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Instead of selling, they’re growing
April 4, 2023 / in Business Strategy, Exit Planning / by Al Statz
If it’s a bad time to sell your business, consider growing instead. That’s the takeaway from one contractor whose plans to sell their business got squashed by inflation and supply chain issues in 2022. Pre-pandemic the business had been doing about $50 million in sales with $6 million in EBITDA (earnings before interest, taxes, and depreciation). In most markets, that would have made this business a highly attractive acquisition target. But problems started when the …
Pros and Cons of Selling to Family
April 4, 2023 / in Sell a Business / by Al Statz
A business transfer to your children or other family members is a great way to ensure your business culture and legacy remain intact. You get to share a valuable asset with people you love and will probably have ongoing opportunities to stay involved in the business you started. On the downside, your children may not actually want the business and may feel pressured to take on something for which they have no real interest (or …
A Difference of Opinions: Closely-Held vs. Venture-Backed Companies- Part 1 of 2
March 17, 2023 / in Business Valuation / by Joe Orlando
In my transition from leading a valuation practice at an accounting firm to an M&A advisory firm, quickly realized significant differences between valuing venture-backed technology startups to valuing owner-operated small to middle-market businesses with between $2 million to $50 million in revenue. Over the last four years, I’ve concluded that there is a distinct and noticeable difference of opinions on the diligence, tools, and approaches used in valuing smaller, privately held companies. But before I …
How to Divest Part of a Company
March 7, 2023 / in Business Strategy, Exit Planning, Sell a Business / by Al Statz
Selling a division or line of business is often more complex than selling an entire company. If you’re like most private business owners, you have never sold a business, let alone carved out and divested part of one. This article shares some of what I’ve learned about planning and executing a successful divestiture during my 20+ years of investment banking. In my experience, most divestitures are intentional efforts to generate liquidity or streamline and strengthen …
Highlight Your Company’s Intangible Assets When Selling
February 28, 2023 / in Business Valuation, Exit Planning, Sell a Business / by Al Statz
Intangible assets represent most of the value in almost all of the companies we sell, so it only makes sense that showcasing the intangible assets that make your company unique and successful can significantly impact your final transaction value. Here are some practical tips to help you leverage your intangible assets in a sale process. Intangible assets are non-physical assets such as contracts, customer lists, proprietary software, databases, designs, recipes, proprietary business processes, well protected …
“In God we trust; all others bring data”: A Due Diligence Survival Guide for Sellers
February 8, 2023 / in Exit Planning, Sell a Business / by Al Statz
“In God we trust; all others bring data” is a famous quote from W. Edwards Deming that emphasizes the importance of data analysis in business decision making. The due diligence process is a critical part of every M&A transaction, and in today’s data-driven world, having relevant and accurate company data has never been more important. Buyer due diligence has become increasingly thorough and wide ranging over the 20 years that I’ve been advising sellers. Contributing factors …
New law exempting M&A Advisors from SEC registration is welcomed by small businesses and those who depend on them
February 7, 2023 / in News, Sell a Business / by Al Statz
The Consolidated Appropriations Act, 2023 (H.R. 2617), signed into law by President Biden on December 29, 2022, includes a provision exempting brokers that facilitate small business M&A (Mergers and Acquisitions) from federal broker-dealer registration. The section on “Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification” amends the Securities Exchange Act of 1934, effectively codifying the SEC’s sweeping 2014 M&A Broker No Action Letter. It benefits businesses who work with M&A advisors because advisors will no …
Better to sell early in consolidation. Here’s why.
February 4, 2023 / in Exit Planning, Sell a Business / by Al Statz
Consolidation is inevitable in maturing industries. As an M&A advisor working with owners of private wholesale distribution, manufacturing and industrial service companies, one of the questions I am often asked is whether it is better from a valuation perspective to sell early in a consolidation phase, or hold off. It depends of course, but generally earlier is better, all else being equal. I’ll explain why, but first I want to point out that industry consolidation …
Business Valuation 101 for Testing Laboratories
January 31, 2023 / in Business Valuation, Exit Planning / by Adam Wiskind
Testing laboratories operating in the agriculture, food production, environmental, manufacturing and construction industries provide essential and recurring services to their customers. As such they can be attractive to investors looking for steady growth, recession-resistant acquisition opportunities. If you own a testing laboratory and are thinking about an exit, you’ll likely want to know its value. Business valuation can help lab owners to plan for their future and to understand how to improve their company’s financial …
Avoiding costly M&A delays and deal failure
January 17, 2023 / in Exit Planning, Sell a Business / by Al Statz
No matter how motivated the buyer and seller, selling a business is always a challenge. There’s a lot that can go wrong, and deals can fall through at any time. Delays are one of the biggest problems contributing to deal failure. The longer the process drags on, the more likely it is that a) someone gets fed up and moves on or b) something big will happen, economically or geopolitically, that disrupts the deal. Here …
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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