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Due Diligence Tests – The Legal Side

Posted by Carl Doerksen on August 29, 2016 at 8:30 AM

A few days ago we published a piece on due diligence, focusing on one of the many financial “tests” that buyers often do prior to closing a transaction in order to have some assurance that their assumptions about the financial health of the transaction are sound. We looked at the Net Working Capital test (NWC) and discovered that even though the idea of the test is straightforward, ensuring that it is done accurately is vital, hence the need for professional help.

Today I thought we would shift our focus from the financial side of the due diligence equation and provide you with insights on the legal arena. One of the complicating issues, as you can imagine, is legal M&A due diligence.

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Topics: due diligence, selling a business, selling your business

What Are Due Diligence Tests?

Posted by Carl Doerksen on August 26, 2016 at 8:30 AM

Over the years we have talked a great deal about due diligence and its importance and impact on deals actually closing. As one of our clients described to me, “The easy part of the M&A process is getting to the letter of intent (LOI). The hard part is once you have the LOI, getting through due diligence…and due diligence was incredibly time consuming.”

His perspective is not unique. Based on post-deal close interviews I have conducted, the sentiments are the same: Be prepared to work really hard for 3-4 months after the LOI.

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Topics: due diligence, selling a business, exit planning

Generational Equity Reaches Major Milestone

Posted by Carl Doerksen on August 24, 2016 at 8:30 AM

That headline in the press release sums up the amazing fact that Generational Equity, a prominent M&A advisory firm in North America, reached an industry-leading 500th closed transaction at the end of June.

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Topics: m&a activity, M&A advisors

An Example Of Private Equity In Action

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

As we have reflected in the past, it is interesting to see the investment patterns of private equity firms that specialize in acquiring privately held, lower middle-market businesses. These firms do their research and focus on business opportunities that make sense and offer growth possibilities over the longer term.

Recently BV Investment Partners publicized an investment that caught my attention for a number of reasons.

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

Private Equity Dry Powder Update – August 2016

Posted by Carl Doerksen on August 19, 2016 at 8:30 AM

One of the interesting trends we have seen the last few years is the accumulation of committed capital on the books of private equity firms. Despite significant acquisition activity, the size of the dry powder (a.k.a. overhang) has remained fairly large. In fact, according to Preqin, the alternative assets industry’s leading source of data and intelligence, private equity firms are sitting on a cash pile of over $800 billion.

Unfortunately far too many business owners are either unaware of this fact and/or they assume that typical equity firms, based on the news they see, only invest in really large companies or in dynamic, growing, high-tech industries.

As we have discussed in past posts, nothing could be further from the truth!

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Exit Planning Mistake No. 6: Not Knowing Your Company’s BEV Before Going To Market

Posted by Carl Doerksen on August 17, 2016 at 8:30 AM

One of the most interesting and befuddling issues we encounter when we meet with prospective clients is this: They all think they know what their companies are worth. However, very few, in fact about zero, have paid for a professional evaluation on the business. So how can they claim to know what the business is valued at?

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Topics: selling a business, valuation, exit planning

What We Can Learn from M&A Deals That Fail

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

A wise man once told me that sometimes the best lessons in life are our failures. We learn more from our mistakes than our successes; sadly, most folks spend more time basking in their triumphs than analyzing their failures.

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Topics: mergers, selling a business, exiting your business, acquisitions, exit planning

The Time is Right for Families to Sell Their Businesses

Posted by Carl Doerksen on August 5, 2016 at 8:30 AM

 

Recently Mergers & Acquisitions magazine met with Mike Taylor of Midwest Growth Partners (MGP) to discuss current market conditions. The gist of the interview drilled into current trends not just in M&A in general but specifically in the lower middle market (LMM), which is usually defined as deals valued below $100 million.

MGP is a “$41 million private equity fund seeking investment opportunities in growth-oriented companies located in upper Midwest communities.” Mike Taylor is a managing partner with the firm and has extensive experience in lower middle-market acquisitions.

And in his view, the time is right for family firms to sell.

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Topics: selling a business, exiting your business, exit planning, family dynamics, timing

Exit Planning Mistake No. 5: Selling at the Wrong Time

Posted by Carl Doerksen on August 3, 2016 at 8:30 AM

A potential client once told me, “I will exit my company when I know the time is right.” When I followed that comment with a question regarding how he would know that the time is right, the answer was, “I just will know.”

Unfortunately far too many entrepreneurs use their gut when it comes to exit planning. Although this method may work for many business decisions, when it comes to monetizing their largest asset, most M&A professionals counsel a more contemplative approach.

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Topics: Exit Strategy, exit planning, timing

Keys to Post-Acquisition Success

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

Unless you have completed an acquisition or been part of one as an integration team, it’s hard to appreciate the work it takes to make a transition successful. Since many of our readers are “sellers,” I thought it might be interesting to take a look at the M&A process from a buyer’s perspective, specifically analyzing the steps that are key in order to improve the odds of post-merger integration success.

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Topics: selling a business, exit planning

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