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Critical Concerns for Business Buyers (and How Sellers Benefit by Knowing Them!)

By Generational Equity

Critical Concerns for Business Buyers

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.

This is especially true in our current environment where buyers are looking for deals (and unwilling to pay top dollar unless you have professional guidance in most cases).

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:

  • Innovation
  • Business Continuity and Disaster Planning
  • Supply Chain Diversification

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.

© 2021 Generational Equity, LLC All Rights Reserved

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We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.
Rick Greene of Dobbs Equity Partners LLC
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 most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.
Salvo Stoch, Founder and CEO of Sleeping Partners
We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.
Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
I wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.
Shane and Johanna Kline, Owners of Vision Upfitters
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
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
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.
Caroline Connelly, CEO, OptoTest
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
Betty L. Brennan, President, Taylor Studios
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!
JoAnn Ellis, Owner of Fondren 5 Star Kennels
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
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
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.
Thanks to you, the entire GE team and especially Michael Goss for driving a great valuation, coaching me and driving the process across the finish line. Please let me know if there is anything I can do to support GE going forward. P.S. Given my experience with GE I felt comfortable enough to sign up with Generation Wealth Advisors!
Tom Currier, Former President & CEO, Rackmount Solutions
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
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
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
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
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.
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.
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
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
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
I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.
JoAnn Ellis, Owner of Fondren 5 Star Kennels
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.
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.
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