Tag Archives: Negotiations

Traffic Builders has been acquired by GS Marketing

ABOUT THE DEAL: GS Marketing, Inc. (“GSM” or the “Buyers”) has acquired Traffic Builders, Inc. (the “Company” or “Sellers”). Headquartered in Louisville, Kentucky, Traffic Builders is a multichannel direct marketing agency servicing over 300 automobile dealers of all manufacturer types across the United States. The Company, with approximately 20 full-time employees, is an expert in creating […]

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Lynn’s Paradise Café has been acquired by Fresh Capital Group

ABOUT THE DEAL: Lynn’s Paradise Café (also referred to as the “Café” and “Sellers”) has been acquired by Fresh Capital Group (“Buyers”). Opening its doors in 1991, in Louisville, Kentucky, Lynn’s Paradise Café created a unique setting that has continuously attracted a diverse clientele from around the world. The Café has always made customers feel welcome; presenting […]

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Know When To Hold ‘Em

Exiting a business at its highest value requires business owners to have a deep understanding of their business, their industry, and the marketplace at large. As the publisher and businessman Malcolm S. Forbes said, “the best vision is insight.” Timing the market necessitates a business owner’s ability to recognize the not-to-often phenomena of “in the […]

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Looking Back to Move Forward

The Alliance of Merger & Acquisition Advisors (AM&AA) is the premier international organization serving the educational and resource needs of middle-market M&A professionals. AM&AA surveys its membership annually to provide insights into sell-side transaction multiples of earnings before interest, taxes, depreciation, and amortization (EBITDA) and sell volumes completed in the second half of 2014; generating […]

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Earn-Outs: A Viable Solution

A major point of contention between buyers and sellers in M&A transactions is the purchase price. Earn-out agreements provide buyers and sellers with an effective technique to “bridge the price gap.” Although opinions and experiences vary widely, carefully structured earn-outs can mitigate risk and successfully meet the needs of both buyers and sellers. Risk reduction […]

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Hikes Point Paint & Wallpaper has been acquired by Dages Paint

ABOUT THE DEAL: Hikes Point Paint & Wallpaper (also referred to as the “Company” and “Sellers”) has been acquired by Dages Paint (the “Buyers”). Established in 1976 and headquartered in Louisville, Kentucky, Hikes Point Paint & Wallpaper has become the preeminent, independent retailer of high-quality paint and decorating supplies in the region. With three locations, […]

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A. Arnold World Class Relocation has been acquired by the Management Team

ABOUT THE DEAL: A. Arnold World Class Relocation (“A. Arnold” or the “Company”) has been acquired by the Management Team (“Buyers”) of the Company. Established in 1905 and headquartered in Louisville, Kentucky, A. Arnold is one of the largest, independent moving companies in the country; transporting families and entire corporations around the world. Through the […]

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Bull’s Eye: The Net Working Capital Target

In conjunction with the future earnings of a business, merger and acquisition (M&A) deals require the delivery of the ordinary and necessary balance sheet of the business to the buyer. The balance sheet should be adequate for the continued operation of the business and exclude cash and long-term debt (the “Enterprise Value”). Due to the […]

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Good Intentions

The Letter of Intent (LOI) may be the single most important document created during the merger and acquisition process. This document outlines the mutually-agreed upon key business terms between the buyers and sellers. Although nonbinding in nature, sellers should always consider the following before signing the LOI: Provide the most accurate information and data during […]

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Confidentiality: Loose Lips Sink Ships

Nearly every M&A Advisor would agree that confidentiality is the foundation upon which successful transactions are built. Confidentiality is paramount throughout the M&A transaction process, but this is especially true when it concerns: the seller’s employees the seller’s customers and vendors the seller’s competitors and the public public companies and the possibility of insider information […]

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The Honeymoon is Over…

Leading up to a transaction, buyers and sellers of companies can’t help but be enthusiastic about the endless opportunities that lie ahead. With all the synergies, growth possibilities and efficiencies to be realized; what’s not to be excited about!? This Honeymoon phase may continue post-transaction, but as integration becomes a reality, the excitement dissipates and […]

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New Cars for Everyone!!

Commonly referred to in the Letter of Intent (LOI), a clause or similar verbiage may be found asserting that, “from the date hereof, until the closing of the transaction contemplated by this LOI, the Company shall conduct its operations only in the ordinary course of business …” What is the definition of the phrase “only […]

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The Lone Wolf: A Seller’s Nightmare

“Having only one buyer is the same as having no buyers,” is a statement often quoted by professionals in the M&A marketplace. After exhausting every qualified financial and strategic buyer, private equity firms, and the like, and to no avail; what is a Seller to do about the lone prospective buyer? Seller rest assured, if […]

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Who is on the hook?

Earn-out agreements are useful but contentious tools in M&A transactions to bridge disagreements. In an earn-out, the seller agrees that a portion of the deal consideration will be contingent upon the future performance of the company. Sellers must participate in estimating their earn-out expectations and in due diligence of the likelihood of collection. The possibility […]

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So how much is it worth; valuation versus value?

Although both methods use the same reference data and terminology, there is a difference between a formal valuation and the M&A transaction value of a Company. These variations can most simply be thought of as: formal valuations value entities that own businesses and M&A bankers value businesses. The formal valuation tends to be the approach […]

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The importance of the three-party Merger & Acquisition transaction

Almost all M&A transactions consist of a three-party event: the seller, the buyer and the tax collector. A myriad of tax issues must be considered and understood as part of the valuing, pricing, negotiating and structuring of a deal. Proper planning will minimize the tax collector’s share of the deal and maximize the remaining value […]

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The Blind Spot!

In M&A deals, the buyer is purchasing the future earnings of the business, along with the assets that will produce them. Although valuations are initially derived from earnings considerations, the resulting valuation includes the buyer’s right to receive the ordinary and necessary balance sheet of the business; the Company’s Enterprise Value. The Company’s Enterprise Value […]

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Beating double taxation using personal goodwill

What should matter most to a seller of a business are the after-tax proceeds. One of the roadblocks that arise in structuring a business sale has to do with the competing tax consequences of the buyer and seller. If structured properly, the seller of personal goodwill receives significant benefits with no adverse tax consequences to […]

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Navigating the acquisition agreement mind

Negotiating an Acquisition Agreement involves a complex legal process intertwined with critical business decisions. This set of documents and its terms and conditions are surprisingly unique to each deal. Agreements are a tool for allocating risk; the key components include: Consideration: structure scope of purchase, price, how/when paid, deferred consideration, earn-outs, contingent payments, employment/consulting agreements […]

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Due Diligence: Begin with the End in Mind

Confirmatory (final) due diligence in M&A transactions begins following the execution of the Letter of Intent (LOI) and should be completed when the Definitive Agreement is signed; normally, 60 days. The buyer’s purpose in due diligence is to ensure that the Target Company meets the expectations created in the selling memorandum. This process examines the […]

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