Category Archives: Valuation

Institutionalize Your Business Before You Sell It

The more you institutionalize your company, the more value it will have in a transaction. Middle market companies often suffer from the effects of transitioning from an entrepreneurial activity to a more formalized business operation. The more you can accelerate this transition prior to a deal, the more value you will drive to your business in a transaction. This transition generally occurs as a company hits
 revenues of $10 million or so, but can often last well
 up into the $100 million Read More [...]

Five Steps to Retire and Sell Your Business

I was recently asked to record a podcast on planning for the sale of your business with Andy Asher of bloomerboomer.com.  The host asked me to discuss ways to best prepare for a sale of your company and to get the highest value from a potential transaction. You can listen to the podcast here:   Much of the content is based on my recent article for the same website:  5 Things to Consider if You Plan to Retire From and Sell Your Business in 5 Years. Read More [...]

New Articles

Last week, I had two articles released by leading publications. First, Middle Market Executive published "Increasing Your Company's Value by Streamlining the Black Box." Generally, the main takeaway from the article is that you should review your balance sheet to ensure that you are deriving as much value from it as possible. While it is possible to get value from excess capital present on your balance sheet during a transaction, it is much easier to streamline your balance sheet and extract Read More [...]

Understanding Working Capital in a Transaction

Handling working capital in a transaction is an issue that is often difficult for sellers of middle market companies to come to grips with.  While grossly oversimplified, in most cases, the practical definition of working capital for transactional purposes usually means the amount of the company's accounts receivable less the amount of the company's accounts payable.  (Other items can be important from company to company including inventory, accrued compensation, and other amounts, but in most Read More [...]

The Value of Having a Management Team in Place for a Sale

Recent data suggests that ensuring that your company has adequate management in place that will continue downstream of a sale transaction can be worth a significant amount of money to you as a seller. GF Data, one of the firms that aggregates data on private equity transactions in the middle market, recently published an article entitled "Where have all the Sellers Gone?"  As part of their analysis of 2013 data, the firm analyzed 50 transactions where PE firms acquired companies from individual/family Read More [...]

Buyers Are All About Metrics

Last week, Middle Market Executive published an article I wrote entitled Knowing Your Financial Metrics Can Increase Your Company's Value to Buyers (and Make It Easier to Manage Along the Way). While I won't repeat the whole article here, I wanted to draw your attention to a couple of key points. First, while many middle market owners may feel comfortable managing their companies by "gut feel," buyers expect and want more.  Inevitably, buyers (whether financial or strategic) will feel compelled Read More [...]