Everyone wants to avoid making major strategic mistakes. The problem is that the world is complex and most decision-making models and strategies are based on simple tools and processes. It is difficult to foresee and plan for all the factors that might impact a positive outcome. Therefore, you need to find the weak points in your strategies before the strategy is implemented. This can only be accomplished by applying a rigorous process to your strategic decision making and following it ruthlessly. Seeing where a strategy can go wrong ahead of time means you can take actions to prevent those bad…
Author: Gregory Pearl
Selling A Troubled Company
To start, let’s see if your Company actually is ‘troubled’. Of course, there many different types of ‘troubled’. And some are in more difficulty than others. But you will know it when you see it. Here are some of the characteristics to look out for: Declining earnings or negative earnings Negative book value Rapidly running out of cash Default on bank loans Inability to meet debt obligations Just knowing that a company is in trouble can decrease the time needed to sell the company by addressing the issues that a buyer will be concerned with. Sellers of healthy companies try…
Mind the Gap: Closing The Price Difference Between Buyers and Sellers
In an acquisition situation, there almost always is a price expectation difference between the buyer and the seller. The most important factor in closing that gap is whether the buyer and seller really want to do a deal. And also how much their advisers help to accomplish this. Here are some ideas on how to close the gap through deal structure. A subsidiary is created for the fastest-growing part of the business, in which the buyer/seller share 50/50 in the best-performing part of the business. The next generation of sellers could take back 10% of the transaction in preferred stock.…
Due Diligence Quick and Easy
Due Diligence is the phase in Mergers & Acquisitions that refers to the investigation of a company by a seller after the Letter of Intent is issued. It needs to be completed before the actual sale of the company is completed and the Sale Agreement is signed. The trend is that the time for Due Diligence by a buyer is getting shorter and shorter. In the old days, the due diligence phase could last up to 90 days, sometimes more. Now it usually is under 60 days. Sometimes even shorter. What causes the most time in due diligence? What is…
Why the Rich Keep Getting Richer
Have you ever noticed how an ordinary person or company has one “lucky” random opportunity and then becomes increasingly successful over time, starting with that one opportunity? The success continues for the lucky one as their former peers continue to plod along without much to show. No one could have forecasted the lucky success at the beginning. The recipient of that lucky break is often mediocre. That mediocrity may never disappear but the success continues. As things compound to the extreme, great wealth and prestige may accumulate as a result. What is happening is that the first random success compounds…
How Are Small Businesses Financed?
It is hard to categorize Small Business as to being one type or another. Small businesses and their owners are a very diverse group. For example, this is true for the number of employees in a business. Number of employees is an indicator of size. Depending on how employees are counted and the definition of such, the number of employees can range from zero up to 499. The financing needs of a business can be vastly different based on size and other factors. These other factors can include the maturity of the business (startups, later stage), capital requirements (does the…
The Hows and Whys of Recasting Financial Statements
Businesses have certainly seen a variety of conditions in the last conditions, both up and down. Businesses track their performance using the standard financial statements such as balance sheets, profit and loss (income) statements, cash flow analysis and tax returns. Cash flow analysis is particularly important, understanding how the money is used in the business over time. These performance tracking statements and documentation should reflect the ups and downs of a business over time. Recasting or restating these financial statements are important in determining the value of a business prior to sale. Recasting means a deep analysis to make sure…