Companies That Have Sold Businesses with Generational Equity in 2014

Posted by Carl Doerksen on September 19, 2014 at 8:30 AM

Quite a few times during the past several months we have talked about how merger and acquisition (M&A) activity in the market is up in 2014 and it is up significantly with Generational Equity so far this year. I thought in this posting we would review a sampling of some of the recent deals we have closed so that you can get a flavor for what is happening in the real world of M&A.

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Topics: deal activity, exiting your business, m&a activity

Do Private Equity Firms Invest in Small Companies?

Posted by Carl Doerksen on September 17, 2014 at 8:30 AM

We are asked the question in the title of this piece quite often at our exit planning seminars. Because it is an area of interest for most business owners, we spend time on it in the teaching we do on the merger and acquisition (M&A) process. And even though we know equity firms are interested in lower middle-market companies because they tell us so (we have more than 34,000 registered buyers in our buyer database – buyers who have told us exactly what their investment criteria are), the data continues to amaze us.

The latest research from PitchBook* illustrates my point:

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Topics: deal activity, selling a business, exiting your business, finding a buyer, private equity firms

What Are Add-Ons?

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

Equity firms specialize in acquiring platforms and then during the ensuing 5- to 7-year “hold period” make additional investments in synergistic companies in order to expand the platform far beyond the size of the initial investment. These additional investments are called “add-ons” or “bolt-ons.” These descriptors refer to the fact that the subsequent investments are acquired and then rolled into the platform acquisition. They are typically “additive” and enable the equity firm to grow its investments beyond just organic expansion.

This strategy has become extremely popular for equity firms to pursue, according to PitchBook, a leading research company focused on private equity and venture capital firms. They do a great job compiling research on an industry that is notoriously secretive.

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Topics: add-on company, partial sale, Exit Strategy

M&A Activity in Canada

Posted by Carl Doerksen on September 12, 2014 at 8:30 AM

As we have discussed in past posts, merger and acquisition (M&A) activity is experiencing a significant lift in 2014. This is not only true in the U.S. but it is also occurring in Canada. According to a recent article in PE Hub:

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Topics: canadian m&a activity, economy, exit planning

Protecting Your Financial Legacy

Posted by Carl Doerksen on September 10, 2014 at 8:30 AM

There is an old Scottish proverb that goes something like this: “The grandfather buys, the father builds, the son sells, and the grandchild begs.”

This saying is referring to the transfer of wealth from generation to generation. Sadly, as we have seen over the decades, it is often true. A family creates a business that is well run and profitable, and as successive generations take the reins, too often the investment and the legacy in the business is completely lost through bad management, lack of focus, and poor decision making.

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Topics: baby boomer business owners, retirement, succession planning, exit planning, family dynamics, becoming buyer ready

Positive Economic News: Manufacturing Recovery

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

The title of a recent BusinessInsider.com article really caught my attention: Business Is Booming in the U.S.

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Topics: u.s. manufacturing, economy

What is an Emergency Operating Plan?

Posted by Carl Doerksen on September 5, 2014 at 8:30 AM

Today we are going to talk about a topic that no one really wants to discuss: What would happen to your company if an unfortunate event occurred and you were no longer able to run it? Who would step in to fill your shoes if for some reason you were incapable of being there?

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Topics: succession planning, becoming buyer ready

The Value of an M&A Advisor

Posted by Carl Doerksen on September 3, 2014 at 8:30 AM

Business owners that we meet will typically get around to asking us the same question: Why should I hire your firm when finding a buyer for my company? Why can’t I just attract a buyer and close the deal myself?

Our answer is always the same: You can. Lots of businesses exchange hands every day without using a professional merger & acquisition advisory firm. You could possibly do this as well. However, it has been our experience that all too often business owners who are experts in running their businesses are not experts in selling them to an optimal buyer. Chances are good that most business owners will only sell one company in their careers. As the old saying goes, practice makes perfect. If you only do it once, that is not a lot of practice!

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Topics: selling a business, selling your business, exit planning

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

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