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Optimal Exit Timing

Posted by Carl Doerksen on April 27, 2015 at 8:30 AM

Nearly every business owner that we meet with asks the same question: When is the best time for me to sell my company? Although this can be quite a complicated decision for many business owners to make, if you take the personal issues out and look at it through the lens of a purely financial decision, the optimal time to exit is when the market tells you it is time and your business indicates the same.

Simply put: Optimal timing is when buyers are active AND your business is performing well.

Unfortunately far too many entrepreneurs ignore the market signs, and when times are good and business is booming, they decide to “hang on just a little longer” under the hopes that the company performance will continue improving … Unfortunately many business owners learned the hard way the folly of waiting when the Great Recession hit and lingered.

As we have said many times before, we are in the midst of one of the strongest seller’s markets in memory.

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Topics: exiting your business, sellers market, Exit Strategy, exit planning

Small Business Loans Increase in 2014 – Bankers Are Confident!

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

One of the surest signs of economic confidence and growth is bank lending activity. An even more telling indicator if you drill into the data is bank lending to small and mid-sized businesses. One of the more common complaints we heard during the Great Recession (and even in the couple of years after it passed) from business owners attending our exit planning workshops was that banks were simply not lending money for growth among smaller entities.

Now that has changed as bankers become more confident in the long-term growth of the U.S. economy and its impact on small business growth. Sageworks, a financial information firm that has been gathering data on small business finance for years (and producing some leading research based on this data), recently released a study indicating banks indeed now are looking at small business loans in a much more favorable light. This is how Sageworks describes the current situation:

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

When Should You Hire An M&A Advisor?

Posted by Carl Doerksen on April 22, 2015 at 8:30 AM

The answer to this question is really one of the most important issues that an owner of a privately held company should thoughtfully consider. If you are like most business owners that Generational Equity works with, a significant portion of your net worth, if not all of it, is tied up in one very illiquid asset: your business.

Think about that for a moment…

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Topics: selling a business, sellers market, exit planning

Employees Are Key to Being Buyer Ready

Posted by Carl Doerksen on April 20, 2015 at 8:30 AM

One of the first items on most buyers’ punch list during due diligence revolves around the capabilities and the quality of the staff working for the company they are acquiring. The reality is if the buyers are unable to retain the current staff post acquisition, and if they are not going to find qualified employees going forward, then they will have concerns about the long-term viability of the organization. This is especially true if the company is significantly dependent on the owner that is selling and exiting.

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Topics: due diligence, exit planning, becoming buyer ready, human resources

Mergermarket and Merrill Datasite Release 2014 M&A Overview

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

One of the nice things about this time of the year if you are doing M&A research is that lots of sources are releasing new reports almost daily regarding last year’s performance and this year’s projections.

What is really exciting is that no matter which study you read and no matter how they slice and dice the data, 2014 turned out to be a record year for M&A activity.

A new study substantiates this theme.

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Topics: projections, m&a activity

PitchBook Indicates A Record Year for Mergers & Acquisitions

Posted by Carl Doerksen on April 15, 2015 at 8:30 AM

As we have examined, 2014 turned out to be tremendously productive year for sellers of privately held companies. The seller’s market that we entered in 2013 was maintained and even picked up steam in 2015. Another source has also substantiated this fact.

According to PitchBook, a leading M&A research organization, in their 2015 M&A Report:

“17,357 transactions were finalized last year, a 12% increase over the 15,453 deals made in 2013. Total value was up about 24%, from $1.02 trillion in 2013 to $1.27 trillion last year.”

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Topics: deal activity, m&a activity, buyer activity

U.S. Manufacturing and M&A

Posted by Carl Doerksen on April 13, 2015 at 8:30 AM

The past few years have revealed a new trend in mergers and acquisitions (M&A): the recovery of the manufacturing-related deal. As we have discussed in the past, if you own a manufacturing entity housed in the U.S., you may be sitting on a very valuable business and not even be aware of it.

Recently The M&A Advisor, along with Foley & Lardner LLP, released a study entitled “Additive Manufacturing – The Next Generation.” The focus of the report was interesting because it was based on a roundtable discussion from late last year examining the role that M&A is playing in the resurgence of manufacturing activity in the U.S. Here are some of their findings:

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Topics: u.s. manufacturing, offshoring, m&a activity

Business Owners and Retirement – The No-Plan Pain

Posted by Carl Doerksen on April 1, 2015 at 8:30 AM

A few weeks ago we published an article discussing how vital it is to hire a team of professionals to help you effectively plan, create, and conclude your exit plan. Now a recent article in USA Today supports that notion. Entitled “Retirement: Why Small Business Owners Don't Save,” the articles ultimate conclusion was this:

“Robert Bosart, financial adviser with Wells Fargo Advisor's Group in Birmingham, Mich., says entrepreneurs and small-business owners need a team. ‘They need a CPA, a financial planner and a good attorney on the estate side. There is a realization once your head comes out of the clouds that, 'I need professionals guiding me.' It's a partnership.’"

Of course to this team listed above we add a vital partner: an M&A advisory firm/consultant!

And why is a team important?

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Topics: retirement, exiting your business, Exit Strategy, exit planning

The Acquisition Trends of U.S. CEOs

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

A lot of questions have been asked this year about the current merger and acquisition (M&A) cycle, and the real issue behind the questions is this: How long will the current sellers market remain in force?

Given that last year was nearly a record year in terms of volume and was a record year in terms of value, business owners that attend our exit planning seminars often wonder, how long will this continue?

The reality is the factors underpinning the market in 2014 are still in force this year. Even with interest rates expected to increase sometime in 2015, they will still be far below historic levels and should not impact deal making that dramatically.

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Topics: corporate strategics, deal activity, selling a business, finding a buyer, acquisitions

Strategic Buyers’ M&A Initiatives in 2015 and Beyond

Posted by Carl Doerksen on March 27, 2015 at 8:30 AM

As much as we talk about private equity playing a key role in middle-market merger and acquisition (M&A) activity, it is important to remember that strategic players are also a key buying group driving activity in this sector. Both groups bring differing strategies and goals to their acquisition programs but they ultimately want the same thing: To find companies in the middle market that are profitable, growing, and “buyer ready.”

Recently Firmex and Mergermarket combined to survey corporate leaders (from now on referred to as strategic buyers) regarding their expectations for M&A activity in U.S. and Canada going forward. Their report, entitled “Mid-Market: The Crux of North American M&A,” is a great examination of how leaders of these strategic players in North America are viewing the M&A environment they face.

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Topics: corporate strategics, m&a activity, sellers market

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