Capital Ideas | Corporate Finance Associates | Newsletter Q2 2019

 
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.


The Heartbreak of Busted Deals and How to Avoid Them

By Jeffrey A. Wright, Managing Director
Minneapolis Office
Corporate Finance Associates

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There is nothing worse for the seller of a private company than to invest months of time and emotion on a sales transaction only to have it end without a closing – a busted deal! Seeds of a busted deal rear their ugly heads at different stages during a transaction and it is our job as investment bankers to help our clients overcome or entirely avoid deal pitfalls.

Motivation: Are you and your partners really ready to sell the business and if so, why? When we meet with a company owner, we believe it is wise to do everything possible to determine their motivation to sell. We often ask what the owner has planned after an exit. Those owners who have a clear vision are good prospects for a successful transaction. Those with muddled thinking may revert, clinging to their company as the defining factor of their life. We have occasionally referred confused owners to life coaches who specialize in working with owners and senior executives to clarify "what's next".

Valuation Expectation: Do your valuation expectations line up with current market data and valuation analysis? We perform a valuation range analysis for every potential engagement. We keep these ranges responsibly conservative, trying not to under-promise or over-promise. If the gap between your valuation expectations and the market value range is significant, you may never be satisfied with the price your company would ultimately bring in the marketplace.

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Is a Buyer Outside the USA Right for Your Company?

By Jim Zipursky, Managing Director & Principal
Omaha Office
Corporate Finance Associates

The USA has been a favorable destination for foreign investment for many years. With offices across the USA, India and Europe, Corporate Finance Associates Worldwide (CFAW) has been active closing cross-border transactions for over 20 years. "It is difficult enough closing transactions in your own country, but even more challenging moving a buyer and seller through the deal process when the parties to the transaction speak different languages, are in different time zones and have different frames of reference on business in general" said Andres Zweig, Managing Director and Principal of the Ramus Company, the Zurich office of CFAW.

Finding a buyer for your company that is outside the USA might be the perfect solution to your business exit. The right foreign buyer may offer unique capabilities or access to important global markets. Understanding what are the biggest challenges of selling your business to a buyer outside of the USA is essential before you make that decision? The following, non-inclusive list of challenges is based upon our experience working with buyers and sellers on cross- border transactions.

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