Exit and Growth Strategies for Middle Market Businesses

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Business Exit Planning – It Helps to Know What You Want

By Peter Ventre | Mar 10, 2015

Business Exit PlanningI am reminded that it helps to know what you want from life. Here in the Northeast last week was winter school vacation week. We took the opportunity to tour a handful of states looking at prospective colleges with my son, who like many 16 year olds has little notion of what he may want in a college or what lies ahead for him. We toured urban and rural schools, large universities and small quaint colleges, academically rigorous schools and school that were not so competitive, as everyone needs a back-up plan. Surprisingly by the end of a rather demanding travel week, even my son began to formulate opinions about what he liked and didn’t like. The trip will pay dividends next fall when he ultimately decides where to apply to college.

Many business owners seeking to exit their business remind me of my son. They are not sure what they want. Each owner has read or heard of industry friends who may have sold their business to an unrelated third party at high multiples, or transferred the business to their children, or sold the company to their employees through an ESOP structure or to members of their management team, or perhaps they sold a portion of the company to a private equity group and decided to stay on building the company further with an additional capital infusion. The right path forward to exiting a business is unique to each owner, their company and circumstances. What options best fit the company’s circumstances and also matches the desires of the owner, considering his personal situation. Are there options for the company at a price that would work for the owner to move on? Does the owner wish to retire immediately or do they wish to continue to work in some capacity for years to come? Are there other family considerations?

Business exit planning demands thought, planning, and knowing what you want as the owner.  Like many things in life, it helps to know what is important to you. If you are contemplating a business exit contact a Corporate Finance Associates representative, who would be happy to discuss the various options with you.

Posted by Pete Ventre.

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Is Your Management Team Increasing Your Business Value?

By Peter Ventre | Feb 26, 2013

Business Meeting with PaperYou’ve worked diligently to grow your company.  You’re building a solid management team that you can count on.  This management team should allow you to step back a little from day to day business, and focus more on strategic matters, positioning the company for the future.  You know your management team members well; many have grown up with you.  You know they are loyal and devoted. 

But are they achieving the results you desire?  Are they objectively measured against fair, but challenging goals? Are they each in the right seat? Are they receiving sufficient mentoring and training?  Do they each see their individual path forward within the company? Read more »

Selling Your Business – The Risk of Waiting

By Peter Ventre | Apr 24, 2012

Money GraphFor most business owners managing a company is all about managing risk…calculated risk.  And, when a business owner begins the selling process, it’s also about managing risk.  As a veteran of the middle-market M&A industry, I’ve had the good fortune to work with many private business owners as they begin the selling process.  If I had only one piece of professional advice to impart it would be this:  “Holding out for a better price doesn’t always lead to a larger bank balance in the end.”  Too many times during the past five years business owners I’ve worked with have fallen into the timing trap.  When their businesses were booming and the economy was robust, they decided to delay a sale or partial sale in the hopes that by waiting, they would be able to cash out at a higher price.  “I’ll just wait a couple more years, and then I’ll sell.”  That was a risk they were willing to take.   For most of the “waiters”, that did not happen.  When the recession hit full force, many of those businesses simply didn’t make it or their businesses retracted significantly.  The cash out was zero or greatly reduced making a sale highly undesirable.  Read more »

Planning For Your Business Exit

By Peter Ventre | Nov 08, 2011
Exit Sign

As a middle market investment banker, I talk with business owners every day who are thinking about selling a company.  They proclaim that they are finally ready to move on to another chapter in their lives and it’s now time to sell the business that they have spent a lifetime building.  Interestingly, many of these business owners have done little or no planning for their business exit and although they may be ready to sell…their business isn’t.  Learn how to.. Read more »

Community Banks and the Rise of Collaborative Lending

By Peter Ventre | Jun 01, 2010

It’s no secret banks across the country have tightened their lending standards, and in many cases actually reduced the size of their commercial lending portfolios, as my recent newsletter article “Banking On an Old Model for New Loans” points out. Over the last eighteen months, many business owners have found their banks unwilling to support them beyond their present lending level, regardless of their strong lending history, current condition, or the length of the relationship. However, as banks recognize that the economy is slowly recovering, some are beginning to make new commercial loans. While capital for senior debt financing is once again beginning to flow, it does so within a new set of realities: less leverage, more collateral required, stricter covenants and higher pricing spreads. This new environment requires borrowers to find collaborative ways to work with the few active albeit cautious lenders.

We have experienced success participating multiple community banks in deals that are attractive with a solid sponsor, but too big for any one lender to take on alone. Why community banks? While many large national and regional banks are in holding patterns, the smaller community banks that have survived in this environment have done so due to traditionally conservative credit standards and a local market focus. These banks are lending, but with stricter guidelines than in the past, and at maximum loan amounts that are down from their historic levels.

Partnering on loans is not an every day practice for community banks, and the process is different than closing a deal with a single lender. Choosing the right combination of lenders is critical, and requires strong relationships with each one. These multi bank loan structures take creativity to develop and longer to close than single-lender loans, as multiple stakeholders are involved. Having an experienced adviser to quarterback the deal from application through closing is critical to successfully combining lenders.

posted by Peter Ventre