Sell Your Company in 120 Days!

The Blog of The M&A Marketplace by cHc

TAXES - 10 BEST States for Business

Huxley Nixon - Monday, February 13, 2012

The just published 2012 State Business Tax Climate Index by the Tax Foundation provides the reader an easy to understand index to see where their state ranks.  It is a comprehensive study of a very complex topic that examines all of the tools in each state’s Tax toolbox.  The 10 BEST for 2012 are …. Read more.

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be and should not be taken as advice on any particular matter nor is it intended to be a solicitation regarding any securities transaction and or investment relationship.  For those desiring additional information please visit our website www.mamarketplace.com.

 

ATTENTION Business Owners - Another Reason 2012 is the Time to ACT!

Huxley Nixon - Monday, January 23, 2012

Did you know “ … an individual can transfer $5,120,000 in assets either during their life or at death free of estate and gift tax liability? Married couples can aggregate this exclusion amount up to a $10,240,000 tax free exclusion. However, the benefit of this exclusion is set to expire by the end of this year.”    This is a great article by Jeremy Piccini on the cost of a donor failing to act by December 31, 2012. Read more….  

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be and should not be taken as advice on any particular matter nor is it intended to be a solicitation regarding any securities transaction and or investment relationship.  For those desiring additional information please visit our website www.mamarketplace.com.

 

Why landing a plane on the Hudson River is like Selling your Business

Huxley Nixon - Friday, January 20, 2012

What Owners should expect when selling their businesses.  John Warrillow interviews Brad Bottoset of the Liberty Group about this process most owners are not prepared for and provides some helpful insights.  What do these two very different events possibly have in common?  Read more…

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be and should not be taken as advice on any particular matter nor is it intended to be a solicitation regarding any securities transaction and or investment relationship.  For those desiring additional information please visit our website www.mamarketplace.com.


Early Exit vs the Laggard

Huxley Nixon - Wednesday, December 14, 2011

When is the RIGHT time to SELL?  What is the author’s definition of an early exit?  John Warrillow introduces us to successful entrepreneur and private equity investor, Basil Peters, who shares his rich experience and knowledge obtained over decades of creating and investing in over 100 companies. He states: “Having watched about 100 exits reasonably closely, I am convinced that in the very large majority of situations, entrepreneurs wait too long to start working on their exit.” 

When asked by owners why shouldn’t they wait for better times to sell, he states….read more.

Why Equity Recaps make Sense for Private Companies!

Huxley Nixon - Tuesday, December 13, 2011

Would you like to turn a significant amount of your closely held stock into CASH without giving up operational control and still have meaningful equity position remaining?  Does this sound too good to be TRUE?  Read more to find out why this is NOT the case…

Great article published in Smart Business (August 27, 2007) by Joel J. Guth of Citigroup/Smith Barney Family Office.  Guth summarizes the benefits of the equity recap, how it works and explores who are the best companies for this structure, types of owners that can benefit most and dangers to be aware of.  While this was written prior to the Great Recession, its content is MORE relevant NOW that ever before.   

Outlook for M&A in 2012 - STRONG!

Huxley Nixon - Friday, December 09, 2011

Ernst & Young’s recently released report by their Transaction Advisory Group says strong economic “fundamentals” will bode well for an active M&A market in 2012.  "Despite the slowdown in transactions over the past few years, fundamentals have risen to their strongest point since the financial crisis began," says Rich Jeanneret, Americas Vice-Chair, Transaction Advisory Services at Ernst & Young.  Read more…..

How Lower Margins Saved Phil's Company!

Huxley Nixon - Monday, December 05, 2011

Posted by Huxley Nixon

 

John Warrillow, a successful entrepreneur and author, relates the story of Phil, an owner who was forced to re-invent his company or go out of business.  GRU-Group, a creator of indoor signage to help employees and visitors navigate easily, won most of its work through competitive bids by responding to RFP’s from hospitals and large commercial contractors.   To avoid selling their product solely on PRICE, Phil analyzed the entire design, creation and installation process and documented these in SEVEN steps and branded his unique methods and created ……..read more

Transaction Valuations: How Important are Quality and Transaction Size?

Huxley Nixon - Sunday, December 04, 2011

By Huxley Nixon

According to GF Data's CEO, Andrew Greenberg, business quality and transaction size are the CRITICAL drivers of value in today's unsettled M&A market.While the average Lower Middle Market EBITDA multiple of 6.4X is the highest since Q2 2009, the SIZE Premium GAP has never been greater in recent history. 

GF Data's Q3 2011 Report reviewed 1,278 transactions involving companies with total enterprise values ("TEV") between $10 M and $250 M and reveals the huge difference SIZE and Quality make in DEAL VALUE. Part of the answer is the leverage availability is a greater differentiator for the upper tier of the lower middle market.  Lenders are more aggressive in participating with private equity groups ("PEG") in financing larger more stable companies that tend to have less severe fluctuations in their earnings in weak economic times allowing these buyers to pay more. 

Total debt as a multiple of EBITDA for transactions with a TEV in the $10M to $25M range was 2.9 X compared to 4.7 X for transactions with TEV's between $100M and $250M.

Size Premium chart for transactions closed in Q3 2011:

 

2011 YTD

September 30th

TEV     EBITDA Multiple




$10-$25M

5.3X




$25-$50M

6.1X




$50-$100M
6.9X




$100-$250M
7.2X
(Source: GF Data Q3 2011 Report)

 

In addition to lenders becoming more aggressive, PEG's are still sitting on record levels of cash and are increasing their equity contribution percentage to remain competitive for quality businesses that will continue to receive premium valuations.

Author: Huxley Nixon has been involved in M&A (mergers and acquisitions) for 35 years as a buyer, seller and intermediary.  He is founder of the M&A MARKETPLACE by CHC (www.mamarketplace.com) where the buyer pays all success fees and the process is only 120 days.  For owners of private companies considering a sale of part or all of their company – it provides a very quick, confidential and competitive alternative to current options less transparent and more disruptive for the owner.

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be a solicitation regarding any securities transaction and or investment relationship by Wm. H. Murphy and Co., Inc.. For those desiring additional information please visit our website www.mamarketplace.com.

 

 

Is an EQUITY Recap right for YOU?

Huxley Nixon - Saturday, November 12, 2011

What is an Equity Recap?  Why this structure of the 1980’s and 1990’s is making a comeback as Bob, owner of Zenith Distributors, explores exit alternatives to de-risk his personal finances, address succession issues,…...

Bob has received an appraisal that determines Zenith’s enterprise value is $27.5 million.  Out of the blue he receives an offer of $30 million from a much larger strategic player wanting to expand its geographic reach but will not need Bob and other family employees who are also shareholders post closing. Bob is excited about this seemingly generous offer but concerned about succession issues and his fear of missing the excitement of being the center of his world – Zenith has become his identity.  What will he do after the sale?  John, a friend and mentor who sold his company five years earlier suggest ……..Click here to discover Bob’s decision.

Who is the BEST Buyer for YOUR Company?

Huxley Nixon - Tuesday, November 08, 2011

By:  Huxley Nixon

This is a frequently asked question and there is no simple answer. Most feel a Strategic Buyer can pay more but this analysis of both Financial and Strategic Buyers WILL surprise many Business Owners! Selling a family business is NOT just a financial decision - there are succession issues, employees who are like family, fears about what the owner will do after closing the office door for the last time, etc..

Click here to see how a owner can find the BEST fit for themselves, their family and their employees without sacrificing PRICE...

 


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