Sell Your C Corp Software Company- Asset Versus Stock Sale By: Dave Kauppi | - If you are the owner of a C Corp and are planning on selling your software company, you must understand the ramifications of the stock sale versus the asset sale. Here is what happens when there is an asset sale of a C Corp. The assets that are sold are compared to their depreciated basis and the difference is treated as ordinary income to the C Corp. Any good will is a 100% gain and again is treated as ordinary income. This new found income drives up your corporate tax rate, often to the maximu ... Tags:information technology investment banker, merger acquisition, venture capital, sell software company
Selling Your Software Company - Market Timing Is Critical By: Dave Kauppi | - Our firm was engaged as a merger and acquisition advisor in 2007 to sell a Content / Document Management Software Firm. We put together a database of likely buyers in that software category and began our contact process. Fast Forward to early 2010. We have been engaged by a second Content / Document Management Firm to sell their software company. From our earlier engagement, we dusted off our database of mid-market software companies in that space and began making our phone calls.
Information Technology Merger & Acquisition Trends For 2010 By: Dave Kauppi | - We surveyed CEO's and Directors of Mergers and Acquisitions over a broad cross section of software, Healthcare IT, IT services, and Information Technology. We were pleasantly surprised by the robust growth projections and level of optimism from these Information Technology Executives. Below are the results from this brief survey:
I believe my business will do the following in 2010.
Selling Your Business - Treat It Like An Investment By: Dave Kauppi | - Think of the joy you feel when you look back and realize that you sold a stock at a big profit and got out within a few percentage points of its all time high. You chuckle a bit as you watch the stock pull back by over 100% while you have redeployed your proceeds into other diversified investments that have performed well. That is a very disciplined approach to investing and unfortunately I have failed to execute that on several very costly occasions.
Your Accountant Does Not Want You To Sell Your Business By: Dave Kauppi | - Normally a business owner does not want any contact with a merger and acquisition firm until immediately prior to selling the business. Because of this, one of the strategies we have employed to obtain deal flow for our investment banking practice is to cultivate relationships with local accounting firms or local offices of national accounting firms.
Ten Signs That It's Time To Sell The Family Software Business By: Dave Kauppi | - For the past 20 years you have built your software business. Your company has become part of your identity. Even when you are not at work, you are working, thinking, planning. You never stop. If you sell, you are leaving behind much more than a job. In this article, we will discuss some signs that might indicate that it is time to exit your business.
Selling Your Healthcare Company- Beware Of The Tire Kicker By: Dave Kauppi | - We are often contacted by a healthcare company owner after he has been approached by a buyer. He wants information from us on the merger and acquisition process, which we are happy to provide. He wants to wait, however, to engage our firm to sell his company "until this situation with the buyer plays itself out."
Selling Your C Corp Healthcare Company- Negotiate Hard For A Stock Sale By: Dave Kauppi | - If you are the owner of a C Corp and are planning on selling your healthcare company, you must understand the ramifications of the stock sale versus the asset sale. Here is what happens when there is an asset sale of a C Corp. The assets that are sold are compared to their depreciated basis and the difference is treated as ordinary income to the C Corp. Any good will is a 100% gain and again is treated as ordinary income. This new found income drives up your corporate tax rate, often to the maxi ... Tags:business broker healthcare information technology, merger acquisition, sell, investment banker
Selling Your Software Company- The Number One Value Driver By: Dave Kauppi | - Why is contractually recurring revenue so important? The first answer is risk. Buying a business is risky. Any factor that reduces this risk is rewarded with transaction value. Forecasted sales, for example, are at the high end of the risk scale and are heavily discounted in value. Historical time and materials revenues that are "most likely to be at about the same level" next year are somewhere in the middle of the risk scale and are valued accordingly.
Ten Signs That It's Time To Sell The Family Healthcare Business By: Dave Kauppi | - For the past 20 years you have built your healthcare business. Your company has become part of your identity. Even when you are not at work, you are working, thinking, planning. You never stop. If you sell, you are leaving behind much more than a job. In this article, we will discuss some signs that might indicate that it is time to exit your business.
Should You Sell Your Healthcare Company? By: Dave Kauppi | - For many healthcare companies, the answer to that question is a resounding, NO! There is an exception to this with the rapid rise of the new economy, new media, and highly scalable companies like Google, YouTube, Ebay, PayPal, and MySpace. In their case, their prospective customers highly value their newness, their breaking the mold, their non-establishment approach. They are viewed as doing what they do far better than the technology establishment stalwarts. The notable exception to this is App ... Tags:business broker healthcare information technology, merger acquisition, sell, investment banker
Selling Your Software Company- Why Use A Merger And Acquisitions Advisor? By: Dave Kauppi | - Perhaps the most important business transaction you will ever pursue is the sale of your software company. Many business owners attempt to do it themselves and when asked if they got a good deal, many respond with "I think so," or "I got my asking price," or "I really don't know," or "It was a disaster." Often times these very capable business people approach the sale of their business with less formality than in the sale of a home. The purpose of this article is to answer the questions - Why wo ... Tags:information technology investment banker, merger acquisition, venture capital, sell software company
Selling Your Healthcare Company- Why Earnouts Make Sense Today By: Dave Kauppi | - The purpose of this article is to present earnouts to sellers of healthcare companies as a method to maximize their transaction proceeds. Sellers have historically viewed earnouts with suspicion as a way for buyers to get control of their companies cheaply. Earnouts are a variable pricing mechanism designed to tie final sale price to future performance of the acquired entity and are tied to measurable economic milestones such as revenues, gross profit, net income and EBITDA. An intelligently str ... Tags:business broker healthcare information technology, merger acquisition, sell, investment banker
Selling Your Software Company- Prepare For The Buyer Visit By: Dave Kauppi | - In our mergers and acquisitions practice, a very important event prior to receiving letters of intent is the buyer visit. Don't be fooled into thinking that this is a simple headquarters tour. Experienced buyers know just the right questions to ask to uncover risks and to discover opportunities. We try to coach our sellers on how to present and how to answer these carefully scripted questions.
Global Merger & Acquisition By: Clive Sexton | - Innovex uses Interim Manager for International Assignment
International business experience, knowledge of UK, European and US tax and accounting procedures, and fluent German was the management mix needed for Innovex, the British-based pharmaceutical outsourcing company, during a global merger and acquisition and a period of unprecedented change and growth.
Paul Barton, an accountant with fluent German and good French, who has previously worked in Germany and the USA, was plac ... Tags:global, merger, acquisition
Before You Sell Your Healthcare Business- Focus On Recurring Revenue By: M&A Guy | - This article discusses some actions the owners should take in anticipation of selling a medical business. Many of these actions would be implemented by the acquirer post acquisition. If you implement them prior to the sale, the buyers will reflect that in an enhanced purchase price. If the buyer implements them post acquisition, they certainly will not pay you for the improvements.
Before You Sell Your Software Company- Focus On Recurring Revenue By: M&A Guy | - This article discusses some actions the owners should take in anticipation of selling a software business or an IT Services business. Many of these actions would be implemented by the acquirer post acquisition. If you implement them prior to the sale, the buyers will reflect that in an enhanced purchase price. If the buyer implements them post acquisition, they certainly will not pay you for the improvements.
Selling A Business, New Rules For Merger And Acquisition Success By: M&A Guy | - If you are a business owner considering selling your business, most likely you will interview several business brokers or merger and acquisition advisors. In the process you might hear, "We have lists of qualified buyers." Some potential business sellers find this phrase almost hypnotic. It congers visions of this group of well funded, anxious buyers who can't wait to pay a generous price the moment they are made aware of this great opportunity.
Sell Or Keep Your Business - The Numbers May Surprise You By: M&A Guy | - In our Merger and Acquisition practice we watch as business buyers go through an exhaustive analysis to determine if it is financially prudent to make a particular company acquisition. Some use EBITDA multiples or free cash flow multiples. Others use the classic discounted cash flow approach while another group might look at a payback period analysis or debt coverage ratios. They all have one thing in common, however. They do a financial analysis as the primary determinant in making a decision t ... Tags:business brokers, merger, acquisition, sell a business, Chicago Illinois, investment banker, valuation
Selling Your Business - Beware Of The By: M&A Guy | - We were just concluding our first information gathering meeting with a new client who had engaged us to sell her business when she handed us a letter. That letter was from another Merger and Acquisition Advisory or Business Broker firm.
The letter began: "Our buyer group has requested that our firm assist them in locating a company within your industry that would be willing to sell their business. The limited information we have regarding your firm indicates that your business may ... Tags:qualified buyer, business brokers, merger, acquisition, sell a business, Chicago, Illinois
Selling Your Business - We Have Qualified Buyers By: M&A Guy | - If you are a business owner considering selling your business most likely you will interview several business brokers or merger and acquisition advisors. In the process you might hear, "We have lists of qualified buyers." Some potential business sellers find this phrase almost hypnotic. It congers visions of this group of well funded, anxious buyers who can't wait to pay a generous price the moment they are made aware of this great opportunity.
Sell A Business, Keys To A Successful Exit By: M&A Guy | - The decision to sell is all too often a reactive one rather than a proactive one -- the primary reasons are a serious health issue, owner burnout, the death of a principal, general industry decline or the loss of a major customer. The purpose of this article is to discuss the ten key factors that a business owner should consider in their once in a lifetime opportunity to maximize the rewards from their lifetime of work.
Avoid The Number One Mistake In Selling Your Business By: M&A Guy | - Ask any business owner who has sold a business or attempted to sell a business, "What would you do differently?" If he or she attempted to sell it without help, chances are pretty good that the transaction did not succeed. If the transaction were actually completed, chances are that they did not get a good price, but had no idea that this occurred.
Financial Advisors - It's Time For Some Difficult Discussions With Your Business Owner Clients By: M&A Guy | - If this recent market meltdown has taught us anything it is to make sure you are diversified over several investments and asset classes. Would you recommend that a client put 80% or more of their assets into a single investment? Of course not, but a large percentage of your clients actually have that level of concentration. Your clients that are business owners likely have 80% or more of their family's net worth tied up in their business.
Prepare To Sell Your Material Handling Business By: M&A Guy | - Baby Boomers are hitting retirement age and are starting to retire in large numbers. For business owners, that retirement is often accomplished through a business sale.
Even if you currently view the idea as unlikely, you are wise to consider the possibility of selling your material handling company. The decision to sell is all too often a reactive one rather than a proactive one -- the primary reasons are a serious health issue, owner burnout, the death of a principal, general ind ... Tags:business broker material handling, merger acquisition, investment banker, lift truck, sell
Before You Sell Your Material Handling Business By: M&A Guy | - If you're a family business owner, chances are you're thinking about what you'll do when your working days are over. As William Rothwell, a professor at Penn State University, noted in the foreword to Exit Right: A Guided Tour of Succession Planning for Families in Business Together "More than 40% of the people who run the closely held operations that comprise 80% of the North American economy will retire by 2007."
The Offer To Buy A Business Depends On The Many Characteristics By: M&A Guy | - Business sellers should be prepared for the multitude of different deal structures that they should expect from various buyers. A business sale often consists of multiple elements like cash at close, seller notes, earn outs, non-competes, escrow accounts, etc. More often than not a first time seller will actually put out his or her hand in a stop gesture and reply, "I only want the full price in cash at close." This article will discuss some of the selling company characteristics that directly e ... Tags:business selling price, letter of intent, cash at close, earnout payment, seller note, merger acquisition
The First Himss Venture Fair -2007 By: M&A Guy | - I attended the new Venture Fair at the Himss Conference and applaud the organizers for launching this new event. In spite of its maiden voyage, it was very well organized, well attended and very effective. In fact, the biggest difficulty was the weather not co-operating and the morning session had a majority of entrepreneurial presenters compared with qualified investors. By Mid Afternoon, with late arrivals, however, the ratio of investor to presenter was approximately one-to-one.
Business Sellers - Beware Of The C Corp Asset Sale By: M&A Guy | - We recently completed a Merger and Acquisition engagement to sell our client to a large publicly traded company. Our client had started her company 25 years ago and had set it up a C Corp. She never was advised to change that structure in preparation for a much better tax treatment on the sale of the business.
Selling A Business - The Eleventh Hour Contract Change By: M&A Guy | - The next line could be, "Will it Derail Your Sale?" We have seen it go both ways, unfortunately. If a deal does blow up, everybody looses. The seller has spent six months of divided focus and many of the normal business development activities have been put on the back burner. His or her business will simply not be as strong if the business sale process is not completed.
Do Your Company's Sales Match The Excellence Of Your Product Or Service? By: M&A Guy | - For many entrepreneurs, technology based companies or healthcare companies, the answer to that question is a resounding, NO! There is an exception to this with the rapid rise of the new economy, new media, highly scaleable companies like Google, U-Tube, Ebay, PayPal, and MySpace.
Is Venture Capital Right For You? By: M&A Guy | - I tried and I gave up. When we started out high-tech Merger and Acquisition Practice, I thought it a natural fit to also offer finder services for Entrepreneurs seeking Venture Capital Funding. That service is no longer available. Why not you ask? We failed miserably. Our firm has successfully completed several small high tech M&A deals at great multiples, but finding venture capital turned out to be a very frustrating and unproductive experience.
Venture Capital Alternative For Technology Entrepreneurs By: M&A Guy | - If you are an entrepreneur with a small technology based company looking to take it to the next level, this article should be of particular interest to you. Your natural inclination may be to seek venture capital or private equity to fund your growth. According to Jim Casparie, founder and CEO of the Venture Alliance, the odds of getting Venture funding remain below 3%. Given those odds, the six to nine month process, the heavy, often punishing valuations, the expense of the process, this might ... Tags:venture capital, merger acquisition, private equity, business broker, sell a business
Depreciation Recapture In A Business Sale By: M&A Guy | - As Merger and Acquisition advisors, our goal is to maximize our seller clients' after tax proceeds. The first step is to get the best price from the marketplace by presenting the acquisition opportunity in a competitive bid situation. Having several interested buyers is the most important factor in achieving the best sales price.
Business Sellers Often Suffer From Single Buyer Syndrome By: M&A Guy | - Remember when you were a child and your mother told you not to touch the hot stove? You couldn't really appreciate that message until you felt the pain shoot through your entire body by way of your finger tips. Oh, now I understand. Sometimes our prospective business sellers get the same kind of message as they pursue the sale of their business to a buyer who approached them with an unsolicited interest to buy.
Selling Your Business - Beware Of The Tire Kicker By: M&A Guy | - We are often contacted by a business owner after he has been approached by a buyer. He wants information form us on the merger and acquisition process, which we are happy to provide. He wants to wait, however, to engage our firm to sell his company "until this situation with the buyer plays itself out."
Selecting A Merger And Acquisition Advisor For The Sale Of Your Business - The Request For Proposal By: M&A Guy | - In my prior business experience in the information technology industry, it was a very common practice for potential buyers to submit a Request for Proposal in order to make a purchase decision. After several years as a Merger and Acquisition advisor, I finally got an RFP. A light bulb went off.
Build Versus Buy - A Merger And Acquisition Strategy For Information Technology Companies By: M&A Guy | - As a Merger and Acquisition advisor, we regularly dialogue with the top executives in the information technology industry. We have to chuckle when we reach a decision maker with a large IT company and he says, "We have a corporate policy that we do not buy companies." Does this guy read the industry publications? Is his company's development group that good? Does he understand the first mover advantage or window of opportunity?
Before You Sell Your Lift Truck Dealership By: M&A Guy | - Engage other professionals that have experience in business sale transactions and especially the unique valuations of heavy equipment dealers. You may have a great outside accountant that has done your books for years. If he has not been involved in multiple business sales transactions, you should consider engaging a CPA firm that has the experience to advise you on important tax and accounting issues that can literally result in swings of hundreds of thousands of dollars. What are the tax im ... Tags:business broker equipment dealer, merger acquisition, investment banker, lift truck, sell
Selling Your Equipment Dealership By: M&A Guy | - When you are wearing all the hats already, trying to sell your company yourself can hurt your business. A major mistake business owners make in exiting their business is to focus their time and attention on selling the business as opposed to running the business. This occurs in large publicly traded companies with deep management teams as well as in private companies where management is largely in the hands of a single individual. Many large companies that are in the throws of being acquired ... Tags:business broker equipment dealer, merger acquisition, investment banker, lift truck, sell
Before You Sell Your Heavy Equipment Business By: M&A Guy | - The biggest mistake business owners make is waiting too long to sell. Have you ever heard, "I sold my business to early?" Compare that with the number of times you've heard somebody say, "I should have sold my business two years ago." Unfortunately, waiting too long is probably the single biggest factor in reducing the proceeds from the sale of a privately held business. The erosion in business value typically is most pronounced in that last year before exiting.
PURPOSE: To provide a quick guide to business owners that desire to sell their business but do not want a significant portion of the transaction value to go to a business broker or M&A intermediary.
1.Have an idea what your company is worth. The most common rule of thumb is that buyers usually pay a multiple of EBITDA. The normal range is a selling price between 3 and 5 times EBITDA. There are exception ... Tags:sell business, business broker, merger acquisition
Selecting A Business Broker - Look Out For These Red Flags By: M&A Guy | - Last week I got a call from a business owner who had decided to sell his business. He and his partners were beginning the beauty contest phase of selecting a firm to represent them in the sale. His partners had begun discussions with a merger and acquisition advisory firm. He had followed up with this firm prior to calling us and had questioned them on several issues. He shared his findings with me and asked my opinion. Generally I subscribe to my old IBM training and will not disparage a compe ... Tags:business broker Chicago Illinois, merger acquisition, buy sell business, sell technology company
This is particularly true in the case of mergers or acquisitions. Recently, a company I founded, EMJ, was acquired by SYNNEX. Prior to that EMJ had acquired 12 other companies. The following is a list of lessons I have learned on how to do a successful merger.
Branding Amid Chaos: How To Handle A Merger Or Acquistion By: Laura Pasternak | - Your company is considering a merger or acquisition. Youve explored the financial and legal ramifications. But do you know what your point of distinction will be post-merger?
Today, mergers and acquisitions (M&A) are commonplace. They are strategic decisions grounded in geographic expansion, product and competency diversification, and brand leveraging. While businesses clearly address the associated legal and financial issues, they often overlook a critical componentbrand ma ... Tags:brand, identity, corporate, business, market, point, laura pasternak, logo, merger, acquisition
Merger And Acquisition - A Strategy For Corporate Growth By: M&A Guy | - Two companies that are recognized as among the best at making successful acquisitions are General Electric and Cisco Systems. These companies have been star performers in growing shareholder value. The core principal that runs through almost every acquisition is integration. Over the past 10 years Cisco Systems has acquired 81 companies. Their stock price is up a remarkable 1300%. GE outperformed the S&P 500 index over the same period by 300%. There are several categories of strategic acqu ... Tags:merger, acquisition, business sale, business broker, investment banker
Selling Your Business - Don't Underestimate The Value Of Your Company's Web Site By: M&A Guy | - Business owners often contact us requesting an introductory meeting. They are contemplating the near to intermediate term exit from their business. The meetings generally have two major themes: 1. The beauty contest "" they want to interview merger and acquisition firms or business brokers to evaluate their qualifications and process in comparison with other competitors and 2. Preparation for Sale "" what should we be doing in anticipation of putting our company on the market?
Selling Your Business - The Number One Value Driver By: M&A Guy | - When helping our clients sell their businesses, we get to witness buyer behavior first hand. The most important behavior is their economic vote "" how much they are willing to pay for a business. Many factors go into their assessment of value, but a contractually recurring revenue stream is consistently the number one value driver.
