Tag Archives: Transaction mechanics

What is a Deal?

For those of us in the merger and acquisition or “deal” business, buying and selling companies is second nature. We live through transaction after transaction, buying and selling companies as routinely as middle market businesses provide their own products or services. But, in most cases, the people involved in the middle market companies we buy and sell go through the merger and acquisition process only one time. Most entrepreneurs and business owners don’t know what to expect from a sale Read More [...]

Selling Your Business The Smart Way on MSNBC

I was recently interviewed on MSNBC's Your Business with JJ Ramberg.   They were nice enough to have me on the show to talk about the things you need to do to start planning for the sale of your business. The key bullet points: 1.  Invest in people and processes 2.  Focus on what you do best, outsource the rest 3.  Create recurring revenue streams 4.  Get your house in order Watch the rest here: https://www.youtube.com/watch?v=pY5eAi9LZLE 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 [...]

Hiring an Intermediary for the Sale of Your Business

Last week, Middle Market Executive published the most recent article in my series on the "Inner Workings of a Deal."  In this article, I explored the decision to hire an intermediary. The article looks at three areas: 1.  Should you hire an intermediary?  While plenty of deals get done without an intermediary, business sale transactions are difficult to complete.  There are a variety of pitfalls and stumbling blocks to getting a deal over the finish line, and deals can take huge amounts Read More [...]

Maximizing the Value of Your Deal: Prepare!

Selling a company requires the same level of planning that any other business activity requires.  With advance planning, you'll be able to significantly increase the post-tax value of a transaction.  Surprisingly, many of my clients don't start the planning cycle until it is too late. Last week, Middle Market Executive published the second in my series on the Inner Workings of a Deal, entitled "Preparing for a Deal: What to Expect When You're Expecting." While my full advice can be seen in Read More [...]

New Series on The Inner Workings of a Deal

I am working with Middle Market Executive to publish a new monthly series entitled "The Inner Workings of a Deal: Tips for a Successful Transaction." As the title suggests, I will over the course of nine articles go through the planning and execution of a middle market transaction, and provide ideas on how to think through your goals, and help form expectations for your "deal." This month, the series launches with a discussion of the sorts of "deals" that are common in the middle market, 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 [...]

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 [...]

Why Sell? No Need to Go it Alone.

"Why do you need to wreck this company?  - Bud Fox "Because it's WRECKABLE, all right? - Gordon Gekko A common misconception among entrepreneurs (and the public) is that buyers of businesses channel Gordon Gekko on a regular basis, looking to destroy rather than build. Nothing could be further from the truth.  Buyers can often provide middle market business owners the opportunity to increase their wealth by collaborating on accelerating growth. Buyers, whether financial or strategic, Read More [...]

Calculating your Company’s True Profitability: What Adjustments to EBITDA are Appropriate?

While hardly the only option, it has become fairly routine for middle market transactions to use EBITDA as the measure of value.  EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization.  So, it is effectively a company's net profit plus any expenses incurred for interest, taxes, depreciation and amortization. Despite sounding like a relatively straightforward calculation, it is important to carefully analyze this number along with the company's financial statements Read More [...]