Category Archives: The Sale Process

working capital adjustment

Working Capital Adjustment in an Acquisition

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…

Winners Remorse

Buyers Remorse: Does the M&A Process Lead Buyers to Overpay?

Buyers 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,…

How long does it take to sell a company

How Long Does it Take to Sell a Business?

How long does it take to sell a business?  Milestones in a sale process are outlined in the following chart. Milestone          Timeframe Preparation of the marketing materials (by the advisor in concert with the seller) and due diligence materials (by the seller). The documentation including a teaser, CIM and buyer list,…

Selling a Small Business

What are the Steps in Selling a Business?

Steps in selling a business include four phases of progressive information release to smaller and smaller audiences. Phase 1: Prepare Marketing Materials The first document used is called a teaser and is typically only one to three pages in length.  The teaser is a “blind” (i.e. it should include no specific information from which the company name…

earn-out

Form of Payment; Should You Accept an Earn-Out?

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…

Minimize Tax

Shares Versus Assets: It is About Minimizing Net Taxes

How do you minimize taxes payable in a business sale?  Company acquisitions can be in the form of a share purchase or an asset purchase.  Both can accommodate the full transfer of a going concern business.  The fundamental difference is that in a share sale, the shareholders sell their shares and receive the proceeds personally…