Recently Firmex, a global provider of virtual data rooms and a secure document sharing platform, and Mergermarket, an independent, mergers & acquisitions proprietary intelligence tool, co-hosted a roundtable discussion focusing on current M&A conditions. Their point was that no matter what cycle the market is in, deals still close and according to one panelist, preparation is the key:
Mary Ann Travers, Principal, Crowe Horwath: Private company sellers need to make sure they’re putting their best foot forward. Part of that entails analyzing their operating expense bases and preparing financial statements that reflect their company’s operations in a favorable light. They should remove non-operating expenses; identify off-balance-sheet items; and make sure that their headcount is optimal, although not too lean, since they want to achieve their forecasts. When preparing their forecasts, they should make sure that they’re capturing growth opportunities and that they have supporting documentation to back up their assumptions.
Truer words have never been spoken. And what Travers is referring to is the process Generational Equity calls its evaluation; we conduct one of these on every client before we take them to market and we do this for two primary reasons:
The BEV is vital because every business owner should have an idea of the baseline value for their firm before approaching buyers. If sellers have no idea of the value of the company, how can they know which offers to take/reject/ignore/pursue? Realistically they can’t, so before we enter the market, we determine the BEV, which then leads us to point No. 2 above: Strategies which we call The Roadmap for Enhancing Value (REV). These are ideas/strategies that owners can implement even while in market that will enhance the company’s value and/or improve its sale-ability. This is how another participant of the roundtable describes the idea:
Jeff Cleveland, Managing Director, D.A. Davidson: We counsel all of our clients to take deliberate steps to properly prepare in advance of a transaction in order to optimize results ... areas of focus tend to include business operations, customer and supplier relationships, market dynamics and growth opportunities, and facilities and equipment. Assessing and adjusting a business around these key areas can facilitate meaningful value creation by the time shareholders execute a sale. Fundamentally, this sort of preparation is simply about building a better business for the long-term. Investors will take note of these sorts of improvements, above most things.
Cleveland makes a great point at the end of his discussion on value improvement: Buyers will take note of the steps you are taking, even if the final goal of the strategic improvement has not been reached.
This is really important for business owners to comprehend. Too often entrepreneurs delay operational improvements assuming they are not worth the effort. But buyers see these moves in a much more positive light and will often be pleased to see efforts being implemented while negotiating with sellers. Typically it is the overcoming of inertia in business improvement that is the most critical to buyers.
As both Travers and Cleveland point out, savvy, well prepared business owners that take steps today to make their businesses more attractive, healthy, vibrant, and operationally effective will reap the benefits of any market cycle.
Businesses are sold every day, in all market environments; if you would like to learn more about how you can prepare yours to participate, attending a Generational Equity exit planning seminar is a great first step. An investment of a few hours of your time could richly pay off in the long term as you learn from our M&A professionals about how to think like a buyer when preparing your company for sale. To learn more, follow these links:
Carl Doerksen is the Director of Corporate Development at Generational Equity, part of the Generational Group.
© 2016 Generational Equity, LLC. All Rights Reserved.
The information we learn from customers helps us personalize and continually improve your experience at gencm.com. Here are the types of information we gather.
Information You Give Us: We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice. Our computer system protects personal information using advanced firewall technology.
Information from Other Sources: For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Capital Markets LLC may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Capital Markets, L.L.C. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Capital Markets LLC at is office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
INFORMATION ON THIS WEB SITE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Capital Markets may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Capital Markets does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Capital Markets will be deemed NOT to be confidential. By sending Generational Capital Markets any information or material, you grant Generational Capital Markets an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Capital Markets is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Information Generational Capital Markets publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Capital Markets intends to announce such products, programs or services in your country. Consult a Generational Capital Markets representative for information regarding the products, programs and services which may be available to you.
Generational Capital Markets makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Capital Markets web site, please understand that it is independent from Generational Capital Markets, and that Generational Capital Markets has no control over the content on that web site. In addition, a link to a non-Generational Capital Markets web site does not mean that Generational Capital Markets endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Capital Markets BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Capital Markets.
Honored to win Investment Banking Firm of the Year 3 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.