The Advantages of a Well-Conceived Buy-Sell Agreement

In the previous issue of this newsletter, we made a strong case for creating a buy-sell agreement for co-owned businesses. To summarize, if owners agree in advance of any transfer event about how to appraise business value, and about the terms of payment, they can avoid the heated and often damaging negotiations that can occur   [READ MORE]

Sell the Company, Not Yourself

Establishing rapport with the buyer is important for owner-entrepreneurs because without it, the buyer will probably decline to proceed. So, in some respects, it is just as important to sell yourself as it is to sell the company. But don’t confuse selling yourself with self-congratulation. Entrepreneurs who have experienced financial success sometimes feel compelled to   [READ MORE]

Should You Engage an Investment Banker?

Short Answer:A good investment banker will enhance your opportunity for a successful sale. Middle market companies typically engage an investment banker to assist in mergers, acquisitions and sales. Recognizing the importance of “getting it right the first time,” most sellers seek out professionals whose expertise and experience in selling similar-sized companies pave the way for   [READ MORE]

Selling A Business…The Top Seven Issues

1. I Don’t Know What My Business Is Worth.Most owners will not commit to a sale without a realistic idea of what the business can be sold for. Do not necessarily expect to get a good answer from a business appraiser. A “fair market value” appraisal ordinarily excludes strategic buyers in determining the value of   [READ MORE]

Capital Availability: Feast or Famine?

Historically, companies seeking to fund working capital, internal expansion, mergers and acquisitions and other general corporate needs have had many traditional and alternative sources of capital available to them. While certain markets are available only to publicly held, investment grade or companies with at least $15 million in cash flow, most companies have been able   [READ MORE]

Pricing a Business: EBIT or EBITDA?

Everybody knows that companies are priced based upon multiples of earnings, but what earnings are they talking about? Is it net income, earnings before interest and taxes (EBIT) or earnings before interest, taxes, depreciation and amortization (EBITDA)? For small middle market companies (revenues from $5 to $50 million), the multiples are generally applied to EBIT   [READ MORE]

How to Sell Your Company Twice

With merger and acquisition activity and multiples at an all time high, one might ask whether the activity and multiples will continue to increase. No one knows the answer for sure, but a recapitalization is one way for a business owner to capitalize on the current merger and acquisition activity and the high multiples while   [READ MORE]

Preparing to Sell Your Business: Steps You Should Take Today

Business owners often ask us, “What steps can I take today to maximize the value of my company when I sell?” The most obvious answer is to increase revenue and cash flow prior to selling. A less obvious answer is to minimize the risks that may be perceived by the future buyer of the company.   [READ MORE]

One Year From Today: Pre-sale Strategies for Selling a Business

The slogan “Be all you can be” gets our attention because we all know we seldom realize our potential. Business owners are no exception. Is your business everything it should be? Do you envision the changes you need to implement but fail to carry through? Or have you retired mentally? Do you find yourself overlooking   [READ MORE]

Asset vs. Stock Sale: What is the Tax Impact to the Buyer?

For multiple reasons, buyers usually prefer to structure a transaction as an asset sale rather than a stock sale. In certain situations, an asset sale allows a buyer to purchase the company without fear of unknown or contingent liabilities. The reason most often cited for a buyer’s decision to purchase assets versus stock is the   [READ MORE]