In acquisitions, a Letter of Intent, or LOI, is a document that outlines the key business terms the buyer and seller agree to, which later become the basis for all agreements and documents that legally bind a business sale. Common clauses in the LOI should include who the buyer and seller are, purchase price, structure […]
According to the results of the PPCMP (http://bschool.pepperdine.edu/), business owners reported having increased enthusiasm about their company’s growth plans, but almost one-half of them reported the lack of necessary financial resources to successfully execute their growth strategies. There have been about 250 bank failures since the start of the financial crisis in 2007 and with […]
The buyer’s due diligence process deals with the legal, financial and strategic reviews of all of the seller’s documents, contractual relationships, operating history and organizational structure. Due diligence is a process and a test of the value proposition underlying the transaction to insure that the buyer’s company meets the expectations created before the signing of the […]
The value of your company is in the eye of the buyer; therefore, sellers of middle-market companies should position their businesses to drive the strategic value and attractiveness before a possible sell transaction. Enhancing the value of your company is an ongoing process; sellers should prepare their company for sale 18 to 24 months before […]
In the current economic environment, troubled, distressed, insolvent and Chapter 11 bankruptcy businesses are presenting strategic and financial investors with attractive opportunities. Distressed transactions may provide the acquirer with a pathway to: gain access to a new client base or geographic territory; acquire assets at extremely discounted prices; effectively eliminate a competitor; or new technology, […]
Sellers and buyer’s perspective vary greatly when looking at the value of companies. When it comes time to sell, it is important that the seller consider those factors that are important to a buyer. Buyers look at the expectation of future earnings; then use the characteristics below as risk factors affecting, both positively and negatively, the […]
A great amount of real wealth is created when entrepreneurs sell their business. The secret behind ultra-successful entrepreneurs is their development and implementation of an exit strategy and timetable of events beginning with the start their business. The good news is the short and long term successes are not mutually exclusive. Exit planning is absolutely […]
Most M&A professionals will warn you that you can’t keep your intentions to sell your business close enough to your vest. Confidentiality in M&A transactions is a serious concern in four areas: With employees of the selling company With customers and suppliers of the selling company With competitors of the selling company and the public […]
Synergy is the magic dust that allows for the achievement of revenue enhancement and cost efficiencies in business mergers and acquisitions. The value of synergy depends entirely on the assumptions made about how combined businesses will operate after closing. The assumptions are unique to the companies involved in the deal and may not always be […]
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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