Navigation Links
Newport Board Group, a CEO Advisory Firm, Provides Guidance on Exit Strategies for Middle Market Companies
Date:8/18/2014

San Francisco, CA (PRWEB) August 18, 2014

Mergers and sales of companies are accelerating at a significant pace, and it is not just at the mega-merger level. Small and mid-sized companies are being swallowed up by larger companies flush with cash and ready to take advantage of the growing economy. Prices paid for companies are up 30 percent over just three years ago and with prices so tempting, many family businesses and small companies are considering a business sale.

Be prepared with a strategy to explore and seriously consider the “deal that may be too good to pass up.”

1. Analyze the Option to Exit

Private companies considering an exit should be prepared to analyze the full range of options from all relevant perspectives including financial expectations, time horizons, risk appetite, and tax issues for the Board, investors, managers, and other stakeholders.
A key issue to expect: stakeholders may not have the same time frame for a transaction. Some stockholders might have tax issues if a sale is structured as a taxable transaction.

Steps to improve a company’s business enterprise value preparatory to a sale include:

  • Assess whether the company has the resources to create a deal team to manage a 24 x 7 transaction process.
  • Consider the basic parameters of a potential exit, including the desire of the current owners to retain a stake in or control of the business.
  • Anticipate issues that are likely to be raised in due diligence and fix as many problems as possible.

2. Assess Transaction Readiness

If there is initial interest in pursuing an exit, companies must determine if they are prepared to execute a transaction. Consider having an outside advisor provide a preliminary valuation of the company to manage the owner/investors’ expectations. Be ready to define the current state of the company’s readiness to execute a transaction and address availability of basic collateral to support a sale, such as material for a “book.”
Consider the readiness to respond to the key criteria that will drive buyers’ interest in a transaction and the price they will pay, including: predictability and consistency of the company’s revenue, profit and cash flow, customer base and its loyalty, pricing power, concentration issues, and incentives to keep key employees and executives.
Consider differentiation and market positioning relative to competitors.

3. Consider Buyer’s View of the Company

Successful companies do not face their customers unprepared. All the more so when it comes to facing a buyer. Be ready to address the concerns of prospective buyers of the company. Expect them to ask about the following:

  • Capital investment and operating improvements needed to be done after the acquisition to realize the targeted value.
  • How quickly and well a strategic acquirer would be able to integrate your operations, customers, and culture.
  • Drivers of sale value such as intellectual property, R&D, technology and updates to products, and human talent. Some of these can be improved before negotiating a transaction.

4. Create an Exit Plan

Key steps to an exit are often tax driven. Mergers can be fully or partially tax free and can generate capital gains or ordinary income, depending upon how the transaction is structured. Most sellers will want a stock deal while most buyers will want an asset deal to avoid any contingent or undisclosed liabilities.

  • Consider the full range of options for the transaction, including refinancing, sale to insiders/ERISA, sale to a “benevolent” acquirer, or a transfer to heirs.
  • Understand the ramifications of each transaction scenario. A private equity deal will close off other funding options and involve an aggressive exit strategy.
  • Develop the preliminary “story” about the business to give an acquirer a compelling vision about prospects to grow the business and earn a return on their investment.
  • Integrate into the operating metrics and analytics that are used to run the company and the model that potential buyers will use to put a valuation on the company.
  • Prepare information memoranda and related presentation material.
  • Create a presentation to investors and be ready to respond to their concerns.

CEOs and shareholders have worked long and hard to build a company. Take the time and devote the focus required to exit it successfully.

Michael Evans is the National Managing Director of the Newport Board Group

Read the full story at http://www.prweb.com/releases/2014/08/prweb12099389.htm.


'/>"/>
Source: PRWeb
Copyright©2014 Vocus, Inc.
All rights reserved

Related medicine news :

1. Audiologists at Maico Audiological Services in Newport News Virginia Advise Consumers about Drugs that Lead to Hearing Loss
2. This Thanksgiving, a Newport Beach Facial Plastic Surgeon Has Given a Young Girl's Life Back
3. David-Dorian Ross Leads TaijiFit Sneak Peek at Equinox Newport Beach
4. Facial Plastic Surgeon, Dr. Kevin Sadati Launches Nose Job Newport Beach Web Site
5. “Beauty and Style” Event Features Consults from Prominent Newport Beach Plastic Surgeon
6. Dr. Kevin Sadati Launches Cosmetic Plastic Surgery Newport Beach Website
7. Five Key Steps for Franchising Your Business in 2013 - An Executive Briefing by Newport Board Group, a National Business Advisory Firm of CEOs
8. Newport Board Group, a National Business Advisory Firm of CEOs Cautions Buyers on 5 Questions to Ask Before Acquiring a Technology-Based Middle Market Company
9. Newport Board Group, a National Business Advisory Firm of CEOs That Serves the Middle Market, Issues Guidance for Companies Considering a Sale in 2013
10. Newport Beach Facelift Specialist's Tips on Skin Care Before and After Surgery
11. Newport Beach Cosmetic Dentist John Ravera Adds New Member to Dental Team
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:7/1/2020)... (PRWEB) , ... July 01, 2020 , ... Dexur’s ... showed that OrthoColorado Hospital , Porter Adventist Hospital , and Sky ... episode for Hip & Knee Replacement. Dexur’s value analysis tracks a patient’s episode of ...
(Date:7/1/2020)... ... July 01, 2020 , ... Psilera ... of psychedelics and analogues, announces its core executive team. The co-founders Drs. Jackie ... discovery, novel formulations, and as distinguished researchers within the cannabis industry. They are ...
(Date:7/1/2020)... ... July 01, 2020 , ... G-CON ... been selected by Codiak BioSciences to support its cleanroom build out at its ... infrastructure for the drug substance and product manufacturing for its clinical pipeline. , ...
(Date:6/28/2020)... ... 26, 2020 , ... Medisend College of Biomedical Engineering Technology, ... training that prepares graduates for professional careers as field service engineers and biomedical ... Trustees. , Ms. Williams currently serves as Associate Vice Chancellor of Workforce and ...
(Date:6/28/2020)... ... June 26, 2020 , ... Recovery from ... premier residential addiction treatment center, proudly announces that it has reopened to serve ... for recovery in a world affected by Covid-19. , When social-distancing guidelines changed ...
Breaking Medicine News(10 mins):
(Date:7/2/2020)... OCEAN SPRINGS, Miss. (PRWEB) , ... July 02, ... ... Ocean Springs, Mississippi-based wholesale pharmaceutical distributor, is pleased to announce its donation of ... Health and the Michigan Department of Health and Human Services. As extreme medical ...
(Date:6/28/2020)... , ... June 28, 2020 , ... ... health. New studies substantiate the effectiveness of oral-care probiotics to maximize teeth ... While the science behind both is simple – utilizing naturally occurring positive ...
(Date:6/25/2020)... ... 2020 , ... BeCurious Studio LLC was named as a ... launch a recent project. BeCurious Studio, the rule breaking web/app development hub, completed ... by MyVictory Inc , the platform delivers a seamless, individualized healthcare experience ...
Breaking Medicine Technology: