Service Type: Transition Services

To Increase Market Share

Good news: It is possible for your company to increase its market share by the acquisition of another company. Bad news: With rare exceptions, the financial information of the seller is incorrect. It then becomes very difficult to put a correct value on the seller until such financial information is correct and until a certain... Read more »

Employees (ESOP)

Good news: A company’s employees may become the buyer of the company in a structure named ESOP (Employee Stock Ownership Plan). Bad news: An ESOP is complicated and the purchase prices is often 5X-6X EBITDA. Motivation: An owner desires to transfer the company to employees, increase after-tax earnings, diversify personal assets, and still control key... Read more »

Family Members

Good news: It is easy to transfer a business to family members. Bad news: Family members typically do not have the cash necessary to buy a business. Consequently, they not only pay a lower multiple of EBITDA but they also create a contractual agreement to purchase the company. This contractual agreement is typically called an... Read more »

Financial Buyer

Good news: Interested in a company’s return on equity, investment burden and future cash flow. They are long-term investors and are looking for a well-managed company. They will quickly execute an acquisition. Bad news: They are looking for a good ROI and will usually try to drive down the acquisition price. For example, they may... Read more »

Strategic Buyer

Good news: They often pay a premium for an acquisition, as much as 8X-10X EBITDA. They want to enhance their company by capturing market share, gaining access to new customers, obtaining technology and innovation, etc. Bad news: They are slow-moving on an acquisition. They do not want the seller’s back office. Their intention is complete... Read more »

To Acquire Other Assets

Good news: Your business may be able to grow or be enhanced by buying the assets of another company, such as customers, contracts, trademarks, software, technology, patents, trade secrets, key vendors, key employees, copyrights, royalties, etc. Bad news: The assets you wish to purchase may not be truly owned by the seller and/or may be... Read more »

Management (MBO)

Good news: A company’s key management may become the company’s buyer. Bad news: Management usually does not have the cash to purchase a company for cash. The seller often creates a note secured by the stock of the company. Definition: A management buyout (MBO) occurs when an existing management  team purchases all or part of... Read more »

Private Equity Group (PEG)

Good news: They currently have billions of dollars to invest. They often provide capital for strategic growth. They typically buy 20% to 80% of a company’s stock. They invest when they feel a company’s management team can execute a business plan. Bad news: They normally offer 4X-7X EBITDA. They often gain a controlling interest by... Read more »