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.

Exit Strategies helps ProtoFab Expand its Prototyping Capabilities in the Northern California Machining Services Market

/in , /by Al Statz

Exit Strategies recently advised on the merger of two closely-held Northern California precision machining companies.

Founded in 1996 by Grant Kerr, GMAN Precision LLC is a full-service precision machine shop specializing in complex machined parts and services for R&D, prototyping, and preliminary production work. Its markets include aerospace & defense, biotech, electronics, energy, food processing equipment, medical device, and others. ProtoFab, Inc., based in Petaluma, California, is an ISO9001:2008 certified Northern California manufacturer of precision-machined components for low and high volume production. Major industries served by Protofab are medical, automotive, commercial and test and measurement.

Acquired by

Operationally, adding G-Man’s superb R&D prototyping expertise to Protofab’s world-class production capabilities will deliver even greater value to customers.  The move will give customers single-point machining services for the entire life cycle of their products; from initial R&D, through product launch, production and end-of-life. Culturally the companies share a strong commitment to quality and continuous improvement, and to their clients’ success. This is a smart combination that, combined with disciplined execution of a well thought out integration plan, will accelerate the combined entity’s growth in the Northern California market. Exit Strategies is pleased to have advised on this strategic merger. Terms of the deal will not be disclosed.

This transaction is another example of Exit Strategies’ M&A experience in the California manufacturing sector. We have appraised, sold and merged numerous contract manufacturers representing a broad swath of manufacturing disciplines and vertical markets. If you own a food, wood products, electronics, machining, fabrication, molding, finishing, or manufacturing services business of any kind, and you are looking to sell, merge or acquire a company, we are interested in hearing from you.

Contact ESGI’s president Al Statz at 707-781-8580 or alstatz@exitstrategiesgroup.com.

Exit Strategies Advises IRR San Francisco-Sacramento on its Sale to BBG

/in /by Al Statz

Exit Strategies, a California based mergers and acquisitions (M&A) brokerage and business valuation firm, recently advised the owners of Integra Realty Resources of San Francisco and Sacramento on the sale of their Northern California commercial real estate valuation company to BBG, Inc.

BBG ranks among the largest real estate valuation and assessment firms in the United States. With this acquisition, BBG will have 22 offices across the U.S. and a workforce of 262 employees.

of San Francisco and Sacramento

Sold to

Terms of the acquisition will not be disclosed.

This sale is another example of Exit Strategies’ M&A brokerage experience and valuation expertise in the business-to-business services sector. Exit Strategies has appraised and brokered hundreds of service businesses including medical, professional, software as a service (SaaS), real estate, maintenance and repair, test and inspection, construction, and many other types of service businesses. If you own a service business of any kind, and are looking to sell, merge or acquire, we would be interested in hearing from you. Al Statz can be reached at 707-781-8580 or alstatz@exitstrategiesgroup.com.

Economic indicators help put the current U.S. economic climate in perspective.

/in , /by Louis Cionci

I have four common gauges of U.S. economic activity that deserve a few moments of your attention today: stock market, interest rates, inflation and unemployment. Let’s look at graphs of each of these measures for a visual perspective on the state of our economy.

Stock Market. The Wall Street Journal, Equities pg. B17, January 25, 2017 reported the DJIA rose 100 points amid expectations of increased government spending on infrastructure projects.  The DJIA crossed the 20,000 mark during trading on Wednesday, January 25.US-stock market

Interest Rates. The Federal Reserve raised the target range for its federal funds by 25 basis points rate to 0.5 percent to 0.75 percent, during its December 2016 meeting.US-interest-rate

Inflation. Inflation has been hovering below 2%, the Federal Reserve Open Market Committee has indicated a long-term goal for the inflation rate at 2%.US-inflation-cpi

Unemployment. The unemployment rate has been dropping slowly and steadily since it peaked during the Great Recession.US-unemployment-rate

Overall, the present U.S. economy looks good with rising stock valuations, low interest rates, low to moderate inflation, and declining unemployment. While we can’t predict what the future holds, we can look at recent history to get a perspective on current economic conditions. Thanks for your attention!