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How important is the management team when selling a business?
January 20, 2025 / in Exit Planning, Sell a Business / by Al Statz
Selling a lower middle-market business involves various factors that can impact the price buyers are willing to pay, the cash amount they offer, and the likelihood of a successful sale. One of the most crucial elements is the strength and stability of the management team and key contributors within the organization. Continuity and Stability A strong management team is essential for ensuring continuity and stability, which are highly attractive to buyers. Investors are more …
A Definitive Approach to Life Insurance and Share Redemption in the Valuation of Family-Owned Businesses
January 20, 2025 / in Business Valuation, News / by Pete Wilson
In June 2024, the US Supreme Court, in a unanimous decision, ruled that proceeds from a corporate (or key person) life insurance should be added to the value of a business. Simple, right? So why is the decision in Connelly v. United States sending shockwaves through the valuation and estate planning exercises that go into an estate valuation? Let’s dive into the case and talk through its impact. Facts: The case involved two brothers, Michael …
Give Yourself the Gift of a Valuation This Holiday Season?
December 14, 2024 / in Business Strategy, Business Valuation / by Al Statz
As the year winds down, there’s a gift every business owner should consider—a current valuation of your business. Knowing the true value of your business is a gift that keeps on giving. Here’s why. Estate Planning One of the key benefits of a valuation is that it sets the groundwork for smart estate planning. If the unforeseen happens, knowing your business’s worth simplifies the inheritance process for your heirs and ensures they receive what you …
M&A Glossary: No-Shop Clause
December 2, 2024 / in Exit Planning, Sell a Business / by Al Statz
Many M&A negotiations include a no-shop clause. This is a period of exclusivity when the seller cannot solicit offers from other parties. The due diligence process is expensive for buyers, so sellers sign these agreements as an act of good faith. Typically, a no-shop clause has a near-term expiration date and is only in effect for a couple of months (45—90 days). Buyers with a lot of leverage, and those working with inexperienced sellers trying …
Scaling for Sale: Growth Strategies that Double as Exit Plans
December 2, 2024 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
As a business owner, you’re likely consumed with the daily challenges of building and growing your business. The question of selling might seem like a distant concern—something to worry about years down the road. But the reality is that planning your exit and growing your business are two sides of the same coin. We’ve been conditioned to think about entrepreneurship in distinct phases: First, you build; then, you grow; finally, you sell or pass it …
Goodwill hunting: How to build and finance this intangible asset
December 2, 2024 / in Business Strategy, Business Valuation, Sell a Business / by Al Statz
When it comes to selling a business, the term “goodwill” often arises. But what exactly is goodwill, and how does it impact the mergers and acquisitions (M&A) process? Goodwill is the value of a business that exceeds its tangible assets. It arises when a company is sold for more than the worth of its physical assets such as equipment, vehicles and inventory. Most successful companies have some level of goodwill, which is tied to cash …
From the M&A Glossary: Add-backs
November 20, 2024 / in Business Valuation, Exit Planning / by Al Statz
Add-backs are adjustments made to a company’s financial statements to more accurately reflect its true earning potential and “normalize” its financial performance. These adjustments are typically made to the target company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) to create a metric known as “Adjusted” or “Normalized” EBITDA. Add-backs to EBITDA are expenses or income items that are considered definitional, discretionary, non-recurring, one-time, or not essential to the company’s core operations. Common examples of …
Exit Strategies Group Advises Afineol in Sale to ITS
November 12, 2024 / in News, Sell a Business / by Roy Martinez
Exit Strategies Group recently served as financial advisor to the owners of Afineol IT Consulting, a Sacramento area-based managed IT service provider (MSP), on their sale to Intelligent Technical Solutions (ITS), a Tower Arch Capital portfolio company. The acquisition strengthens ITS’ geographic footprint and technical leadership position in the Sacramento region. Terms of the transaction were not disclosed. Afineol’s founder, Michael Strong, said, “We were looking for a strategic partner to build on Afineol’s decades …
What Does ChatGPT Think?
October 14, 2024 / in Business Strategy, Business Valuation / by Joe Orlando
This October, I will celebrate my 12th year as an Accredited Senior Appraiser (ASA) in Business Valuation with the American Society of Appraisers (also ASA). ASA members meet every year for an International Conference to discuss current topics and to share knowledge and best practices. I attended the most recent Conference in Portland, OR. A presentation entitled “The AI Revolution – Why it Matters to Appraisers & Application Strategies” by Greg Endicott of Strategic Value Group, …
How to Purchase the Company You Work For
October 13, 2024 / in Acquire a Business, Business Valuation / by Exit Strategies
For many C-Suite employees, owning the company they work for would be a dream come true. If you’ve been leading a successful private business or are a seasoned member of its executive team, acquiring that business may be a realistic goal. Secure Funding Typically, the biggest hurdle in buying a business is obtaining the cash/equity and securing the debt financing necessary to close the deal. The good news is that a healthy business is an …
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