The investment banking business is very competitive.  I’m guessing that may be true in your industry as well!  Moreover, merger and acquisition dealmakers run the gamut in terms of skills and abilities.  So, how do you go about selecting the right investment banker to sell your business?    

Let’s start with the notion that a dealmaker must be able to deeply understand your business, exceptionally market and represent your business, and advocate on your behalf in the relentless pursuit of their fiduciary responsibility to you!  Of course, a seller or buyer of a company should look for certain key skills before they hire an investment banking representative who has (or doesn’t have) some ability to alter the course of their future!  Skills come in two varieties… hard skills and soft skills.  Some of these skills are easily identified through simple questions and some may only be apparent after you get to know your prospective representative.

So, let’s address the definitions of hard and soft skills. Read more »

In addition to teaching a “How to Value a Business” continuing education course each year, I am also asked to speak to various groups of CEOs, entrepreneurs and business owners on the same subject.  Regardless of the audience, invariably, someone will ask, “Jim, this valuation stuff is all well and good, but what is a simple multiple of earnings or formula to use to value a business?”

Face it, we all love shortcuts. We learn at an early age the benefits of shortcuts: whether we cut through our neighbor’s yard on our walk to school, clean our room by stuffing our messes into our closets, or even feed our unwanted vegetables to our dog (surreptitiously under the table, of course) so we can get the dessert our mothers’ promised if we clean our plates, who can resist a good shortcut?

Today, I still use the shortcuts my high school mathematics teacher taught us to check our addition and how to quickly multiply by 25. I doubt any of us can get through the day without utilizing at least one shortcut we learned as kids. For business buyers and sellers, multiples are simply shortcuts to the valuation and/or negotiation process.

When applied properly, multiples can be used effectively as sanity or temperature checks/gauges. However, I personally would not want to buy or sell a business based strictly upon a multiple. There are always so many variables to consider when acquiring or selling a business; basing such an important decision on a simple multiple does not make sense. Take a look at the following, admittedly simple, example as a way of illustrating my point. Read more »

A former partner (and highly successful serial entrepreneur) taught me that the two best ways to prosper in a slack period is to feed your winners and cut your losers. Year-to-date 2008 trends in global mergers and acquisitions (‘M&A’) reflect this; corporate ‘pruning’ is very much in evidence today.

How can this benefit you? Several ways, if you act aggressively:

1. Divestiture of ‘Non-Core’ Assets:
   This is a particularly good time to escape the accumulated time-wasters, by selling them at reasonable prices and terms, either in the US or abroad. This will allow your management team to focus. Cut your losses—stop wasting precious manpower and money.
2. Sale to International Acquirers:
   The weak US dollar means offshore buyers now recognize American M&A is a bargain. You can achieve a full and fair value at favorable terms if your advisor knows how to (i) access strategic buyers, (ii) capture their attention and (iii) hold it long enough to properly showcase your business.
3. Strategic Acquisitions:
   This is a great time to acquire technology, product lines, extend geographic reach, customer lists, etc., on favorable terms if you can fund the deal largely from generally available corporate funds.
4. Create Your Exit Strategy:
   With day-to-day activity softening, this is a perfect time to craft, adopt and begin to implement a carefully coordinated, value maximizing exit plan. A professional M&A advisor would be pleased to discuss this with you, begin to identify an action plan, do a preliminary valuation as your benchmark, and provide additional consultative input, all at no cost to you. The actual exit process could take several years, so it is never too early to start.

Known for superior advisory skills, capital raising expertise and an over 50 year history of strategic and creative thinking, CFA’s investment banking professionals provide a broad range of services in support of mergers, acquisitions, divestitures, capital raising and corporate restructuring in North America, Europe and India.

Our banking professionals apply their expertise across many industry groups including Aviation/Aerospace/Defense, Business Services, Commercial Real Estate, Energy, Engineering/ Construction, Equipment, Food/Beverage, Healthcare, Hospitality/Leisure, Industrials, Metal Fabrication, Plastics/Rubber, Printing, Technology/Media/Telcom, Transport/Logistics/Supply Chain. If you are interested in selling a business, buying a business or sourcing capital please contact your local CFA office.

Contributing Authors

	JP Balestrieri CFA Principal Profile/Contact Articles		Peter Heydenrych CFA Principal Profile/Contact Articles
	Brian Ballo CFA Principal Profile/Contact Articles		Gerald W. Lindsay CFA Principal Profile/Contact Articles
	Arun Batavia CFA Principal Profile/Contact Articles		Greg McKinley CFA Principal Profile/Contact Articles
	Herbert “Bud” Boles CFA Principal Profile/Contact Articles		Peter Moore CFA Principal Profile/Contact Articles
	Marc Borrelli CFA Principal Profile/Contact Articles		Larry Rogers CFA Principal Profile/Contact Articles
	Joseph Contaldo CFA Principal Profile/Contact Articles		David Sinyard CFA Principal Profile/Contact Articles
	Robert Contaldo CFA Principal Profile/Contact Articles		Robert St. Germain CFA Principal Profile/Contact Articles
	Lee Crawley CFA Principal Profile/Contact Articles		Peter Ventre CFA Principal Profile/Contact Articles
	David DuWaldt CFA Principal Profile/Contact Articles		George Walden CFA Principal Profile/Contact Articles
	Roy Graham CFA Principal Profile/Contact Articles		Jim Zipursky CFA Principal Profile/Contact Articles
	John Hammett CFA Principal Profile/Contact Articles
	John Klearman CFA Principal Profile/Contact Articles

 
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