One of the most important aspects of the services Generational Equity provides its clients is the perspective of a business buyer and how they view privately held companies. You see, far too often business owners are so involved in the minute details of their daily operations that they are unable to fully grasp how a buyer may view their company. We help them, through our experienced evaluation team and dealmakers, to begin to see their business as buyers will.
This is important for two contrasting reasons:
Both of these “buyer” perspectives are equally important. First, when selling your business, you may have no idea why the fact that you make all the key decisions for your company could be seen as risky. Known as owner dependence, this is a vital area that buyers look at when making an acquisition. “Will the operations continue once the current owner departs?” is the question behind this one.
Nor will you understand why having 80% of your revenue coming from one client might be a challenge for many buyers to overcome. We call this customer concentration and it is probably one of the most prevalent issues we tackle with our clients.
From a seller’s perspective, it shows just how great your company is at filling orders and exceeding client expectations that you are able to have a long-term relationship from one blue-chip business. But professional buyers see this issue differently: They wonder, if 80% of the revenue were to disappear the day after our acquisition, where will we recover it from?
These are just two of dozens of risk factors that we help our clients understand the importance of from a buyer’s perspective. Are they generally happy when we point these items out? Usually not. But we have a fiduciary responsibility to do so as their M&A advisors. We also suggest how to improve these areas within our Roadmap for Enhancing Value document that is provided to each client.
In addition, we also help business owners realize that oftentimes their companies hold intangible assets (a.k.a. off-balance sheet assets) that can also be seen as valuable to specific professional buyers.
Because most business owners only sell one company in their entire career, they have no way of knowing how a buyer might view items that they often take for granted as part of their daily operations. These can include many items, such as:
This is just a short list of some of the intangible assets we look for when evaluating/selling a company. Do all buyers value these equally? Of course not. For some, many of these might be irrelevant. However, one or two of these could be considered as a goldmine to the buyer and worth paying a premium for.
For example, let’s say a manufacturer of a complementary product to what you produce has a tremendous plant with lots of capacity, but lacks a sales team. Your dedicated and skilled sales/marketing team might be quite attractive to that individual.
Furthermore, let’s say your plant is located on a local rail spur, allowing you to load and ship your product more efficiently (and cheaply). Many buyers might find that worth paying a premium for!
And these are just two examples of intangible assets that many business owners take for granted. But we don’t. Our deal teams are extremely skilled at knowing what specific buyers want and putting the right opportunities in front of them. This is probably why we have been awarded Investment Banking Firm of the Year two years in a row and have led the Thomson Reuters league tables year in and year out for nearly a decade:
If you want to learn more about how buyers think when they are examining acquisition opportunities, a great place to start is at a Generational Equity exit planning conference.
We hold these throughout North America, and they are designed to help business owners reach a better understanding of all aspects of exiting, but also how professional buyers operate, what they are looking for, and above all else, how they often value intangible assets.
To learn more from our professional M&A advisors, use the following links or call us at 972-232-1121:
As you move forward with your exit plans, the more you can learn how to think like a buyer, the better your chances of securing an optimal value!
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2021 Generational Equity, LLC All Rights Reserved
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
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
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 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.
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.
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
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.Betty L. Brennan, President, Taylor Studios
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.
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
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
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.
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
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
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
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
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 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
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.
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
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
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
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
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
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 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
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.Tom Currier, Former President & CEO, Rackmount Solutions
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
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