Will appear on Seller pages – RECENT SELLER ARTICLES

20 Exit Planning Questions that Every Business Owner Should Ask Themselves

July 17, 2023/in Exit Planning, Sell a Business /by Al Statz

Eventually every business owner will retire and hand over the keys, and in my experience, the farther ahead owners plan for their exit the happier they’ll be with their exit.

While there are many things to consider when planning an exit, particularly for owner-operators of businesses, here is a list of twenty questions that business owners should be able to answer with clarity and confidence.

Twenty Questions that Every Business Owner Should Ask

When do I want to retire? And what will I do when I retire?
What must my company be worth when I sell, to fund my desired retirement lifestyle or next business venture?
What is my company worth today?
Is there a gap between what my business is worth and what I need? If so, what can I do to close that gap?
How marketable is my business?
Do I want a role in the company post sale? What role and for how long?
What should I be doing to demonstrate to buyers that my company will continue to prosper when I leave?
What are the potential benefits and risks of retaining a minority equity stake in the company?
What will my taxes be on a sale? And do I have the best entity structure to maximize my after-tax proceeds? If I don’t, what can be changed and when?
Do I understand the pros and cons of selling to family, managers, a private equity group, a consolidator, a competitor?
What should I do if I want to sell to my key managers? And is my company an ESOP candidate?
What should I do if I want to sell to my children?
Which of our key employees should we have non-compete agreements or retention bonus agreements with?
What language should we have in our contracts with customers and suppliers to facilitate a change of ownership?
What is considered high customer concentration in my industry and should I be taking steps now to diversify?
What is considered good financial performance in my industry and how does my company compare?
Should our financials be Audited or Reviewed? For how many years before the sale?
Should we have a Quality of Earnings analysis done before going to market?
In a sale, how does it matter if our liability insurance policy is claims made vs occurrence? What is tail insurance?
Beyond money, what are my priorities and preferences in a sale?

For those seeking professional assistance, engaging an M&A advisory firm is a great way to set your business up for post-sale success. At Exit Strategies Group, we can estimate the probable selling price or fair market value of your business. We can evaluate your business for factors that are boosting or detracting from its value and marketability, and we can work with you to improve these factors over time. And when you are ready to sell, we can maximize your value and ensure a smooth and successful transition through our structured M&A sale process.

Al Statz is the founder and President of Exit Strategies Group, Inc. For further information on this subject or to discuss an M&A, exit planning or business valuation question or need, Email Al or call him at 707-781-8580.

Questions to ask when hiring an M&A advisor

June 29, 2023/in Exit Planning, Sell a Business /by Exit Strategies

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

Why do you want to represent my business?

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

What’s your fee structure?

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

What is your experience in selling businesses like mine?

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

Who have you worked with in the past?

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

How many people will work on my deal?

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

How many other deals will you be representing?

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

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

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

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

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

What’s your average over benchmark?

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

How will you ensure the confidentiality of my business information?

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

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

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

Market Pulse – Seller Market Sentiment

June 29, 2023/in Exit Planning, Sell a Business /by Exit Strategies

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

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

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

How ASC 842 (the lease reporting standard) Can Impact the Sale of Your Business

June 14, 2023/in Sell a Business /by Adam Wiskind

What is ASC 842?

The Accounting Standards Update (ASU) 2016-02, commonly known as ASC 842, requires that all companies large and small that issue GAAP-based financials account for leases on their financial statements. It was issued by the Financial Accounting Standards Board (FASB) in February 2016 and was effective January 1, 2022. ASC 842 significantly changes how companies account for leases on their financial statements and may impact the sale of your small business.

ASC 842 applies to both private and public companies that enter into lease agreements. The standard applies to all leases, including operating leases and finance leases, with certain exceptions such as short-term leases (leases with a term of 12 months or less) and leases of low-value assets (such as office furniture and equipment).

For companies with complex lease agreements, including operating leases for real estate, equipment, and other assets. The implementation of ASC 842 affects how these leases are reported on financial statements and can have a significant impact on a company’s financial metrics.

Impact on Due Diligence

One of the primary impacts of ASC 842 within a sale transaction is the increased complexity of due diligence. Under ASC 842, companies must report all leases on their balance sheet, including lease liabilities and right-of-use assets. This requires a detailed analysis of all lease agreements, including identification of lease terms and conditions, calculation of lease liabilities and right-of-use assets, and determination of lease classification. This diligence will likely be a focus of a buyer prospect and their advisors.

The lease assets and lease liabilities will not always be equal. Under ASC 842, the initial recognition of the lease liability is equal to the present value of the lease payments over the lease term, discounted using the interest rate implicit in the lease or the lessee’s incremental borrowing rate. The lease asset under ASC 842, is the conveyed right to control the use of the identified property. It is initially measured as the sum of the lease liability, any lease payments made at or before the commencement date, and any initial direct costs incurred by the lessee, such as leasehold improvements. Therefore, if the lessee makes any lease payments before the commencement date or incurs any initial direct costs, the lease asset will be greater than the lease liability.

Additionally, the lease liability may change over time due to various factors, such as changes in lease payments, modifications to the lease agreement, or reassessments of the lease term or discount rate. This could cause the lease asset and lease liability to differ at any given point in time.

This increased complexity can make due diligence more time-consuming and costly, especially for companies with a large number of lease agreements. As a result, buyers and sellers may need to engage additional accounting resources or expertise to ensure compliance with ASC 842 and accurately report lease obligations.

Impact on Valuation

Another impact of ASC 842 on a business sale transaction is the potential effect on valuation. ASC 842 brings previously off-balance sheet operating leases onto a company’s balance sheet. By reporting all leases on the balance sheet, ASC 842 can impact a company’s financial metrics, such as debt-to-equity ratio and in some cases adjusted earnings metrics, like EBITDA.

Adjusted earnings could change based on the classification of a lease as an operating or finance lease. Under an operating lease the company typically reports the entire expense as lease expense under SG&A. Expense under a finance or capital lease consists of amortization and interest. While reported income is relatively unaffected by this difference in treatment, the expense classification impacts adjusted earnings for valuation purposes because amortization and interest expense are typically “add-backs” and lease expense is not. An example of how the classification of a lease can affect EBITDA can be found in this article: https://blog.netgain.tech/exploring-operating-vs.-finance-lease-journal-entries-and-amortization-calculations.

A lease classified as a financing rather than an operating lease will likely affect a company’s EBITDA, resulting in a change of value. However, the difference in value would be offset to some extent in a business sale transaction where the liability incurred under the financing lease is considered a “debt-like item” and is paid off by the seller.

Ultimately, analysis will need to be completed on a case-by-case basis to understand the magnitude and direction of impact from ASC 842 on a company’s business value.

Impact on Deal Structure

ASC 842 may also impact the structure of your deal. For example, buyers may choose to structure the transaction as an asset purchase rather than a stock purchase to avoid assuming the seller’s lease liabilities. Alternatively, buyers may negotiate adjustments to the purchase price based on the impact of ASC 842 on the target company’s financial statements.

Conclusion

In conclusion, ASC 842 may have significant implications for the sale of your small business. The increased complexity of due diligence, potential effect on valuation, and impact on deal structure require careful consideration by both buyers and sellers. Companies with complex finance and capital leases should work with experienced accounting professionals to ensure compliance with ASC 842 and accurately report lease obligations. By doing so, they can help facilitate successful sale transactions and minimize the risk of unexpected financial impacts.

Adam Wiskind is not an accountant, but he can certainly refer you to a good one. If you’d like to have a confidential, no commitment discussion on your exit plans or the sale of your business, please contact Adam Wiskind, Senior M&A Advisor at (707) 781-8744 or awiskind@exitstrategiesgroup.com.

Representation and Warranty Insurance in M&A

June 6, 2023/in Acquire a Business, Exit Planning, Sell a Business /by Exit Strategies

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

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

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

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

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

Pros and cons of reps and warranty insurance

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

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

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

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

What does it cost and who pays?

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

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

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

Considerations and alternatives

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

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

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

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

May 30, 2023/in Exit Planning, Sell a Business /by Exit Strategies

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

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

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

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

Main Street failures due to financials and financing

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

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

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

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

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

Unrealistic expectations plague lower middle market

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

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

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

Economic uncertainty played a role

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

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

Plan ahead to avoid pitfalls

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

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

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

A Key Performance Indicator to Improve the Results of your Testing Lab Exit

May 22, 2023/in Business Strategy, Sell a Business /by Adam Wiskind

When preparing to sell your Testing Laboratory using Key Performance Indicators (KPIs) can help to focus your efforts and resources in the right areas. While numerous KPIs exist, one metric that should be on the radar of all business owners in the testing laboratory industry is the Sales/Employee Ratio. Labor costs make up the largest single expense for Laboratory Testing businesses, accounting for an estimated 38.4% of industry revenue in 2022 (IBIS WORLD July 2022). For lab owners, monitoring labor costs is critical to improve financial performance and improve business valuations. This KPI is simple to calculate, easy to understand, and offers valuable insights into a company’s efficiency, productivity, and overall financial health.

Defining the Sales/Employee Ratio:

The Sales/Employee Ratio, also known as Sales per Full-Time Equivalent (FTE), measures the sales generated by a company divided by the total number of full-time employees. It provides a clear picture of how efficiently a business is utilizing its workforce to generate sales. The formula for calculating this ratio is straightforward:

Sales/Employee Ratio = Total Sales Revenue / Number of Full-Time Employees

Why Sales/Employee Ratio Matters:

Efficiency and Productivity: A high Sales/Employee Ratio indicates that a company efficiently utilizes its human resources to generate revenue. It signifies that employees are productive, effective, and contributing significantly to the organization’s bottom line. A low ratio, on the other hand, could suggest inefficiency, underutilization of staff, or a need to optimize processes.
Financial Performance: The Sales/Employee Ratio directly correlates with a company’s financial performance. By analyzing this KPI over time, businesses can identify trends, measure growth, and evaluate their competitiveness within the industry. A higher ratio indicates strong financial health, profitability, and the ability to generate revenue with fewer resources.
Resource Allocation: The Sales/Employee Ratio can aid in resource allocation decisions. By benchmarking against industry standards and peers, businesses can determine whether they need to adjust their workforce size, invest in employee training, or streamline processes. This ratio can guide decision-making and help optimize human resource utilization.
Scalability and Growth Potential: As businesses expand, the Sales/Employee Ratio becomes even more critical. It helps identify if the current workforce is capable of supporting growth or if additional employees are required to maintain efficiency. A consistent or improving ratio amidst growth indicates that a company has the potential for scalable operations without compromising productivity.

How to improve your company’s Sales/Employee Ratio:

Achieving and maintaining a favorable Sales/Employee Ratio requires a strategic approach. Here are some key considerations for improving this KPI:

Training and Skill Development: Invest in training programs to enhance the skills and capabilities of your team. By improving their effectiveness, they can generate higher sales, and be more productive thereby increasing the Sales/Employee Ratio.
Process Optimization: Continuously analyze and refine business processes to eliminate inefficiencies and bottlenecks. Streamline operations can lead to improved productivity and higher sales output per employee.
Technology Adoption: Leverage technology solutions such as customer relationship management (CRM) systems, lab automation tools, and analytics platforms. These tools enable better customer management, data-driven decision-making, and increased production efficiency.
Performance Incentives: Implement performance-based incentive programs to motivate employees and drive them towards achieving higher production targets. Aligning incentives with the Sales/Employee Ratio can create a culture of productivity and accountability.

Figure 1:US Testing Laboratories Sales/Employee VerticalIQ, May 2023, US Census

It is possible for the Sales/Employee Ratio to be too high. This could mean that the business is working their employees too hard or not investing sufficiently in business operations. Figure 1 above shows the average Sales/Employee for Testing Labs in the US based on the number of employees. This can serve as a benchmark for your company.

Conclusion:

The Sales/Employee Ratio is a powerful and simple-to-understand KPI for the owners of Testing Laboratories that want to improve their company’s financial performance in preparation for an exit. By monitoring and optimizing this ratio, business owners can make informed decisions about resource allocation, training, and growth strategies. It serves as a compass for sustainable success, helping organizations unlock the full potential of their workforce while driving revenue growth.

Exit Strategies Group helps the owners of Testing Laboratories to navigate their best exits. If you’d like to have a confidential, no commitment discussion on your exit plans or have related questions, please contact Adam Wiskind, Senior M&A Advisor at (707) 781-8744 or awiskind@exitstrategiesgroup.com.

Tags: KPI, testing laboratories, testing lab, exit, M&A, labor costs, sales, key performance indicator

Exit Strategies Group Advises Shepherd Controls in Sale

May 14, 2023/in News, Sell a Business /by Al Statz

May 2023 – Exit Strategies Group is pleased to announce that it represented Shepherd Controls & Associates, a leading regional supplier of industrial automation products, in a recent sale to Flow Control Group, a portfolio company of KKR.

Shepherd Controls & Associates, founded in 1985 by Ron Shepherd and Bill Benko, is headquartered in Allen, Texas. The Company has branch offices in El Paso and Houston and serves the Gulf states and Mexico. It offers a broad portfolio of innovative industrial automation products including robotics, pneumatics, motion controls, sensors, safety, vision, machine framing and material handling technologies. Value-added services include technical support, vision system and robotic proof of concept, custom mixed technology systems design-build, panel building, kitting and sub-assembly production.

“Exit Strategies Group took the time to thoroughly understand our business and positioned us to achieve a very successful transaction,” stated Ron Shepherd, cofounder of Shepherd Controls. “They brought several candidates to the table who saw the value of our company, and their guidance throughout the process was spot on,” added cofounder Bill Benko.

Shepherd was advised by an Exit Strategies Group team led by founder and M&A advisor Al Statz. “We are delighted to have partnered with Ron and Bill and their leadership team. We were seeking an acquirer who recognized the value that the Shepherd team had created, would nourish Shepherd’s culture and provide opportunities for its employees, had a track record of successful acquisitions, and had a clear strategy for expanding the business further. FCG checked all of those boxes,” said Al.

This transaction demonstrates Exit Strategies Group’s expertise in lower middle market transactions and continued commitment to providing strategic valuation and M&A advisory services to North American industrial automation technology companies. Our expertise spans all areas of automation, including custom machine building, product manufacturing and distribution, control system integration and repair services.

If you have questions or want information about Exit Strategies Group’s M&A advisory or business valuation services, please contact Al Statz at 707-781-8580 or alstatz@exitstrategiesgroup.com. Deal terms will not be disclosed.

Exit Strategies Advises IRR Los Angeles & Orange County on their Sale to CBRE

April 17, 2023/in News, Sell a Business /by Roy Martinez

Exit Strategies, a California based mergers and acquisitions (M&A) brokerage and business valuation firm, recently advised the owners of Integra Realty Resources of Los Angeles and Orange County on the sale of their Southern California commercial property and right-of-way appraisal business to CBRE Group, Inc.

IRR Los Angeles co-owner, John Ellis, said, “Roy Martinez of Exit Strategies helped us understand the value of our business and introduced us to resources needed to complete the transaction. We could not have done it without him.”

IRR is a network of commercial real estate valuation, counseling and advisory firms in the United States.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm.

Terms of the acquisition were not disclosed.

This sale is an 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. If you are looking to sell, merge or acquire, we would be interested in hearing from you. Roy Martinez can be reached at 707-781-8583 or jroymartinez@exitstrategiesgroup.com.

Cornerstone International Alliance sets new record: $1.3 billion in business transactions

April 14, 2023/in News, Sell a Business /by Al Statz

Exit Strategies Group is a partner in the Cornerstone International Alliance

After a record setting year in 2021, Cornerstone International Alliance members, a consortium of industry-leading lower middle market mergers and acquisitions (M&A) and investment banking firms, shattered that record in 2022, completing 169 deals with an enterprise value of more than $1.3 billion.

“2021 was a milestone year with $1.1 billion in deals closed for the first time. So to have another record year in 2022 is evidence of the strength of the Alliance and its members,” said Nick Olsen, Managing Director of Cornerstone International Alliance. “Notably, this past year was unique with so much uncertainty in the global market. The way our group made it a successful one, speaks volumes to their experience, focus and drive to do what is best for their clients. Even more encouraging is the outlook for 2023 is also very promising.”

Echoing Olsen’s sentiment is Craig Castelli, found and CEO of Caber Hill Advisors, an Alliance member headquartered in Chicago. “Congratulations to Cornerstone International Alliance and its member firms for another fantastic year,” said Castelli. “It’s a testament to the disciplined focus on only accepting best-in-class firms into the network. It’s an honor to be considered worthy of membership. I’d like to personally thank my team at Caber Hill and all of our clients and partners as we celebrate a great 2022 and a strong start this year. We couldn’t have done any of this without you and the Alliance.”

Alliance members typically work with business owners whose companies have $500,000 to $15 million in EBITDA or $5 million to $150 million in revenue. The members’ primary services provided include business sales, acquisitions, and valuations. Since its founding in 2018, the Alliance has selectively grown its membership and now has 27 members on four continents, creating a global network that opens doors to transactions being completed worldwide along with access to industry experts and an array of tools to best service their clients.

The organization’s most recent international member is Netherlands-based, Florijnz Corporate Finance.

“At the same time we’re celebrating our 10-year anniversary in 2022, we’re also celebrating a significant growth in business, leading us to hire additional staff and move to a new office location,” explained Hans Minnaar, Florijnz founder and director. “Last year we served 20 Dutch businesses in national and cross-border transactions and we’re on track to beat that this year. A part of that success is derived from our membership with the Alliance, the global connections it creates and the ability to share experiences and expertise that can’t be found anywhere else.”

The Alliance’s diverse membership creates a global footprint that is unmatched in the lower middle market. That, combined with members’ experience, resources and collaborative efforts are the driving force behind this continued level of success. To date, members have completed more than 3,750 business transactions.

CIA members are high performers with high integrity. Together we are working to set the standard for M&A excellence in the lower middle market.

Al Statz, CEO of Exit Strategies Group, Inc., alstatz@exitstrategiesgroup.com.