Imagine a buyer has offered you a six-multiple on EBITDA in their initial letter of intent. Unfortunately, you don’t have clean financials that have been tested and scrutinized by an outside party. Once the buyer vets your financials, they uncover some adjustments they don’t agree with and revenue that was accounted in the wrong period.
Imagine your kids going to school, kindergarten through high school, without ever receiving a report card. As a parent, how would you know when they needed additional help? If they were ready for a new challenge? Whether you should help them prep for college or consider alternative training?
At the end of the day, it would be hard to make well-informed decisions. Your kids would go to school and put in the time every day, and you’d have no idea if they were doing D or A-level work.
Lower-to-mid-size businesses typically go to market without a preset asking price. You will set an internal benchmark with your M&A advisors, but we won’t publish or discuss your value expectations with potential buyers.
Recently, we did an estimate of value (EOV) for a company, calculating that it would sell for around $8 million or $9 million in the current market. It’s a nice business and I think that number is achievable. We might even get a bit more with a strategic buyer.
DealCoach's Estimate of Value (EOV) provides owners with a realistic understanding of what the market would most likely bear for their company in today’s marketplace.
If you’re one of the several million baby boomers thinking about selling their company in the near future, you might be wondering how long the whole process will take and what to expect along the way.
If you have a focused advisor who is working the deal, expect two months of initial prep, 30 to 120 days for marketing, one month for negotiations, and roughly 60-90 days to handle due diligence, financing, and legal. Here’s the process in more detail:
By Scott Bushkie, Cornerstone Business Services, Inc. | March 23, 2016
We tend to gravitate toward what feels familiar. That’s why many business owners think about growth in terms of organic strategies like opening a satellite office or expanding capacity. M&A feels big and risky, like something only large companies do.
Last year set new records for M&A activity. Big corporations drove the market, and that momentum was also reflected in the lower middle market and Main Street. But not everyone got a deal done last year. Let’s review why some business transitions go sour:
Most entrepreneurs are a rare breed, full of optimism and confidence. But that same optimism it takes to run a business is the same sense of faith and certainty that can make them feel invincible. Every economic downturn is the last, every prospect is the next big sale, and every good leader retires happily with their family.
Unfortunately, none of us are invincible. And if you’re like many business owners, a significant portion of your wealth—and your family’s income after your death—is tied up in the business.
If you’re one of the several million baby boomers thinking about selling their company in the near future, you might be wondering how long the whole process will take and what to expect along the way.
In a nutshell, if you have a focused advisor who is actually working the deal, expect two months of initial prep, 30 to 90 days for marketing, one month for negotiations, and roughly 60 days to handle due diligence, financing and legal. Here’s the process in more detail.