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Exit Planning Insights
Phase I Environmental Assessment in M&A Transactions
August 6, 2019 / in Exit Planning, Sell a Business / by Al Statz
A Phase I environmental site assessment is commonly required by buyers and lenders in merger and acquisition transactions that include commercial real estate. One may even be called for when the target company (seller) uses or stores hazardous materials at a leased facility. Sellers are generally rewarded for conducting a Phase I assessment before taking a deal to the marketplace. Understanding environmental risk allows sellers to argue for a higher price and increases the likelihood …
Roundup of Recent Sale Transactions
July 19, 2019 / in Exit Planning, News, Sell a Business / by Al Statz
Sitting down and writing quality articles on business valuation, exit planning, mergers and acquisition strategy has taken a back seat this year, thanks to a strong M&A market. In this post I will recap many of the transactions for which Exit Strategies (ESGI) provided sell-side advisory services during the first half of 2019. I haven’t included deals that we were asked not to announce. Nor have I included the internal buy-sell transactions, management buyouts and …
Steps in a Management Buyout
May 2, 2019 / in Exit Planning, Sell a Business / by Al Statz
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 …
Financial exit planning, Is your business ready?
March 13, 2019 / in Business Valuation, Exit Planning, Sell a Business / by Exit Strategies
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 …
Manage Working Capital to Increase Business Value
February 8, 2019 / in Business Valuation, Exit Planning / by Jim Leonhard
As you likely know, working capital equals current assets minus current liabilities. Companies that have a high level of cash tied up in current assets (primarily cash, accounts receivable, and inventory) without similar levels of current liabilities are not as attractive as those who tightly manage their working capital. Buyers are often leery of businesses that require high working capital to sales ratios because as sales grow the company must continually invest more cash in …
Business sale planning: Three lessons from Shark Tank
February 1, 2019 / in Exit Planning, Sell a Business / by Louis Cionci
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 …
How to Build a Sellable Construction Business
December 19, 2018 / in Exit Planning / by Adam Wiskind
With the San Francisco Bay Area building industry booming I am regularly approached by the owners of construction companies with requests to help them to sell their companies. As interest rates are low (but creeping up) and investors are still in the market for solid businesses, some construction company owners with strong financial histories and future growth prospects are looking to cash out. However, even in the best of times construction companies are notoriously difficult …
Inside the Mind of a CEO
December 8, 2018 / in Business Strategy, Exit Planning / by Al Statz
Of course it’s in a CEO’s DNA to think big, challenge the status quo, set stretch goals and inspire teams to perform to their full potential. So, why did this recent CNN Business article on How power changes the CEO brain catch my attention? Because my wife pointed it out to me Seriously, according to this article, neuroscience researchers have found that those who feel powerful become: more goal-oriented and think more abstractly more optimistic about …
Business Sale Planning – How CPA’s Can Help
November 14, 2018 / in Exit Planning, Sell a Business / by Louis Cionci
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 …
Business Valuations Can Create Value, Not Just Report It!
October 23, 2018 / in Business Valuation, Exit Planning / by Jim Leonhard
I recently completed a valuation engagement for two shareholders of a California manufacturing company who were going through a buy-sell transaction. After the sale, the buying shareholder called to tell me how my valuation report gave him the confidence he needed to complete the purchase, take on debt, and revamp the company’s business plan. Besides making my day, his call made me think about why almost every business owner can benefit from a valuation. When …