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

working capital adjustment

Working Capital Adjustments in an Acquisition

Determination of working capital is always a point of negotiation in a Share Purchase Agreement.  This is different from an asset purchase where the cash held in the business would not be an issue.  However, it should be noted that you can still purchase a going concern business by way of an asset purchase. Simply…

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…

Constellation Software Inc., The Descartes Systems Group Inc., Enghouse Systems Limited, and Open Text Corporation

Four Companies That Know How to Acquire

There have been numerous studies on the difficulties of successfully completing acquisitions.  Some studies suggest that the majority of all acquisitions fail.  We won’t debate what is a success or failure, and over what time frame it should be measured here but what we will do is review four leading Canadian software companies and examine their…

Strategic Buyer

What Will a Strategic Buyer Pay?

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…

Comparable Company Analysis

Valuation – Comparable Company Analysis

There are a number of approaches to valuing a business. There are market based approaches such as public company trading multiples and comparable transaction analyses and cashflow and earnings based methodologies such as the Discounted Cashflow (DCF) analysis. In this post we will review market based approaches.  Let’s start with the easier one to explain;…

asset

Top Five Impediments to Securing Exceptional Value

What are the main impediments to securing exceptional value for small private companies?  Many owner-entrepreneurs develop expectations for their business’ value based on news items and industry chatter about M&A and financing activity.  However, the small percentage of transactions that make the headlines are not reflective of the average transaction.  The factors we see most…

Situations to Avoid When Selling Your Business

12 Situations to Avoid When Selling Your Business

12 situations to avoid when selling your business.  Here we provide common challenges to realizing full value in a sale process. A Must Sell Situation Selling on strength should be your goal but be mindful that the selling window can close anytime.  If you are in a must-sell situation it is critical not convey this…