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5 Issues Business Buyers Like To Avoid

Posted by Carl Doerksen on September 2, 2015 at 8:30 AM

Professional buyers are typically looking for well run, profitable businesses. That statement probably sounds a bit elementary, but the reality is a buyer who looks at dozens of opportunities annually (and in some cases monthly) quickly cuts through the verbiage in offering documents to locate companies that have features that reduce the level of perceived risk.

Risk is the factor that impacts deal valuations, terms, conditions, and ultimately your quick and timely exit from the business. Simply put, the more risk associated with your company, the lower the valuation (all things being equal); conversely, as risk or the perceived risk is reduced, the value of your company in the eyes of the buying community will be enhanced.

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Topics: thinking like a buyer, becoming buyer ready

The Key Role of M&A Advisors in Exit Planning

Posted by Carl Doerksen on August 31, 2015 at 8:30 AM

At some point during the day, nearly every business owner that attends our M&A conferences begins to wonder, “Why do I need to hire these guys to sell my company? With all the info they have given me, I will just do it on my own.” That will certainly save you some upfront costs in the form of our commitment fees, but in the end chances are good you will leave a significant amount of money at the closing table.

Why?

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Topics: due diligence, selling a business, exit planning, becoming buyer ready

Family Buyouts – The Challenges of Cashing Out Family Members

Posted by Carl Doerksen on August 28, 2015 at 8:30 AM

In the course of my daily readings I came across a tremendous article covering the downside and risks associated with intra-family buyouts and succession. Penned by John A. Davis, senior lecturer in the Entrepreneurial Management unit at Harvard Business School, the piece examined one tragic story of family transition gone bad, using it to point out some of the pitfalls of family succession and how NOT to manage it.

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Topics: succession planning, family dynamics

DealForce – A Unique Benefit to Our Clients

Posted by Carl Doerksen on August 26, 2015 at 8:30 AM

A few weeks ago we published an article announcing our new deal portal named DealForce. This new system was launched in November of 2014 and was designed to:

Allow buyers to browse all deals, or narrow their search based on EBITDA, region, revenue, keyword, or client ID. To utilize the DealForce website most efficiently, buyers can customize their profile by setting specific investment criteria to receive email notifications for any deals that match their profile. Buyers will also have access to Generational Equity’s electronic versions of client profiles, as well as be able to sign NDAs electronically. DealForce aims to make Generational Equity’s deal flow as visible and user-friendly for buyers as possible.

After we published the piece, I realized that even though this is an excellent, timesaving tool for buyers, the real beneficiaries are our clients because DealForce enables us to speed the velocity of our deals into the market and significantly enhances our clients’ visibility to the buying community.

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Topics: selling a business, finding a buyer, dealforce

U.S. and U.K Dealmaking – Mutual Attraction

Posted by Carl Doerksen on August 24, 2015 at 8:30 AM

As we discussed in a prior postings, North American-based companies are becoming quite acquisitive in the U.K. According to PitchBook data, companies with U.S. headquarters are very active across the pond:

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Topics: sellers market, exit planning, timing

M&A Strategies – Why Your Assumed Buyer May Not Be Your Optimal Buyer

Posted by Carl Doerksen on August 21, 2015 at 8:30 AM

Quite a few of the business owners we meet with at our M&A seminars tell us that they know exactly who the buyer of their business will be. When we explore that idea with them, the “perfect” buyer from their perspective is typically their key competitor located across town. So it is always interesting for them to learn a key concept that we teach in our seminars: One buyer is no buyer. The concept, also known as a limited auction, is usually a topic from the seminar that they remember years later when I conduct our post closing client testimonial interviews.

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Topics: buyers, selling a business, finding a buyer, selling your business

Building a 'Buyer Ready' Business – Removing a Family Member When Necessary

Posted by Carl Doerksen on August 19, 2015 at 8:30 AM

Owning and operating a family company can be tremendously rewarding as well as hugely challenging. Unlike a non-family-managed firm, where you can make business decisions that don’t involve family relationships, decision making in privately held companies can be far more complicated.

This is especially true if you have several generations involved ranging from the original founder through direct siblings and grandchildren. And it gets even more complex if you have 5-6 generations involved and multiple extended family members occupied in various aspects of the company. You then have to factor in the institutional memory of the organization relating to the original founder(s), which can impact decision making for years.

So it was with great interest I read a recent article written by John A. Davis, a senior lecturer in the Entrepreneurial Management unit at Harvard Business School. Entitled “Managing the Family Business: Firing the CEO,” Mr. Davis does a great job examining one of the toughest decisions a family-owned business can make: removing underperforming family members from key leadership positions.

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Topics: succession planning, family dynamics, becoming buyer ready

Recasting of Financials – A Key First Step in an M&A Process

Posted by Carl Doerksen on August 17, 2015 at 8:30 AM

One of the most compelling topics that we discuss in our M&A seminars is the concept of “recasting” financials. The notion that you as a business owner can ethically, legally, and morally re-state your financials to more accurately reflect the company’s true earnings is a radical idea to most business owners. In fact, when I conduct post deal interviews with our clients and the topic of the seminar comes up, recasting is one of the two items that they recall months, and in some cases years, after attending our seminar (the other topic that is universally remembered is the “one buyer is no buyer” concept).

Let’s face it, you and your accountant have taken every step legally possible to suppress your company’s earnings throughout the years. This is one of the few benefits of owning your business; you are allowed to retain as much as you can and enjoy the perks of being the owner by expensing some items that are discretionary in terms of operating the business.

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Topics: recasting

How Do Private Equity Firms Add Value?

Posted by Carl Doerksen on August 14, 2015 at 8:30 AM

On July 7 Clearview Capital announced that it sold one if its holdings, the QualSpec Group, to Team, Inc. According to the press release:

After a very productive nearly seven-year run during which revenue and EBITDA more than tripled, the QualSpec Group ("QualSpec") has been sold by Clearview Capital Fund II, LP ("Fund II") to Team, Inc. (NYSE: TISI) for $255 million cash plus the potential for an additional payment of up to $10 million based on the achievement of certain financial targets for the 2015 calendar year.

What caught my eye was the fact that during the seven-year time frame that Clearview participated in the ownership of the company, revenue AND earnings both tripled.

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Topics: add-on company, platform company, partial sale, private equity firms, case study

M&A Basics: Let The Buyer Tell You What Your Company Is Worth

Posted by Carl Doerksen on August 12, 2015 at 8:30 AM

One of the most important concepts that you need to consider when marketing your business to buyers is this:

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Topics: selling a business, selling your business, m&a basics

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