When it comes to selling a midsize business, the journey from “listing” (going-live) to closing can vary significantly. On average, the process typically spans 9 to 12 months, but this is not set in stone. The timeline is influenced by a multitude of factors, including market conditions, the business’s financial health, and the readiness of […]
Business Valuation and Pricing – Balancing Art and Science
Pricing a mid-size business is akin to blending art and science, with a dash of subjectivity. It involves striking a delicate balance between risk and potential return, all while considering the perspective of a buyer. Below we explore the key aspects of this process. Risk and Return Balancing When determining the price of a business, […]
Business Sale Marketing Processes
Business sales process and marketing takes various forms depending on the type of business, industry, market, financial health and the owner’s preferences. For mid-size businesses, the sale process falls into three typical categories: a negotiated sale, private auction or public auction. A negotiated sale is when only one buyer is in a discussion with the […]
Letter of Intent (LOI) must be Thorough
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 […]
Selling your Business, do what you do not know what to do.
“Do what you do not know what to do” may seem a tongue twisting paradox, challenging to articulate but far more difficult to action as is the reality of change. The decision to sell a business is complicated. It is doing something in which you don’t have much experience. It is doing something that you […]
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 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 […]