Capital Ideas | Corporate Finance Associates | Newsletter Q2 2016

Capital Ideas for Middle Market Businesses

Welcome to this issue of Capital Ideas, our newsletter dedicated to business selling, business buying and financial resources for mid-market companies.

Evaluating the Offer

By Jay Carter, Managing Director
San Diego Office
Corporate Finance Associates


As an owner, you are likely to have multiple opportunities to sell your business. When you receive an offer, how do decide whether or not to accept it? Should you negotiate for a better deal? Should you find a different buyer altogether? Should you do nothing? Before answering these questions, it helps to put the offer into proper perspective.

First, consider the offer in the context of the market. Second, consider the offer in the context of your goals. A market rate offer that meets your personal and financial goals is one worthy of careful consideration.

Is this a market rate offer? This can only be determined by obtaining multiple offers from qualified buyers and comparing them. Valuing a privately-held company is tricky, and it cannot be done in a vacuum. Rules of thumb and “comparable” valuations provide valuation pointers, but they do not determine the true market value of a business. A well planned sale process produces multiple offers within a short period of time and enables objective evaluation of each. Without multiple offers, it is impossible to know whether the valuation and terms offered are fair for your business.

Read more »

The Do-it-Yourself Dealmaker


By John Hammett, Managing Director
Minneapolis Office
Corporate Finance Associates

In 1961 Leonid Rogozov removed his own appendix. The 27-year-old Russian doctor was on an expedition to Antarctica; his team was frozen into their base for the winter. Dr. Rogozov had no choice other than to do the surgery himself.

Operating mostly by feeling around, he worked for an hour and 45 minutes, cutting himself open and removing the appendix. The men he'd chosen as assistants watched as the "calm and focused" doctor completed the operation, resting every five minutes for a few seconds as he battled vertigo and weakness.

In 2016 some company owners will sell their companies by themselves. Most of them will survive the process, and most of those will leave big money behind because they don’t know what they don’t know about selling companies.

Is it really smart to do a job yourself that a trained expert can do a whole lot better?

Read more »

Featured Transaction - CFA Dallas

The Situation:

Rehabilitation Associates, Inc. (RA) had 2 owners, who as partners built the business over the last twenty years. They felt the business could go to the next level, and they both were interested to continue to lead, but weren’t comfortable doing all that on their own. Also, they weren’t sure about what type of M&A transaction would best serve their growth goals.

The Solution:

CFA Dallas was engaged to represent RA and conduct a full sell-side process. We provided guidance to RA over several months to help them prepare the company for market, while we developed a complete CIM, financial analysis, and research about potential buyers. We had great results with the process – almost too many good options for the seller. One of the challenges was to help RA understand what the future might look like with these different options, the advantages and disadvantages.

In the end, the owners selected a very strong strategic buyer. Part of their decision was that they see competition coming into their area. They felt that this buyer would be the winner in any competition and this transaction would ensure the growth for their team. They plan to continue with the company and operate as a new division of the buyer.


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