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Exit Planning Insights
M&A Advisor Tip: F-reorganization
July 22, 2022 / in Exit Planning, Sell a Business / by Al Statz
Deal structure can have a big impact on your after-tax proceeds. The right structure can help you retain more of the sale price. For example, an F-reorg is a tax efficient method that allows you (the seller) to rollover equity into the buyer’s new entity without paying taxes on the rollover amount. Without using an F-reorg, you might sell 100% of the company and get taxed on that full amount (ouch!) before reinvesting some of …
Market Pulse – Q4 2021
June 28, 2022 / in Exit Planning, Sell a Business / by Al Statz
Financing Deals in 2021 Presented by IBBA & M&A Source Deal financing has not changed significantly since before the pandemic. On average, sellers continue to receive 80% or more of total consideration as cash at close. (Cash at close includes senior debt and buyer equity.) Seller financing accounts for 15% or less of most deals. For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.com. Exit Strategies …
Is it the right time to sell your business?
May 6, 2022 / in Exit Planning, Sell a Business / by Adam Wiskind
Business owners often ask, “When is the right time to sell my business?” The answer is some version of “A good time to sell is when there is a seller’s market, and the owner and the business are prepared”. Simple enough, but there is a lot to unpack in this response. Don’t Try to Time the Market A seller’s market exists when, because of economic conditions, demand for viable businesses is higher than the supply …
Market Pulse – Quarter 4, 2021
May 6, 2022 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
Seller’s Market Presented by IBBA & M&A Source A seller’s market occurs when demand exceeds supply. There are more interested, active buyers than there are quality deals on the market. In a seller’s market, buyer’s compete in order to win deals. This typically translates to increased values and more favorable deal terms for the seller. In Q4 2021, seller market sentiment rebounded, setting a new peak in all but the $5M-$50M sector. “Business confidence, and …
M&A Advisor Tip: And the economist says…”Sell!”
April 8, 2022 / in Exit Planning, Sell a Business / by Al Statz
Economist Steven Chiavarone presented at CIA partner’s annual State of M&A conference in February. As he pointed out, there have been 11 rate hike cycles since 1970 of three hikes or more. Of those, nine were followed by a recession. (The other two were followed by a stock market crash and the Mexican peso crisis.) He had about 50 minutes more of economic analysis for us, but his takeaway advice was this: “If you are …
M&A Advisor Tip: Avoid key-man risk
February 16, 2022 / in Exit Planning, Sell a Business / by Al Statz
Business owners should ask themselves, if I became incapacitated, could my business run without me? If the answer is no, buyers will be concerned about the business’s ability to operate when you’re gone. If you can’t get away for at least a week of vacation at a time… if you hold key customer relationships… if you’re solely responsible for an essential business function… buyers will see risk, and rightly so. To get the most value …
$1.1 Billion Sets New Record for C.I.A. Members
February 16, 2022 / in Exit Planning, News / by Al Statz
Cornerstone International Alliance (C.I.A.) members completed 146 business transactions in 2021, representing more than $1.1 billion in combined transaction value. Cornerstone International Alliance is comprised of 25 industry-leading M&A and investment banking firms in the U.S. and across the globe, focused exclusively on serving businesses in the lower middle market. Exit Strategies Group is a founding member of the Alliance and our CEO Al Statz serves on its board. “This is an incredible accomplishment and …
M&A Advisor Tip: Perks & business value
February 2, 2022 / in Business Valuation, Exit Planning, Sell a Business / by Al Statz
Business owners take a number of perks from their business, from the standards like auto expenses, memberships, and insurance plans to extras like entertainment, vacations, or an additional family member on the books. Perks are a way for owners to be further compensated for their hard work. However, they can complicate valuing a business. When preparing your business for sale, your advisors will “normalize” your financials to account for these extras. Be aware of providing …
Creative deal structures and deal terms move to lower middle market
January 24, 2022 / in Exit Planning, Sell a Business / by Al Statz
When selling your business, price is not the only important factor you’ll negotiate with a buyer. The deal structure includes a wide range of considerations from transaction type, ownership and payment structures, working capital, assurances, timelines, and more. What we’re seeing in the market right now is a rise in creative deal structures. These are non-typical solutions that help dealmakers bridge some sort of gap between the buyer and seller. If properly negotiated, these structures …
M&A Advisor Tip: Value = Risk vs. Reward
January 24, 2022 / in Business Valuation, Exit Planning, Sell a Business / by Al Statz
Buyers value your business based on risk (real or perceived) and future cash flow. Consider potential business risks. What could prevent your company from realizing your forecasted earnings? Think talent, customers, suppliers, competition, cash flow. Strategize ways to reduce risk in each area, e.g. cross training, outsourcing, succession planning, customer diversification, backup suppliers, etc. The more you do to take away potential pain points, the more attractive your business will be. For advice on exit …