As many of our loyal readers know, from time-to-time we like to give you intel on how buyers are approaching the M&A market, and how you can benefit from this knowledge.
Since the vast majority of our readers are owners of privately held companies, the more you can understand about how buyers are approaching the market, the better armed you will be to obtain an optimal deal for your company when you decide to exit.
So when themiddlemarket.com recently published an article entitled “11 factors for dealmakers to consider before buying a company during the pandemic”, we thought we would share some of them so you can see how you need to address buyer concerns/issues as we move forward.
Although many of the items are true during the acquisition of any privately held company even during the best of times, what it showed us is the reality that most business owners are underprepared to negotiate from a position of strength UNLESS they understand the key issues impacting deals today from a BUYER’S perspective.
A few of these eleven factors really stood out to us given our current challenging times:
It is vital to remember that buyers are buying your future – NOT YOUR PAST! This has always been true, but it is really important to consider if you are talking to buyers today. If you have innovated, if you have come up with strategies that have helped you survive the last few months, and especially if you have adapted to the new world we are in and thrived, it will be vital that you make buyers aware of what you have strategically done. Don’t assume they will “get it” from your documentation you present. Brag about what you have done! Shout it from the mountain top!
If anything has become clear, even the smallest of business operations needs to develop business continuity and disaster planning within its operations. This is not the last major business disruption we will face – regionally we deal with earthquakes, wildfires, floods, hurricanes, and dozens of other potential interruptions. This pandemic has clearly shown how critical it is to have back-up plans, remote work sites, and other documented ways of doing business in the face of planned (or unplanned) disasters. Having survived this one, it is vital to document how you did it (and prepare for the next one!).
Finally, the Japanese Tsunami in March of 2011 was a wake-up call to the auto industry. And the trade wars the past year have clearly demonstrated that having multiple supply chains located in varied locations is vital. This is even more important as buyers begin to examine your business and how you are supplied by your vendors. If you have one vendor accounting for a substantial portion of your business, you need to address this in order to obtain maximum value for your business, no matter what economic cycle we may be in.
And that last point is really key. As we have said before, this too shall pass. But when it does, buyers will always maintain their risk reduction goals associated with any business: How can they be assured that any privately held business will grow and flourish once the founder has moved on? This is when due diligence becomes paramount – and that will never change.
What these eleven factors point out more now than ever before is how critical it is to have professional M&A advice LONG before you begin your exit journey. We have never met a business owner who was upset at starting his/her planning too soon.
If you are interested in beginning your journey to obtaining maximum value for your business, no matter the current economic cycle, you need to reach out to Generational Equity and meet with an exit planning professional at one of our conferences near you.
The time you spend learning how to maximize your exit will be invaluable. To learn more, call us at 972-232-1121 or visit our website, provide us with your contact info, and we will be in touch.
And again, special thanks to our friends with themiddlemarket.com for providing us with valuable insight into how buyers are approaching the market today. If you want to see all eleven factors, you can do so by downloading this valuable report here:
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!Eric Erlandson, Owner, Action Fastenings, Inc.
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Dear Chris and Andre, I just wanted to say thanks for all your help. Even though this process was not an easy one, it was comforting to know that I had a capable team standing beside me. You made me feel like we were almost your only client or at least the most important one. Thanks again, and I will recommend your service in the future.Shenille Engelhart, Owner – CLS Technology
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.Bryan D. Horn, Owner, Over Under Clothing
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
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