Today’s M&A Weekly Digest features articles that discuss industries that strategics actively making acquisitions in, how business owners’ exit planning strategies need to line up with the new reality, and the difference between economic value and market value of a business when conducting a valuation.
M&A Activity – Industries That Strategics Are Active In
“Many business owners are under the mistaken belief that the industry they operate in is not attractive to buyers. We recently dispelled this notion as it relates to private equity groups, learning that financial buyers look for great deals no matter what the industry the business operates in. Today I thought we would look at strategic buyers and see if the same holds true with them (Note: a strategic buyer is typically a public or private corporation as opposed to “financial” buyers which are usually equity firms).”
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Risk and Reward – How Your Exit Planning Strategies Need to Line Up With the New Reality
“Every entrepreneur, whether he or she knows it, conducts some sort of risk/reward analysis before taking the leap and starting a business… This analysis doesn’t stop prior to the launch. In fact, most business owners do this frequently, usually when they go home at the end of a long week and stop at the bank to make the weekly deposits.
However, more and more entrepreneurs are telling us that the equation defining the risk/reward relationship has radically changed.”
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How to Value a Business: Economic Value vs. Market Value
“One vital concept to consider as you begin to learn more about how to value a business is the difference between an economic value and market value.
Simply put, the economic value is the amount that a willing and informed investor will pay for your company based purely on your projected financials. … Market value, as the name implies, is the value that the market tells you that your business is worth. That is to say, buyers who see synergies in your investment opportunity may pay a premium over market value in many cases because of the expected benefits they see in your entity being combined with what they currently own.”
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