Market Pulse Survey – 2nd Quarter 2019
Baby Boomers Are Ready To Transition
“The Baby Boomers are aging out of their businesses. The Exit Planning Institute estimates there’s more than 4.5 million businesses expected to transition in the next 10 years in the U.S.,” said David Ryan, advisor with Upton Financial Group. “But business owners who don’t plan ahead may not exit on their own terms. They may have to accept a lower price or take on a lot of seller financing or earnouts, if they sell at all.
Advisor M&A Tip: What ‘Buy-and-build’ Means For You
Private equity firms have increased their investment in buy-and-build strategies. This involves bolting together several smaller companies into a larger business empire that generally sells at higher multiples. The trend is affecting all sorts of industries, from healthcare clinics to niche business services.
Contact us to learn more about consolidation trends in your market. The uptick in buy-and-build acquisitions could mean more buyers and more competition for your business than you expect.
9 Warning Signs Your Buyer Can’t Close The Deal
The proof is in the pudding. It’s not over ’til it’s over. Don’t count your chickens before they’ve hatched. Pick your cliché. Just because someone makes an offer to buy your business doesn’t mean they have the resources to get it done.
As a seller, you need to look at more than dollar signs on an offer to purchase. Make sure your advisors are researching and asking questions to figure out which buyers are for real, and which ones are just talking a big game.
Sometimes buyers want to rope you in to exclusive negotiations. They throw out a high price, fully intending to negotiate down as they do due diligence and “discover” weaknesses or areas where your businesses aren’t a good fit.
Still other buyer reps make what they believe to be a legitimate offer with all good ethic and intent. But if they’re not the final decision maker-the person controlling the checkbook-their efforts might be scuttled by a higher up, or a lender, who simply doesn’t see the same advantages in the deal.
9 warning signs your buyer can’t follow through:
- Too good to be true.They offer a super high price and a 45-day closing “guarantee no risk” if you’ll sign their exclusivity agreement. Your buyer may have ulterior motives. They’ll get access to your sensitive information and get you off the market (putting you in a weaker position). Later, they’ll try to renegotiate the deal at a sizeable haircut or just walk away when you don’t accept their lowball offer. Either way, they gained meaningful competitive intelligence which could significantly hurt your business or its value going forward.