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The working capital adjustment in an acquisition is always a point of negotiation in an M&A transaction. Simply put, working capital is

A working capital adjustment is required when a going concern business is acquired by way of a share purchase agreement. This is the case for two main reasons: (i) because working capital changes every day as revenues come in and payments are made and (ii), because working capital is easily manipulated in a material way…

Rising interest rates will lower the value of your Company. How? Because valuation multiples are based on interest rates; let me explain.

Rising interest rates will lower the value of your business. Why? Because valuation multiples are based on interest rates; let me explain… Interest rates in the United States reached an all time high of 20 percent in March of 1980 and then declined to a record low of 0.25 percent in December of 2008. Since…

When niche businesses receive unsolicited interest from key customers or suppliers, this can leave the owners wondering,.. is there another logical buyer for my business? Should you consider hiring an agent at that point and engage in a process that could take many months to complete or take the...

When niche businesses receive unsolicited interest from potential buyers this can leave the owners wondering, who is the best buyer for my business?

#unsolicited-interest

Mergers & Acquisitions

What is a financial buyer and what logic drives their approach to price and structure? A financial buyer is one who is buying strictly for a financial return. Financial buyers include individual investors, who have either saved up or cashed out, and institutional funds such as Venture Capital...

What is a financial buyer and what logic drives their approach to price and structure? A financial buyer is one who is buying strictly for a financial return. Financial buyers include individual investors, who have either saved up or cashed out, and institutional funds such as Venture Capital Funds, for early stage high growth opportunities,…

Five Examples of acquirers paying a premium. What are buyers looking for in acquisition targets? The objective of an acquisition is to create value. This is accomplished by improving profitability and/or reducing risk; both enhance earnings quality and drive value. More specifically, acquisition...

Five Examples of acquirers paying a premium. What are buyers looking for in acquisition targets? The objective of an acquisition is to create value. This is accomplished by improving profitability and/or reducing risk; both enhance earnings quality and drive value. More specifically, acquisition objectives can include achieving economies of scale or economies of scope, vertical…

#what-makes-a-good-buyer

Due diligence is an investigation of a business or person prior to signing a contract. More specific to a business sale, business due diligence is the process of verifying the representations made in the CIM and other marketing materials provided to the potential acquirer by the seller. For...

Due diligence is an investigation of a business or person prior to signing a contract. More specific to a business sale, business due diligence is the process of verifying the representations made in the CIM and other marketing materials provided to the potential acquirer by the seller. For example, in a CIM it may say…

#virtual-data-room

What is the difference between a business broker and an M&A Advisor? The main difference is in the size of transactions they work on. Business brokers deal with smaller businesses, retailers, restaurants, franchisees while the term M&A Advisor is more associated with investment banking firms who...

What is the difference between a business broker and an M

#ma-milestones

How do you select the best possible buyer for your business? Simply put, companies with an ability to pay and an interest in paying a premium. Assessing the ability to pay for private companies is not as straightforward as it is for public companies, which have to disclose their financial...

How do you select the best possible buyer for your business? Simply put, companies with an ability to pay and an interest in paying a premium. Assessing the ability to pay for private companies is not as straightforward as it is for public companies, which have to disclose their financial information to their shareholders (by way of EDGAR in the…

#synergy

There are two broad answers to the question of: how do I attract a high valuation multiple for my business. The first concerns the business itself (see: Preparing a Business for Sale) and the second concerns the sale process. The when, to who, why and how much of selling. We will address the...

There are two broad answers to the question of: how do I attract a high valuation multiple for my business. The first concerns the business itself (see: Preparing a Business for Sale) and the second concerns the sale process. The when, to who, why and how much of selling. We will address the sale process here. …

#process

How does an M&A advisor add value to the sale process? There are many non-price issues that arise during an M&A process. An M&A advisor can keep the process running smoothly and ensure the post sale relationships are started on the right foot. The following are three areas where an advisor...

How does an M

#three-areas-where-an-advisor-improves-the-chances-of-a-successful-transaction

Non Disclosure Agreements (NDAs, also called CAs for Confidentiality Agreements) are contracts that stipulate that information received from a counterparty will only be used for the purpose as defined in the NDA and will not be used as a basis for competitive tactics or shared freely with...

Non Disclosure Agreements (NDAs, also called CAs for Confidentiality Agreements) are contracts that stipulate that information received from a counterparty will only be used for the purpose as defined in the NDA and will not be used as a basis for competitive tactics or shared freely with others. NDAs are signed in cases of…

#stand-still

Advice and answers to questions about mergers, acquisitions, valuation, buying or selling a private business, and how the M&A process works

Many owner-entrepreneurs are cautious about exploring the benefits and opportunities Private Equity (“PE”) can bring to a growing business. To summarize some general characteristics. PE investments are typically: - Control positions ranging from 51% to 100% equity - Held for five to seven...

Many owner-entrepreneurs are cautious about exploring the benefits and opportunities Private Equity (“PE”) can bring to a growing business. To summarize some general characteristics; PE investments are typically: – Control positions ranging from 51% to 100% equity – Held for five to seven years – Part of a strategy to grow a strong competitive position in…

#private-equity

Public company take-over bids typically consist of all cash or a combination of cash and shares. Consideration in private company acquisitions will usually include a sizable portion in cash (50 to 100%) but will often include an unsecured note and/or an earn-out as well. This is typically...

Public company take-over bids typically consist of all cash or a combination of cash and shares. Consideration in private company acquisitions will usually include a sizable portion in cash (50 to 100%) but will often include an unsecured note and/or an earn-out as well. This is typically because: (i) the buyer does not have (or have…

#vtb

Winners remorse - Does the M&A process lead buyers to overpay? Not necessarily; the process extracts the highest price for the seller but ...

Winners remorse: does paying more for a business than anyone else mean you have overpaid? Not necessarily. When managing a company divestiture, there comes a point when interested parties are requested to provide non-binding expressions of interest (called an EOI, this is the first indication of value based on reviewing the CIM and answering select questions,…

#winners remorse

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Mergers & Acquisitions