The importance of executing Letters of Intent (LOIs) that thoroughly address all relevant business terms cannot be overstated. The LOI should not be an invitation to further negotiate issues it does not explicitly cover. Rather, it should be the final culmination of the negotiation of business terms, leaving no room for ambiguity particularly in the […]
It’s only agreed when it’s all agreed – M&A Deal Making
M&A negotiations can become acrimonious when you get to finalising detailed documentation. This often arises due to surprises in DD or differences in understanding of a letter of offer, or, the letter of offer misses important items. This may cause delays and changes to price with the deal eventually called off. Significant costs are incurred […]
Business Sale Price Multiples
Business sale price multiples are functions of “factors” such as earnings, EBITDA, EBIT, revenue or some other multiplier, neither of which are “set in stone” and are not precise. Factors and multiples vary with every business sale depending on many issues and the structure of each unique business deal. In pricing a business using EBITDA […]
M&A Success Fees Explained – (Sell-Side)
In order to maximize transaction value, Middle Market sellers and their M&A advisors know that it is in their mutual best interest to reasonably compensate advisors, this typically includes M&A success fees. Where M&A success fees and retainer fees are too low, good advisors will generally walk away from the opportunity with the seller probably […]
M&A Intermediary Services Agreement Explained (Sell-Side)
For privately owned middle market companies the sale of a business is often complex, influenced by the type of business, the market, the buyer, deal structure and potential liabilities. Most deals are unique regarding price and price structure, earnouts, escrows, employment contracts for owners, the owners’ personal tax position, intellectual property ownership, business properties and […]
Valuation – “What is the Value of My Business”, How is it Valued?
How much would you pay for your own business? How do advisors answer a business owners question “what is the value of my business, what will we get for it”? The easiest way to answer is to ask the owner how much they would be willing (truthfully) to pay for their own business? Very often there is a significant […]