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What is an Earn-out?
June 26, 2014 / in Acquire a Business, Sell a Business / by Al Statz
An earn-out is when part of the consideration received for a business is based on future sales or earnings. Earn-outs usually come in to play in business acquisitions when a business has high risk factors, or when non-linear growth is reasonably expected, or when there is a significant gap in the price expectations between the buyer and seller. In all cases the parties share the risk and reward of future performance. Bridging a Price Gap An …
Exit Strategies Represents Mentzer Electronics in Acquisition by Innovative Circuits
June 4, 2014 / in News / by Al Statz
Burlingame, California — Mentzer Electronics, Inc., a respected and long-established electronics manufacturing services (EMS) company located in the San Francisco Bay Area, has been acquired by Innovative Circuits. Exit Strategies Group, Inc. introduced the parties and served as exclusive financial advisor to the seller in the transaction. Terms of the transaction are confidential. Menzter Electronics was founded in the Bay Area in 1965 by Ed and Betty Mentzer. The Company’s electronics manufacturing services include surface mount …
Private Equity Fact and Fiction
May 20, 2014 / in Exit Planning, Sell a Business / by Al Statz
Private equity groups are active acquirers of closely-held lower middle market companies here in California. Private equity consists of individuals, families and institutional investors that make passive minority investments in partnerships that invest in, provide debt financing for, and operate private companies. Republican presidential candidate Mitt Romney’s run for the presidency in 2012 brought sudden attention to the private equity world. Romney, who had been the founder and CEO of private equity firm Bain Capital, didn’t go …
Is it Better to Own or Lease your Business Facility?
May 5, 2014 / in Exit Planning, Sell a Business / by Bob Altieri
For some businesses, specialized building construction is required — hotels, car washes, wineries, some food processing facilities, etc. — making the business and real estate nearly inseparable, and making owning the real estate almost mandatory. However most enterprises need a more generic commercial, industrial or retail property to support business operations, and the decision to own or lease real property is more elective. Companies that lease their facilities avoid the sizable cash investment associated with …
Upcoming Event on Valuation of Ag and Food Businesses
April 25, 2014 / in Business Valuation, News / by Al Statz
Al Statz of Exit Strategies Group will be a panelist for the American Society of Appraisers (ASA) Northern California workshop —Working with a Going Concern: Valuation Issues Related to Ag-Food Processing Facilities, on Saturday, May 31, 2014, in Fairfield, California. A Message From Al: My passion is helping baby boomer business owners exit right and retire well. My background as a valuation and M&A professional, business owner and corporate development executive allows me to bring a wealth of knowledge …
Is it too early to have my business valued?
April 22, 2014 / in Business Valuation, Sell a Business / by Roy Martinez
A potential client has been dragging his feet on having a business valuation done. Most recently, he asked, “Is it too early to have my business valued?” A better question may be, is it too late? This baby boomer wants to exit his business and retire in the next 2-5 years. He said, if the business isn’t worth much, he would probably hold on to it and transition management of the business to a group …
Why do business owners hire an M&A broker?
April 12, 2014 / in Acquire a Business, Business Strategy, Sell a Business / by Jim Leonhard
Recent clients “Jane and John Doe” were satisfied with the market value estimate of their manufacturing business, as determined by the independent valuation we prepared. Armed with this essential piece of information, they were ready to sell the business they had founded and grown with much effort over many years. John thought they should try to sell the business themselves. After all, weren’t they the best salespeople for their business? And why should they share …
What is Fair Market Value?
April 2, 2014 / in Business Valuation / by Al Statz
You’ve heard the term Fair Market Value many times. Fair Market Value is indeed the most common standard of value used in business valuations, but what does it actually mean? Fair Market Value is typically defined as “the price at which the property would change hands between a willing buyer and a willing seller, when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both …
Why Should I Only Retain a Certified Valuation Expert?
March 17, 2014 / in Business Valuation / by Jim Leonhard
If you’re thinking of using a non-certified or non-credentialed individual to value a business, consider the following recent judicial ruling. The United States Tax Court ruled on February 11, 2014** that a valuation conducted by a non-valuation credentialed individual used for an estate tax filing was materially deficient. The individual who prepared the valuation was both a CPA and a CFP (certified financial planner), had written 10-20 valuation reports, and had testified in court. However, …
Why Should I get My Business Valued?
February 26, 2014 / in Business Strategy, Business Valuation / by Roy Martinez
I received a call the other day from a friend who owns a publishing company. I was telling him about the types of valuation projects I was working on, and he asked, “I’m not in the middle of selling my business or transferring it to my children; why would I want to have my business valued? Besides, I know the rules of thumb for my industry.” The answer I gave him was essentially the following. First …
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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