The document provides an overview of buying or selling a business, focusing on the components needed for a successful transaction. It discusses that the success rate of buying or selling a business is only around 5% due to a lack of planning, team approach, and focus on vision. The key components of a successful transaction are outlined as vision, the right team, and business assessment. Vision involves establishing shared goals and priorities. The right team ensures the necessary expertise and commitment. Business assessment covers valuation, viability, management/employees, customers, and key assets. The document emphasizes setting clear goals, taking a strategic team approach, and thoroughly evaluating the business for saleability and financing feasibility.
This webinar focused on the ins and outs of purchasing a business. The objectives of this webinar were to provide the attendees with tips and tools to use as a buy side party in a transaction. More specifically, the participants came away with a basic knowledge of how to approach and communicate with targets, how to analyze a target, the due diligence process, and what to expect at close and post-closing of a transaction.
The presenters discussed the process from start to finish with a focus on the following areas:
- What do you want to be and where do you want to go? – First step is to identify the type of business that best fits your overall business plan and strategy (culture, size, business lines, etc.).
- Preliminary process – How to identify targets, use of professionals, development of a professional, and internal advisory team.
- Transaction process – Initial discussions, development of an LOI, transaction type, and due diligence.
- Closing process – Purchase document, delivery of assets or working capital, and final adjustments.
- Post-closing – Now What?
This webinar focused on the ins and outs of purchasing a business. The objectives of this webinar were to provide the attendees with tips and tools to use as a buy side party in a transaction. More specifically, the participants came away with a basic knowledge of how to approach and communicate with targets, how to analyze a target, the due diligence process, and what to expect at close and post-closing of a transaction.
The presenters discussed the process from start to finish with a focus on the following areas:
- What do you want to be and where do you want to go? – First step is to identify the type of business that best fits your overall business plan and strategy (culture, size, business lines, etc.).
- Preliminary process – How to identify targets, use of professionals, development of a professional, and internal advisory team.
- Transaction process – Initial discussions, development of an LOI, transaction type, and due diligence.
- Closing process – Purchase document, delivery of assets or working capital, and final adjustments.
- Post-closing – Now What?
If you are looking to exit a business, this webinar is perfect for you! Cover the process of selling; potential acquirers; timescales and tax considerations
Due Diligence - What You Don’t Find Out Will Hurt YouNow Dentons
This presentation focuses on the details of the due dilligence process. It covers the definition and role of due dilligence, provides a legal due diligence checklist and gives an overview of key due dilligence points and mining considerations.
Obtaining a 360 degree view by conducting a thorough due diligence to ensure ...Kenny Ong
Marcus Evans Structuring and Financing M&A Conference
Singapore,12-13 July 2010
Obtaining a 360 degree view by conducting a thorough due diligence to ensure a successful acquisition
• Analysing the pre-offer preparation
• Amplifying internal fitment
• Focusing on areas for due diligence
• Balancing valuation with fitment
• Examining the key facets of negotiation
Before going to market to sell your business, you or your executive team may want to obtain an independent appraisal. Likewise, prospective buyers may wish to obtain expert services to value an acquisition target or discrete portions of a target. This webinar provides a look into how valuation experts place a value on a going concern.
Part of the webinar series: Valuation 2021
It goes without saying that business owners who want to sell their business within the next couple of years will have a few new factors to consider. Let here what you need to be thinking about and how to prepare.
If you are looking to exit a business, this webinar is perfect for you! Cover the process of selling; potential acquirers; timescales and tax considerations
Due Diligence - What You Don’t Find Out Will Hurt YouNow Dentons
This presentation focuses on the details of the due dilligence process. It covers the definition and role of due dilligence, provides a legal due diligence checklist and gives an overview of key due dilligence points and mining considerations.
Obtaining a 360 degree view by conducting a thorough due diligence to ensure ...Kenny Ong
Marcus Evans Structuring and Financing M&A Conference
Singapore,12-13 July 2010
Obtaining a 360 degree view by conducting a thorough due diligence to ensure a successful acquisition
• Analysing the pre-offer preparation
• Amplifying internal fitment
• Focusing on areas for due diligence
• Balancing valuation with fitment
• Examining the key facets of negotiation
Before going to market to sell your business, you or your executive team may want to obtain an independent appraisal. Likewise, prospective buyers may wish to obtain expert services to value an acquisition target or discrete portions of a target. This webinar provides a look into how valuation experts place a value on a going concern.
Part of the webinar series: Valuation 2021
It goes without saying that business owners who want to sell their business within the next couple of years will have a few new factors to consider. Let here what you need to be thinking about and how to prepare.
Exit Planning - Maximizing Value Through Pre-Transaction ReadinessDominic Brault
According to numerous surveys, more than half of business owners intend to transition ownership of their business during the next 10 years. Yet most business owners do not have a formal strategic or financial plan, and many are unaware of the possible tax and estate implications. As a result, there is a real need for business exit planning. A robust exit plan will help chart a course toward extracting maximum value from the company to reach the seller’s goals.
The Power of Discovery for Increasing Win RatesMike Kunkle
This is the webinar I delivered on 11/08/2017 on how to conduct a highly-effective consultative discovery to improve sales effectiveness and win rates.
Getting your business ready for sale - Smith & Gesteland WebinarSmith & Gesteland
Preparing your business for sale requires knowledge of what a buyer is looking for along with knowing where the value in your business resides. We discuss this topic from three different angles: M&A strategy, Valuation drivers, and using 80/20 to increase the EBITA of your business.
Increasing your win rate could make a huge difference in beating your 2016 sales goals. Join Mike Schultz and Dave Boyce as they share key insights and surprising research about what you can do to achieve higher win rates, as well as which sales technologies enable greater sales goal achievement.
In this webinar you will learn:
-What separates top-performing sales organizations from the competition
-Which four questions you must answer to win the sale
-Which sales technologies can help you increase conversion rates and contract value
Sell Your Business - Create an Exit Strategy or Exit PlanTerri Levine
Most business owners don't have a succession plan, exit strategy or exit plan. They don't know the value of their business or what their business is worth or how to get the most money from their business when they are ready to sell it. Business and executive coaches and consultants can easily find more clients when they learn to be sellability advisors and can show business owners where the gaps are in their business and help them learn how to drive up the worth of their business.
A short presentation on early-stage financing with a primer on how angel investors consider risk and reward for equity investments in high-growth companies at their earliest stages.
Marketing Operations ROI: It`s Simpler and Way Harder Than You ThinkClearAction Continuum
For an updated version of this presentation: https://www.slideshare.net/clearaction/marketing-operations-roi-its-simpler-and-way-harder-than-you-think-127189832
How Marketing Operations can help you more effectively utilize metric data to measure ROI.
See https://ClearAction.com
Account Based Sales for Key Account GrowthRevegy, Inc.
According to SiriusDecisions, the recent buzz around account based sales reflects a long overdue need to enhance the way companies do account management...by breaking out of the status quo and exploring new, innovative approaches to the age-old concept of account planning, companies like Oracle are driving immediate pipeline growth from their most strategic customers.
Learn how world-class sales organizations are applying modern, account-based selling techniques to grow existing revenues:
The critical missing element that prevent account teams from discovering more immediate revenue opportunities
Why traditional approaches to account planning fail and what the most successful programs have in common
The best practices framework that companies like Oracle, JDA and BlackLine use to drive organic growth
This presentation was presented at #CustomerAnalytics Conference, Chicago 2014 by Maruti Peri, VP Sales.
BRIDGEi2i helps businesses extract each ounce of loyalty in today's “Age of the Customers” as customer loyalty keeps fighting an uphill battle with increased product choices and proliferation of prospective client information. To know more about BRIDGEi2i Customer Intelligence Solutions, visit http://www.bridgei2i.com/customer-intelligence.html
Business Growth By Customer Acquisition and Loyalty MarketingAutoSyndicationUSA
The purpose of the Dynamic Growth Concepts is to help business owners and leaders hurdle the many stumbling blocks that impede progress and, all too often, knock
businesses and organizations completely out of the race. The most daunting obstacle blocking the path to success is what I call the cold, hard truth.
Call Mark @ Dynamic Growth Concepts because I want to help you learn the truth,
Discover and understand the critical actions needed on the venture journey to scale successfully.
What is it for?
To help corporate entrepreneurs identify and successfully navigate each critical action that will ultimately become the foundation of a corporate venture’s scaling effort. Based on the insights from 200+ corporate innovation and venture tracks, this practical guide provides a deeper understanding of what’s needed early-on for long-term venture growth.
Benefits:
Identify the right measurement approach that shines a light on your path forward.
Create an ideal team setup with access to the right talent at the right time.
Select the appropriate ownership structure and legal entity format.
Using Real-Time Financial Benchmarks to Drive Dynamic Decision-Making and Act...Niels Pflaeging
Slides for the Proformative webinar
"Using Real-Time Financial Benchmarks to Drive Dynamic Decision-Making and Action"
by Niels Pflaeging, BetaCodex Network
This is a presentation on planned giving that was made to the Ottawa County Parks Foundation. It includes estate and tax planning considerations for planned giving.
It's never too early to start thinking about your estate plan! Take a look at our top tips for estate planning to see if you're on the right track for your income and family situation.
Veterand Benefits Estate Recovery and Updates to Medicaid Rules
Buying and selling a business seminar part 1 slides
1. Buying or Selling a Business
Randy Rua, Rua Associates
Haans Mulder, Cunningham Dalman
2. The Agenda
The Two Choice Dilemma
• Your Big Goal
• Why Transactions Typically Fail
The Components of A Successful Transaction
• The First Three Components
• Vision
• Right Team
• Business Assessment
3. The Two Choice Dilemma
Grow
Sell
• Organic
• Acquisition
• Internal Sale
• External Sale
5. The Success Rate of Selling a Business
Only 5% of Businesses are Successfully Sold
80% of Business
owners that try to
sell fail
Of those that
are able to sell,
75% report
regretting selling
their business
because their
goals weren’t
met
6. The Success Rate of Buying a Business
Only 5% of Businesses are Successfully Purchased
75% of business
acquisitions fail
after a Letter of
Intent is signed
Of those that
are able to
purchase a
business, 80%
report their
acquisition goals
were not met
7. So why is the success rate so low?
Lack of planning
Lack of a team approach
Lack of focus on the vision
8. The Two Choice Dilemma
React to Growth
or Sale, Don’t
Have a Team
Approach and
Ignore the
Vision
Plan to Grow or Sell,
Have a Team Approach
and Focus on the Vision
9. The Components of a Successful Transaction
Vision
Right
Team
Process
Successful
Transaction
Market
Creation
Business
Assessment
Alternatives
Analysis
12. The 8 Questions
Values
Core Reason
5-10 Year Goal
Prospect Selection
Transaction Picture
1 Year Post-Transaction Goals
90 Day Pre-Transaction Goals
Issues List
16. The 8 Questions
Values
Core Reason
5-10 Year Goal
Prospect Selection
Transaction Picture
1 Year Post-Transaction Goals
90 Day Pre-Transaction Goals
Issues List
17. How to Get on the Same Page
Other
Stakeholder
Goals
Owner’s
Goals
Business
Goals
Other
Stakeholder
Goals
Owner’s
Goals
Business
Goals
18. Typical Goals of a Seller
Seller Business Goals
Seller Personal Goals
Other Stakeholder Goals
19. Typical Goals of a Buyer
Buyer Business Goals
Buyer Personal Goals
Other Stakeholder Goals
24. The Components of a Successful Transaction
Business
Assessment
• Valuation
• Viability
25. Valuation
Focuses primarily on the businesses’ financials through
three approaches:
Income approach
• Discount future earnings to present value
Market approach
• Cash flow times market multiple
Asset approach
• Liquidation or going concern- what your assets
are worth
26. Tool Example
100% Controlling, Non-Marketable Interest in Consulting Company
Discount/
Indicated
Premium Confidence
Value
Rate
Level
Valuation Method
The Market Approach
Price/Gross Sales Method
Price/DE Method
The Income Approach
Capitalization Method
Illiquidity Discount
Indicated Value
Discounted Future Benefits Method
Illiquidity Discount
Indicated Value
Weighted
Estimate
$ 1,065,000
20%
$
213,000
$ 2,486,000
20%
$
497,200
50%
$
961,200
10%
$
245,250
$ 2,136,000
$ (213,600)
$ 1,922,400
10%
$ 2,725,000
$ (272,500)
$ 2,452,500
10%
Value Conclusion - 100% Interest in Company
Value Conclusion - 100% Interest in Company (Rounded)
100%
$ 1,916,650
$ 1,917,000
27. Valuation Metrics
•
•
•
•
•
•
Public Company Industry PE Ratio - 3 year trend
Private Company EBITDA Multiples - 3 year trend
EBITDA Multiple
Revenue Multiple
Capitalization Rate
Required Working Capital
28. Median EBITDA Multiples for Buyouts
The median valuation-to-EBITDA multiple has exploded to a decade
high of 10.7x
29. Median EBITDA multiples rose for large deals but
fell to just 2.5x for transactions of less than $25M
30. West Michigan – Selling Multiples (3 year history)
4.5
Other Transactions
Rua Associates
Transactions
4
3.5
3.94
2.96
3
2.5
2
1.5
1
0.98
0.54
0.5
0
Price to Revenue
Ratio
Price to Cash Flow
Revenue: $1-15M
Ownership: Privately Held
Industry: Service, Manufacturing and Distribution
Location: West Michigan
Price to Revenue
Ratio
Price to Cash Flow
31. Viability
The problem with just getting a valuation is it doesn’t
answer many of the key questions regarding a transaction:
What are my options?
Will there be a market interest?
What expectations does the market have?
What type of structure(s) can be expected?
Can the structure(s) be financed?
Is the business saleable?
32. Options Analysis
Grow
Organically
Grow Through
Acquisitions
Internal Sale
External Sale
New
Products/Services
Buy Suppliers
Family
Liquidation
New Markets
Buy Customers
Shareholder
Buyout
3rd Party
Gain Market Share
Buy Competitors
Management
Buyout
Recapitalization
Buy
Complimentary
Companies
ESOP
34. Prospecting Case Study
Oil and Gas
Mfg
Tech
Furniture
Number of Prospects
116
326
152
362
Total Prospects Contacted
87
248
64
121
Willing to Discuss
34
39%
140
59%
28
44%
39
32%
Interested Parties
12
14%
39
16%
13
20%
7
5%
35. Tool Example
Market Test
Summary
• Contacted 20 Strategics and 20
Private Equity Firms
• Received Feedback from 5
Strategics and 7 PE’s
• 50% of Strategics were
interested and 75% of PE’s
Typical Structure:
• Strategic: All Cash if long-term
management team is in place
besides ownership
• PE: 70% Cash at Close, 30%
Seller-Note, Rolled-Over Equity
or Earn-Out
Typical Multiple Range
Strategic: 4-6 times EBITDA
PE: 4-6 times EBITDA
Drivers of Multiple and Structure:
Strategic Top 3:
• Location
• Synergies
• Service Type
Private Equity Top 3:
• Flexibility of Ownership
• Customer Concentration
• Strength of Management Team
36. Financing Metrics
Seller Factors
• Collateral Value
• Required DSC
• Goodwill Financing
• Seller Financing
Buyer Factors
• Industry Experience
• Liquidity
• Net Worth
• Down Payment
37. Tool Example
Financing Feasibility
Bank
Industry Experience
First National Very important along
with the new owner
being behind the
Company and the
capital injection that
may be required.
Huntington Most important - Not
just manufacturing, but
a competitor or
someone with
substantial knowledge
of the field.
Buyer Liquidity
$150,000-$225,000
(10%-15% of
outstanding debt)
Buyer Equity
25% of purchase price should
be equity in the form of cash
or full stand-by seller note.
15% cash at close.
Structure
Other Comments
Cash at close for equipment If SBA is involved, it must be
with additional seller note a 100% acquisition.
and full-standby seller note.
Higher than 10% due
to projection.
If Goodwill > $500,000, SBA
requires 25% of the purchase
price.
Financial structure
proposed would fit under
SBA guidelines.
Chemical
Bank
Must have knowledge
of the technology
required.
Depends on how
SBA may not see it as an
hungry a banker is for entirely "new business" if
the deal.
there is no major change in
management team for 5 years 10% down at close.
Fifth Third
Less important than
liquidity.
Projection-basis
requires 15% of debt
outstanding.
Management team would
need to either sell their
shares now to be part of the
buyer group in 6 months, or
they would have an
employment contract for 12
months. It would be up to
the buyer group to renew
this contract after 12
months. be confident in
Need to
May be willing to lend 10%
on inventory and 75% on AR equipment value. Bank will
less than 90 days. Could
need to order appraisal and
refinance seller note as SBA specifiy SBA as a user.
7A after close, but bank
would require
subordination agreement.
SBA requires 25% of purchase May be willing to bump up
price.
financing with a highlyliquid buyer.
39. Highest Multiple Offered To Companies With A
Sellability Score of 80+
Q
“What multiple of your earnings did the offer represent?
Data from 6955 users of The Sellability
Score between July 1, 2012 and December
31, 2013. 96.9% of business owners
surveyed had revenue of less than
$20,000,000.
3.55
Average multiple
“The Sellability
Premium”
Comparing
average
multiple
offered
6.1
80+
0
SellabilityTracker Q4 2013. Copyright 2014
www.SellabilityScore.com
2
4
6
8
40. Tool Example
Sellability Report
Overall Score driven by a weighted algorithm made up of 32 questions in a
total of 8 categories:
1. Financial Performance
2. Growth Potential
3. The Switzerland Structure
4. The Valuation Teeter Totter (i.e. See Saw)
5. The Hierarchy of Recurring Revenue
6. The Monopoly Control
7. Customer Satisfaction
8. Hub & Spoke
42. Other Key Components of Business Assessment
Management Team and
Employees
Sales Team and Customer
Relationships
Key Assets
43. Other Key Components of Business Assessment
Management Team and
Employees
•
•
•
•
Strong/loyal management team
Incentives aligned to motivations
Risk of employees leaving
At-will employment clear in documentation
44. Other Key Components of Business Assessment
Sales Team and
Customer Relationships
• Protect confidential info/relationships
• Agreements to lock in revenue streams
• Assignment rights
45. Other Key Components of Business Assessment
Key Assets
• Tangible vs Intangible
• Legal issues related to assets
• Transferability
46. Conclusion
The Two Choice Dilemma
• Your Big Goal
• Why Transactions Fail
The Components of A Successful Transaction
• Vision
• Right Team
• Business Assessment
47. Next Seminar
Next Seminar Date:
Monday, April 28
Process
8AM-10:30AM
Same Location!
Alternatives
Analysis
Market
Creation