This week’s M&A digest focuses on the unprecedented large transfer of wealth between generations, the importance of creating a “know risk” strategy for your business, and why private equity firms focus on the middle market.
Generational Transfer of Wealth – The Unprecedented Exchange
“There was an amazing piece of information in USA Today recently. An article focused on the pending wealth transfer in this country and how countless recipients of this generational transfer are unprepared to manage the new funds that they will be inheriting. The two points of the article were that during the next several decades, millions of offspring in this country will be inheriting significant sums of money, and many are completely ill equipped to manage it…
Unfortunately, as pointed out in the article, too many heirs are woefully unprepared to manage the funds that they will be inheriting. Many lack basic financial acumen in order to know how to wisely and safely invest these funds. And far too many will be taken advantage of by unscrupulous family members and friends and will unfortunately squander much of their inheritance away.”
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Exit Planning – Create a “Know Risk” Strategy
“Whether it is financial troubles in Greece and the rest of Europe, threats of potential wars in the Middle East, or North Korean missile launches, we are challenged nearly on a daily basis with some aspect of doom and gloom in the news.
Because of this, now more than ever before, you need a “know risk” strategy when it comes to your financial future.”
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Private Equity – Why the Focus on the Middle Market?
“At the recent ACG meeting in Dallas, which was their largest convention of 2012, I had the opportunity to sit down with individuals from five different equity firms. The focus was to discuss ongoing trends that they see in the M&A industry during the next 12 -18 months.
One area we discussed in detail was the focus of their buying mandates throughout the next year or two. Each of their organizations has a number of “platform” companies for which they were interested in finding “add-on” opportunities. For platform acquisitions, most of them look for companies with earnings typically in excess of $4-$5 million annually. However, for add-on opportunities, many of these buyers will drop that minimum down to as low as a couple of hundred thousand dollars in earnings.”
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© 2012 Generational Equity, LLC All Rights Reserved
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