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Avoid Seller Let Down
May 27, 2015 / in Sell a Business / by Don Ross
The “Let Down” is commonly a reflexive response to imminent success of a stated objective. Recently, in an NBA playoff series between the Los Angeles Clippers and the Houston Rockets , Houston defied the odds by winning the last three games to take the series 4 games to 3. The pivotal game was game 6 when Houston, down by 19 points with 14:30 remaining, outscored Los Angeles 49 – 18. The final and deciding game …
Business Acquisition Financing: What Lenders Want
May 12, 2015 / in Sell a Business / by Al Statz
In 13 years of selling private businesses, financial leverage has been a consistent success factor for us in expanding the pool of buyers and closing deals. Fortunately for business owners, the Small Business Administration’s (SBA’s) loan guaranty program is an excellent funding source for deals up to about $5 million. Today’s interest rates are low, and lenders are lending now. Here are ten things lenders look for when evaluating a loan request for a small …
Business Valuation: Step one in the sale process.
May 5, 2015 / in Business Valuation, Exit Planning, Sell a Business / by Louis Cionci
If you are considering selling your business, I would like to let you in on an M&A (merger and acquisition) professional’s insight. I have been involved in initiating and managing M&A transactions for over 15 years and have handled deals representing over $250 million in transaction value. Those transactions ranged from $2.6 mm to $90 mm. In addition, I was on a team that helped an international client acquire a $2.6 billion industry rival back in …
Pricing Methodologies in Buy-Sell Agreements
April 29, 2015 / in Business Strategy, Buy-Sell Agreements / by Jim Leonhard
When it comes to valuing a business for tax filings, M&A transactions, ESOP’s and most other purposes, business appraisers are usually free to use all of the methodologies in their arsenal. But, when it comes to Buy-Sell Agreements that govern the sale or exchange of interests among closely-held business owners, many of these agreements specify a fixed amount or formula to price equity interests. Recently our firm analyzed the valuation and funding-related provisions used in thirteen buy-sell …
Funding Your Buy-Sell Transactions
April 22, 2015 / in Business Strategy, Buy-Sell Agreements / by Al Statz
A properly structured Buy-Sell Agreement (BSA) ensures a market for owners’ equity when they leave the business, restricts the transfer of shares to unwanted parties, and lays out a set of rules and processes that mitigate the overall risk of uncertainty when a trigger event occurs. However, without having adequate funding mechanism(s) in place, a well-intentioned buy-sell agreement may not satisfy the shareholders needs when a trigger occurs. In this post I’ll briefly outline the …
How a Covenant not to Compete Affects Value in Buy-Sell Agreements
April 1, 2015 / in Business Strategy, Buy-Sell Agreements / by Al Statz
When someone sells a privately-held company, the buyer usually insists that the seller sign a covenant not to compete. In fact, in over 20 years of business sales and acquisitions, I have yet to see a purchase agreement without a covenant-not-to-compete (CNTC) provision. Now let’s say that your Company or its shareholders purchase all of a departing 50% shareholder’s interest for fair market value; is it reasonable to expect that the selling shareholder would not …
Valuation: Theory, Practice and Reality
March 11, 2015 / in Business Valuation, Exit Planning / by Exit Strategies
I attended a luncheon last week where a private equity firm’s panelist claimed that business valuation is too theoretical and inappropriate in the transactional world. I instinctively question broad-based statements like this, when I hear them; however I listened attentively. The panelist correctly asserted that most valuation firms focus on compliance and litigation work as opposed to transactions. However, his criticism of valuation work was illogical and inconsistent, and offered no better alternative. To make …
Success Habits of Optimistic People
March 4, 2015 / in Business Strategy / by Don Ross
“Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence.” “- Helen Keller The medical community has accepted the heavily subscribed opinion that optimism is a dynamic source of good health, reduced stress, and improved cardiovascular function. The successes that optimists are able to attain is largely a result of their expectation or visualization of success. They succeed because they expect to succeed. The following are habits that optimistic people …
Your Buy-Sell Agreement: In good shape? Needs a tune up? Or Disaster waiting to happen?
February 25, 2015 / in Business Strategy, Business Valuation, Buy-Sell Agreements / by Bob Altieri
An Ounce of Prevention is Worth a Pound of Cure I can’t tell you how many times I’ve heard from business owners and their spouses that a key person became disabled or died and left an operating closely-held business in turmoil. What, no Buy-Sell Agreement? Ask anyone who has been selling and appraising business for a number of years and they will tell you this sort of thing is common. All businesses with more than one shareholder should have …
Court Chastens Expert Over Deficient Business Valuation
February 18, 2015 / in Business Valuation / by Al Statz
Sometimes courts face a hard choice, having to decide between equally compelling and competent valuations. Not so in a recent fair value proceeding in which the skills gap between the testifying experts made it easy for the court to pick the winner. Use of the Valuation: Business Divorce The petitioner and the respondent were the two owners of a New York company that installed solar energy panels on buildings. Business boomed, and the company enjoyed …
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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