Having just watched highlights from the Peyton Manning press conference this morning, one can make the case that the Colts’ decision to let Manning go is very much like a business owner making that decision to sell all or part of his company.   It is evident that the time for change has come.  The decision is emotional for all parties involved.  It’s in the best interest of the business entity to move on.   But it is also bittersweet.

Manning spent his entire career with the Colts and the team knew great success with him at the helm.  Management trusted his abilities and rewarded him amply.  He has gotten older and a step slower , apart from his recent injury.   Business owners spend a lifetime building a business and at some point they grow older, a step slower, and realize it’s time to either call in the reinforcements or find someone else to take the helm.

Peyton Manning will move on…play for someone else until that time when he hangs up his cleats.  He’ll have help deciding on his best options (his agent).    Business owners do the same…they move on…choose to concentrate their efforts elsewhere, whether it’s with a new venture, a charitable endeavor or  spending time with loved ones and improving their golf game.  They also have help deciding on their best options (their trusted M&A advisor). 

This change, this process of transition, is inevitably emotional and bittersweet.

Posted by Anthony Contaldo.

With the high price of gasoline at the pumps the headline story on every nightly news broadcast, CFA’s current quarterly energy newsletter is relevant reading.  Bud Boles, a prominent member of our Energy Industry Practice Group and oil industry veteran, writes a compelling newsletter every quarter analyzing the industry trends and provides insight into what’s in store on the energy front.

The current issue discusses global energy supply and demand, pricing, exploration and recent M&A deals in equipment and services.   I suggest you read the newsletter in its entirety for an in depth summary of the energy sector.   You can download the Q4 2011 Energy Industry Newsletter by clicking here. 

Posted by Lee Crawley.

Part 5

After selling companies for over thirty years, I have found that it is near impossible to convince a business owner to sell until the business and personal reasons align. But once they do, no good ever comes from delaying a sale. Over the past few weeks, my blog posts have focused on signs it may be time to sell your business… from boredom and a changing market place to risk intolerance. Another good reason to consider selling is a plethora of motivated buyers.

Sign #5 – It’s a Seller’s Market – Always

The three principal buyer groups are Private Equity Groups, strategic acquirers, and high net worth individuals.

Private Equity Groups have become the new conglomerates with overflowing levels of investment capital. With 2,500+ Private Equity Groups in the United States and a like number overseas, competition to buy companies remains robust among financial buyers. Multiple offers can be a reality for even some marginal or smaller companies. Premiums are being paid for companies as demand exceeds supply for those performing well in these tough economic times.

Strategic acquirers see growth through acquisitions as the preferred way to gain market share quickly, add product lines, augment human resources, enhance management, and stay competitive.

Strategic acquirers flush with cash have led the charge to buy companies particularly as banking has tightened for financial buyers.

High net worth individuals and family funds can be worthy suitors. These individuals bring significant personal finances, outside private investment capital, experience, contacts, expertise, and many times a unique investment strategy to the mix.

Perhaps you have been approached by one of these bona fide buyers who is large, cash heavy, willing to pay generously… and inebriated with the desire to own your company. (We can dream can’t we?). This may be a sign it’s time to sell.

Posted by Bob Contaldo.

Part 4

Entrepreneurs are successful because they are versatile and are unafraid to take on the challenge of doing what needs to be done at each stage in the life cycle of their company.  So it’s natural for company owners to want to take on the task of selling their company as one more personal challenge that they can do as well as an outside expert.

As I have mentioned in my last few blog posts, some company owners chose to handle the process of selling their company themselves.  Some of these owners successfully sell their company for a high valuation.  Many of them successfully sell their company, but for a lower price or on weaker terms than they may have deserved.  And too many of them aren’t successful at selling at all.

There are a number of reasons why smart owners hire investment bankers to manage the process and represent their interests in the sale of their companies.  An outside M&A advisor stays focused on the deal while the owner stays focused on running the company’s day-to-day operations.  An investment banker also provides a level of experience and sophistication when dealing with potential buyers.

Reason #4

MARKET VALUE & TERMS.  Many companies are sold to buyers that make many acquisitions.  These experienced buyers are accustomed to the standard valuations, terms, and conditions in the marketplace.  An experienced advisor can tell the seller what is expected in the marketplace and what provisions the buyer is asking for that are beyond the limits of accepted practice.  The investment banker will protect the seller’s interests.

The contracts that document the sale of the company add up to more than 100 pages.  The price is in one place on one page of those documents.  The remaining terms and conditions are vitally important to the seller.  An experienced dealmaker can advise on what is acceptable and what provisions may be detrimental to the seller.  The end result is a better sale on better terms.

Posted by John Hammett.

Part 4

Selling your business, which is perhaps your largest asset, can be a difficult decision. It has been part of you and part of your family. It has been good to you like an old friend. You have loved it – you have cursed it – you have nurtured it, you have seen it from birth through the teen years and into maturity. Unlike us, it can live for generations – though the time will come when it must change hands.

When the cycle of business and our personal circumstances begin to herald the transition, it should be addressed in order to realize the financial security for which it was created.

In this series of blog posts I’ve been discussing the 10 signs that it might be time to sell your business.   The first sign is when the enthusiasm for the business has diminished.  A changing marketplace can also be a sign it’s time to exit, as can a risk/reward imbalance.

Sign #4 – A Change Would Be Good For the Family

Many have experienced the challenges of a family run business. As the succeeding generation grows into personal and business maturity, it may be time for a generational transfer of ownership. A recapitalization with a Private Equity Group as a financial partner can allow the founding shareholders to take the lion’s share of the business value in cash at closing, while the succeeding generation reinvests (through a small amount of the proceeds) for a meaningful share of the company going forward. The company would also have access to growth capital. How great would it be to again have a family relationship that is not encroached upon by business? Is the business stealing time from your kids? Are you trading memories for dollars? Many business owners have delayed a sale in spite of the concerns of a loving spouse who desires a different and better life for themselves.

Posted by Bob Contaldo.

Part 3

Most private company owners are used to doing things for themselves.  Many founded the companies that they run, and they took care of sales, operations, and financing alone before their company grew large enough to have an organization to manage those functional areas.  Entrepreneurs are successful because they are versatile and are unafraid to take on the challenge of doing what needs to be done at each stage in the life cycle of their company.  So it’s natural for company owners to want to take on the task of selling their company as one more personal challenge that they can do as well as an outside expert.

As I have mentioned in my last few blog posts, some company owners chose to handle the process of selling their company themselves.  Some of these owners successfully sell their company for a high valuation.  Many of them successfully sell their company, but for a lower price or on weaker terms than they may have deserved.  And too many of them aren’t successful at selling at all.

Company owners hire investment bankers to manage the process and represent their interests in the sale of their companies.  There are a number of reasons why smart owners pay investment banking fees for these services.

Reason #3

PERSONAL DYNAMICS.  The initial contact with a potential buyer sets the stage for subsequent negotiations.  An owner who contacts buyers directly may seem weak or desperate to sell.  Alternatively, too casual an approach can lead buyers to think that the seller is not serious about selling the company.

Having an experienced dealmaker make the initial contact sends a message of sophistication and seriousness on the part of the seller.  Furthermore, a third-party can maintain the confidentiality of the seller until an interest has been established and initial buyer qualifications are validated.  This protects the seller’s confidentiality in the marketplace.

Posted by John Hammett.

Risk vs. Reward May Signal The Time To Sell A Business

Your business – it has been part of you and part of your family. It has been good to you like an old friend. You have loved it – you have cursed it – you have nurtured it, you have seen it from birth through the teen years and into maturity. Unlike us, it can live for generations – though the time will come when it must change hands and the decision to sell your business can be a difficult one to make.

In this series of blog posts I’ll be discussing the 10 signs that it might be time to sell your business.   The first sign is when the enthusiasm for the business has diminished.  A changing marketplace can also be a sign it’s time to exit.

Sign #3 – Risk Becomes a Four Letter Word

With all that needs to be done in a changing marketplace, business owners cannot afford to be squeamish when it comes to ongoing investment in the company. When one reaches the point of not making logical investments in the company or tends to count the debt rather than the probable benefit, it might be time to sell. Most business owners reach a point where they are tired of “betting the farm”, tired of personal guarantees, tired of meeting financing requirements and covenants, and worn out over protecting assets from legal liability. There comes a time when it makes sense to “take some chips off the table” and build financial firewalls.

Posted by Bob Contaldo.

Part 2

As I mentioned in my last blog post, some company owners choose to handle the process of selling their company themselves.  Some of these owners successfully sell their company for a high valuation.  Many of them successfully sell their company, but for a lower price or on weaker terms than they may have deserved.  And too many of them aren’t successful at selling at all.

Company owners hire investment bankers to manage the process and represent their interests in the sale of their companies.  There are a number of reasons why smart owners pay investment banking fees for these services.  The first reason investment bankers are hired to sell a company is it allows the business owner to focus on the day to day operation of the company.

Reason #2 – The Buyers

Owners tend to think of buyers that they know.  They think of their close competitors and other companies they see in the industry.  A high-value sale requires finding buyers that have three characteristics: (1) they can realize a higher value from the company than the owner can realize today; (2) they have the cash and other resources to close a deal at a fair value; and (3) they are experienced at closing deals.  Just because companies come immediately to mind, or are convenient, does not mean that they are the best buyers.

A good investment banker will research and contact 300 to 400 potential buyers to find several that are qualified and ready to buy.   The advisor has access to research and to personal connections that will be used to identify a bigger pool of qualified buyers than an owner can readily access.

Posted by John Hammett.

Part Two

Your business – it has been part of you and part of your family. It has been good to you like an old friend. You have loved it – you have cursed it – you have nurtured it, you have seen it from birth through the teen years and into maturity. Unlike us, it can live for generations – though the time will come when it must change hands  and the decision to sell your business can be a difficult one to make.

When the cycle of business and our personal circumstances begin to herald the transition, it should be addressed in order to realize the financial security for which it was created.

In my next few blog posts I’ll be discussing the 10 signs that it might be time to sell your business.   The first sign, which I wrote about last post, is when the enthusiasm for the business has diminished.

Sign #2 – Your Marketplace Is Changing

Businesses that do not change will ultimately fade away. Change requires new market direction, more equipment, more people, new technology, expanded facilities, and other capital investment. Market changes can include more complexities involving government regulations, taxes, banking, certification requirements, customer reporting requirements, foreign competition that threatens margins and customers seeking fewer suppliers and lower costs. Many times the direction is clear, but the mind, body, and emotions are not willing to embrace change.

Download The Ten Biggest Mistakes Sellers Make.

Posted by Bob Contaldo.

Part One

Most private company owners are used to doing things for themselves.  Many founded the companies that they run, and they took care of sales, operations, and financing alone before their company grew large enough to have an organization to manage those functional areas.  Entrepreneurs are successful because they are versatile and are unafraid to take on the challenge of doing what needs to be done at each stage in the life cycle of their company.  So it’s natural for company owners to want to take on the task of selling their company as one more personal challenge that they can do as well as an outside expert.

As a result, some company owners choose to handle the process of selling their company themselves.  Some of these owners successfully sell their company for a high valuation.  Many of them successfully sell their company, but for a lower price or on weaker terms than they may have deserved.  And too many of them aren’t successful at selling at all.

Company owners hire investment bankers to manage the process and represent their interests in the sale of their companies.  There are a number of reasons why smart owners pay investment banking fees for these services. Read more »