Buying & Selling a Company, Exit Planning

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…

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Buying & Selling a Company

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.…

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Buying & Selling a Company, Decision Making

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…

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Business Valuation, Buying & Selling a Company, Decision Making

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…

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Business Valuation, Buying & Selling a Company, Exit Planning

Know These Six Biggie Mistakes When Selling Your Business

I write a lot about the issues that can arise when selling a business.  You may get tired of reading about it … but the once in a lifetime sale of a privately held business is probably the most important transaction in a business owner’s life. So here is another post on the subject. Business owners often underestimate the effort needed for a good outcome in a transaction.  They also over estimate the value and salability of their companies. Consider these items: Overestimating the value of the company.  The listing price should be based on the fair market value of…

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Buying & Selling a Company, Exit Planning

Myths About Selling A Business

The business owner will only sell their business once.  It is the most important transaction of their lives. The process is complex with legal, tax, valuation and personal planning issues all co-mingled. If you are a business owner looking to sell a business soon, here are some of the ‘myths’ we often hear that, if believed, can result in a less than optimum outcome. First Myth: I know what my business is worth, better than anyone else. Some owners want to be reimbursed for “sweat equity”.  Others think their business is worth what they need in retirement.  Yet others use…

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Alternative Investments, Buying & Selling a Company, Exit Planning

SBA Loans Help Finance Small Business, #2

This is a continuation of the last post, which primarily focused on the SBA 7(a) program.  Here I’ll discuss other SBA lending programs. Because SBA loan guaranty requirements and practices can be change by the government at any time, it is important for applicants to obtain current and accurate information. This article is merely intended to help a business owner ( potential borrower) start thinking about these programs.  You must do your own investigation and research. The information here is not to considered legal or financial advice.  Just a prompt to start thinking about the topic. CDC/504 Loan Program The…

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