How Long Will Interest Rates Stay Low?

Posted by Carl Doerksen on August 29, 2014 at 8:30 AM

One of the key components of most business acquisitions is financing. Very few deals are closed with 100% cash from the buyer; most have a percentage of the transaction price that is financed via various forms of lending. This is a key reality that many business owners are unaware of, and this is why professional buyers are keenly hanging on every word that the Fed mutters regarding interest rates.

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Topics: interest rates, economy

Why is Exit Planning Important for Business Owners?

Posted by Carl Doerksen on August 27, 2014 at 8:30 AM

We hear this question a lot from attendees at our exit planning seminars. It seems odd to us since we are so close to the idea, but for many business owners the notion of planning an orderly exit seems to be way off in the future. The common refrain we hear is, “I will get around to it someday. Until then, I am way too busy running my company to even consider the idea.”

Of course after attending one of our seminars, most entrepreneurs have a renewed sense of urgency regarding exit planning and its importance. Christopher Snider, the owner of the Exit Planning Institute, an organization dedicated to helping merger & acquisition advisors educate business owners regarding the importance of planning for an exit, has come up with the five D’s to impart the importance of exit planning. These are unplanned, unforeseen circumstances that may force you to exit when you have to, not when you want to. They include:

  • Death
  • Divorce
  • Disability
  • Distress (business and/or personal)
  • Disagreement
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Topics: exiting your business, Exit Strategy, exit planning

Why Should I Get A Valuation Done On My Company?

Posted by Carl Doerksen on August 25, 2014 at 8:30 AM

We get asked this question all the time by business owners at our M&A conferences. The answers are many and varied depending on your personal situation. Recently Bloomberg Businessweek focused on answering this same question and in a broad sense they covered the topic well. As they put it in their intro:

“There are a number of valid reasons to get a professional business valuation. And really, assuming your small business is your family’s biggest asset—perhaps other than your home—isn’t it smart to have a realistic idea of what it’s worth? Recent research shows many small business owners are counting on their companies as nest eggs—they’re less likely to have diversified investments because they plan to retire on the proceeds of selling the business.”

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Topics: enhancing value, valuation, exit planning

Private Equity and M&A in 2014

Posted by Carl Doerksen on August 22, 2014 at 8:30 AM

On a monthly basis, Mergers and Acquisitions magazine polls a group of private equity professionals regarding their expectations for M&A activity in the pending months. During the past year or so, the survey has shown a continued positive trend in private equity optimism regarding getting deals done this year.

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Topics: m&a activity, private equity firms, sellers market

New Middle Market Caucus Formed in Washington

Posted by Carl Doerksen on August 20, 2014 at 8:30 AM

Finally some good news coming out of Washington for owners of lower middle-market companies! A few weeks ago a new caucus was announced that should help to shed light on the needs of smaller business owners in this country.

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Topics: middle market, economy

How Do Equity Firms Operate?

Posted by Carl Doerksen on August 18, 2014 at 8:30 AM

Throughout the years we have examined the ways that private equity firms operate, especially those companies that focus on the lower middle-market (typically companies valued below $100 million). What we have learned, contrary to what the business media often reports, is that firms focused on the lower middle-market invest in companies to GROW them by providing additional capital, marketing skills, managerial talent, and financial controls. They typically do not acquire assets in this niche to tear them apart and sell them separately.

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Topics: partial sale, private equity firms, growing a business

Why Does M&A Activity Continue to Surge?

Posted by Carl Doerksen on August 15, 2014 at 8:30 AM

The title in the Forbes piece summed it up nicely:

Why More Entrepreneurs Will Get A Phone Call Worth Millions

As we have discussed before, current merger and acquisition deal volume and values are surging close to pre-recession levels. And according to Forbes, more and more buyers are simply cold calling businesses around the country looking for good deals (and possibly aren’t limiting themselves to good deals in their desperation to acquire).

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Topics: m&a activity

Due Diligence Issues – How to Alleviate Risk

Posted by Carl Doerksen on August 13, 2014 at 8:30 AM

We are often asked by business owners who attend our M&A workshops to give them ideas regarding areas they can work on before due diligence begins to reduce the perceived risk in their business. If you are not familiar with the due diligence process, typically it is the 60- to 90-day period after the LOI (letter of intent) is signed where the seller provides detailed information to the buyer about his/her business. It can be an intense process, especially if you are unprepared, and can literally chew up much of your time, even if you have an M&A advisor working with you.

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Topics: thinking like a buyer, due diligence

When is the Right Time to Sell a Business?

Posted by Carl Doerksen on August 11, 2014 at 8:30 AM

Recently Sageworks, a financial information company that has been gathering data on small to mid-sized businesses for years, released a study examining the current performance of the business environment for privately held businesses. What they found was very encouraging:

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Topics: selling a business, exit planning, timing

Why Intangible Assets Matter When Selling A Business

Posted by Carl Doerksen on August 8, 2014 at 8:30 AM

This week we’re revisiting a few important topics we’ve discussed in the past. Today we explore the role intangible assets play during the process of selling a business. For the entire piece, read “Identify Your Intangible Assets To Attract Buyers.”

A Peter Drucker quote perfectly summarizes the dilemma between sellers and buyers: 

The buyer rarely buys what the seller thinks he is selling.”

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Topics: intangible assets, selling a business

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