26 Aug Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent article from BOSS Magazine entitled “Why Sell Your Business in 2021? 6 Good Reasons” discusses the current economic climate and why it might be a good time to sell your business if that is something you have been considering.
6 reasons why it might be a good time to sell include:
- There is strong buyer demand
- Post-pandemic will be a time of change
- Financial challenges have been brought on by the pandemic
- You want to plan for retirement
- If the risk of holding is greater than the reward of selling
- Tax rates haven’t increased yet
A recent article from Divestopedia entitled “Deal Structures Through the Eyes of an Acquirer” explores three business transactions from the buyer side, specifically how the buyer funded the deal. Understanding the buyer’s position can help the seller know what to expect and plan for a successful sale.
In the first transaction, the buyer was able to obtain nearly 75% secured debt financing since the value was in the capital equipment.
In the second transaction, multiple sources of financing including cash flow financing and a seller’s note were necessary because so much value was tied to goodwill.
In the third transaction, the buyer was able to minimize their personal investment due to their successful acquisition track record and the strong historic cash flows of the business.
A recent article from Axial entitled “No Ugly Babies in M&A” discusses the correlation between accounting and valuation. Some owners may be concerned that their accounting practices could prevent them from completing the deal. But this isn’t necessarily the case.
If the business appears less profitable due to accounting practices, it is important to consider adjustments or add-backs that come into play during valuation. Some of these adjustments or add-backs may include:
- Large one-time purchases
- Impact of the pandemic
- Owner and/or family benefits