Ken McCauley Joins Exit Strategies as Senior Valuation Analyst

/in , /by Al Statz

Exit Strategies Group is pleased to announce that Ken McCauley, CPA, ABV, has joined us a Senior Business Appraiser in our North San Francisco Bay Area California office. Ken will provide a broad range of business valuation services for our clients. He has been appraising businesses since 2010, including wineries, medical and professional services, software, retail, restaurants, manufacturing, construction, and businesses in other sectors.

Prior to joining Exit Strategies, Ken was a partner in AL Nella & Company, LLP Certified Public Accountants in San Francisco California, where he specialized in financial reporting, business valuation services and cash flow analysis for small to medium sized companies. Ken and his partner sold the firm in 2018. Ken’s background includes financial audit experience with a national public accounting firm and multiple corporate finance positions.

Ken holds the Accredited in Business Valuation (ABV) credential and is a licensed CPA. He graduated from the University of Michigan with a BA in Accounting. He has served on the boards of several nonprofit organizations over the years and is currently active on the Stewardship Team at the Center for Spiritual Living.

We’ve known Ken for many years as a client and referral partner. He brings unique talents, knowledge and experience to the ESGI team, and he is great to work with. We are happy to have him help us meet the growing need for professional business valuation and succession planning services.

Contact Ken McCauley at kenm@exitstrategiesgroup.com or 707-823-8440.

Get LinkedIn with Ken.

Exit Strategies Advises on Management Buyout of Carpenter Crane Hoist

/in , /by Al Statz

MARE ISLAND, California – Exit Strategies is pleased to have recently served as financial acquisition advisor in management’s carve-out of the Carpenter Crane Hoist division from The Carpenter Group (TCG). The buy-out (MBO) was led by executives Dane Oliver and Ben Jones with the support of an equity partner. The acquisition marks the beginning of an exciting era for Carpenter Crane Hoist (CCH) as management implements plans to expand offerings and operations to address the needs of a growing specialty crane market.

Since its forming in 1996 as the seventh division of The Carpenter Group, CCH has designed and produced overhead cranes for clean rooms and harsh environments. CCH uses proprietary components and materials and customizes every system to satisfy the unique application requirements of its clients. Electronic controls and custom holding fixtures are typical. CCH produces cranes to 25-ton capacity for up to class 10 clean room environments for top semiconductor companies and research facilities across the U.S. For more information see www.carpentercranehoist.com.

The Carpenter Group, with six locations, distributes rigging products to OEMs and end users throughout California and the West Coast in the construction and marine industries and other sectors. The carve-out of CCH made sense for TCG because the business unit was not core to its overall strategy.  See www.carpenterrigging.com for more information.

How Exit Strategies Helped

Management contacted us on the advice of their attorney to determine if a buyout was feasible and to help put the deal on track. Exit Strategies’ role consisted of sizing up the situation, advising management on process and strategy with respect to the proposed carve-out, analyzing historical financials and helping develop projections, valuation calculations, finding a lender to preapprove financing, pitching the spin-off to The Carpenter Group, and working with management’s attorney to negotiate a favorable letter of intent. Umpqua Bank supported the deal with senior term debt. Deal terms are confidential.

About Us

Exit Strategies Group is a California-based M&A brokerage and business valuation firm. Founded in 2002, we mostly serve sellers in lower middle-market  transactions, representing them from start to finish. Our seasoned brokers and advisors have over 100 years of combined deal making experience spanning many industries.  In this instance we are very pleased to have facilitated a successful management buyout and spin-off that benefited all stakeholders.

To find out how Exit Strategies can help you complete a successful business sale, spin-off, merger or acquisition, contact President Al Statz at 707-781-8580, alstatz@exitstrategiesgroup.com.

August 21st Seminar: How and When to Exit Your Business for Maximum Value

/in , , /by Al Statz

Are you considering retirement or exiting ownership and wondering if you’re going about it the best way? Will your business sell for maximum value? Please join us for an exclusive, limited-seating breakfast seminar in Roseville on Tuesday August 21, 2018 for business owners contemplating their exit. Learn the ins and outs of successful exit strategies and how to maximize value when you sell. This free, educational seminar is sponsored by Exit Strategies Group and Exchange Bank, a local community bank serving northern California since 1890.

You’ve spent years creating value in your business and you deserve to make a full-value exit on your terms and time frame. You’ve heard about hugely successful deals and horror stories of deals gone wrong. But what separates them? Not just luck.

What is the value of your business today? Is that enough to retire or fund my next endeavor? Is the timing right to maximize value? What are my exit options and how do I select the right option? What should I be doing to prepare for an exit? How far in the future should I plan? What can I do to make my company more attractive to buyers? How can I position it to attract strategic buyers? How do I present my financials properly? How do I avoid financing a sale? How do I get more value for all my years of hard work and ensure a successful sale when I’m ready to sell?

If you’ve asked yourself any of these questions, this seminar is for you. This fast-paced 2-1/2 hour live session will provide practical answers regarding:

1) How companies are valued and what factors influence the price buyers pay
2) How to prepare yourself and your company for a better sale outcome
3) The current state of the market for business sales
4) Pros and cons of different types of buyers for your company
5) Steps and important tools in an M&A sale process, and mistakes to avoid
6) How experienced professionals level the playing field with sophisticated buyers
7) The criteria banks will use to qualify your business for buyer financing
8) How to maximize proceeds and reduce financial risk in a sale

SEMINAR DETAILS

• Date: Tuesday, August 21, 2018
• Time: 7:30am – 10:00am (check-in and continental breakfast start at 7:00am)
• Location: Exchange Bank, 1420 Rocky Ridge Dr. Suite 190, Roseville, CA 95661
• Presenters: Senior advisors from Exit Strategies Group and Exchange Bank
• RSVP Required:  CLICK HERE TO REGISTER ONLINE  Or, contact Mike Lyman at 916-476-2611 or mlyman@exitstrategiesgroup.com. We will call you to confirm your reservation. For privacy, we allow only one company per business type. Register early. The seminar is free and seating is limited.

We hope to see you on August 21st. If you cannot attend but would like to be notified of future seminar dates, receive our monthly newsletter, or discuss a business sale or valuation need, please contact Mike Lyman at 916-476-2611 or mlyman@exitstrategiesgroup.com.

About the Sponsors:

Founded in 2002, Exit Strategies Group, Inc. is a full-service Northern California-based merger and acquisition brokerage firm serving $1-50 million revenue company owners.  Exit Strategies also appraises businesses for MBO, buy-sell transactions, ESOP, estate and gift tax, litigation support and other uses.  With 12 seasoned professionals and 4 California offices, Exit Strategies combines the expertise and resources of a large firm with the close senior-level attention of a boutique M&A practice.

Founded in 1890, Exchange Bank consists of 18 branches.  Exchange Bank is an SBA PLP lender with decades of experience.  Dedicated SBA M&A lending professionals committed to outstanding customer service and fast turnaround.

 

Exit Strategies Advises on Sale of Valley Inventory Services, California’s Leading Inventory Services Provider

/in , /by Al Statz

Exit Strategies Group acted as exclusive advisor to Valley Inventory Service, Inc. on its recent sale to private investors. Terms of sale will not be disclosed.

Founded in 1972, VIS is the leading regional physical inventory service provider in California. VIS serves supermarkets, retail stores, pharmacies, distribution centers, wineries and manufacturers in the Western U.S. Using state of the art data collection hardware and software, VIS tailors its services to meet the timing and reporting requirements of clients. Valley’s service philosophy is centered around timeliness, accuracy and professionalism. The new owners intend to build on that tradition of quality service and expand into new markets.

“After we interviewed other brokerage firms, our attorney recommended Al Statz at Exit Strategies. We selected Exit Strategies because of the thoughtful advice they gave us before we hired them, the professional way they present businesses, their approach to identifying buyers, and their reputation for providing great service. I am pleased with the ultimate outcome achieved through their rigorous process, extensive knowledge and attentiveness,” said VIS CEO Jeff Link.

Established B2B service companies like VIS with competitive service offerings, proven systems and capable staff, strong reputations and  growth prospects are getting lots of attention from strategic and financial buyers in this market. We are pleased to have been able to advise on this successful business ownership transfer.

Exit Strategies Group is a California-based mergers and acquisitions brokerage and business valuation firm. Founded in 2002, the firm advises sellers and buyers in lower middle-market M&A transactions. Senior advisors at Exit Strategies have over 100 years of combined transaction experience across a variety of industries.

For more information or help completing a business sale, acquisition or merger, contact Al Statz, President, at 707-781-8580, alstatz@exitstrategiesgroup.com.

May 10th Seminar: How to maximize the value of your business upon exit.

/in , , /by Adam Wiskind

Are you starting to think about retirement, but don’t know how best to transition out of your business? Consider attending a free breakfast seminar hosted by Exit Strategies Group and Exchange Bank on how to maximize the value of your business upon exit.

  1. This 1-1/2 hour seminar will answer the following questions:
  2. What are the value drivers that determine how much my company is worth?
  3. What can I do to prepare my company for sale? What should I not do?
  4. What are the steps in the sales process?
  5. What is the current state of the business sales market?
  6. What criteria does a bank use to qualify my business for a bank loan?
  7. How do I maximize the proceeds from the sale of my business?

The Details

May 10th, 2018 7:30 am to 9:00 am in Santa Rosa. A continental breakfast will be provided.

Space is limited.  For your privacy, only one company per industry will be allowed to attend. To reserve a spot, RSVP to Adam Wiskind, awiskind@exitstrategiesgroup.com or call (707) 781-8744.

About the Sponsors

Exchange Bank was the #1 Community Bank SBA Lender in Sonoma County in 2017, and is a Preferred SBA Lender and a Top Ranked SBA Lender in the San Francisco District/Greater Bay Area.

Exit Strategies Group is a full-service mergers and acquisition brokerage firm serving private companies with $1-50 million in revenue. Exit Strategies also offers expert business valuation services for many reasons including exit planning, buy-sell agreements and litigation opinions.

If you are unable to attend but would like information on maximizing the value of your business, please contact Adam.

2018 Sonoma County Backroad Challenge Cycling Event/Fundraiser

/in /by Al Statz

Like you, ESGI’s advisors are invested in the communities in which they live and work. Exit Strategies is proud to once again sponsor the annual Sonoma County Backroad Challenge, a one-day cycling event full of spectacular scenery, fun and excitement where riders of all levels from across the United States converge to raise funds for worthy humanitarian projects, both local and international.

The annual Sonoma County Backroad Challenge is a fundraising project of the The Petaluma Sunrise Foundation, a 501(c)(3) non-profit established by the Rotary Club of Petaluma Sunrise.

If you are a cyclist and enjoy supported century, metric century, and half-metric century rides, the 2018 Sonoma County Backroad Challenge is one of the most scenic and enjoyable rides you will find anywhere.

Please come join us on Saturday May 19, 2018. CLICK HERE for details, to register for the ride, or simply to make a donation.

We welcome our clients, future clients, professional advisor colleagues and referral partners to help us give back by participating in our sponsored charitable events and we try to do the same for them. If you have any questions about the Backroad Challenge or Rotary, you can reach Al Statz at 707-781-8580.

What are the current expectations for interest rates?

/in , /by Louis Cionci

One of the important factors that effect business value is macroeconomic conditions which include interest rates and the cost of capital. Business owners who want to know what is going to happen to interest rates should be aware of new leadership at the Federal Reserve.

On February 5, 2018, Jerome “Jay” H. Powell took the oath of office as the new Chairman of the Board of Governors of the Federal Reserve System, succeeding Janet Yellen.

The Federal Reserve System (“the Fed”) is the central bank of the United States. It performs five general functions to promote the effective operation of the U.S. economy and, more generally, the public interest.

One of the Fed’s functions is to conduct the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy. The Fed sets the federal funds discount rate to influence the interest rates banks and other lending institutions charge to business and consumers.

What does the change in leadership mean for interest rates and the economy? The new chairman is stressing continuity as he takes over as Fed chairman, which suggests the central bank will keep gradually raising interest rates in 2018, unperturbed by recent market volatility and signs of firming inflation.

Interest rates have been at historical lows since the Great Recession but are expected to continue gradual rising toward more long-term historical levels. For business owners, knowing where interest rates are headed can help in planning both ongoing operational financing needs and in understanding buyers cost of capital. If you are a business owner considering selling, now is a good time as expectations are for continued growth in the U.S. economy, and interest rates are at historic lows.

For more information on the effects of interest rates and macroeconomic conditions on business valuation and M&A activity, Email Louis Cionci at LCionci@exitstrategiesgroup.com or call him at 707-781-8582.

Current Market Multiples for Main Street Business Sales

/in , , /by Louis Cionci

Each quarter, The International Business Brokers Association (IBBA) and M&A Source together with Pepperdine Private Capital Markets Project and the Graziadio School of Business and Management at Pepperdine University publish a quarterly national survey of business brokers and M&A advisors called the Market Pulse Survey. Price multiples and other key metrics in the Main Street Market section of the Q3 2017 survey are presented below.

Main Street businesses are defined as those with enterprise values up to $2.0 million.

 

MEDIAN MULTIPLES PAID FOR MAIN STREET BUSINESSES

 

 

 

 

SDE is Sellers Discretionary Earnings, which is defined as earnings before owner/GM compensation (one full-time working owner), depreciation and amortization, non-operating income & expenses, nonrecurring income & expenses, interest income & expenses, and taxes.

 

PORTION OF SALE PRICE RECEIVED AS CASH AT CLOSE

 

 

 

 

WHY SELLERS WENT TO MARKET

 

 

 

WHAT WAS MOTIVATING BUYERS

Exit Strategies Advises RST in Strategic Sale to Subsite Electronics

/in , /by Al Statz

Exit Strategies Group, Inc. (ESGI) is pleased to announce the acquisition of its client, robotic inspection equipment manufacturer RS Technical Services, Inc. (RST), by Subsite Electronics, a Charles Machine Works company. Exit Strategies served as exclusive M&A advisor to RST.

Acquired by:

Since 1984, R.S. Technical Services, Inc. (rstechserv.com) has been a leader in the design and manufacture of robotic video inspection equipment used to monitor and repair municipal water and wastewater collection and conveyance systems, mainly pipelines too small to allow man entry. Its systems are designed around a unique technology that incorporates all power and control functions into a single conductor, making its equipment more reliable and safer to use than competing solutions. RST has facilities in Kentucky and California.

Subsite Electronics (subsite.com), a Charles Machine Works company, manufacturers utility locators and horizontal directional drilling (HDD) guidance systems. The RST acquisition adds proven remote video inspection capabilities to Subsite’s line of underground awareness solutions. Employee-owned Charles Machine Works, founded in 1902 in Perry, Oklahoma, has several brands and divisions, and is perhaps best known for its Ditch Witch brand of HDD and trenching equipment. For more information visit charlesmachine.works.

Al Statz, President of Exit Strategies, who led the transaction, stated “We are proud to have represented the owners of RST in this successful sale to Subsite. Our team identified, profiled and had preliminary talks with over 100 target buyers, both strategic and private equity, and qualified 6 finalists. Subsite was selected not only on economic terms, but also because they demonstrated a strong culture of customer care, innovation, integrity and commitment to employees that was important our clients.”

For advice and representation in the valuation, sale, merger or acquisition of your company, contact Al Statz at 707-781-8580 for a free confidential consultation. Financial terms of the RST-Subsite transaction will not be disclosed.

About Exit Strategies

Exit Strategies Group, Inc. (ESGI) is a California-based M&A brokerage and business valuation firm focused on producing exceptional exits for closely-held and family owned lower middle-market companies. ESGI brings M&A experience, process management and close attention to detail to help companies sell, merge, recapitalize and acquire businesses successfully. Our advisors have sold companies in a variety of industries including sophisticated technology design, manufacturing, distribution and value-added services.

Is 2017 a good year to sell my company?

/in , , /by Roy Martinez

Sellers often ask us if it is a good time to sell their business. My response is usually, “yes, but it depends”.  The optimum time to sell a particular business depends on many factors, and this article discusses some of them.

First of all, timing depends on the company:

  • How are its business fundamentals?
  • Is it growing? Flat? Shrinking?
  • Is it profitable? How is the quality of earnings?
  • What is the outlook for the business for the next 5 years?
  • Does the company have a good management team in place if the owner leaves?
  • Does the company have intellectual property? Is it robust? Is it protected?
  • Does the company have concentration risk? Customer, supplier, etc.?
  • How many family members does the company employ?
  • How many personal expenses does the owner run through the business?
  • Is working capital being optimized?

The state of the industry is important too:

  • How are industry fundamentals?
  • Is the industry growing? Flat? Shrinking?
  • Are there industry buyers?
  • Is the industry consolidating?
  • Are there any trends or changes on the horizon that could have an impact (good or bad) on your company?

The economy also matters, and market conditions factor in. When the world, U.S., state or local economy stalls, it can be difficult to sell businesses, at any price. Economic factors include:

  • Is the economy growing? Flat? Shrinking?
  • Is the economy stable? Any risks looming?
  • What is going on with interest rates?
  • What is the status of the Mergers and Acquisitions (M&A) market? Are strategic buyers and Private Equity Groups (PEGs) active or sitting on their wallets?
  • Are lenders lending?
  • At the low end of the market, are individual buyers buying? This may be contra-cyclical. In good times, individuals may not want to leave lucrative jobs. On the flip side, when people lose their jobs, some decide to buy a small business.

Last, but not least, your situation as the owner has a major influence on sale timing:

  • Why sell? Retirement? Illness? Death? Divorce? Burnout? Generally its best to have a good reason.
  • What are you planning to do post-sale?
  • If the business sells at its probable selling price, will you have the funds to support those plans, after taxes? Will you need all cash, or can your provide some seller financing?
  • Are you interested in retaining a stake in the company for investment?
  • Do you have family or management that want or expect to take over the business? Are you willing to leave some money on the table (vs. a strategic sale)?
  • How do you want to be involved with the company after the sale? Is there a time by which you have to be completely out?
  • How important to you are the ongoing success of the company, continued employment of staff, customer or supplier continuity, etc., versus maximizing proceeds?

There are more questions, but this is a good start. The point is, deciding when to sell a business is complex and deserves thoughtful analysis. Some of the answers will be easy, others require more analysis and assistance.

So, is 2017 a good year to sell?

For the first time in a long time, most small-to-medium-sized businesses can look back and see five solid years of financial performance. And, importantly, owners and investors can look forward with an expectation of good years to come. It has taken almost a decade, but most companies have completely shaken off the effects of the Great Recession. Furthermore, in most industries, strategic acquirers, private equity groups and lenders are writing checks and valuations are strong.

So, fundamentally, YES, 2017 is a very good year to sell, in the U.S., in California and in the Bay Area, and in nearly all industries. Of course, the full answer depends upon your specific company and personal circumstances.

Contact Roy Martinez with an immediate need or for further information on exit strategies and the market for your business.