The Key Ingredient to Selling Your Company

Business Appraisers, before beginning an assignment, like to know the purpose of the appraisal. Usually the assignment demands “bullet proof” documentation: comparables, EBITDA multiples, projections, discount rates, etc.  Unfortunately, in situations where the purpose of the valuation is to establish a selling price, the business appraiser really doesn’t understand the business elements – or, since these business elements don’t figure into the numbers, they are largely ignored. However, they do have value; in some cases, significant value to a buyer.

Valuing these business elements requires that computers, adding machines and calculators be put aside. The business should be looked at from three key business elements: the Market, the Operations, and Post-Acquisition. These elements are certainly subjective, but also critically important to a prospective buyer.  A buyer’s opinion of the business elements can drive the actual offering price significantly higher—or lower. In fact, the business elements such as Fundamentals and Value Drivers can impact price as much as the Financials.

Here are some important questions to consider:

Market:   
Are there significant competitive threats?
Is there a large market potential?
Does the company have a reasonable market position?
Are there broad-based distribution channels?
Is there a wide customer base?
What’s the company’s competitive advantage?

Operations:
Are there significant alternative technologies?
Is sound management to remain?
Is there product/service diversity?
Are there multiple suppliers?

Many business owners feel that what prospective acquirers are looking for are quality and depth of management, market share, profitability, etc. Brian Tracy, in his book, The 100 Absolutely Unbreakable Laws of Business Success, states that the key ingredient is “a company-wide focus on marketing, sales and revenue generation. The most important energies of the most talented people in the company must be centered on the customer. The failures to focus single-mindedly on sales are the number one causes of business failures, which are triggered by a drop-off in sales.”

Tracy goes on to point out that company owners and/or presidents should observe industry trends, pay attention to what the competition is doing that works, and learn from them.  Find out what is successful and what isn’t in your industry – trends are vital. It is important to understand that established and mature companies are generally just trying to protect their market share, while start-up companies are really attempting to gain or establish market share.

Tracy estimates that 80 percent of new businesses close down within the first two years, and 100 either fall off or join the top 500 companies in the U.S. because they are acquired, merged or broken-up, and even a few actually fold.

Tracy also mentions that problem solving, decision making and team (not individual) collaboration are key factors.  However, as he points out, the best companies have the best people.

Copyright: Business Brokerage Press, Inc.

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Four Recent Growth Trends among Small Companies

When it comes to company growth trends, it is safe to state that there has been enormous change since just 1999.  In 1999-2000, the median sales of a company going public has gone from averaging $15 million to averaging a whopping $164 million just 4-5 years later in 2004.  The fact is that smaller companies have decided not to go public as often as in the past.  As a result, companies are able to amass cheap money but the question, of course is, “Why?”

Skipping IPOs

It is safe to state that a company with $15 million in annual revenues would likely not be too interested in an IPO.  A company with this level of annual revenue would not want to absorb the attendant costs as well as other on-going fees associated with going public.  Such a company would have little interest in spending the money necessary to comply with Sarbanes-Oxley regulations.  It is quite costly and laborious for small companies to go public and then remain public.

Merging with Larger Companies

It has become a common practice for CEOs to merge or acquire other companies when they are looking to quickly grow their businesses.  Yet, it is also quite common for these mergers and acquisitions to fail and later get sold off.  The trend has been for larger companies to acquire smaller ones to help facilitate growth, and this means that many smaller companies simply don’t go public due to the costs and compliance issues.  Instead, they want to be acquired by larger companies.  This is a trend that is quite common in manufacturing.  In particular, if a larger company is looking to add growth, then acquiring a small service company, one that provides complementary services, can be an excellent way to achieve that goal.

Focusing on Core Business Attributes

However, many companies are also divesting themselves of companies that fail to fit with their overall core strategy.  A prime example of divesting is McDonald’s purchasing of Boston Market, which was part of an effort to continue McDonald’s growth.  In the end, however, McDonald’s discovered that a more appropriate strategy was to focus on their core business instead of working on the development of new concepts.  Many companies ultimately realize that they are better off divesting and focusing on their core business.

Offering New Products and Services

It is also possible for companies to essentially reinvent themselves by adding new products and services that are more profitable.  Not surprisingly, this strategy can boost a company’s value.  A smaller company is usually a more agile one and, as a result, can introduce new products and services more quickly than a larger company.  Products or services that are not profitable can quickly be replaced with products and services that are profitable.  In short, experimentation and adjustments are easier for small companies than large ones, at least most of the time.

Small companies are less likely to go public as they can quickly shift gears and improve their profits.  These same companies are also likely to become acquisition targets of larger companies looking for rapid ways to add growth.

Why Do Small Companies Spearhead Innovation?

Increasingly, experts can agree that small companies spearhead innovation.  Of course, this isn’t to state that large companies don’t innovate at all.  But the simple fact is that usually the size and internal bureaucracy of large companies is such that innovation comes at a much, much slower pace.  Since small companies are at the heart of innovation, they often draw the attention of larger companies who need the new products and services being created by smaller companies in order to maintain a competitive advantage.

According to Fortune Magazine, big companies rarely innovate.  Fortune points out that this is unfortunate as innovation is necessary to “gain propriety advantage and stay profitable.”  It is important to note that innovation itself is not a rare commodity.

Innovation is taking place everywhere and in every industry; it’s just that innovation is rare within large companies.  Thus there is the need for larger companies to acquire smaller, more agile and more innovative ones.  A business that wants to remain profitable should be innovating internally while also seeking out sensible acquisition targets.  In other words, large corporations should be looking for all-important innovation both from within and from outside.

There are many reasons that innovation is hard within larger companies.  Bureaucracy and groupthink are two factors that occur, but perhaps more importantly is that innovative people tend to prefer to work for smaller companies and organizations.  They feel more comfortable in the small business environment.  Innovative thinkers can find it frustrating when even a smaller company adopts a large-company management style and approach.

Many feel that in the end the problem with large companies isn’t that they never try to accomplish large and ambitious projects, but instead that they fail to attempt the smaller and more controversial ones.  Growth and new ideas is often about being at the cutting-edge and thinking outside the box, which are inherently risky.

Large organizations tend to be risk adverse, and here lies the paradox.  How do large, typically risk adverse organizations foster an environment where innovative thinkers can thrive?  Employees will need to successfully work on smaller and even controversial ideas in an unorthodox manner within the confines and framework of a large company.

Large corporations, dedicated to preserving their existing place in the market, often find themselves threatened by new ideas whether they are generated internally or externally.  As a result, large companies are typically hostile and very resistant towards innovative thinkers.  Most the of the time the innovative thinkers know this.

Forget What You’ve Heard, Entrepreneurship is Doing Just Fine

You may have heard that entrepreneurship is in trouble, but the facts don’t support this assertion.  A recent Boston Globe article noted that increasingly large numbers of people are successfully running their own businesses.  Approximately 500,000 new businesses are launched each and every year.

When those numbers are viewed in a different light, it becomes clear that entrepreneurship is doing very well.  Half a million new businesses mean that roughly 10% of the workforce is either starting a small business or working for one that is less than 3 ½ years old.  Perhaps the best news of all, is that these new businesses are also creating a large number of new jobs.

From Where Does Seed Capital Originate?

Considering that so many new businesses are started every year one has to wonder  as to where the funding originates.  The simple fact is that most people don’t have the funds necessary to start their own business.  Bank loans and SBA funding are not available to most people, and a mere 7% of new or prospective business owners receive venture capital funds.  How does the bulk of this army of new business owners fund their businesses?

There are several ways that business owners are funding their businesses.  It is quite common for new small business owners to use credit cards and take out second mortgages to fund their new business endeavors.  The Boston Globe article noted that in the last few years more than 80% of Inc. Magazine’s “Fast 1000 companies” had been started with roughly $50,000 or even less.

New Companies Boost the Economy

The article also outlined the great importance for seed capital as well as additional funding form both public and private sources.  Considering the number of jobs that small business owners are generating every year, this only makes sense.  As the Boston Globe article recommends, new sources of funding should be made available to these new small business owners.  Additionally, this article serves to underscore the tremendous importance and role that small businesses play in the overall health and well-being of the nation’s economy and the global economy.

With a truly whopping 80% of the Inc. Magazine’s Fast 1000 coming from small businesses started with less than $50,000, can we afford to continue to largely ignore the needs of small businesses?

The fact that so many small businesses are initially funded with credit cards and second mortgages is a testament to just how strong the entrepreneurial spirit is in the United States.  So forget what you’ve heard, entrepreneurship is doing quite well.

Copyright: Business Brokerage Press, Inc.

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The Top 3 Unexpected Events CEO’s May Encounter During the Selling Process

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When it comes time to sell a business, not everything goes as planned.  You may be one of the lucky ones and find that selling your business is a streamlined process with only a few unexpected occurrences.  But most CEO’s looking to sell a business find they can expect the unexpected.  Let’s take a closer look at some of the top surprises CEO’s experience during the sale process.

Unexpected Occurrence #1 – Surprisingly Low Bids

CEO’s looking to sell their businesses need to be ready for almost anything.  One of the larger surprises that CEO’s face are surprisingly low bids.  Don’t let low bids shock you.

Unexpected Occurrence #2 – A Huge Time Commitment

CEO’s have to make sure that everything from an offering memorandum to management presentation and suggestions to potential acquirers are ready to go.  The offering memorandum is considered the cornerstone of the selling process and is typically at least 30 pages in length.

Most business intermediaries expect the potential acquirers to submit their initial price based on the information contained in the memorandum.  Management presentations are also time consuming, but it is common to have these presentations ready before the final bids are submitted.  Ideally it is best for the CEO to show the benefits involved in combining the acquirer and the seller as well as the future upside for selling the company.

Unexpected Occurrence #3 –The Need for Agreement from Other Stakeholders

You, as the CEO, are able to negotiate the transaction, but the sale isn’t authorized until certain shareholders have agreed and done so in writing.  Until the Board of Directors, shareholders and financial institutions who may hold liens on key assets, have agreed to the deal, the deal simply isn’t finalized.  Often this legal necessity turns out to be an issue that gets in the way of a successful deal.

Sellers can take their “eye off the ball” during the time-consuming process of selling a company, however, this can be a serious mistake.  CEO’s must understand that potential acquirers will be examining monthly sales reports with great interest.  If potential acquirers notice downward trends they may want to negotiate a lower price.  No matter how time consuming the sales process may be, CEO’s have to maintain or even accelerate sales.

Ultimately, there can be a wide array of surprises awaiting a CEO who is looking to sell a business.  Avoiding these kinds of issues is often, but not always, a matter of excellent preparation.  However, it is vital that they keep in mind that even with the very best preparation and diligence, there can still be surprises when selling a business.

Copyright: Business Brokerage Press, Inc.

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Around the Web: A Month in Summary

A recently published article from Business.com entitled “Why Every Business Owner Needs an Exit Strategy” outlines the importance of having an exit strategy for business owners, no matter what point they are at in running their business. The author uses an analogy involving building construction: if multiple exit options are required for each floor of a multi-story commercial building in preparation for disaster, why not plan for the same in your business?

As can be expected with most elements of a business, exit strategies will vary depending on the business and will be tailored to each specific business’s circumstances. The basics, however, include the following:

  1. Business Goals
  2. Timeframe
  3. Intentions for the Business
  4. What’s Next for the Business Owner

While some may argue against incorporating an exit strategy into a business’ initial business plan, some benefits for exit planning early on include enhanced business value and the ability to use the strategy as a blueprint for success or a flexible template for sale preparation. Whether or not an owner decides to pursue exit planning now or further down the road, these are all factors to consider.

Click here to read the full article.

 

A recent article from Divestopedia entitled “Who is the Right Buyer for Your Business?” illustrates the thinking that should go into determining which type of buyer will fit best in the sale of a business. A single business transaction can present several different types of potential buyers, each having their own goals and motivations for buying a business. Understanding these types of buyers can help an owner make the right choice for their own personal goals as well as for the good of the business.

Some buyer types include:

  1. Defensive
  2. Synergistic
  3. International Entity
  4. Financial or Private Equity

While sometimes surprises do happen during the sale process, it is invaluable for a seller to have some knowledge and understanding of the types of buyers they will encounter during the sale process.

Click here to read the full article.

A recent article posted on the Axial Forum entitled “Succession Planning — A Critical Missing Element in Many Family-Owned Businesses” outlines shocking statistics from a recent survey that shows the succession plans of U.S. family-owned businesses: only 52% plan to keep their businesses in the family! This is down a whopping 22% from only two years ago and raises some questions regarding the goals and plans owners have for their businesses after their death or retirement.

These statistics can help to reveal some important findings about the owners of family-owned businesses in this country: they often have little understanding of the fair market value of their businesses. Unfortunately, many small businesses overestimate the true value of their investment, which can come as a shock when it comes time to sell. According to the survey, less than 25% of respondents had a clear, actionable transition plan in place, while almost a third had no plan in place at all. These things alone can debilitate any seller, especially in the necessity of a quick sale.

Understanding what an effective transition plan and process entail is a great start for any business owner, especially one that falls into the category of owners without proper transition plans. These things can be better understood with the help of an M&A advisor or business consultant, who will help iron out some of the wrinkles and prepare a business for its future.

Click here to read the full article.

 

A recent article posted on The Business Journals entitled “How to Pass a Family Business from an Overbearing Father to the Next Generation” illustrates a hypothetical example of a difficult business transition from a ruthless old-school owner to a seemingly less passionate and less aggressive family member. It explains how transitioning from an overbearing leader is often difficult because not only are potential family successors unmotivated to take over, existing employees are also alienated due to harsh and improper treatment.

The author’s solution for this is forgiveness: when it comes to business, animosity can kill motivation and productivity and revenge is never the right answer. Business survival relies on proper practice and great leadership, among many other factors, so forgoing personal grudges for a seamless transition can prove to be vital to future and ongoing success.

Click here to read the full article.

 

Copyright: Business Brokerage Press, Inc.

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Are You Sure Your Deal is Completed?

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When it comes to your deal being completed, having a signed Letter of Intent is great.  While everything may seem as though it is moving along just fine, it is vital to remember that the deal isn’t done until many boxes have been checked.

The due diligence process should never be overlooked.  It is during due diligence that a buyer truly decides whether or not to move forward with a given deal.  Depending on what is discovered, a buyer may want to renegotiate the price or even withdraw from the deal altogether.

In short, it is key that both sides in the transaction understand the importance of the due diligence process.  Stanley Foster Reed in his book, The Art of M&A, wrote, “The basic function of due diligence is to assess the benefits and liabilities of a proposed acquisition by inquiring into all relevant aspects of the past, present, and predictable future of the business to be purchased.”

Before the due diligence process begins, there are several steps buyers must take.  First of all, buyers need to assemble experts to help them.  These experts include everyone from the more obvious experts such as appraisers, accountants and lawyers to often less obvious picks including environmental experts, marketing personnel and more.  All too often, buyers fail to add an operational person, one familiar with the type of business they are considering buying.

Due diligence involves both the buyer and the seller.  Listed below is an easy to use checklist of some of the main items that both buyers and sellers should consider during the due diligence process.

Industry Structure

Understanding industry structure is vital to the success of a deal.  Take the time to determine the percentage of sales by product lines.  Review pricing policies and consider discount structure and product warranties.  Additionally, when possible, it is prudent to check against industry guidelines.

Balance Sheet

Accountants’ receivables should be checked closely.  In particular, you’ll want to look for issues such as bad debt.  Discover who’s paying and who isn’t.  Also be sure to analyze inventory.

Marketing

There is no replacement for knowing your key customers, so you’ll want to get a list as soon as possible.

Operations

Just as there is no replacement for knowing who a business’s key customers are, the same can be stated for understanding the current financial situation of a business.  You’ll want to review the current financial statements and compare it to the budget.  Checking incoming sales and evaluating the prospects for future sales is a must.

Human Resources

The human resources aspect of due diligence should never be overlooked.  You’ll want to review key management staff and their responsibilities.

Other Considerations

Other issues that should be taken into consideration range from environmental and manufacturing issues (such as determining how old machinery and equipment are) to issues relating to trademarks, patents and copyrights.  For example, are these tangible assets transferable?

Ultimately, buying a business involves a range of key considerations including the following:

  • What is for sale
  • Barriers to entry
  • Your company’s competitive advantage
  • Assets that can be sold
  • Potential growth for the business
  • Whether or not a business is owner dependent

Proper due diligence takes effort and time, but in the end it is time and effort well-spent.

Copyright: Business Brokerage Press, Inc.

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Around the Web: A Month in Summary

A recent article published by Divestopedia entitled “The Only Valuation Method that Really Matters” explains the best method to use to value a business: the Business Buyer Valuation Method. While there are certainly other valuation methods, the author suggests that this one is the best and will bring you close to what a buyer is actually willing to pay.

Steps like determining who the most likely buyer is for your business and how this buyer may structure the transaction, among others, will help a seller build a valuation that will both make sense and be fair for a potential buyer.

Click here to read the full article.

 

A recent Axial Forum article entitled “Take Customer Due Diligence to the Next Level – Here’s How” identifies revenue growth as the majority driver of new value growth after a business transaction. The article outlines the vitality of due diligence within both the overall market and the customer base. One huge factor in this process involves customer due diligence, or the exploration of customer relationships with the business that is being purchased. This typically includes customer feedback, typically through interviews or surveys, and helps to educate potential new owners on things like customer satisfaction and loyalty, risks and opportunities, market growth outlook, market trends, and more.

Click here to read the full article.

 

A recently published Business.com article entitled “Your Five Year Plan to Build a Business to Sell” explains the steps involved in building a business for the purpose of a sale. Although many owners think that this is just a fantasy, there are actually some early steps that can be taken to help push a business toward a potential sale in the future. While the process can take several years, it truly can pay off in the end for both the seller and buyer.

One of the first and often overlooked steps in this process is to build a business in a market that is not only lucrative now, but will be in the future as well. This is much easier said than done in some instances of course, because many markets and industries are difficult to predict three to five years out, so this step should be taken with care.

The next, and arguably most important, aspect of creating an attractive business is profitability: a business that is profitable and one in which the profit is growing is the most attractive to potential buyers. Bidders want to see a business that is both making money and growing.

Other important aspects of an attractive business include keeping the business “clean” and building a corporate structure that doesn’t depend on the involvement of the owner. Clean businesses are ones that are transparent with well documented processes and transactions, as well as a problem-free workforce. An independent corporate structure is one that is able to function without the current owner as the core of the business. A business that cannot function when the owner is absent is not an attractive option for buyers.

Click here to read the full article.

 

A recent Forbes.com entitled “How To Make Millions Off Your Exit: 7 Entrepreneurs Worth Over $2 Billion Explain” outlines important insights for making an exit, taken directly from entrepreneurs that have started and sold businesses of their own. The list below outlines the entrepreneurs’ advice:

  1. Sell to Make Your Business Grow
  2. Prepare in Advance
  3. Create an Expert Team
  4. Sell the Potential of Your Business
  5. Focus on Providing Value
  6. Seek Advice
  7. Actively Look for Buyers

While some of these aspects of a successful business sale may seem obvious, many are often overlooked. Another important lesson to take from this: learn from those that have experience making deals!

Click here to read the full article.

 

A recent BizBuySell article entitled “Top 4 Small Business Funding Methods of 2017” outlines some of the best options for funding the purchase of a small business when personal savings, loans from family and friends, or credit cards don’t quite cut it. They include:

  1. SBA Small Business Loans
  2. 401(k) Business Financing
  3. Home Equity Lines of Credit
  4. Unsecured Loans

Each of the above methods have their own pros and cons, and deciding which method is best when looking into funding options is ultimately up to the borrower. While there still several options outside this list, these are some of the most common and are widely available to applicants in a wide variety of situations.

Click here to read the full article.

 

Copyright: Business Brokerage Press, Inc.

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Around the Web: A Month in Summary

A recently published Divestopedia article entitled “The Top 10 EBITDA Adjustments to Make Before Selling a Business” explains common practices in adjusting EBITDA before selling a business for the purpose of helping the seller get the best value from the sale. The process of normalizing a company’s financials is often done by investment bankers before a sale to help show potential buyers the best possible version of a company’s financials with the ultimate goal of getting a higher selling price. The following adjustments are some of the best:

  1. Non-Arms-Length Revenue or Expenses
  2. Revenue or Expenses Generated by Redundant Assets
  3. Owner Salaries and Bonuses
  4. Rent of Facilities at Prices Above or Below Fair Market Value
  5. Start-Up Costs
  6. Lawsuits, Arbitrations, Insurance Claim Recoveries and One-Time Disputes
  7. One-Time Professional Fees
  8. Repairs and Maintenance
  9. Inventories
  10. Other Income and Expenses

Adjustments in these factors can be crucial to getting the most out of a business sale. Follow the link to read more about how each of them can affect the sale price of a business.

Click here to read the full article.

 

A recent article published on Axial Forum entitled “Dying is Not an Exit Strategy” speaks on the importance of having an exit strategy and succession plan. There can be nothing worse than the unexpected illness or death of a business owner without a proper plan for the business in place. These unfortunate circumstances will not only burden the family of the owner, but will likely result in the liquidation of a business at a fraction of its true value.

Three important factors to consider when planning a succession strategy include:

  1. Who will run the business?
  2. Who will own the business?
  3. How will proceeds from a sale be distributed?

Whether or not you’re in a position to think about selling your business in the near future, it is still important to think about how you’d like to transition in the event of unexpected circumstances.

Click here to read the full article.

The recent article published in Divestopedia entitled “Who Will Buy My Company?” helps business owners understand the avenues for finding a buyer for their business. With options in selling internally, externally, or a combination of both, there are multiple paths and opportunities to finding the right buyer. Each of these paths can result in a unique outcome, so it is important for a seller to choose the one that best fits their needs.

The article identifies two important and useful steps in understanding who will want to purchase a business: identify best buyers and take an offensive approach. Having at least a general idea of who would even consider buying your business is a great first step, which can be refined with better and more pertinent information over time. Taking an offensive approach involves actively becoming a bigger presence in different communities related to the business or industry, giving a seller better insight into what potential buyers may be interested in.

Click here to read the full article.

 

The recent article published in Divestopedia entitled “If You’re Selling Your Company, Don’t Get Sandbagged” explains what a “sandbag clause” is and how sellers can avoid them during the transaction process. As explained by the author, sandbagging occurs when a purchaser goes through with closing a deal when they are aware of misrepresentations in a seller’s contract. This is often used as basis for an indemnity claim by the buyer after the sale.

Sellers can get sandbagged in a few different ways, with some of the more common related to the fact that the seller doesn’t know every exact detail about the daily operations of a business. Often times, a buyer can uncover some of the finer details that may have been missed in the contract, which is why it is of utmost importance for sellers to be diligent in the process. As the article suggests, having an experienced M&A lawyer may help to mitigate these risks.

Click here to read the full article.

 

Copyright: Business Brokerage Press, Inc.

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Around the Web: A Month in Summary

The recently published Axial article entitled “How Customer Due Diligence Led to a 30% Reduction in Offer Price” explains how important the due diligence process is for a prospective buyer during a business transaction. The author goes in-depth into a case study that demonstrates how proper due diligence can save a bad deal from coming to fruition, while giving examples from the case to show the effect that due diligence can have on a sale.

In the author’s case, further research into a business that seemed to have a great track record and excellent position in the market turned out some interesting information:

  1. Competitors were making progress
  2. Customer service could be improved
  3. Innovation was lacking
  4. Customer loyalty was much lower than average

These things could have easily been overlooked without a proper vetting and due diligence process, but since the business was researched thoroughly, the buyer was able to bring down their offer price by a significant amount.

Click here to read the full article.

 

The recent Forbes article “When Negotiating to Buy a Business – Attitude Is Everything” illustrates how negotiations can and should be treated with care, especially in regard to the attitude of the buyer. It explains how deals can take a quick turn due to things like struggles over non-negotiable points of interest or simply a bad attitude on the part of either the buyer or seller.

Money, of course, always comes into play at some point during negotiations, which is a point of contention and heavy negotiation. Understandably, money talks can draw out a lot of emotion: sellers want to make sure they are getting what they deserve and buyers want to get a deal that will be profitable in the long-term. It is so important for both parties to have respect and to build trust in these negotiations, as a deal can fall through easily if not treated with care.

Click here to read the full article.

 

The recently published Axial article entitled “Selling? Look for a Buyer Who’s Walked a Mile in Your Shoes” explains the benefits of due diligence and patience when selling a business. The article outlines the sale process of the footwear brand Flojos, the pride and joy of the Lins, a couple that built the company into a $50 million+ business over their tenure as owners and operators.

After finding an M&A advisor with experience in the consumer products field, the Lins focused on finding a buyer that would understand and succeed in the business, as well as continue the legacy that they had created. They wanted a buyer that represented their business well, and after receiving a few offers, they were able to select a buyer that was able to do this.

Click here to read the full article.

 

A recent article in The Business Journals “3 Questions to Consider When Looking at Mergers and Acquisitions” outlines what a prospective seller should consider regarding mergers and acquisitions as a means to exit their business. The current state of the M&A market makes this option very lucrative, with record transaction numbers and valuations. But no matter the state of the market, knowing whether or not this is the best option is important. When considering a merger or acquisition, you should ask yourself:

  1. Does M&A align with your company’s strategic plan and vision?
  2. Have you conducted adequate due diligence?
  3. Do you have a post-deal integration plan?

While time and patience are very important during this process, it is also very important to understand everything about the process, why you’re undergoing it, and what it means for your business. A merger or acquisition could mean very good things for your company if you are well prepared and know what questions to ask.

Click here to read the full article.

 

The recent article in Divestopedia “What Role Does Your Brand Play in a Successful M&A?” explains how a business’ brand often takes a backseat to most other business activities during the M&A process. The author explains how crucial the brand really is within the transaction process, as it represents how the new business is both perceived and received by the public and shareholders of the acquiring entity, as well as employees and customers.

Branding in consideration of employees is very important in the transaction process, as the cultures of the now combined companies may differ drastically. This makes consideration in terms of culture and structure so important for both entities to ensure the process runs smoothly and the new entity is able to move forward seamlessly.

In consideration of the customers of both entities, the transaction process should flow and occur in a way that will least affect customers. This includes seamless integration of customer service processes as well as pricing and product availability, among others.

Other stakeholders to be considered during the M&A process include investors, partners, and others that are directly affected by the sale. A brand strategy that takes into account these members’ best interests will lead to a better rate of success.

Click here to read the full article.

 

Copyright: Business Brokerage Press, Inc.

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