A recent article from Divestopedia entitled “How the Best M&A Advisors Deliver” explains the importance and value of an experienced M&A advisor in the business sale process. Maximizing value and improving how a potential buyer views a business are some of the most important factors in a sale, and also things that a good M&A advisor can help the management team work through.
The author goes on to stress the importance of having an experienced advisor on hand during the preparation phase of the selling process: their prior experience with this sometimes difficult and lengthy process makes them an invaluable asset to a seller. They are able to develop a complete approach that takes all important factors into account, from aligning the goals of the management team and shareholders with the exit to coordinating with legal counsel in developing negotiation strategies and more. An experienced M&A advisor has virtually seen it all and done it all, and in the end, can help relieve the stress of going it alone while increasing the probability of a positive outcome for a seller.
A recent article from Entrepreneur.com entitled “Avoid These Financing Mistakes That Kill Business Valuations” speaks on the importance of “good debt” and trying to avoid “bad debt” when financing a business. The utilization of either of these forms of debt, which encompass several different types of financing, can either significantly help or harm a business in the transaction process, depending on what forms are used and how they are used.
The main differentiator between these good and bad sources of debt centers is whether or not the debt contributes to business growth or can provide positive cash flow in the event of a sale. Whether it’s under-utilized assets or a high-interest loan, bad debt can be an instant turn-off for a buyer come sale time.
A recent article from BizBuySell entitled “How to Find an Investor for Your Small Business by Thinking Outside the Box” explores some unconventional or less frequently thought of ways to find a small business investor. Typical routes of asking friends or family or other personal loan options are always possibilities, however the following list includes some alternative funding options:
- Assistance from the Small Business Administration
- Incubators or accelerators
- Online lending clubs
- Smaller, more specialized social media platforms aside from Facebook or LinkedIn
These methods, however, aren’t sure-bets for everybody. Like any investor, investors from the aforementioned channels will likely need to see a proven business model, a thorough business plan, and an exit strategy, among many other things.
A recent article posted on Divestopedia.com entitled “How an MBO Can Be the Right Solution When Planning Your Exit” illustrates the potential value a management buy-out (MBO) might have during the transaction planning process. After all, the management team typically knows the ins and outs of the business and has an excellent grasp of how the company is run. But no matter how well they know the business, having the proper skills and experience to take the company forward with success is vital.
While moving forward with an MBO can have its advantages, like maintaining the confidentiality of a sale for example, value and growth can potentially take a hit during an MBO. These are just a few things to consider when determining the viability of this type of business transaction.