Ask any business owner who has sold a business or attempted to sell a business, \"What would you do differently?\" If he or she attempted to sell it without help, chances are pretty good that the transaction did not succeed. If the transaction were actually completed, chances are that they did not get a good price, but had no idea that this occurred.
We were recently engaged to sell a...
If you are the owner of a C Corp and are planning on selling your company, you must understand the ramifications of the stock sale versus the asset sale. Here is what happens when there is an asset sale of a C Corp. The assets that are sold are compared to their depreciated basis and the difference is treated as ordinary income to the C Corp. Any good will is a 100% gain and again is treated as...
When dealing with only one buyer, he is right. When there are multiple suitors, competitive market forces are allowed to function properly and true business value is established. I am often asked by a business owner what he should do when he is approached by an unsolicited offer. As a general rule, these buyers are only interested if they can get a bargain and limit the process to themselves...
Selling your software business is the most important transaction you will ever make. Mistakes in this process can greatly erode your transaction proceeds. Do not spend twenty years of your toil and skill building your software company like a pro only to exit like an amateur. Below are ten common mistakes and how to avoid them:
1. Selling because of an unsolicited offer to buy - One of the...
The purpose of this article is to demonstrate the importance of the tax impact in the sale of your business. As an M&A intermediary and member of the IBBA, International Business Brokers Association, we recognize our responsibility to recommend that you consult your attorneys and tax accountants for specific advice on your business sale transaction.
As a general rule, buyers of businesses...
Hopefully, before selling a business, you meet with a CPA or tax accountant and get an estimate on how much of your proceeds will be going directly to Uncle Sam if you pay them in a lump sum at time of sale. You don't want to save this surprise for after all is said and done, because not only will it most likely be a shock, but you will have given up your chance to do anything about it.
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The purpose of a letter of intent is to define the economic terms and conditions that apply to the pending business sale if the due diligence results in no material differences in the condition of the seller's business. In simple terms, it means that if I go over your books and records in great detail and I verify that everything you had previously presented checks out, I am willing to pay you...
One of the most challenging aspects of selling a software company is coming up with a business valuation. Sometimes the valuations provided by the market (translation - a completed transaction) defy all logic. In other industry segments there are some pretty handy rules of thumb for valuation metrics. In one industry it may be 1 X Revenue, in another it could be 7.5 X EBITDA.
Since it is...
I must admit that I have had a bias against my clients selling their businesses to private equity firms until I discovered that there are some situations where it might be the best exit strategy. Our firm represents business sellers primarily in the information technology and healthcare industries. Because the valuation multiples in these industries can get a little rich, they do not normally...
Two companies that are recognized as among the best at making successful acquisitions are General Electric and Cisco Systems. These companies have been star performers in growing shareholder value. The core principal that runs through almost every acquisition is integration. Over the past 10 years Cisco Systems has acquired 81 companies. Their stock price is up a remarkable 1300%. GE...
