26 Apr Around the Web: A Week in Summary
A recently published article on BizBuySell entitled “Number of Small Business Transactions Jumps In Early 2017 While Median Revenues, Cash Flow Reach Record Levels” outlines results from the first quarter of 2017 in the business transaction market. According to the article, business sales are up 29% from this time last year, likely due to a healthy economy and a New Year rush. Median revenue and median cash flow are also up 8.4% and 6.6%, respectively, new highs since tracking began in 2007.
Indicators show that business owners are getting more value from the sales of their companies, with almost an 8% increase in sale price with asks remaining flat. The article suggests that this uptrend in value and overall sales volume will continue over the year.
The recent article published in Divestopedia entitled “If You’re Selling Your Company, Don’t Get Sandbagged” explains what a “sandbag clause” is and how sellers can avoid them during the transaction process. As explained by the author, sandbagging occurs when a purchaser goes through with closing a deal when they are aware of misrepresentations in a seller’s contract. This is often used as basis for an indemnity claim by the buyer after the sale.
Sellers can get sandbagged in a few different ways, with some of the more common related to the fact that the seller doesn’t know every exact detail about the daily operations of a business. Often times, a buyer can uncover some of the finer details that may have been missed in the contract, which is why it is of utmost importance for sellers to be diligent in the process. As the article suggests, having an experienced M&A lawyer may help to mitigate these risks.
A recent article published on Axial Forum entitled “6 Tips for Creating Company Value” explores the following value drivers:
- Create A Company Succession Plan
- Don’t Forget Qualitative Factors
- Take a Retirement Account Perspective
- Protect Existing Value
- Create Customer Value
- Plan Ahead
These tips are just a few of many actions that a business owner can take to help drive value in their businesses.