Selling a Business

Who Is Today’s Buyer?

It has always been the American Dream to be independent and in control of one’s own destiny. Owning your own business is the best way to meet that goal.  Many people dream about owning their own business, but when it gets right down to it, they just can’t make that leap of faith that is …

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Why Deals Fall Apart — Loss of Momentum

Deals fall apart for many reasons – some reasonable, others unreasonable. For example: • The seller doesn’t have all his financials up to date. • The seller doesn’t have his legal/environmental/administrative affairs up to date. • The buyer can’t come up with the necessary financing. • The well known “surprise” surfaces causing the deal to fall apart. The list …

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How’s Your Corporate Social Responsibility (CSR)?

Your first question may be, “Just what is Corporate Social Responsibility (CSR)?” We see CSR demonstrated in a variety of ways in areas such as: THE COMMUNITY: o Contributing to local community programs through financial support and personal involvement THE ENVIRONMENT: o Using packaging and containers that are environmentally-friendly o Recycling o Using low-emission and high mileage vehicles where …

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Personal Goodwill: Who Owns It?

Personal Goodwill has always been a fascinating subject, impacting the sale of many small to medium-sized businesses – and possibly even larger companies. How is personal goodwill developed? An individual starts a business and, during the process, builds one or more of the following: • A positive personal reputation • A personal relationship with many of the …

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Ownership Transition — Survey Results

Mass Mutual Life Insurance Company provided the following survey results based on family-owned businesses. Although the survey was conducted several years ago, the results are still quite revealing, and still applicable. • Four out of five companies are still controlled by the founders. • 30% of family-owned companies will change leadership within the next five years. • 55% …

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An Update on Earnouts

New accounting rules may require that acquirers and acquiring companies report earnout agreements as liabilities. Joel Johnson, president of Orchard Partners Inc., in his article, “Earnouts,” published by Valuation Strategies, states: “In a given year, 2% – 3% of announced mergers and acquisition agreements involve earnouts.  These figures probably understate their prevalence.  Earnouts tend to …

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The Offering Memorandum

A solid, factual and compelling offering memorandum maximizes the chances of not only selling a business, but obtaining the highest possible price.  An offering memorandum is also referred to as the selling memorandum, a confidential descriptive memorandum, or simply as “the book.” The memorandum, regardless of the terminology used, must be as factual as possible, …

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Reasons to Sell / Reasons to Acquire

A January 2004 survey conducted by the DAK Group/Rutgers found the following breakdown of why businesses are for sale: Reasons To Sell Risk reduction      44% Competition or market changes   41% External pressures     27% Lifestyle factors (age, health, etc.)   14% Lack of capital      9% Ownership/management issues  07% Note: Multiple responses allowed;  Source: DAK Group/Rutgers It is interesting to note that the …

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