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Exit Strategies helps ProtoFab Expand its Prototyping Capabilities in the Northern California Machining Services Market
April 20, 2017 / in News, Sell a Business / by Al Statz
Exit Strategies recently advised on the merger of two closely-held Northern California precision machining companies. Founded in 1996 by Grant Kerr, GMAN Precision LLC is a full-service precision machine shop specializing in complex machined parts and services for R&D, prototyping, and preliminary production work. Its markets include aerospace & defense, biotech, electronics, energy, food processing equipment, medical device, and others. ProtoFab, Inc., based in Petaluma, California, is an ISO9001:2008 certified Northern California manufacturer of precision-machined components for …
Do investment bankers, M&A advisors and business brokers actually add value? If so, how?
March 30, 2017 / in Exit Planning, Sell a Business / by Al Statz
Financially savvy company owners, such as private equity groups and diversified public companies, clearly see the value that M&A advisors add, since virtually all of them hire one to run a professional sale process when selling a company in their portfolio — even when they know who the buyers are and which one is likely will pay the highest price. On the other hand, most entrepreneurs only sell their company once. As a first time …
Increase Business Value with Recurring Revenue
March 23, 2017 / in Exit Planning, Sell a Business / by Exit Strategies
Businesses with a higher percentage of recurring revenue generally sell for higher prices. Recurring revenue business models are highly sought after by strategic and private equity buyers because they are perceived as less risky. Future revenue is more predictable and requires less ongoing sales effort and reinvestment. Companies like Salesforce.com pioneered recurring revenue in the software world, creating the Software as a Service (or SaaS) model. SaaS turned the traditional software licensing model on its …
Early-Stage Tech Company Exits
January 11, 2017 / in Exit Planning, Sell a Business / by Exit Strategies
You’ve built a world-class software solution, delivered to customers as a SaaS application or web service. You’ve recruited a team and created intellectual property. Customer retention is strong and the buzz is growing in your vertical market. Each new customer acquisition represents incremental recurring revenue that falls directly to your bottom line – and the company is closing in on cash flow positive territory. Could this be the right time to sell the company? You may be thinking, I’ve barely …
Don’t Forget the Net Investment Income Tax when Selling a Business
November 30, 2016 / in Exit Planning, Sell a Business / by Al Statz
The Net Investment Income Tax, which our friends at the IRS put into effect in 2013, takes an extra toll on business owners who sell their businesses; and for that matter, on most higher income taxpayers and any moderate income taxpayer whose income increases suddenly in a given tax year. What is the Net Investment Income Tax? The Net Investment Income Tax (“NIIT”) is a 3.8 percent federal tax on certain income of individuals, estates …
Selling an Ecommerce Business in the Lower Middle Market
October 10, 2016 / in Exit Planning, Sell a Business / by Exit Strategies
With continuing growth in consumer online spending and many high-profile public acquisitions this year, it seems like a great time to sell your online retail business. But things are never quite as simple as they appear. Over the past few months, several impressive acquisitions have been announced in the public markets. Walmart has purchased Jet.com at a jaw dropping $3.3 billion; a move that is presumably Walmart’s effort to narrow Amazon’s ever-increasing dominance. Consumer brands company, …
Recent Trends in the M&A Market
October 5, 2016 / in Acquire a Business, News, Sell a Business / by Jim Leonhard
Pepperdine University, of Malibu, California, in conjunction with the International Business Brokers Association and M&A Source, publishes a quarterly Market Pulse Survey of business brokers that provides useful information concerning the market for Main Street ($0-$2M sales price) and lower middle market ($2-$50M sales price) businesses. Highlights from their most recent report for Q1 2016, include: 50% of all business sell Retirement is still the prime motivating factor for sellers followed by burnout. The strongest growth …
Using Retention Bonuses to Enable an M&A Transaction
September 7, 2016 / in Exit Planning, Sell a Business / by Al Statz
Assurance of business continuity is essential to most business acquisitions, and for small to mid-size companies, this often translates to retaining key employees. This blog looks at using a simple tool, called a stay bonus or retention bonus, to keep your key people on board through a sale or merger of your company. Bonuses are commonly used in business to reward employees for performance, such as hitting a sales target, implementing a new system, or boosting manufacturing productivity. …
Can You Sell a Contracting Business to a Buyer Without a License?
August 31, 2016 / in Exit Planning, Sell a Business / by Adam Wiskind
Solar Installers, General Contractors, Electricians and Plumbers in California have something in common when it comes to selling their businesses. All of these businesses require a Contractors State Licensing Board (CSLB) license to operate. This can be an additional burden to the process of transitioning a business to a new owner. What if a potential buyer doesn’t have the necessary licenses? The easiest solution to this issue is to target investors that already have the Licenses …
Add-On Acquisitions are on the Rise
August 3, 2016 / in Exit Planning, Sell a Business / by Jim Leonhard
When developing an exit strategy for your company, we will consider whether Private Equity Groups (PEG’s) would want to acquire it as either a new platform company or as an add-on (also “bolt-on”) to one of their existing portfolio companies. Most small companies are too small or don’t have strong enough management teams to be attractive platform opportunities, however many are strong add-on candidates. According to PitchBook, which tracks the PEG M&A activity in the middle market, the number of add-ons as a percentage of …
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