Tag Archives: Value Drivers

BURGER KING® has been acquired by Carrols

ABOUT THE DEAL: Carrols Restaurant Group, Inc. (“Carrols”) (Nasdaq: TAST) has acquired six BURGER KING® restaurants in Kentucky and Indiana. Headquartered in Western Kentucky, the franchisee owns and operates six restaurants, and employs nearly 180 people. Over the last thirty years, the franchisee has built a talented workforce and a loyal, consistent, and predictable customer […]

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The Prospect Village Shopping Center has been acquired by Kroger

ABOUT THE DEAL: The Kroger Co. (NYSE: KR) has acquired The Prospect Village Shopping Center. Built in 2000, the Center is approximately 153,486 square feet, and anchored by a newly renovated Kroger Marketplace. Located on Hwy 42 in northeast Jefferson County in Prospect, Kentucky, the Center is conveniently located in one of the most affluent […]

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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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Emergency Exits!

According to a number of recent surveys, including the Securian Financial Services survey, it’s estimated that less than 30 percent of business owners have an exit strategy. These figures are alarming given the inevitability of an exit, and the fact that most business owners’ accumulated wealth is tied to their businesses. After years of hard […]

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When Opportunity Meets Need

Companies driven by growth strategies need to consider mergers and acquisitions, especially when the following motivations exist: To capture operational synergies To grow market share or access to distribution channels, markets or products To provide new capabilities, technologies or talent Opportunities exist when “targets” provide: Increase scale Broadened product and service offerings Geographic expansion New […]

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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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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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Knowing your key performance indicators

QUESTION: “AS A SMALL BUSINESS OWNER, WHAT CAN I DO IN THIS PRESENT ECONOMY TO PROTECT MY COMPANY?” Know Your Key Performance Indicators! If you are not keeping score, you aren’t going to make it. You must know your numbers! You can start with your monthly income statement and balance sheet. You must identify the Key […]

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The Most Appropriate Process

When discussing the motivating factors of maximizing M&A sale prices, value drivers are best understood in terms of how they influence either expected cash flows (EBITDA) or the perceived risk (the purchase multiple). The significance of the planning and conducting phases of the sales process can often times be overshadowed from heavily focusing on the […]

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Quality of Earnings Assessment

In order to gain insight into a company’s future earnings and cash flows, a Quality of Earnings (QE) assessment must be done quickly after the signing of a Letter of Intent. In the M&A context, the QE of a business refers to how close a company’s earnings are to actual free cash flow. A QE […]

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Strategizing for “The Big Dance”

Having a preliminary valuation performed by a qualified M&A professional is one way for a middle market entrepreneur to identify the issues in their business that should be addressed, cleaned-up, or improved to make their business more successful and eventually more attractive to prospective buyers. A preliminary valuation analysis will identify the “value drivers” of the […]

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In the Year 2030… Succession Planning

There are four types of valuations used to understand middle market transactions and helpful with succession planning: Fair market value, hypothetical concepts, most commonly used in estate, income and gift tax planning or litigation support. Preliminary estimate of value in the market-place; will include strategic values recently paid in an industry. Investment value, value particular […]

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How Seller’s weaknesses are made Buyer opportunities

It is important for the Seller to address Company weaknesses up front in the Offering Memorandum (OM) as opposed to later in the sales process. If not disclosed early, Buyer discovered weaknesses will certainly have price implications and challenge the Buyer’s confidence in the Seller’s management ability and honesty. A simple list of common weaknesses […]

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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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Stock Appreciation Rights (SAR) Plan: Rewarding & retaining key staff in connection with building a business for value or sale

Rewarding key personnel is an important element of many Middle Market M&A transactions. A Stock Appreciation Rights (SAR) Plan is a method for Companies to give their key employees a bonus if the Company performs well financially. Participants do not own stock nor are they required to purchase anything; however, their benefit from the SAR […]

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Normalization of Income

“Normalizing Adjustments” are essential to value a Company and to make meaningful comparisons between a Company’s past and future performances. The normalization of the financial statements should reflect a willing buyer’s expectations for operating results and assist in determining the appropriate future cash flow stream. In order to minimize confusion and disagreements between Buyer and […]

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Avoiding expensive mistakes by understanding multiples of EBITDA

A multiple of EBITDA (earnings before interest, taxes, depreciation and amortization) is a means to reflect the economic value of an operating business and is a significant driver of sale price discussions in M&A transactions. EBITDA represents the earnings stream (free cash flow) produced by a company available for distribution to the investor. Multiples are […]

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