A recent study revealed that only about 28 percent of family businesses have developed a succession plan. Here are a few tips for family-owned businesses to ponder when considering selling the business: You may have to consider a lower price if maintaining jobs for family members is important. Make sure that your legal and accounting representatives have “deal” experience. […]
Consider two different companies in virtually the same industry. Both companies have an EBITDA of $6 million – but, they have very different valuations. One is valued at five times EBITDA, pricing it at $30 million. The other is valued at seven times EBITDA, making it $42 million. What’s the difference? One can look at the usual checklist for[…..]
It has often been said that valuing companies is an art, not a science. When a buyer considers the purchase of a company, three main things are almost always considered when arriving at an offering price. Quality of the Earnings Some accountants and intermediaries are very aggressive when adding back, for example, what might be considered one-time or[…..]
Putting a price on privately-held companies is more complicated than placing a value or price on a publicly-held one. For one thing, many privately-held businesses do not have audited financial statements; these statements are very expensive and not required. Public companies also have to reveal a lot more about their financial issues and other information than the privately-held ones. This makes[…..]
Neglecting the day-to-day running of their business with the reasoning that it will sell tomorrow. Starting off with too high a price with the assumption the price can always be reduced. Assuming that confidentiality is a given. Failing to plan ahead to sell / deciding to sell impulsively. Expecting that the buyers will only want to see last year’s P&L. Negotiating[…..]
Selling one’s business can be a traumatic and emotional event. In fact, “seller’s remorse” is one of the major reasons that deals don’t close. The business may have been in the family for generations. The owner may have built it from scratch or bought it and made it very successful. However, there are times when[…..]