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Success Fees When Selling a Business The continual upheavals in the market today have forced many business owners to re-evaluate their expenses. In many cases, those expenditures that are not directly related to revenue are decreased such as marketing, training, and hiring budgets. When it comes to selling a business, it is hard not to get caught into this same mindset. Comparing firms can be confusing when each firm has a similar sales pitch. Yet, the way a firm negotiates success fees with an owner upfront can provide some insights into how they will negotiate the business transaction. Our firm

The recent bank collapses have triggered large waves of additional uncertainty throughout our economy, already weakened by increasing inflation and interest rates. While our firm represents primarily lower middle market, privately held businesses, these unexpected shifts in the banking system have had direct impacts on the sale of businesses regardless of the size. Yet, even before these recent disruptions, buyers have become increasingly more meticulous in scrutinizing financials during the due diligence process. If you are an owner considering the sale of your business within the next few years, we recommend that you start working with your accountant to actively

Our firm meets regularly with business owners who have had their businesses valued by a 3rd party. While these valuations can provide some good insights, invariably, the valuations often don’t adequately address the intangibles in the business that go beyond the financial statements. Of course, there are exceptions, but too often 3rd party valuations fail to address some key areas that significantly affect the market value of a business. Below are a couple key questions a business owner should consider when obtaining a business valuation. How are trends in the last 2-3 years applied? Prior to the pandemic, trends over

When an offer is presented to a seller, how the buyer plans to address working capital is an important consideration. As the cost of capital has increased over this past year, working capital has become more and more of a negotiation point between buyers and sellers. Without a good understanding of the working capital requirements for a particular business, sellers could be leaving their hard-earned money at the closing table. Below are a few key questions to consider when addressing working capital in a transaction. 1) How is working capital calculated? To understand why working capital can be hard to

As 2022 comes to an end and we look back on the challenging economic turns we’ve had this year, the ability for a business owner to predict trends going forward and to figure out the right time to sell has become even harder. In our conversations with owners, in many cases, the right time is more dependent on each owner’s unique situation versus being at the mercy of unstable economic conditions.  In fact, we find the right time to sell is more driven by the owner’s expectations and ability to understand when they’ve hit a point of diminishing returns both

What a difference a half a year can make! I just returned from the M&A Source conference in San Diego this past week. These valuable biannual conferences bring together M&A advisors from across the nation for in-depth workshops, specialized training, and exclusive education. At our last conference, held back in May here in Denver, the consensus among attendees was significantly more upbeat. While there was a growing uncertainty building by the war in Ukraine, concerns of high inflation, and possible interest rate hikes, most transactions were still moving forward, and many had assumed a small correction would be good for

As we move into the last quarter of 2022, few would argue that market uncertainty has substantially increased to a level that have caused many in the process of buying or selling a business to push away from the closing table and take a “wait and see” approach. Our firm works with businesses across many different types of industries and while each industry has its unique set of challenges, there have been three clear messages from the current market that should not be ignored. Higher Interest Rates Are Affecting Buyers The average interest rate for SBA and other traditional loans

With the corporate tax deadline extension of September 15th behind us and many accountants taking a much-needed break, it may be an opportune time to schedule a strategy meeting with your CPA if selling is a consideration in the next 3-5 years. Over the past few months, our firm has experienced a substantial increase in new clients going to market. During our initial review of each company’s financials, it becomes very clear which owners have been preparing and will benefit the most now with the burden of historically high interest rates and the ongoing recession debate. We have daily conversations

Over the past few years, turmoil in the global market and considerable impacts of COVID-19 shutdowns have created two distinct groups of business owners: those who have successfully transitioned their business to new ownership and those that wish they had started sooner. Rarely do we hear of an owner who believes they transitioned too soon. As we circle back with our clients within months after closing, we hear a common theme of unforeseen major changes that occurred post-closing. Below are a couple of key issues that come up most often. Employee Challenges The current labor shortage has changed the landscape