This week’s M&A Weekly Digest covers how a partial sale could benefit you, why succession planning is so important if you want to sell your business some day, and what you need to know about the current M&A activity. Let’s get to it!
Raising Capital – How A Partial Sale Could Benefit You
“So how does a partial sale work? Your M&A advisory firm would look for a buyer (typically a private equity group but not exclusively so) who has the capital available for investing and is willing to partner with you – retain you post-sale in a leadership role – to help the company expand. As we have discussed in previous articles, there are literally hundreds of equity firms that specialize in the partial sale deal structure.
A very positive aspect of this arrangement is that it allows the current owner of the business to receive a second “bite of the apple” when the new entity is sold or taken public. Generally, over the course of five years to seven years, additional synergistic companies will be added on to the new entity after the initial acquisition.
Adding complementary businesses allows the firm to grow much faster than solely through organic methods. In addition, it combines the synergies of several companies into one, creating a real win-win scenario for all acquired firms.”
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The Importance of Succession Planning – How To Be Buyer Ready
“One of the fundamental flaws we find with many privately held businesses is the fact that far too often they are completely dependent on their owners for success…
However, the reality is one day you [the business owner] will decide to exit your company. When you get to that point, if your business is totally dependent on you for its ongoing success, you will have a very hard time finding buyers.”
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M&A Activity – What You Need to Know About Current Conditions
“Many of the business owners who attend our M&A conferences are surprised to learn that M&A activity has made a solid recovery over the past few years. Many of you hear about the overall malaise affecting the economy and make the assumption that this is also the case for mergers and acquisitions. Based both on what Generational Equity has experienced over the past year and data we have seen created by industry analysts, it is apparent that M&A activity has begun to quietly recover from the impact of the financial crisis and recession in 2008 and 2009.
New data released last month by Capital IQ, a leading provider of data and analytics for global financial professionals, illustrates this.”
Click here for the full article.
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