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Roundup of Recent Sale Transactions

Finding time to sit down and write informative blogs has been almost impossible this year. Thanks in advance for giving me a pass as I recap some of Exit Strategies’ recent deal closings in this post.

Below are some of the transactions for which Exit Strategies (ESGI) provided sell-side advisory services in the first half of 2019. Not represented here are deals that we have been asked not to announce, nor the many internal buy-sell transactions and management buyouts for which we provided business valuation services. As always, deal terms are not disclosed, to respect our clients’ privacy.

Sale of Eldercare Services to Home Care Assistance

Eldercare Services is one of the San Francisco Bay Area’s top professional eldercare management and home care services providers. The baby boomer owners of ES were looking to turn their business investment into cash (i.e. “liquify” their investment), maximize value and retire. Home Care Assistance is a leading provider of home care for seniors in 150 regions throughout the United States, Canada, Puerto Rico and Australia. (service, health care)

Sale of DC Precision to Tecan Group

DC Precision, established in 1999, manufactures high precision plastic valve assemblies for life science OEMs and metal products for Silicon Valley high-tech manufacturers. Our client was ready to pursue other business interests. Tecan Group is a Swiss manufacturer of automated workflow equipment for pharmaceutical and biotechnology companies, university research departments and diagnostic laboratories. (contract manufacturing, CNC machining, proprietary technology, turn-key assembly)

Sale of Precision Asphere to II-VI Optical Systems

Precision Asphere produces aspherical optical components (lenses and mirrors) using proprietary surface-forming technology. The majority owner wanted to retire. II-VI Optical Systems develops and produces highly engineered materials and material systems for medical, defense, aerospace and military clients.  (manufacturing, technology)

Sale of Axis of New England and New York to Motion Industries

Read the ESGI announcement here.  Our clients were looking to take advantage of industry consolidation and maximize value through a competitive M&A sale process. (distribution, manufacturing, robotics, technology, service, system integration)

Sale of DZINE Living to Haworth

DZINE is an interior design services and contemporary European furnishings retailer in San Francisco. Our clients were looking to align with a major industry player that would help DZINE to expand its footprint. Haworth is a global company that designs and sells furniture, furniture systems, architectural products, textiles, wall surfaces, and ergonomic and technology tools for workspaces, education and health care. (retail, service)

Sale of You & Me Children’s Center to an Industry Investor

Founded in 1981, You & Me Children’s Center is a local preschool committed to providing a nurturing, safe and educational environment for children. The owner wanted to retire, liquefy her investment and see her legacy survive. The buyer is an experienced preschool operator. (service, education)

Sale of Home Tutoring Plus to a Private Investor

Home Tutoring Plus is a tutoring company serving schools and home school families throughout much of Northern California. Professional tutors provide individualized lessons, in-home and online. Our client engaged us to locate a buyer that would preserve her legacy while maximizing her investment so she could pursue new interests in retirement. (service, education)

Sale of Redwood Building Maintenance Company to Silicon Valley Building Services

Founded in 1965, Redwood Building Maintenance is a full service janitorial and building maintenance company serving the North San Francisco Bay Area. The family owners were ready to retire.  Silicon Valley Building Services primarily serves the south and east Bay Area and this gave them an opportunity to expand. (B2B services, contract maintenance)

Sale of Banner Enterprises to Valley Comfort

Banner Enterprises and Valley Comfort Heating and Air are both full service commercial HVAC companies serving the Bay Area. Our client was looking to sell his business and building in order to retire and reinvest. (construction, services, real estate)

Sale of Communique Interpreting to DCARA

Since 1994, Communique Interpreting has provided in-person sign language interpreting services from Monterey to the Oregon border, in medical, employment, education, legal, performing art and social services settings. Our client wanted to sell her business and building and retire. DCARA, a 501(c)3 charitable organization, provides interpreting, advocacy and employment services for hearing impaired children, adults and families in Northern California. (services, non-profit, commercial real estate)

Sale of a Dietary Supplements Producer to a Strategic Buyer

A producer of herbal supplements sold through U.S. medical practitioners. The owner engaged us to find a strategic partner that could scale the company and allow him to reduce his involvement in operations and transition to retirement. More details next month. (health care, manufacturing)

Conclusions?

Two themes jump out at me: most acquirers were strategic and most sellers were looking to retire. Indeed, we’re seeing tremendous strategic acquisition activity in virtually every industry Most sellers are able to maximize value through a structured auction (competitive bid) process run by a professional M&A brokerage firm. And as long as baby boomers continue to age out, Exit Strategies will largely be a retirement facilitator.

Action Items

If you are considering exiting your company for any reason, call or Email us to discuss your goals and circumstances, and how you can leverage Exit Strategies’ process, resources and experience to improve your results. If you are waiting for market conditions to improve, stop waiting and begin the process!


Al Statz is founder and President of business valuation and M&A brokerage firm Exit Strategies Group, Inc., which has offices in California and Oregon. For further information or to discuss a valuation or M&A question or need, confidentially, you can reach Al at 707-781-8580 or alstatz@exitstrategiesgroup.com.

Steps in a Management Buyout

As a friend of Exit Strategies you know us as M&A brokers and appraisers, but you may not know that we advise on management buyouts.

By management buyout (MBO) I mean selling a company or business unit to managers and key employees using a combination of equity and debt. The assets and cash flows of the company are used to finance most of the purchase price, with the equity portion supplied by management or a Private Equity investor, depending on the size, profitability and nature of the company.

Business owners who choose the MBO exit option typically have strong non-financial motivations. Don’t get me wrong, price is important to them. However, factors such as company legacy, employee welfare and local community are often equally and sometimes more important.

Typical MBO Steps

When advising company owners on management buyouts, we start by understanding our client’s short- and long-term goals, needs and circumstances. If an MBO appears to be appropriate, we will:

  1. Prepare an independent business valuation (fair market value) to provide guidance on pricing and feasibility
  2. Work with financial, tax and legal counsel to determine a deal structure that achieves the owner’s liquidity and income goals
  3. Obtain confidentiality agreements from interested parties
  4. Meet with managers to understand their interest level, goals and resources; educate them on the MBO process; confirm feasibility
  5. Develop a transaction roadmap
  6. Collect details on buyer experience, credit, funds and collateral
  7. Prepare a confidential information memorandum, source documents and disclosures to fill management’s knowledge gaps and explain the merits of the transaction to their advisors and lenders
  8. Recommend wealth management, legal and tax professionals (if needed) and coordinate with them
  9. Evaluate debt financing options (including seller note) and the potential of “rollover” equity
  10. Determine if private equity capital is necessary or desired, and available
  11. Recommend and liaise with best-fit debt and equity providers
  12. Propose terms and facilitate sensitive negotiations while buffering emotions
  13. Draft a nonbinding memorandum of understanding on key deal terms, transaction process and timeframes
  14. Facilitate buyer, seller and lender due diligence
  15. Assist buyers with financial models, business plans and shareholder agreements as needed
  16. Work with the parties’ legal teams to finalize definitive agreements
  17. Advise on leadership transition
  18. Coordinate satisfaction of closing conditions, resolve problems that arise, and maintain momentum for a timely deal closing

Every buyout is unique. We add, remove and rearrange steps as needed, and help both sides navigate the process. In some cases, management, not the owner, initiates the buyout.

Biggest Challenges

Owners and management employees usually lack the time and deal experience to complete successful buyouts on their own. The interdependent owner-employee relationship raises the stakes for all parties and magnifies the consequences of a failed negotiation. Three areas seem to be especially challenging for owners and management:

  1. locking in a fair purchase price (business valuation),
  2. determining the right deal structure, and
  3. financing

Most Common MBO Mistake

For a management buyout to succeed, a business usually has to have a solid earnings track record in order to prove it can service the debt. Management must demonstrate the requisite skills, experience and commitment. Putting everything in place can take months or years of preparation. Waiting too long to begin this process is the most common mistake I see owners make.

Backup Plan

Of course, there is always the possibility that the MBO will fall through, and you should be prepared for that possibility. That may involve creating incentives for management to stay on and being ready to market and sell the company to third party strategic and/or financial buyers.

The First Step

If you are considering selling your company to management some day, feel free to call us to discuss your goals and needs, confidentially.

Al Statz is the founder of Exit Strategies Group and a senior M&A advisor in the firm’s Sonoma County California headquarters. Email Al or call him at 707-781-8580.

Financial exit planning, Is your business ready?

I recently had a client looking to sell their medical supply business and retire. I worked with management to pull together all the documentation and financials needed, and conducted conduct a probable selling price analysis. With report in hand I met with our clients to review the results and plan a go-to-market strategy.

Unfortunately, the probable selling price fell slightly short of what the client needed to retire (after taxes). We identified excessive inventory as one of the factors that was limiting enterprise value. How did inventory reduce value and spoil our client’s exit strategy? What can they do resolve this limitation? Read on for the full story.

The company had thousands of SKUs, colors, shapes, types and sizes of medical supplies in inventory. Fully 78% of its assets were in inventory. Current assets exceeded 99% of total company assets. We compared our client’s financials against 10,000+ companies in the industry. The industry was averaging 35 days of inventory on hand (11 turns per year). By comparison our client turned its inventory less than once per year. Keep these figures in mind as we continue.

Cash Flow is King

It’s no surprise that buyers of going concern businesses buy primarily to get returns on their time and money invested. Tying up cash in inventory means less cash to operate or invest in the business (or pay dividends to investors) and increases the risk that you won’t get your money back out of your inventory. But there’s more to this story about how inventory affects value.

The income approach to valuation is based on the concept that a business is worth the present value of its expected future cash flows to its owners. The other approaches to value (market and asset approaches) are also important, but cash flow is ultimately king.

A common income valuation method involves dividing the forecasted net cash flow by a capitalization rate (Cap Rate). The capitalization rate is a function of the expected growth and risks inherent in a company. There’s a lot that goes into calculating appropriate risk and growth rates, but here’s the basic formula:

Value = Net Cash Flow / (Risk – Growth)

Crunching the Numbers

Working Capital = Current Assets – Current Liabilities

  • With minimal current liabilities and high current assets, the company had high working capital requirements.

Working Capital Turnover (Sales / Working Capital)

  • I previously mentioned that the company turns over inventory less than once a year. This suggests either too much inventory or not enough sales, or both.
  • The working capital turnover for this company was an average of 2 (i.e. sales were 2x working capital cost).
  • Industry data showed an average working capital turnover ratio of 7-8.

Net Cash Flow Calculation

  • Net cash flow to equity (NCFe) measures the cash flow to shareholders in a company (equity interest holders).
  • NCFe = normalized after-tax net income + depreciation – less capital expenses – increases in working capital +/- changes in interest-bearing debt.
  • Notice the NCFe formula subtracts increases in working capital. As a company grows, working capital increases, which means less cash for shareholders. For this client, working capital growth reduced cash flow by 25%.

Enough Numbers – Back to Our Story

Our client’s business has a high risk of not selling through years of inventory before that inventory becomes obsolete, expired, lost, stolen or damaged. Therefore, the value from the income approach came in lower than the market approach and asset approach results. In fact, the cost of inventory was higher than the value of the company on a going concern basis. Even in liquidation, the full value could not be realized after the costs of liquidating.

The moral of this story is that a hard-earned business exit can be busted by excessive inventory and inefficient use of working capital. In this case, we advised our client to put their exit on hold for a few years and work strategically to reduce inventory and increase sales. Not only will the reduction in inventory increase future value, but it will also put more cash in the client’s pocket along the way.

If you’re considering a sale and wondering what financial shape your company is in, Exit Strategies’ team of M&A brokers and business appraisers can help you determine value, evaluate strategic alternatives and maximize results.

Michael Lyman CVA is a certified valuation analyst and M&A broker specializing in health care, technology and education fields. With 15 years’ experience working in and building his knowledge in these markets, Michael understands the needs of sellers, buyer and investors. His background includes university positions, two successful e-commerce startups and president/CEO of a small pediatric health care business.

See our related blog post on Managing Working Capital to Increase Business Value.

Exit Strategies Group Advises Axis on Sale to Motion Industries

BOSTON, MA (March 1, 2019) – Transaction advisory firm Exit Strategies Group served as exclusive M&A advisor to Axis of New England and New York on its successful sale to Motion Industries, Inc., a subsidiary of Genuine Parts Company (NYSE: GPC).

Axis, with facilities in Danvers Massachusetts and Rochester New York, is a leading provider of advanced industrial automation products and engineered systems, specializing in robotics, motion controls, machine vision, sensors and IIOT technologies. Axis, an authorized distributor for many premier automation brands, helps clients in many industries automate their products and processes. Value-added assembly and custom-engineered mixed-technology systems feature prominently in the company’s value proposition. Founded in 1994 by Todd Clark, Axis is the market leader in New England and New York, and one of the largest independent automation technology providers in the U.S.  Industries served by Axis include life sciences, pharmaceutical and biotech, medical, semiconductor, electronics, food and beverage, warehouse automation, packaging, machine tools, 3D printing and robotics.

Axis CEO Todd Clark said, “We’re pleased to be part of the Motion family. Their relationships, systems and financial resources will to allow us to expand our technical sales force and systems engineering and manufacturing capabilities more rapidly in the coming years. Selling to the right buyer was important to us. We are proud of the culture of excellence that we created at Axis and believe that Motion will allow us to continue that legacy and provide a great place for our employees to work and advance their careers.”

“Exit Strategies did a tremendous job guiding us through the process. Their automation industry knowledge, competitive bid process and creative deal making were essential in achieving a successful outcome”, Mr. Clark observed.

We are pleased to have advised Axis on the sale process and to have helped them achieve a great outcome. The acquisition by Motion represents a win for Axis’ shareholders, employees, customers and vendors. And Motion acquires one of the most respected and capable automation solution providers in the U.S.

We expect U.S. companies to continue to increase investments in automation and robotics to compete on the global stage and to improve productivity and profits. Trends driving industrial automation include the shortage of skilled labor and rising labor costs, increasing mass-personalization of consumer goods, growing internet connectivity, product miniaturization and the increased use of electronics in products, and the adoption of new enabling technologies such as AI. As a result, we expect the industrial automation technology mergers and acquisitions market to remain strong for a while.

About Motion Industries

Motion Industries, Inc., headquartered in Birmingham, Alabama, is an industrial distributor with annual sales of $4.9 billion. Its products include mechanical power transmission, electrical and industrial automation, hydraulics and pneumatics. It also provides systems design, fabrication and repair services. This is Motion’s third acquisition of an advanced automation solutions provider.

About Exit Strategies

Exit Strategies Group is a California-based merger and acquisition advisory and business valuation firm serving lower middle market companies in a variety of industries.  For further information about investment banking and M&A advisory services contact Al Statz, 707-781-8580.  Terms of the Axis-Motion deal will not be disclosed.

Business sale planning: Three lessons from Shark Tank

As an M&A advisor having participated in the sale of businesses ranging in price from $500 thousand to $100 million, I enjoy watching ABC’s Shark Tank. On the show, entrepreneurs pitch their businesses to a panel of five investors (“sharks”) who then decide whether or not to invest. Today I want to pass along three key takeaways from Shark Tank for every business owner who plans to sell their business some day.

1. The business valuation has to be realistic and defensible

Many times on Shark Tank, the valuation of a company is way too high. The asking price is not based on sound valuation principles and is not defensible. The Sharks opt out because the owner is unrealistic. This is an important lesson for business owners looking to sell their company. A realistic and well-supported valuation invites serious and capable buyers who seek a reasonable return on their investment, and an unrealistic valuation chases away buyers.

2. Presentation is fundamentally important

The Sharks don’t know anything about the companies prior to the pitch, and the sellers get one shot at presenting their information in the Tank. This is the same in a business sale process. Potential buyers don’t know much about the seller’s business, and if they are familiar it, they don’t know the details of the financials, operations, personnel, markets, customer base, systems, etc. Brokers know the kind of information buyers want and need, and how to position a company for sale or investment. They prepare a Confidential Information Memorandum for use in the sale process to give qualified buyers the information they need to make their best offer, and an offer that will survive due diligence.

3. Deal negotiations – competition is key

Sharks, like all buyers, hate competing for a deal. Sellers love competition because they get to choose the best terms available in the market. Having a broker in a deal creates competition among potential investors (buyers) because brokers promote the acquisition opportunity to a broad and targeted audience. Envision a shark feeding frenzy! Even if only one buyer prospect comes along and begins the negotiation process, they know that low-balling a fairly priced business will likely not fly in a competitive open market of buyers being orchestrated by an experienced broker. In the absence of a broker, it’s anyone’s guess where things will end up, but not likely as good of a deal in the absence of a competitive environment.

Keeping these three lessons from Shark Tank in mind as you go through the exit planning and business sale process will likely lead to a better outcome for you and your stakeholders.

Not familiar with Shark Tank? Shark Tank is an Emmy Award-winning structured reality television series on ABC, now in its tenth season.  Watch Shark Tank on ABC.com

For more information on buying or selling a business, Email Louis Cionci at LCionci@exitstrategiesgroup.com or call him at 707-781-8582.

How Does an M&A Auction Process Work?

This blog covers the basics of an M&A auction process for those of you considering selling your company.

As M&A advisors, we use auctions to maximize price and terms for seller clients. An auction is a type of business sale process that involves competitive bidding. They are incredibly effective when done properly, but are a ton of work and involve strategy and nuance. Auctions are most effective in a strong M&A market like the one we’re in now.

Steps in an M&A Auction Process

  1. First we determine if the business and the seller are right for an auction. An auction is appropriate when multiple buyers are present and when our client is open to selling to more than one buyer. If either of these is not true, a serial negotiated sale process is likely more appropriate. As a general rule, most middle market and lower middle market businesses are auctionable and most main street businesses are not. An auction is usually not appropriate when a client is more interested in who buys the company than in maximizing value.
  2. Preparing a Confidential Information Memorandum (CIM) is the next step for the M&A advisor (a.k.a. broker, investment banker, etc.). The CIM is a prospectus on the company that contains 90% of the information buyers need to submit offers. Offers can be in the form of an Indication of Interest (IOI) or Letter of Intent (LOI) depending on whether the auction will have one or two bid rounds.
  3. Broad auctions can involve over 100 target buyers. Limited auctions typically have anywhere from 2 to 20 targets. A broad auction is likely to involve two rounds of bids and a limited auction is more likely to have a single bid round. The decision to have one or two rounds can also also be driven by the need for speed of execution due to financial distress or market forces.
  4. The M&A firm conducts research and works with the client to develop a prioritized list of target buyers. The list may contain a combination of strategic and financial (private equity) buyers, depending on what type of transaction and continued involvement the client wants. The broker will help the seller understand these options.
  5. In a formal auction process, the CIM lays out a timeline for discovery, initial bids, site visits, final bids, etc. A formal auction is appropriate when we are certain that we will have multiple bidders or when speed is critical. In an informal process, dates are set later on.
  6. Next we contact the appropriate executive at each target company. After screening buyers for fit and obtaining non-disclosure agreements, we provide the CIM, grant data room access and address follow up questions.
  7. In a two-step auction, IOIs are generally requested next. The purpose of round one is to narrow the field of buyers to a manageable number for more detailed discovery. Only the top bidders are invited in for a site visit and meeting with company owners and top management. After these meetings, we update the data room and a issue a CIM supplement to the buyers still in the process.  Equally informing all bidders is critical to a successful auction.
  8. When we are ready, we send final bid instructions (a.k.a. bid process letter) outlining procedures and important issues that we want to see addressed in an LOI.
  9. Once final bids are in, we help the client, in conjunction with the CPA and attorney, select the best offer and negotiate a final exclusive LOI with one party. Due diligence and preparation of definitive agreements begin at that point. Unsuccessful bidders are notified.

How long does an M&A auction process take?

Typically 3 to 5 months from market launch to a signed LOI, depending on whether the auction is broad or limited, formal or informal, one or two rounds. Expect another 2 to 3 months to close the transaction depending on the buyer, scope of due diligence, financing needs, third party consents and other factors. When a compressed time frame was required, we’ve done these in as little as 3 months start to finish.

A well-run auction processes can have a substantial impact on the value and terms received by sellers. In one recent eight figure deal, we had 115 target buyers, 11 IOIs in round one and 5 LOIs in round two. The elapsed time from market launch to closing was 6 1/2 months.

Al Statz is a senior M&A advisor in Exit Strategies Group’s Sonoma County California office. For more information on M&A auctions or to discuss what type of sale process best suits your needs and your company, Email Al or call him at 707-781-8580.

Business Sale Planning – How CPA’s Can Help

Exiting right requires early planning and help from a team of advisors that is often formed by a company’s CPA.

In our work as M&A brokers, business owners often come to us emotionally ready to sell but unrealistic about the value and condition of their business. And frequently they are out of time or unwilling to re-position the business for a more lucrative sale.  Misconceptions, clouded judgement and lack of planning are all too common. Fortunately, a growing number of business owners are turning to their CPA’s for early exit planning assistance.

Potential CPA Exit Planning Services

  • 3-5 years before exit.  A top business CPA can help assemble a team of advisors that typically includes an M&A advisor, a personal financial planner, a business attorney, and perhaps an estate planning attorney. The CPA can recommend a business valuation or a sale readiness assessment by the M&A advisor and run tax calculations under likely deal terms. They can help the client select their best exit option, and if gaps exist, the team can assist with developing a comprehensive exit plan, which typically includes a business growth plan.
  • 2-3 years before exit.  Top business CPA’s can provide finance and accounting advice and services.  They can recommend that a client stop co-mingling personal expenses and adjust related-party transactions to market, help clean up the balance sheet, shore up accounting systems, staff, policies and practices, help organize all financial records, and create important management reports — all things that buyers and their CPA’s and lenders expect to be in place.
  • 1-2 years before exit.  The CPA can perform a sell-side Quality of Earnings (Q of E) analysis of historical reporting. Q of E often covers revenue recognition procedures including rebates, discounts, allowances, credits and collections, analysis of accruals and contingent liabilities, identification of non-recurring revenue and expenses, working capital level analysis, adequacy of capital expenditures to sustain performance and operational plans, changes in personnel and compensation, and stratification of revenue and gross margin by customer and product. Basically, whatever it take to understand and verify the underlying economics of a particular business.
  • During the sale process.  The CPA can provide tax / deal structuring advice, financial and tax due diligence support, and financing support for lender(s). They can also provide or recommend post-closing investment support.

What Business Owners Should Do

Early involvement in exit planning by a seasoned business CPA can help company leaders increase shareholder value, improve marketability, and ensure that owners are able to exit on their own terms and time frame.  When selecting a CPA for your business, ask about their experience and track record in helping other clients achieve more successful exits. Then choose accordingly.

Loui Cionci, ABV, CPA, is a senior M&A advisor and business appraiser with Exit Strategies Group.  For more information on exit planning services, help finding an experienced business CPA, or selling a California business, contact Louis at LCionci@exitstrategiesgroup.com or call 707-781-8582.

When It’s Time to Sell, Put Your Strengths First

Putting your strengths first will help you sell your business. While this may seem obvious, a surprising number of business owners will either improperly index the strengths of their business or fail to emphasize those strengths adequately. In this article, we will examine five key business strengths that you should focus on when it comes time to sell.

Understand Your Buyer

You know your business, but you don’t necessarily know what buyer is best for it in the long run. If you’ve never sold a business before (and most business owners haven’t), then you may not know how to best position and present your business for sale.

A business broker is immensely valuable in this regard. These professionals are very good at determining which prospective buyers are serious and which ones are not. Additionally, a business broker will use their own databases of prospective and vetted buyers and try to match your business up with the prospective buyers that are most likely to be a good fit. When dealing with a buyer, a seasoned business broker will put emphasis on your strengths whenever possible.

Be Sure to Maintain Normal Operations

Selling a business can be very demanding and underscores, once again, the value of working with a business broker. A business broker will focus on selling your business so that you have more time to focus on the day-to-day of running your business.

The last thing you want is to waste your time on buyers who are not serious. Remember, if your business suffers as a result of the time you spend away from your business in the sale process, then the value of your business to prospective buyers could suffer.

Determining the Best Price

If you incorrectly price your business, you could dramatically reduce the interest. Business brokers are experts at pricing businesses and can help you determine the best possible price. Many business owners have unrealistic valuations and others may even undervalue their businesses or they fail to incorporate all aspects of their business. Working with a professional business broker can help you quickly achieve the best price. The best price possible will work to maximize the strengths of your business.

Getting Your Business Ready for Sale

There is a lot that goes into getting your business ready to sell. The simple fact is that getting your business ready to sell isn’t a one-dimensional process, but instead involves every aspect of your business. Getting your business ready to sell isn’t about making it look presentable and putting a “new coat of paint” on things, although this is a factor.

Instead it is necessary to have every aspect of your business in order. From paperwork such as tax returns, contracts and forms to a business plan and more, it is important to consider every aspect of your business. You should consider what you would want to see if you were the one looking to buy the business. Be sure to do everything possible to build up your strengths.

Confidentiality

If word gets out that your business is up for sale, there could be a range of problems. Employees, including key management, could begin looking for other jobs and suppliers and key buyers could begin to look elsewhere. In short, a breach of confidentiality could lead to chaos.

Getting your business ready for sale means factoring in the strengths and weakness of your business then fixing weaknesses whenever possible and building upon your strengths. Working with a business broker can help you address every point covered in this article and more.

Copyright: Business Brokerage Press, Inc.

Contact an Exit Strategies M&A advisor for further information or help selling and preparing to sell your business.

Does Your M&A Advisor have a Stamp of Approval?

When choosing a business broker, M&A advisor, investment banker or transaction intermediary to sell your company it’s wise to consider their professional designations.  Having one or more designations from the right professional organization provides validation that the individual is committed to his or her craft and has sufficient experience to manage a complex sale transaction.

For California brokers that sell main street businesses and businesses at the very low end of the middle-market (say up to $10 million revenue) there are two primary designations:

  • CBB (Certified Business Broker) is offered by the California Association of Business Brokers.  It requires that Brokers complete 16 hours of course work and have completed at least 5 transactions within the last four years.  You can find an advisor with the CBB designation here.
  • CBI (Certified Business Intermediary) is offered by the International Business Brokers Association.  The IBBA mainly serves the U.S. and Canada.  To obtain the CBI requires 68 education hours and at least 3 completed transactions.  Find advisors with the CBI designation here.

For advisors that regularly sell lower middle market companies there are two main mergers and acquisition (M&A) designations:

  • The Alliance of Merger and Acquisition Advisors is an international organization that offers the Certified Merger and Acquisition Advisor (CM&AA). To obtain this designation requires attending a 5 day course.  Find CM&AA’s here.
  • Lastly there is the Merger & Acquisition Master Intermediary (M&AMI) designation offered by the M&A Source, also an international organization and the largest association of middle-market M&A advisors in the U.S. with over 300 intermediary members. The M&A Source is a sister organization to the IBBA.  To obtain the M&AMI credential, advisors need at least 3 years of M&A experience and 40 credit hours of professional education, and must have completed at least 3 M&A transactions.  Find M&AMI’s here.

Some advisors also maintain business valuation accreditations such as the Certified Valuation Analyst (CVA), Accredited Senior Appraiser (ASA) and ABV (Accredited in Business Valuation).  These designations demonstrate a high level of proficiency in this critical part of the sale process.

All of the above designations require passing a competency test and committing to a Code of Ethics. Having a competent and ethical advisor is critical to successfully selling your business.  Having at least one of these designations should be one of your criteria when selecting an advisor.

I should point out that business brokerage in California is licensed by the Department of Real Estate.  However, having a real estate license says nothing about an advisor’s ability to handle a business transaction.

Adam Wiskind is an M&A advisor at Exit Strategies Group, Inc and is a Certified Business Intermediary.  If you are interested in better understanding this subject or in selling your business, contact Adam at awiskind@exitstrategiesgroup.com.

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

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.