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,…
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…
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…
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…
What will a strategic buyer pay? Ideally a premium, but what defines a premium? By definition, it is higher than the average price. But if the market will ultimately determine the price, where do you start? Start With the Notional Value A notional value determination is one in absence of an open market transaction, in…
When assembling a buyer list, it does not necessarily need to include immediate competitors. Sellers will know the reputation of these companies in the marketplace and may not want their legacy in such a company’s hands. It is important to understand all of the objectives/considerations of the seller. Realizing the most money possible is an…
Finding a buyer – the highly anticipated buyer is rarely the actual buyer. When an M&A Advisor is presenting his or her credentials to a prospective client, the part that typically has the most impact is illustrating that, either he or she already has a relationship with the perfect buyer, or that they can readily…
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 bird in the hand? Fiduciary duty…
