation and supply chain issues in 2022.

Pre-pandemic the business had been doing about $50 million in sales with $6 million in EBITDA (earnings before interest, taxes, and depreciation). In most markets, that would have made this business a highly attractive acquisition target.

But problems started when the supply chain slowed down – and prices jumped. The lag time between when they signed a job and when they started it began to grow, while costs were also skyrocketing beyond all predictions. Suddenly their $6 million EBITDA had dropped to $2 million as they continued to deliver jobs as contracted.

At the end of the day, the owners were looking at a potential loss of $25+ million in projected business value, solely due to margin contraction and inflation they couldn’t control. Clearly it was no longer a good time to sell, and together we decided to pull their business off the market.

But the owners aren’t just sitting back and licking their wounds. They’ve modified future contracts to better cover the costs of inflation. Perhaps more significantly, they’ve switched from exit mode to acquisition mode and are actively seeking to buy strategic operations, including vertical integration to control their supply chain and pick up additional margin.

In just a few years – maybe as little as three – they’ll be ready to reenter the M&A market with even bigger margins and the higher multiples that go with it. Instead of $6 million EBITDA at an exit multiple of 6-7x EBITDA, the vision is to build a $10 million business that could, plausibly, sell at 8-10x EBITDA.

Takeaway 1: Exit strong

That old advice that you need to “grow or die” isn’t true for every business. Many business owners find their comfort zone and stay there for years before they sell. There’s nothing wrong with building a lifestyle business and keeping it at a size you can manage.

But the higher multiples come when you exit your business on a growth trend. Companies with a clear, actionable plan for growth can often command a premium price when they sell.

After all, when an investor buys an asset, they do it in hopes the asset will grow. That holds true whether the asset is stock, a collector car, real estate – or a business. The bigger the growth potential, often the bigger the purchase price.

Takeaway 2: Get out before you burnout

After retirement, the number two reason business owners sell is that they’re burned out. They’re worn out and frustrated – tired of dealing with employees, capacity, regulatory issues, you name it. Unfortunately, that means margins are often declining when they go to market. And, it means they don’t have the stamina to deal with unexpected blows like the above supply chain-inflation double whammy.

The business owners above had the foresight to sell while they still had gas in the tank. They didn’t have to take a $25 million haircut because they just didn’t have the energy to continue. Just the opposite, in fact! They’re ready to readjust and reinvest with a clear strategy to increase value and exit on a high note.

And because they were already working with an M&A advisory team, they’re better positioned to view their business through a buyer’s eyes. They know what areas of their business will drive value and the targeted improvements they need to make to not just grow revenue but to strategically build value for a planned sale.

Takeaway 3: Now may be the time to buy

In general, the M&A market is expected to rebalance in 2023. We’re coming off years of record high activity and premium valuations, at levels that couldn’t be sustained long-term. To be clear, business valuations are not expected to tank, but simply to return to (still favorable) 2017 to 2019 market conditions.

That said, fears of a recession are looming. Inflation, talent, and energy issues could create economic headwinds and some businesses will struggle. Some business owners, particularly those who are near burnout (see takeaway #2 above), may be willing to sell at a reasonable price.

Think about smaller competitors operating in your space or related markets. Chances are you already know a few businesses that, if acquired, would increase your top-line revenue and your margins.

The right acquisition could come with added benefits like increased capacity in a key area, access to new customer relationships, better control of supply chain, or cross-selling opportunities from strategic product lines. As employee recruitment continues to be a problem, an acquisition with an established workforce could be your smoothest, and most affordable, path to growth.

Talk to your advisors about market conditions and your ability to withstand future speedbumps. Make an informed decision on whether growing, getting out, or keeping the status quo is the right path for you.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.comExit Strategies Group is a partner in the Cornerstone International Alliance.

How to Divest Part of a Company

Selling a division or line of business is often more complex than selling an entire company. If you’re like most private business owners, you have never sold a business, let alone carved out and divested part of one. This article shares some of what I’ve learned about planning and executing a successful divestiture during my 20+ years of investment banking.

In my experience, most divestitures are intentional efforts to generate liquidity or streamline and strengthen core business operations. Often, the divested unit is underperforming and out of alignment with the company’s strategic direction.

Sometimes the asset to be divested is a distinct business unit with its own P&L and minimal overlap with the selling company’s main business. Other times, the asset is significantly integrated with the company’s primary business and some amount of “disentanglement” is needed before it can be reliably marketed and sold for an attractive price.

Spinning off the business into a standalone entity before a sale might even be necessary. From a buyer’s perspective, stand-alone or near-stand-alone entities are more attractive investment opportunities — because they are easier to value, perform due diligence on, and integrate. And since sellers want the buyer to take on and operate the acquired entity as soon as possible, a presale spin-off by the seller should be given consideration.

An entangled business is more challenging to acquire, and therefore sell, because of the added risk of misunderstanding exactly how the target business functions and the risk of making mistakes in the carveout/integration process. Also, consider that buyers will need to make significant investments beyond the purchase consideration. Plus, the pool of potential buyers is generally much smaller for a significantly entangled business.

When selling an entangled business, sellers must often enter into a Transition Services Agreement (TSA) that extends beyond the sale closing. This is an agreement in which the seller agrees to provide certain services to the buyer to maintain business continuity until the buyer is fully prepared to operate the acquired business.

Before attempting a divestiture, it’s worth having an experienced M&A advisor, business attorney and CPA help you conduct due diligence to assess the value and sale readiness of the assets or unit to be divested, and to identify potential challenges that are likely to arise during the sale process and whether a presale spin-off may be warranted. They will help you see the business through a buyer’s eyes and can help you develop a roadmap and budget for a successful divesture.

The divestiture’s purpose and expected financial benefits to the parent and its shareholders should be clear, and potential risks should be well understood. Your team will need to determine the specific assets and liabilities to be transferred, and each entity’s expected future cash flows. The acquisition costs and incremental investments required of an acquirer must also be estimated to arrive at a justifiable valuation. Sellers may decide to delay a sale to boost the group’s performance and show a track record of results before beginning the sale process.

For the sale process you’ll need reasonably accurate and reliable proforma financial statements. You’ll need to provide figures from the parent company’s books to show a buyer how expenses have been allocated.  It pays to be diligent and thoughtful in your preparation. Sloppiness here can lead to no deal and wasted time and money.

Beyond financial considerations, the “separation review” must consider business processes, customers and vendors, equipment, facilities, IT systems, IP, brand and market perception, leadership and governance, tribal knowledge, employee retention and engagement, and more. Acquirers pay a premium when they confidently understand a target business and clearly see how it will fit into their operations, support their strategic goals, and accelerate their future growth.

You’ll also need a strategy for communicating the spin-off and/or divestiture plans to key stakeholders, including employees, shareholders, suppliers, and customers. This will help ensure a successful transition and minimize disruption and potential harm to the business.

In a divesture, think of an M&A advisor as a strategic short-term member of your executive team. They help you develop a winning strategy and manage the entire process — performing financial modeling and valuation, preparing detailed and compelling offering materials, identifying best-fit buyers, conducting buyer outreach, attracting multiple bids and negotiating deal terms, facilitating due diligence, and liaising with attorneys and diligence providers.

All these efforts ensure that the divestiture is completed smoothly and efficiently. Preparation is key. You’d be surprised how challenging it is to maintain deal momentum while still unravelling organizational and operational entanglements.

In conclusion, divesting part of a business is a complex endeavor requiring thoughtful planning and precise execution. Following these steps will increase your odds of closing a deal and achieving your desired outcomes.

Continue the Conversation

Al Statz is president and founder of Exit Strategies Group, Inc. For further information on divesting a business unit or to discuss a potential need, confidentially, contact Al at 707-781-8580 or alstatz@exitstrategiesgroup.com.

Highlight Your Company’s Intangible Assets When Selling

Intangible assets represent most of the value in almost all of the companies we sell, so it only makes sense that showcasing the intangible assets that make your company unique and successful can significantly impact your final transaction value. Here are some practical tips to help you leverage your intangible assets in a sale process.

Intangible assets are non-physical assets such as contracts, customer lists, proprietary software, databases, designs, recipes, proprietary business processes, well protected trade secrets, works of authorship, key employees, strategic relationships, audit reports, credentials, licenses, and brand recognition. Intellectual property (“IP”), such as patents, trademarks, and copyrights, are all intangible assets. These assets generally produce value for a company, but don’t appear on its balance sheet.

Three steps to inventory your intangible assets:

  1. Conduct an internal audit of your business operations to identify all intangible assets owned by or used in the business and gather appropriate supporting documentation for each asset.
  2. Prepare a detailed description of each item including the nature, scope and history of the asset, how it is used, its original cost, past and future economic benefits, ownership, licenses and any legal restrictions, useful life, potential threats, etc. Include references to supporting documentation.
  3. Group assets into appropriate asset classes (by type and business function) and save the supporting documents in a well-organized virtual data room.

Engaging the services of legal, financial, and valuation experts can help bring to light intangible assets that may not be immediately obvious. An attorney can verify ownership rights and ensure that your assets are properly protected and legally transferable.

When taking a business to market, M&A advisors prepare a marketing document known as a Confidential Information Memorandum or CIM. The CIM will highlight your company’s intangible assets and suggest how buyers can utilize them to create new revenue streams, increase profits, or mitigate potential risks. Of course, buyers will do their own due diligence on your assets, and lots more, before closing the deal, so all assertions in the CIM must be reasonable. Overhyping a company can be a quick turnoff for buyers.

The M&A advisor or investment banker also uses your intangible asset documentation to help them identify potential acquirers that stand the most to gain from obtaining access to those assets.

Intangible assets can exist and not have value to their current owner. When a target business is profitable and growing, it usually isn’t necessary to place values on individual intangible assets for sale purposes. If a business is a pre-revenue startup or marginally profitable, or if certain intangible assets aren’t being used productively in the business, it may be helpful to have an expert determine the economic value of individual assets.

Even owners with long expected hold periods can benefit from identifying and monitoring their company’s intangible assets by using this information in strategic planning and investment decision making. The asset inventory and supporting documents should be reviewed and updated periodically by the executive team as part of its planning process.

In conclusion, having a full inventory of a company’s intangible assets is an advantage when marketing and negotiating the sale of a business. Take the time to identify and document your intangible assets to ensure that you receive the best possible reward for your life’s work.

Continue the Conversation

Al Statz is president and founder of Exit Strategies Group, Inc. For further information on leveraging your intangible assets in a business sale or to discuss a potential M&A need, confidentially, contact Al at 707-781-8580 or alstatz@exitstrategiesgroup.com.