What can happen when you think you're not ready to sell your privately-held company.

1. eMERGE M&A, INC. 295 MADISON AVENUE 12TH FLOOR NEW YORK, NY 10017 212.804.8282
VISIT OUR WEBSITE AT WWW.eMERGEMA.COM ©eMerge M&A. INC. ALL RIGHTS RESERVED
YOU ARE NOT
READY TO
SELL…?
LOOK INSIDE ...
No One Has More Experience With Privately-Held Companies.
No One.

2. eMERGE M&A, INC. 295 MADISON AVENUE 12TH FLOOR NEW YORK, NY 10017 212.804.8282
VISIT OUR WEBSITE AT WWW.eMERGEMA.COM ©eMerge M&A. INC. ALL RIGHTS RESERVED
You Are Not Ready to Sell … Some Lessons Learned
There is an axiom in the Mergers and Acquisitions world -
market timing is made for you and not by you.
In essence, the market doesn’t care if you are ready or not to sell.
The sale of a privately-held company is totally different than the sale
of a publicly- traded company. With a publicly-traded company, you
can see the value of a share of stock on the Internet, call your
Financial Advisor, and 10 minutes later, the money is in your
account. The sale of a privately-held company is totally different:.
It takes 8 to 24 months to sell and no one is sure of the value until the deal closes.
Please take a moment to review these actual cases we have seen over the years.
Many factors can affect the value of your company and the proceeds you
net from the sale. For example, if interest rates go up, the value of your
company automatically goes down. An increase in taxes will result in decreased
net proceeds on the sale, even if the purchase price remains the same.
Geopolitical events now play a more important role in M&A markets than trends
and data. Furthermore, there are market, technology, and governmental risks
that could affect the value of your company or your net proceeds -
none of which you can predict or control.
Life Is Short
“I am not ready to sell … besides what would I do?”
the owner of a $13 million ambulance manufacturing com-
pany once said to me. The company was doing well and the
market was good. Sadly, he passed away at his desk and 6
months later his widow was forced to sell the assets and
close the company. Rather than sell the company and take
good financial care of his family, his family was forced to
close the business at 25 cents on the dollar.
In 2007, the 55 year old publisher of some specialty
periodical magazines decided to wait a few years to sell his
company. A few weeks later, he was playing tennis and had
a massive heart attack. The company was left to his brother
who had limited experience running any kind of company.
The business had declined to the extent that when the
brother (re)contacted us, there was really nothing left to
work with and they closed their doors.

3. eMERGE M&A, INC. 295 MADISON AVENUE 12TH FLOOR NEW YORK, NY 10017 212.804.8282
VISIT OUR WEBSITE AT WWW.eMERGEMA.COM ©eMerge M&A. INC. ALL RIGHTS RESERVED
You Are Not Ready to Sell … Some Lessons Learned
Technology Risk
In the late 1990’s, the owner of a fiber optics company in New Jersey was
offered $85 million for his company from Lucent. This owner was not ready
to sell and was “having fun”. Technology changed and in 2003, he finally
sold for $3 million. Technology risk is ever present.
Market Risk
Many owners of privately-held companies in the energy sector sold their businesses from 2010 to mid 2015
when oil was about $95 per barrel. This sector was hot and growing and there was demand for privately-held
companies. When oil unexpectedly dropped to about $50 per barrel, demand for these companies immediately
died. Furthermore, buyers pulled out of any transactions in the closing process when oil prices dropped.
Paradigm Shift Risk
We represented a $27 million manufacturer of waterproof baby related
products. This company has some spectacular products and had shelf space in
some major retailers. The company was growing and doing well. This business
had been handed from father to son. The son wanted to impress the father with
what he could do with the company. Kimberly Clark wanted to buy the company.
He chose not to sell. Within 6 months, the major retailers instituted a reverse
auction procedure. The vendors were forced to open bid against each other.
Margins were driven out of his product line and he closed the company in less
than a year. Business paradigm shifts can be costly.
Geopolitical Risk
The events of September 11, 2001 had a devastating effect on US M&A
markets. Uncertainty and political risk hit US capital markets hard. Buyers with-
drew and stood on the side line with a “wait and see” attitude. It wasn’t until early
2004 that markets started to improve. Sellers who weren’t ready to sell in 2001
still had their companies in 2004 and they had lost value. Geopolitical events
represent significant risk to the value and marketability of your company.
Financial Market Risk
On September 15, 2008 our financial markets began to topple. This “Great
Depression” of 2008 through early 2010 had the US economy and capital
markets in survival mode. M&A activity for privately-held companies came to
a halt and any transactions in closing died immediately. Those owners that
didn’t close a transaction prior to September 15, 2008 probably still have
their businesses and they may now, after all these years, be worth as much as
they were in 2008. It takes 8 to 24 months to close a transaction. To avoid
the “Great Depression”, owners would have to have started the M&A process
by, at the latest, September 2007. Market risk and volatility still exist today.

4. eMERGE M&A, INC. 295 MADISON AVENUE 12TH FLOOR NEW YORK, NY 10017 212.804.8282
VISIT OUR WEBSITE AT WWW.eMERGEMA.COM ©eMerge M&A. INC. ALL RIGHTS RESERVED
You Are Not Ready to Sell … Some Lessons Learned
Living in a Bubble
In the late 1990’s, we had a client that supplied produce, food, and provisions
to the cruise line industry. There was an offer on the table for $28 Million. They
decided to wait until the patriarch of the family and majority owner turned 70 years
old. He turned 70 in early 2001. We took the company to market and received a
$30 Million offer. We moved into the closing phase and things were moving well
towards a September 30, 2001 closing of transaction. The events of September 11,
2001 occurred and the cruise line industry experienced some rapid contraction.
Rather than take $28 million in 1999, they went bankrupt in early 2002.
The lesson to be learned is the ego and the wallet often have an inverse relationship.
Sell when the market is good regardless of personal desires. You cannot control, or
dictate to, the market. Be prudent. It takes 8 to 24 months to sell a privately-held
company - so much can happen in that time frame that can affect you.
Prudence & Success
In the summer of 2012, we were hired to take to market and represent a
manufacturer of oil rigs, draw works, and related drilling rig components. Oil
was trading in the high $90’s per barrel, the US rig count was increasing, and
fracking and horizontal drilling were driving the success of the energy sector.
The 3 owners were each in their early to mid 50’s in age and the company was
doing well. There was a sound management team, infrastructure and operating
systems in place. Everything was great! Why sell now?
The owners had started the business from their garage in the early 1980’s with
a $1,000.00 investment. The company was now worth 10’s of millions of
dollars. The decision to sell was made given the prospect of rising interest
rates, the probable increase in taxes, uncertain financial markets, dependence
on a volatile yet seemingly unstoppable commodity, and geopolitical events.
In the Fall of 2013, we closed a transaction for these three owners. Each
benefitted greatly.
In late 2014, oil prices started to drop and demand for the company’s products
declined significantly. Rigs and related components are sitting idle throughout
many oil fields. Even when, or if, oil prices reach previous levels, companies like
this will trade at a discount.
Had these gentlemen “not been ready”, they would have lost millions of dollars
and more importantly; years of their lives.