Why do real estate bubbles hurt more than other bubbles?

/in , /by Bob Altieri
I came across an article in the First Tuesday Journal, posted by Jeffery Marino, May 30, 2014, that I thought would be worth sharing. The author quotes two thinkers on the economics of bubble-and-bust episodes; Atif Mian, Economics Professor at Princeton and Amir Sufi, Finance Professor at the University of Chicago.
This blog title’s question is best illustrated by the comparison between the burst of the tech bubble of 2000 and the real estate bubble of 2007-2009. Why is it, the authors’ ask, that the tech bubble that burst in 2000 wreaked relatively little havoc on our economy while the housing bubble sparked a decade(s) long depression?
The answer, according to Mian and Sufi, has to do with  the distribution of losses. The tech crash only affected those holding large amounts of tech stocks. Thus the losses resulting from the downturn were distributed almost exclusively among the wealthy — those who are sufficiently insulated against such financial blows. Losses from the housing crash, on the other hand, were distributed across every income bracket, with the majority of the losses being concentrated among the poor.
Make sense—doesn’t it? The chart below says it all:
Chart courtesy FiveThirtyEight Economics
As the duo’s research shows, excessive household debt leads to foreclosures, causing individuals to spend less and save more. Less spending means less demand for goods, followed by declines in production and huge job losses. A majority of Californians and Americans are vulnerable to the shock of a housing crash, and through them, our entire economic system.
For more information on the effects of macroeconomic conditions on private capital markets, business valuations and M&A activity, Email Bob Altieri or call him at 916-905-5706.

Exit Strategies Represents Mentzer Electronics in Acquisition by Innovative Circuits

/in /by Al Statz

Mentzer Electronics LogoBurlingame, California — Mentzer Electronics, Inc., a respected and long-established electronics manufacturing services (EMS) company located in the San Francisco Bay Area, has been acquired by Innovative Circuits. Exit Strategies Group, Inc. introduced the parties and served as exclusive financial advisor to the seller in the transaction. Terms of the transaction are confidential.

Menzter Electronics was founded in the Bay Area in 1965 by Ed and Betty Mentzer. The Company’s electronics manufacturing services include surface mount printed circuit board assembly, wiring harness assembly, complete box-build electromechanical assembly of chassis and cabinets, testing of completed products, turnkey purchasing and materials management. From prototyping to production volume. Mentzer customers are OEM’s of medical equipment, industrial controls, scientific research instruments, electrical power monitoring and other types of electronic equipment.

Innovative Circuits, Inc., with electronic circuit assembly operations in the U.S. mid-west, acquired Mentzer in order to expand its footprint to the West Coast and increase its presence in the rapidly growing medical equipment market. ICI brings exceptional quality systems, and has plans to expand the firm’s capabilities to support the existing customer base. Mr. Mentzer is working alongside the management team to ensure a seamless transition.

Exit Strategies is pleased to have helped our clients retire after almost 50 years in business, and we are excited to have found in ICI a capable and synergistic buyer to build on the Mentzer legacy and past success. And we’re always grateful when we can make a small contribution to the resurgence of U.S. manufacturing by ensuring the continuity of vital businesses like Mentzer Electronics.

Upcoming Event on Valuation of Ag and Food Businesses

/in , /by Al Statz

Al Statz of Exit Strategies Group will be a panelist for the American Society of Appraisers (ASA) Northern California workshop —Working with a Going Concern: Valuation Issues Related to Ag-Food Processing Facilities, on Saturday, May 31, 2014, in Fairfield, California.

A Message From Al:

My passion is helping baby boomer business owners exit right and retire well. My background as a valuation and M&A professional, business owner and corporate development executive allows me to bring a wealth of knowledge and real-world experience to help closely held and family business owners understand their options, maximize value and achieve successful ownership transfers.
 
I enjoy speaking to groups of business owners on these topics. I also regularly speak to advisers to business owners – accountants, attorneys, lenders, wealth management professionals and industry associations. With baby boomer retirements on the rise, these groups are increasingly looking for experts to educate their constituents. Well look no further! If you own a business or advise business owners and want to explore booking me to speak to your group, Email or call me at 707-778-2040. Thank you.

– See more at: https://webcache.googleusercontent.com/search?q=cache:HnnS5z8O5O4J:www.exitstrategiesgroup.com/blog.html%3Fbpid%3D3943+&cd=1&hl=en&ct=clnk&gl=us#sthash.FYoxOdVu.dpuf

For Historic Mountain Lodge, It’s Not the End of the Rainbow

/in , /by Bob Altieri
rainbowThe historic Rainbow Lodge in Soda Springs, California, which was in receivership and non-operational for almost a year, has been acquired. This 33-room lodge on the Sierra’s western slope near Hwy 80 was originally built as a stagecoach stop in the 1800’s. In the 1990’s, the owner of the nearby Royal Gorge Cross Country Ski Resort bought it with the intention of providing lodging for skiers. The building is currently undergoing substantial renovations and the business is expected to re-open in a few weeks.
“There’s so much history. Families have been coming here for decades.”
Craig Mitchell, new owner of Rainbow Lodge
Exit Strategies Group, Inc. represented the buyer in this acquisition; the receiver was Douglas Wilson Companies based in southern California.
Perry Norris, executive director of the Truckee Donner Land Trust, said he was delighted to hear there were new family owners at Rainbow Lodge. The land trust owns about 2,100 of Royal Gorge’s 3,000 acres and is preserving its holdings for skiing, hiking and open space. Rainbow Lodge is one of the few places to stay on the Sierra’s western slope heading up to the ski area eight miles away.
For advice on exiting your company or acquiring a business, please call Bob Altieri at 916-905-5706 or Email boba@exitstrategiesgroup.com. 

Sales of Small Businesses on the Upswing

/in , /by Roy Martinez

incAccording to a recent Inc. Magazine article, “Let’s Make a Deal”, sales of small businesses in Q3-2013 jumped 42% from the same quarter in 2012. Inc. quotes Curtis Krocker, group manager of BizBuySell.com, “After four years of depressed selling and buying activity, the markets are coming back.”

Why? Motivated sellers and available financing. Many older baby boomer business owners are ready to sell their business and retire. Having held off selling during and immediately after the recession, there is pent-up demand to sell now. Furthermore, banks are willing to lend for small business sales again. During the recession, the Small Business Administration and participating banks had all but turned off the spigot for small business loans. The economy has changed…and so have the financing sources.

So…now what?

If you are a business owner considering selling your business – have your business objectively evaluated by a qualified expert. Know how much your business is worth, so that you can make an informed decision about a) selling now or b) continuing to grow the business and selling later.

If you are an individual thinking about buying a business, pull together a personal balance sheet — know how much of a down payment you can afford. Then…start visiting business-for-sale websites like BizBuySell.com, to get your creative juices flowing, thinking about what kind of business you might like to buy. And…call your local business broker. They may be selling the perfect business for you. And even if they don’t…they can match you with future business opportunities or even do a retained acquisition search for you.

Strike while the iron is hot!

J. Roy Martinez is a Certified Valuation Analyst (CVA) and member of the California Association Business Brokers. He can be reached at jroymartinez@exitstrategiesgroup.com or 707-778-2040

Upcoming Event: A Fast-Paced Overview of Business Valuation for Attorneys

/in , /by Al Statz
On January 29, 2014, Al Statz of Exit Strategies will be speaking to the Sonoma County Bar Association in Santa Rosa, California.
The workshop, titled “A Fast-Paced Overview of Business Valuation for Attorneys”, will rapidly cover a wide range of valuation topics that will help attorney’s spot important issues and use business valuations more effectively in their practices. The comments will address valuations in estate, gift and tax, shareholder disputes, CC§2000 cases, marital dissolution, and of course M&A transactions.
This presentation is open to the public. Click here for more information and to register.

Roy Martinez Adds CVA Business Valuation Credential

/in /by Al Statz
CVA_logo__120x97_Last month our colleague J. Roy Martinez completed the certification process with the National Association of Certified Valuators and Analysts (NACVA) to earn the Certified Valuation Analyst (CVA) credential. The CVA credential is granted only to qualified individuals with considerable training and experience in the field of business valuation. CVA recipients must meet rigorous standards of professionalism, expertise, objectivity and integrity in the field of business valuation and related consulting disciplines.
Congratulations Roy!
At Exit Strategies, we pride ourselves on the amount of time that our professionals dedicate each year to continuing education in M&A brokerage and business valuation. The valuation world in particular is constantly evolving. Staying on the cutting edge means spending time and money in the classroom, compiling and reading numerous journal articles, books and court cases throughout the year, and adding industry credentials. 

Al Statz Earns Accredited Senior Appraiser in Business Valuation (ASA) Credential

/in /by Al Statz
September 30, 2013 (Reston, VA) – The American Society of Appraisers (ASA) is pleased to announce the accreditation of Petaluma, California based Al Statz.
Mr. Statz has completed the Society’s appraisal designation program, which is the industry’s most vigorous and difficult designation to achieve. Al’s accomplishment has earned him the right to bear the “ASA” credentials as a mark of his success. He joins less than 5,000 fellow experts around the world who have earned this prestigious and notable achievement.
asa_logo_web__200x75_The American Society of Appraisers is an international organization of appraisal professionals and others dedicated to the education, development and growth of the appraisal profession. ASA is the oldest and only major organization representing ALL disciplines of appraisal specialists, originating in 1936. ASA’s headquarters is in the Washington, DC area. To learn more about ASA, visit www.appraisers.org or call (800) 272-8258.

Exit Strategies Opens Sacramento Valley Office

/in /by Al Statz

After 12 years serving Northern California business owners, Exit Strategies Group, Inc. is planting its flag in the Sacramento Valley. Seasoned professionals Jim Leonhard and Bob Altieri will open the firm’s new Roseville office on October 1st.

This new location is an important step for us in serving a growing number of Sacramento area M&A clients, as more baby boomer business owners seek retirement after the recent recession. It will also play a key role in the expansion of our business valuation practice. Mr. Altieri and Mr. Leonhard have a combined 30 years of experience in business valuation and M&A.

Exit Strategies, has been headquartered in the San Francisco Bay Area since 2002. The firm sells $1-30 million revenue closely-held businesses in California, and appraises them for owners, shareholders, attorneys, CPA’s, fiduciaries and others when they need accurate, defensible valuations.

Roseville is the second office for Exit Strategies, and the 21st for its affiliate organization National Business Valuation Group (https://www.nationalbizval.com).

For more information contact Jim Leonhard, Jhleonhard@exitstrategiesgroup.com, 916-800-2716.

Jim Leonhard Earns CVA Valuation Credential

/in /by Al Statz
CVA_logo__120x97_Today I want to congratulate our associate Jim Leonhard, CVA, MBA, for recently completing the certification process with the National Association of Certified Valuators and Analysts (NACVA) to earn the Certified Valuation Analyst (CVA) credential.  The CVA credential is granted to qualified individuals with considerable experience in the field of business valuation. The CVA designation is an indication to the business, professional, and legal communities that recipients have met rigorous standards of professionalism, expertise, objectivity, and integrity in the field of business valuation and related consulting disciplines.
At Exit Strategies, we pride ourselves on the amount of time that our professionals dedicate each year to continuing education in M&A brokerage and business valuation. The valuation world in particular is constantly evolving. Staying on the cutting edge means spending time and money in the classroom, compiling and reading numerous journal articles, books and court cases throughout the year, and adding industry credentials.