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 Buy-Side Fees, Risks and Challenges
For M&A Advisors, buy-side representation is inherently more problematic and risky than representing a sell-side client. On the sell-side, an advisor is representing something other people want (always an advantage). When representing the buy-side, we are trying to acquire something someone else owns and perhaps others are interested in too, obviously not as good a negotiating […]
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 […]
Anyone Can Do M&A – Right?
A middle market business owner who chooses to represent himself in the sale of his own business will never know the value of the offer never received, or the deal terms that never were negotiated or the financial sum he left on the table. Why do owners shun M&A Advisor or engage inadequate inexperienced professional […]
Confidentiality Agreement and M&A
Confidentiality is of key importance in deal making and although often considered as a “side-bar” issue, is a foundation to a successful M&A process. When managing a competitive sale process, managing confidentiality allows sellers to maintain negotiating leverage while maximising deal value and terms while ensuring no future damage by unsuccessful buyers. M&A deals […]
Preparing for a Business Sale – Key Elements
Are you preparing for a business sale? Strategic buyers are sitting with a record amount of cash on their balance sheets. As organic growth has been difficult to achieve, strategic buyers have been very active in the acquisition market. Private equity buyers who have raised many millions of dollars are seeking acquisitions. They are the major players […]
EBITDA Multiples Mislead
EBITDA Multiples mislead in valuing a business! Although it is a quick and easy way to view and understand the value of a business, caution must be exercised. When determining the value of a company, close consideration should be taken when using either EBIT or EBITDA (earnings before interest and tax, depreciation and amortisation) multiples and the type of […]
EBIT Multiples and Growth
EBIT Multiples and growth are an ongoing question for many owners looking to sell or buyers looking to buy a company. What EBIT multiple is applicable to my company, what is my company worth, my company is growing or is about to grow; how is the price affected? If the company has been growing, up to what point in the growth […]
How a Higher Price can be Achieved when Selling Your Business
Multiple Bidders In a recent Deloitte survey of executives the most common reasons selected as to how a higher price can be achieved when selling your business was to have multiple competing bidders (44%). Other factors include strength of the management team, their preparation and ability to convey the company goals and objectives (40%). No surprises […]