Posted on April 22nd, 2017
During mergers and acquisitions, apparently inconsequential technological issues can materially impact the ultimate value of the business. So how can you improve the value of your business by driving up the value of its technology? These five simple tips help you navigate the process, but they don’t address more complex issues, like technical debt, undiscovered software defects, or privacy and security risks. Those issues require a separate evaluation and strategy.
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Posted on March 15th, 2017
Working capital is a measurement of operating liquidity, most of the time it is calculated as AR, inventory and prepaids minus AP and accruals. Lines of credit are most often excluded as well as cash, long term debt and notes payable. Because working capital is required to run a business, buyers typically require a certain amount of net working capital be left in the business to meet standard operating needs.
Working capital is not typically used in calculating the initial offer price, although it is certainly a critical point of negotiation. But basically, the higher your net working capital, the less money you put in your pocket after a sale.
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Posted on January 23rd, 2017
When buying a company, one key factor in your success is the transition that happens immediately afterwards. You need time with the previous owner to understand how and why they operated the business the way they did. And you need their support to transition customer relationships.
As you think about negotiating for the seller’s time after a sale, think about their role in the business. Do they have a strong, empowered management team? Or did the seller operate the business from a place of tight, centralized control?
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Posted on December 10th, 2016
No one likes to think about all the what-if scenarios in life. Most business owners have no plan for exiting their business at all, much less exiting in the face of conflict or tragedy. As you finalize your business goals for next year, make time to protect your business against the five dismal D’s.
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Posted on August 22nd, 2016
I see business owners approach the sale of their business with one of two mentalities. It’s either maximize my value, or just get me out at a fair price. There’s no right or wrong, but there are pros and cons to each approach.
We’re working with one seller, a younger business owner, who wants to run through the whole process and do everything he can to get the most out of his company. I always say these sellers want to go to sleep at night knowing they didn’t leave any money on the table.
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Posted on August 15th, 2016
When a business owner says it’s time to sell, one of the first questions I ask is, “What’s your timeframe? When do you want to be out?” And the answer I hear most often is, “Yesterday.”
That is a problem. Most business owners underestimate the time it takes to sell and exit their business. It’s not like selling a house, and you don’t get to hand over the keys and walk away on closing day.
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Posted on August 15th, 2016
I just met with a business leader who’s starting to explore his options around selling part of his company. Based here in Northeast Wisconsin, this business is considered an industry leader, well within the top five in its market throughout the U.S.
Because of the company’s size and success, finding a buyer won’t be the tough part. It’s finding the right fit and negotiating for the best terms that will add complexity.
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Posted on July 26th, 2016
When selling your business, one of your biggest hurdles will be that first management presentation or facility tour. This is the first time you’ll meet the buyer face-to-face in a room to talk. This can be as short as 1-2 hours or more often it is a four to six-hour
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Posted on July 11th, 2016
That’s the challenge we’re tackling on three different client engagements right now. In each case, these businesses have a lot going for them. From market leadership, to innovation, to high-quality products, these organizations check a lot of the proverbial “quality business” boxes. The problem is that their financial reporting is …
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Posted on June 26th, 2016
By Scott Bushkie
According to Q1 2016 Market Pulse survey I help coordinate through the IBBA and M&A Source, businesses in Main Street and the lower middle market are taking about nine months to close. New this survey, we asked how much time was taken up in due diligence, specifically what was the time frame from letter of intent to close?
For the smallest deals with a value of less than $500,000, due diligence takes two months. In most other market sectors, due diligence averaged 90 days.
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