Earnouts, although palatable in principle, may be complex in structure, difficult to define, and subject to unintended consequences. Thus, the gut reaction of most investment bankers to the proposed use of earnouts as an instrument to close transactions is unequivocally: “Don’t use them!” This declaration will more than likely be superseded by a full disclosure of the […]
ABOUT THE DEAL: Brasch Constructors, Inc. (also referred to as the “Company” and “Sellers”) has been acquired by A.L. Post, Inc. (“Post” and the “Buyers”). Established in 1989 and headquartered in Louisville, Kentucky, the Company is one of Kentucky’s leading construction companies. From new construction and site evaluation to Design-Build work, Brasch Constructors continually exceeds […]
ABOUT THE DEAL: U.S. Nut and Bolts (the “Company” and “Sellers”) has been acquired by Stock’d Supply (“Stock’d” or the “Buyers”). Headquartered in Louisville, Kentucky, the Company, a full service fastener distributor, has served the commercial, industrial and manufacturer sectors for nearly ten years. Stock’d Supply was born in 1979 as Bolts & Nuts Corporation […]
The most desired transaction for lower middle market business owners contemplating the sale of their business requires deep consideration of the characteristics, motivations, and aspirations of the businesses’ prospective buyers. Customarily, strategic and financial buyers have the largest appetite for acquisitions in the private capital marketplace, and there are significant differences between the two buyer-types […]
Ownership can be a powerful tool in the effort to attract and retain talented people, have employees think and act like owners, create an ownership culture, and build successful succession plans. Restricted stock gives employees the right to earn shares of stock over some period of time through continued service or the accomplishment of certain […]
Detailed Confidential Information Memorandums (CIMs) require collaboration between Sellers and their Investment Banker(s), and will provide prospective Buyers with enough information to make purchasing decisions. Highly effective CIMs consider the Buyers’ perspective throughout the preparation process; accordingly, CIMs must emphasize the value drivers of businesses and all decision-critical content and data. Motivated prospective Buyers expect […]
Most business valuations calculate the value of a private company using fair market value, and this value is rarely suitable for making investment and financing decisions. Fair market value, although compliance-oriented and theory-based, fails to consider a business owner’s objectives or reasons for a transaction. The type of transaction will determine the owner’s exit channel, […]
Since a company owner never knows for sure what exit strategy may be successful, they should always consider decisions based on maximizing company value no matter what strategy is ultimately followed. Company owners should focus on the qualitative factors that drive quantitative results that align and strengthen the organization, improve profitability, enhance access to capital, […]
According to Robert T. Slee, an investment banker and influential author of Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests, US private markets operate on a 10-year transfer cycle, and mid-market companies are currently in the midst of unprecedentedly high valuations and a pre-recession earnings boom (Seller’s Market). Slee’s corroborated data suggest that […]
A solid growth strategy provides companies with a quantifiable vision for growth in revenues and profitability; thereby, enhancing the value of the company post-implementation and increasing its attractiveness to strategic buyers. Company owners must identify the value drivers of their business, determine an acceptable level of risk, and decide on the best method for their […]
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