The Sale Process

The Sale Process

The business sale process has a number of distinct stages and typically takes 6 to 10 months to complete.

The Business Sale Process

Finding the Right Buyer

Finding the Right Buyer

There are strategic and financial buyers. The best buyer is the one that benefits the most from the purchase.

Finding the Right Buyer

Valuation

Valuation

A business's value is determined by market comparables as well as business specific analysis.

Valuation

Best Buyer for Business

How to Select the Best Possible Buyer for your Business

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…

Normalization Adjustments

Normalization Adjustments for Private Companies

Historical operating income of private companies often requires adjustments in order to present a number that a buyer can reasonably expect going forward.  We call these “normalization adjustments”.  Profitable private companies will try to minimize their taxes payable.  This is simply good business practice. However, one must be reasonable; for example, the spouse of an entrepreneur…

Examples of Acquirers Paying a Premium

5 Examples of Acquirers Paying a Premium

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…

EBITDA Multiple

A Multiple of What (and When)?

When you hear an owner of a similar business to yours saying  “I sold my business at a 10 times multiple!”? or … the tech sector is trading at a 25 multiple.  Early stage companies trade at 2 to 3 times.  The question is a multiple of what?  In the first case it might be…

DCF

Valuation – Discounted Cash-flow Analysis (DCF) and Forecasting

Company specific valuation approaches include the capitalized earnings and the Discounted Cashflow (DCF) method.  A DCF requires a forecast of the company’s revenues and earnings and then a terminal value is established (to represent the value beyond the forecast period), all of this is then discounted to arrive at present values to be added up.  The…

how to choose a business broker

5 Things you Should Know About your M&A Advisor

In the process of choosing an M&A advisor to manage the sale of your business, you will undoubtedly have a discussion about valuation and price expectations.  During such discussions, some advisors will lead you to believe they will secure a higher price than others. How much should you weigh such differences in your decision to…

goodwill

Goodwill Transferability is Critical for a Successful Business Sale

Goodwill transferability is critical for a successful business sale.  In many cases, small businesses rely on key management; typically the founder and CEO. The founder and CEO will have developed the IP, maintain trade secrets in his/her head, manage client relationships and sometimes relies on personal trust as opposed to written contracts in client and…