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IT Due Diligence: An Important Item to Prepare For

Posted by Carl Doerksen on July 25, 2016 at 8:30 AM

In past years, buyer due diligence focused largely on the financials, operations, marketing, sales and HR of the target company. Now, however, due diligence also encompasses IT because buyers are realizing that the company they are acquiring is only as strong as the weakest link in its IT system.

For this reason we are encouraging all of our clients to re-double their cyber security efforts to ensure their computer systems are protected with solid firewall, malware, and virus software policies in place.

This is very important because the costs of data breaches now are estimated to run as high at $4 million on average based on a recent survey conducted by IBM:

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Topics: due diligence, cyber security

Another Private Equity Success Story

Posted by Carl Doerksen on July 22, 2016 at 8:30 AM

The title of the article in Mergers & Acquisitions magazine caught my attention for several reasons:

Clearview Capital Marks 100th Deal, as Lower Middle Market Percolates

It may surprise you to learn that a private equity firm (PE) that manages to escape the mainstream media headlines has just completed its 100th acquisition. Although this is a significant milestone and one that should be celebrated, Clearview is not in the minority when it comes to acquisition activity like this. In fact, Clearview is one of the literally hundreds of equity firms that are quite active right now, especially those who are focused on the “lower middle-market.” Hence the latter portion of the title: the lower middle-market is percolating.

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Topics: add-on company, platform company, private equity firms

Exit Planning Mistake No. 3: One Buyer is No Buyer

Posted by Carl Doerksen on July 20, 2016 at 8:30 AM

This is the third in a series we started a few weeks ago that examines common exit planning mistakes that we see business owners make when exiting their companies via an M&A event WITHOUT professional M&A advice. The first two covered:

These were so well received by our readers that we decided to continue the series and today we examine two concepts that most attendees at our M&A conferences find to be most enlightening:

  • The importance of casting a wide net when looking for buyers.
  • Not assuming at the outset specifically who your buyer will be.
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Topics: exiting your business, finding a buyer, exit planning

Building a Buyer-Ready Business – Good Financial Management is Vital

Posted by Carl Doerksen on July 18, 2016 at 8:30 AM

On several occasions during the past few years we have examined steps you can take as a business owner to create a buyer-ready business. This is a term we coined years ago to sum up the concept of key strategies you can implement prior to marketing your business (or in some cases, while you are in the market) to improve not only the sale-ability of the company but also enhance its value.

These items are two sides of the same coin and when you think about it, both are equally important. Anything you can do strategically to lower the risk associated with your company’s acquisition in the eyes of buyers – and steps you can take to make it more attractive – will both enhance its value to buyers AND improve the time it takes to close your transaction.

One of the most important steps you can take to improve both the sale-ability and valuation of your business is to focus on two things:

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Topics: thinking like a buyer, becoming buyer ready, financial statements

How to Develop a Relationship with a Private Equity Firm

Posted by Carl Doerksen on July 15, 2016 at 8:30 AM

A few weeks ago The M&A Source published an article on their website that was quite interesting. It was based on an interview with Brett Holcomb, Vice President of Prospect Partners, a lower middle-market private equity (PE) firm. It was entitled “10 Key Questions to Ask Before Choosing a Private Equity Partner” and was very insightful because it was written from an insider’s perspective of how to build a solid relationship with a PE investor.

I thought I would share some of these 10 questions with our readers since I know that a good portion of you will eventually be examining PE firms as possible suitors for your business.

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Topics: buyers, selling a business, finding a buyer, private equity firms

Exit Planning Mistake No. 2: Going Alone

Posted by Carl Doerksen on July 13, 2016 at 8:30 AM

Last week we started a blog series examining some of the critical exit planning “miscues” that we frequently encounter when we meet with business owners. Our first piece discussed the critical need to ensure that you maintain focus on operating the company while at the same time negotiating with buyers. Because if you don’t, it will only hurt your negotiations with buyers if the business begins to miss its forecasted revenue and earnings.

In that article we made reference to the second exit planning mistake, which is what we will cover in greater detail today: not using professional exit planning advice.

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Topics: selling a business, exit planning

What is a Platform Acquisition?

Posted by Carl Doerksen on July 11, 2016 at 9:00 AM

The title of the press release caught my attention: Pfingsten Invests in Oliver Printing Co. - First Platform Investment for $382 Million Fund V.

Upon further research, it turns out that Pfingsten, a private equity firm focusing on middle-market companies, has partnered with a printing/packaging industry veteran, a fellow by the name of Brian Dunsirn, to aggressively create a new packaging entity starting with this platform acquisition.

I used several M&A buzz words in the preceding paragraph so let me define them so we are all clear on the meaning of:

  • Platform company and
  • Middle market
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Topics: platform company, private equity firms

Current Trends in Manufacturing M&A Activity

Posted by Carl Doerksen on July 8, 2016 at 8:30 AM

Recently Mergers & Acquisitions magazine, in conjunction with RSM, published their Mid-Market Pulse (MMP), which is an index measuring the predictive sentiments of North American middle-market-focused dealmakers. Typically the MMP is an analytical barometer that measures expectations about future deal-making in the entire market as well as in specific industries.

This issue of the MMP focused on private equity’s interest and involvement in manufacturing sectors. Essentially, based on their surveys, middle-market dealmakers are very bullish on this segment of the economy despite the recent slowing in several manufacturing categories.

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Topics: projections, middle market, u.s. manufacturing, m&a activity

Exit Planning Mistake No. 1: Losing Focus

Posted by Carl Doerksen on July 6, 2016 at 8:30 AM

One of the first things we emphasize to our clients when they begin the process of looking for optimal buyers is this: Do not lose focus on running your company!

This may sound simplistic. However, we often meet business owners at our exit planning conferences who share with us their lamentation about losing a deal with a great buyer because at the 11th hour of negotiations it became apparent that the company was significantly off its projected earnings due to the owner being distraction while trying to find a buyer.

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Topics: selling a business, exit planning

Selling Your Business To Employees – Issues to Consider

Posted by Carl Doerksen on July 1, 2016 at 8:30 AM

Often when we meet with potential clients and do our initial compatibility analysis to ensure that our services are a good match for the company’s, we are frequently told, “I sure would like to take care of my wonderful, loyal employees and sell the business to them.” Although we find this to be a noble sentiment, as history has shown, selling to one’s employees carries big potential risks.

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Topics: selling a business, selling your business

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