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Exit Planning Insights
Why is That Information Needed?!?
September 28, 2016 / in Business Valuation, Exit Planning / by Exit Strategies
When we begin a business valuation project the first thing we do is provide an extensive document request list. A week or two into the analysis, we send a customized questionnaire to help us understand the business in appropriate depth. Our questions are designed to understand the facts and circumstances of your business well enough to develop a reliable opinion of value. To the extent we can, we try to streamline and tailor our requests so as not to …
The Zen Art of Cooperative Negotiation
September 21, 2016 / in Exit Planning / by Don Ross
The common image of an M&A negotiation between a buyer and a seller is that of a rugby scrum: two masses of interlocked muscled bodies scheming and bulldozing their collective strengths in opposing directions in an effort to secure the prize without compromise and ultimately yield one winner and one loser. In contrast, what I call the “Zen Art of Cooperative Negotiation” is a playing field where the players (the principals and their attorney, M&A broker, and …
Using Retention Bonuses to Enable an M&A Transaction
September 7, 2016 / in Exit Planning, Sell a Business / by Al Statz
Assurance of business continuity is essential to most business acquisitions, and for small to mid-size companies, this often translates to retaining key employees. This blog looks at using a simple tool, called a stay bonus or retention bonus, to keep your key people on board through a sale or merger of your company. Bonuses are commonly used in business to reward employees for performance, such as hitting a sales target, implementing a new system, or boosting manufacturing productivity. …
Can You Sell a Contracting Business to a Buyer Without a License?
August 31, 2016 / in Exit Planning, Sell a Business / by Adam Wiskind
Solar Installers, General Contractors, Electricians and Plumbers in California have something in common when it comes to selling their businesses. All of these businesses require a Contractors State Licensing Board (CSLB) license to operate. This can be an additional burden to the process of transitioning a business to a new owner. What if a potential buyer doesn’t have the necessary licenses? The easiest solution to this issue is to target investors that already have the Licenses …
Add-On Acquisitions are on the Rise
August 3, 2016 / in Exit Planning, Sell a Business / by Jim Leonhard
When developing an exit strategy for your company, we will consider whether Private Equity Groups (PEG’s) would want to acquire it as either a new platform company or as an add-on (also “bolt-on”) to one of their existing portfolio companies. Most small companies are too small or don’t have strong enough management teams to be attractive platform opportunities, however many are strong add-on candidates. According to PitchBook, which tracks the PEG M&A activity in the middle market, the number of add-ons as a percentage of …
A Tax Saving Strategy for C-Corp Sellers
May 31, 2016 / in Exit Planning, Sell a Business / by Jim Leonhard
When selling a C-Corporation, most sellers will want to sell stock while most buyers will want to buy the assets. Selling the stock minimizes the built-in gains (BIG) for sellers that carries a hefty double taxation first at the corporate level and second individually. Buyers wish to buy assets for a number of reasons including loss of future depreciable expenses and potential increased liability. One method to possibly reduce the impact of BIG for some …
Risk and its Effect on Enterprise Value
March 31, 2016 / in Business Valuation, Exit Planning / by Exit Strategies
Investors have choices in how to allocate their investment dollars across the risk and return spectrum. Whether it be bonds, public company equity, or private company equity, an astute investor will evaluate the risk of return and expect to be compensated according to this risk. Business valuation, whether for public or private companies, has three key variables: growth, profit margins, and risk. Growth and profit margins are more easily understood by most business owners and …
Business Valuation and M&A Services for Estates and Trusts
March 9, 2016 / in Business Valuation, Exit Planning / by Al Statz
This article takes a look at the various situations in which trusts and estates (those that hold private business interests) need business valuation or M&A brokerage services. Business Valuation Services Our firm, Exit Strategies Group, regularly provides fair market value appraisals (a.k.a. valuations) of closely-held corporations, FLPs and LLCs for estate planning, gifting, estate tax, charitable donations, buy-sell transactions and succession planning. We value fractional interests in operating companies and asset holding companies using appropriate …
Welcome News for Business Owners: Five-Year Built-in Gains Tax Recognition Period Permanently Extended
March 2, 2016 / in Exit Planning, Sell a Business / by Al Statz
The Protecting Americans from Tax Hikes Act (PATH), enacted in December, makes selling a business easier for some. Since most sales of SME’s will be asset (versus stock) sales, double tax for C-corp owners and built-in gain tax (currently 35 percent federal) for owners of recently converted S-corps are very real impediments to selling a business. C-corporation owners face a “double tax”, where gains on a sale of assets are taxed at the corporate level …
Think Like a Buyer
February 24, 2016 / in Exit Planning, Sell a Business / by Roy Martinez
Entrepreneurs spend their entire career thinking like an owner. They don’t need to pay any attention to the value of their business. They may have a vague notion of its value based on anecdotal industry revenue or profit multiples that they heard bandied about at an industry conference they went to years ago in Orlando. But, at the end of the day, during the operating years, what is important to an entrepreneur is the bottom …
Exit Strategies Group, Inc. is a leading provider of business sales and acquisitions, business valuations, and exit planning services for family owned and closely-held companies since 2002.
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