Perfusion.com (PDC) is the leading provider of staffing services to the U.S. perfusion industry. The company’s core perfusion staffing services include autotransfusion, blood management and biologics services, the sale of disposables, capital equipment leasing, training and education services and patient transportation. The company is headquartered in Fort Myers, Florida.READ MORE >>
WHAT IS SECTION 1202?
In the United States, Section 1202 is known as the Small Business Stock Gains Exclusion. It is a section of the IRS code that allows capital gains from Qualified Small Business (QSB) stock to be exempt from federal taxes when selling. But not all small business stocks qualify:
At the 20th Annual M&A Advisor Awards, Benchmark International was awarded M&A Deal of the Year (100M-250M) for the acquisition of PBK Architects by DC Capital Partners.
As the 23rd largest US-based architecture firm, PBK, based in Houston, Texas, and its subsidiaries in California, Beijing, Shenzhen, and Hong Kong, employ more than 500 architects, engineers, and related professionals.
In addition to its Top 25 status, in 2019, PBK was ranked as the “#1 Education Design Firm” by Engineering News-Record (“ENR”), widely regarded as the engineering and design industry’s premier publication. Specializing in K-12 projects and, in particular, large public high schools, PBK has long been the go-to firm for sustainable design and next-gen integrations in particular. The company also focuses on two related building types—higher education and sports facilities.
This transaction followed closely on the heels of 11 other deals that Benchmark International closed in the architecture, engineering & construction (AEC) space in the first half of 2020.
At the 20th Annual M&A Advisor Awards—known as the Oscars of the M&A world— Benchmark International was awarded Investment Banking Firm of the Year. The awards are presented by The M&A Advisor, and the winners were announced at the Gala Ceremony live event held in New York City on November 17, 2021.
Benchmark International beat out the other nominees, which included Capstone Partners, Clearsight Advisors, DC Advisory, Drake Star Partners, Generational Group, Leonis Partners, and Raymond James.
These awards serve as the industry benchmark for dealmaking excellence, recognizing the leading M&A transactions, restructurings, deal financings, products/services, firms, and professionals.
Every company has its own unique circumstances and needs. As a business owner, you can choose from a number of different ways to transition out of your company in a sale or before retirement. When succession planning, you should consider your goals for both the company and your life after the transition, such as financial requirements and how much you want to remain involved in the business. Adequate succession planning ahead of time can also help to create significant value for your company.
A transition of a business can be internal or external. Under an internal transition, the company is usually passed on to the next generation of family or a management team member. In an external transition, a strategic or financial buyer purchases the company, either completely or partially. There is also the option of an employee stock ownership plan (ESOP), which falls somewhere in between an internal and external transition.
Full Business Transition
A complete transition occurs when 100% of company ownership is sold to an investor, such as a strategic buyer or private equity firm. Under a full sale, there is a complete change in ownership control, either as a stock deal or asset purchase. Complete transitions are most often asset purchases because it assuages certain liabilities from the buyer. The owner could be required to stay involved with the business through a transition period that can range from months to years, especially if they are a key part of management.
Business valuations in a full transition are based on competitive negotiations. In many sectors, a multiple of the company’s EBITDA (earnings before interest, taxes, depreciation and amortization) and factors such as size, profitability, industry, customer base, and location. In a complete sale, the seller is often given the majority of transaction proceeds upfront, with the rest paid later through an earn-out or seller note.
Middle-market private equity (PE) dealmaking in the United States didn’t lose its record momentum in the second quarter of 2021, some of which carried over into Q3, thanks to sustained economic recovery, ample debt, and plenty of available capital, according to data from Pitchbook. U.S. GDP grew at an annualized 6.5% in Q2 but slowed to 2% in Q3, mainly due to global supply chain issues.
PE fundraising is also holding strong, with the 87 U.S. middle-market funds raised so far this year on course to set a new record. Additionally, the $68.4 billion in capital raised in 2021 is on track to be the second-highest annual total since 2010.
Most deal activities were put on hold for several months after March of 2020 and the onset of the COVID-19 pandemic, but 2021 and early 2022 may be the right time to sell. The following factors are affecting the viewpoint of sellers of privately-owned companies:
- Some owners are now more heedful of another crisis and how it could affect their businesses.
- Many owners no longer wish to sustain efforts and risks that come with their businesses.
- Owners who worked remotely during the pandemic got accustomed to more flexible schedules and free time.
- Numerous owners nearing retirement are worried about the possibility of higher corporate, personal income, capital gains, and dividend taxes.
- Because wealth built up in private companies is not easily converted to cash, some owners have focused on the fact that after-tax proceeds from a sale will last for a long period of time.
So far this year, the largest share of PE deals has taken place in the lower to middle markets, with deals of less than $1 billion making up nearly 70% of all deals. 2021 remains on pace to easily surpass the prior annual record from 2019. At the end of the year, numbers are expected to be even more impressive as investors may hurry to close deals before the year comes to a close.
According to the Golub Middle Market Index, U.S. middle-market companies registered 21% revenue growth in the third quarter of this year. In addition, direct lending funds account for most middle-market LBO financing and reached record fundraising levels in the second quarter.
Add-ons increased as a share of PE deals. Middle-market firms looked to add mid-sized aggregators and sought out M&A deals to expand platforms, diversify the value chain, and embrace ESG principles.
There was also robust exit activity in the middle market, as valuations were desirable and investor confidence was high. So far this year, the market hosted an estimated 430 exits with a combined value of $87.3 billion. Soaring valuations mean that many GPs meet their investment goals earlier than expected, driving many to cash in on investments ahead of schedule.
Smaller, strategic exits are dwindling in the hospitality and travel sectors for expected reasons after the pandemic impacts. Middle-market sponsors are holding onto investments in these pandemic-stricken sectors. In the second quarter of 2021, there were almost zero exits of hotels, in-person dining, travel providers, or other related companies.
Secondary buyouts are also following an upward trend. So far this year, SBOs account for nearly 62% of all middle-market exits. Buyout firms are taking advantage of limited partners’ healthy appetite for private market exposure as well as the record deal activity that enabled firms to fundraise at a very fast pace. While first-time funds and emerging managers put up positive numbers in 2021, some bigger LPs put less investment into large multi-strategy firms or shifted it to new products offered by those with whom they already had a relationship.
Even amid all this positive activity, middle-market firms in the U.S. are still facing other challenges. While unemployment rates have improved from 2020, there is still a record number of unfilled jobs, causing major labor shortages in sectors such as manufacturing, healthcare, and hospitality. These circumstances are causing firms to focus more on deals that acquire key talent and automated technologies that help with employee management and retention. The sector of senior care has been hit particularly hard by labor shortages, which is likely to result in increased consolidation by home care platforms. Additionally, insurance brokerages, wealth management firms, and registered investment advisors (RIAs) all witnessed record M&A activity in the first half of this year.
PE firms are also pursuing more intricate opportunities to expand lines of business, end-market exposures, and product value chains. Such game-changing add-on acquisitions can be especially effective for vertical software deals because complementary products can be woven into multi-capability platforms to create all-in-one solutions that are good for customer retention.
Deal activity is also being driven by environmental, sustainability, and governance (ESG) initiatives. ESG has moved into the forefront for businesses this year. Transactions in the renewables market represent middle-market opportunities to grow a platform into a sector leader because of the market’s highly fragmented nature. Firms in the middle market are also pursuing add-on acquisitions to better align their portfolio companies with sustainability initiatives, whether to meet changing consumer sentiment or lower capital costs by lowering carbon emissions.READ MORE >>
Benchmark International has been named as one of the 50 Best Workplaces of the Year 2021 by The Silicon Review. The list is handpicked from different areas and recognizes businesses that attract both talent and clientele and stand out with regards to unique and positive company culture.READ MORE >>
A very important part of selling your business occurs after the business has been sold. The transition period, also known as the handover period, begins when the exiting owner remains with business for a period of time to assist the new owner with taking control of the company. The transition period should be carefully planned and thought through in order to ensure that it is well executed when the time comes. It can make a great deal of sense to begin working on these details early on in the sale process.READ MORE >>
Reps and warranties insurance is a policy secured for corporate transactions such as mergers and acquisitions. In recent years, the amount of this type of insurance sold has increased significantly. It covers the indemnification for certain breaches of the representations and warranties in transaction agreements, either partially or in full. Reps and warranties insurance usually doesn’t cover losses for breaches of covenants (other than pre-closing tax indemnification) or purchase price adjustments.READ MORE >>
The U.S. Senate recently passed the $1.2 trillion bipartisan infrastructure bill, titled the Infrastructure Investment and Jobs Act (IIJA), to improve the country’s roads, bridges, and utilities. The bill does face an uncertain future in the House of Representatives, where its support is more limited. Still, the Democratic Party could use the reconciliation process to get the bill passed into law.
The bill includes:
- $73 billion for electric grid and power infrastructure
- $66 billion for passenger and freight rail
- $65 billion for broadband investments
- $55 billion for water systems and infrastructure
- $50 billion for Western water storage
- $39 billion for public transit
- $25 billion for airports
- $21 billion for environmental remediation projects
- $17 billion for ports and waterways
- $15 billion for electric vehicles
- $11 billion for road safety
So, what might this all mean for M&A?READ MORE >>
Every business owner should be keeping up with the top sales trends being used to boost companies’ bottom lines in today’s tech-driven economy. So what does the future hold? Use these sales trends insights to make sure you’re doing every last thing you can to take your business to the next level.
Over the last decade, selling has evolved immensely. More than 90% of consumers do online research before buying something these days. And that’s why social selling is becoming so integral to the sales process. Social media connects you with consumers already interested in what you do, so you already have the upper hand by simply having them as an audience. You are also able to build better relationships with them, which will translate to higher customer retention rates.
And don’t forget about the power of referrals. 70% of companies have reported that referrals convert faster than any other type of lead. If your consumers are happy with what you are doing, they will be more likely to recommend you to their friends and family—something that social media makes it easy to do in just a click or two.
Social selling also comes with a few other added benefits. It increases your brand visibility by actively engaging with people online, and it also keeps your brand top of mind. This means you get higher-quality leads. And with high-quality leads, you can expect to see higher sales numbers.
Customers are savvier than ever. They can see through gimmicks. Simply shoving deals in their faces doesn’t work so well anymore, especially in the B2B sector. This is where value-based selling comes in.
Data shows that 87% of high-growth companies use the value-based approach, and with good reason. By focusing more effort on showing customers the direct benefits or personal value they can enjoy from using their products or services, you’re more likely to close more deals.
Artificial Intelligence (AI)
AI adoption for sales teams is projected to be at 139% for the next three years. This is because business leaders are realizing how it can make a massive impact on sales numbers by helping with processes and tasks. Did you know that AI is capable of performing 40% of sales tasks?
AI can help you gather valuable data on customers that you can use to craft marketing strategies to increase your sales. It can also provide value by offering suggestions to customers based on their recent transactions. But that’s not all. AI can also predict trends in your sector to help you stay ahead of the game, boost productivity by automating menial tasks, identify leads with a higher chance of conversion, and improve customer satisfaction.
READ MORE >>
Personalized Customer Experience
When you give your customers a more personalized experience, they are more likely to do business with you. Research shows that nearly half of all buyers will make an impulse purchase after getting a personalized shopping experience. Because most customers appreciate a level of personalization, they are willing to give you their personal information or create online profiles. And this is really half the battle when it comes to building a solid customer base. Additionally, when customers feel more engaged on your website or app, they are more likely to do business with you. As long as you can offer them convenience, speed, helpfulness, and friendly service, getting personal can take you a long way.
80% of logistics leaders have reported that the matter of outsourcing is no longer a yes or no question—it’s just a question of how much needs to be outsourced. The global outsourcing market is projected to grow to $82.2 billion by 2022.
By outsourcing, you will have a dedicated sales team that is laser-focused on identifying leads, reaches different segments through different platforms, and converts potential customers. Meanwhile, your company saves money and gets the sales expertise needed for the job while you focus more on your business. Outsourcing can also help small businesses with scalability issues. If your company experiences rapid growth, an outsourced sales team is ready to handle it.
Customer Relationship Marketing (CRM)
91% of companies in North America have a functional CRM solution integrated into their system. And guess what else? 65% of sales reps using mobile CRM have a higher chance of meeting their quotas. CRM makes it easy for reps to see all the data they need in a centralized system. Because it also stores customer data, CRM can suggest products depending on their past purchases. It can also improve your relationships with your customers by giving you a complete understanding of their needs and preferences.
Selling today is all about unifying your sales channels and creating a single commerce experience. This gives customers the freedom to choose how they want to buy your product while expecting the same level of service no matter which they choose. 73% of shoppers look at different channels when searching for a product, such as websites, social media, and physical stores. By being visible across channels, your company has a better chance of being chosen by a customer. Omnichannel sales also make the buying experience more convenient. In fact, businesses using omnichannel sales retain 89% of their customers. Yet, 55% of companies do not have an omnichannel strategy in place. It’s simple. Get ahead of the competition by nailing down your omnichannel sales structure.
Millennials live through technology. In the U.S. alone, 82.2 million Millennials use the Internet, spending about $600 billion every year. They are the most likely customer segment to try new technological features that you offer. And 68% of Millennials prefer a more integrated shopping experience. This is why having that omnichannel sales strategy is so important. Offer them a seamless shopping experience that focuses on technology.
Don’t Forget Generation Z
Generation Z now makes up 32% of the global population, and they have a collective $45 billion in spending power. They represent a huge chunk of the consumer population, and they are spending more and more. Gen Z-ers are digitally entrenched, with an affinity for content from sites like YouTube and Instagram. You should use these preferences to your advantage. And the best part of securing their brand loyalty is that they are poised to be customers for the coming decades because they have just recently come of age. That’s a massive sales opportunity you don’t want to overlook.
A topic common to the mergers and acquisitions market is the measure known as the business valuation multiple. This method determines a company’s value by its potential to earn in the future. It calculates a business’s highest value by assigning a multiplier figure to its current revenue. Multipliers differ based on the industry, economic climate, and other factors. There are a few ways in which multiples can be applied. Common multiple methods include:READ MORE >>
You’ve proven you are an expert at running a successful business, and you know how to make money. But are you an expert when it comes to retirement? There are certain financial factors that high-net-worth individuals should consider leading up to retirement.READ MORE >>
Decentralized finance, also known as DeFi, makes financial products available to anyone on a decentralized blockchain network. Through this relatively new software system, all parties can interact directly through applications, eliminating a need for middlemen such as banks or institutions to facilitate transactions. It also eliminates a need for proof of identification or age requirements that banks typically require. There is no need for anyone to know anyone else’s identity. Everything occurs over a public blockchain, using smart contracts, which are bits of code that execute specified actions once certain criteria have been met. It’s based on mutual trust and strict privacy.READ MORE >>
Now that the COVID-19 pandemic is settling into our rearview mirrors, so many of us have been itching to get out there to enjoy an indulgent vacation and a much-deserved change of scenery. So, here you will find a list of some of the most luxurious hotels in the world (in no particular order) to help you start planning your next beautiful adventure or a quiet escape from it all.READ MORE >>
There are many reasons that mergers and acquisitions are critical tools for companies of all sizes, some of which may not even be fully realized by business owners. Ultimately, it’s all about achieving positive results for the business by making strategic moves that make sense, all depending upon what the fundamental goal (or goals) may be. For companies in the lower to middle market, M&A can be an extremely effective solution for a variety of purposes.READ MORE >>
The recent cyberattack on the Colonial Pipeline in the U.S. is a glaring reminder of the vulnerabilities that all industries face, as well as the costly repercussions that can be a result of such a situation. Colonial Pipeline Co. paid the hacker group $5 million to have the company released from the ransomware to restore service to the critical pipeline. This actually turned out to be a wasted $5 million. For that high price, the hackers provided the company with a decrypting tool to restore its disabled computer network. But this tool was too slow, and Colonial ended up using its own backups to restore the system.READ MORE >>
In the first half of 2021, medtech M&A deals already surpassed the total number of deals from last year, and this bustle in activity is forecast to continue through the second half of the year, as medtech companies have stockpiled billions of dollars in cash. The dollar value of deals in 2021 is also expected to far outpace that of 2020. Eleven megadeals were announced in H1, with a total deal value of around $128 billion.
Medtech M&A activity kicked off 2021 right out of the gate, with at least 10 deals announced in January alone. Companies emerged from 2020 flush with cash reserves and were ready to spend on dealmaking. The medtech sector recorded a total of 33 deals in the first half of 2021. That's up from 25 total in all of 2020. In fact, the first quarter of 2021 was the busiest for medtech M&A since 2016. While the initial rapid momentum may have slowed, the second half of 2021 should be abundant with new deals.READ MORE >>
Data released in a recent report by Pitchbook shows the unprecedented performance of U.S. Private Equity (PE) during the first half of 2021, continuing its intense pace for the third quarter in a row. PE firms closed on 3,708 deals worth a combined $456.6 billion. That’s almost two-thirds of the $711.6 billion deal value recorded in the entire year of 2020, and the two years prior.READ MORE >>
The last time we saw leveraged buyouts (LBOs) occur with such frenzied speed and spending, it was during the years of 2006 and 2007, right before the financial crisis of 2008. As we recover from the COVID-19 pandemic, interest rates remain low, and many business owners forced into survival mode are seeking exit opportunities. Plus, private equity firms are more than ready to spend the record levels of cash on which they have been sitting for quite some time.READ MORE >>
Growing a company once it has reached a certain plateau of success can be challenging. Mergers and acquisitions are a powerful tool for boosting the growth of an existing company—especially cross-border M&A. As a business owner, you should consider the different ways your company can benefit from an international deal.READ MORE >>
Timing the sale of a company can certainly be a tricky decision. You don’t want to sell too soon, and you don’t want to sell too late either. In both scenarios, you risk leaving money on the table if the timing isn’t right. So what is a business owner to do?READ MORE >>
A Seller’s Market Versus a Buyer’s Market
In a seller's M&A market, excess demand for assets that are in limited supply gives sellers more power when it comes to pricing. Such demand can be generated and galvanized by circumstances that include a strong economy, lower interest rates, high cash balances, and solid earnings. Other factors that can instill confidence in buyers—leading to more bidders willing to pay a higher purchase price—include strong brand equity, significant market share, innovative technology, and streamlined distributions that are difficult to emulate or recreate from scratch.READ MORE >>
Any company sale process features numerous factors outside of the seller's control. These include the overall state of the economy, finance market behavior, and advancements within specific industries. Most sellers do not fully appreciate that taking the time to thoughtfully prepare a company for its own sale is one of the biggest opportunities to exert control in the process. This opportunity should not be missed.
In business, thinking long-term is crucial – if the overall goal revolves around an exit, business owners need to take advantage of their ability to shape and polish their companies in a way that will ultimately increase their chances of a successful exit. Preparation is key and when a sale is being contemplated, timing is essential. The earlier sellers start preparing, the higher their chances of finding the right buyer and successfully exiting. Ultimately, owners that plan and take enough time to address small issues/details make their businesses more attractive to both financial and strategic acquirers.
Typically, it is not feasible to make radical changes to the nature of a business, product line, or management structure just before a sale, so conducting an internal review is generally the most time- and cost-effective approach – and one that gives sellers the best chance to maximize value. Below is a summary of key items for review prior to your sale process.
- Financials – Getting your company's financials in good shape is essential and will ultimately facilitate getting a deal through each stage of the process smoothly. Choosing adequate accounting principles and standardizing monthly, quarterly, and annual statements (P&L, Cash Flow, and Balance Sheet) typically ensures businesses are valued fairly. Being able to show strong performance credibly – and present long-term sustainability – is essential.
- Litigation – If possible, sellers should settle all litigation before coming to market. Litigation is simply part of doing business, and buyers understand that. However, any more serious or particularly risky legal disputes will present an element of perceived risk and should be dispatched prior to the sale process.
- Online Presence – Investing in sharpening the company's website and overall online presence is often a worthwhile use of time and resources when contemplating a sale. Consider developing and regularly updating the company's website. Be sure to announce company "wins," partnerships, contracts, and milestones on social media platforms. Prospective buyers will most likely access every available platform when engaging in purchasing activities; the more quality information they find, the better.
- Management – In most cases, the Owner/CEO's leadership, relationships, and practices were key contributors to the business's overall success. When looking for the best deal, sellers must convince buyers that the stream of sales/earnings will remain unchanged (or, even better, grow) after they are no longer behind the wheel. This can be done by elaborating a succession plan (hiring/grooming a number two to take the Owner's position) and delegating critical tasks/functions of the business to members of the team that will remain with the company post-acquisition.
Although the preparation period requires time and resources, by putting the effort in early, sellers can best leverage their companies’ overall position when entering the market. The chance of a successful transaction increases proportionately as time and effort are invested into preparation. When the business is fully prepared for a sale, all parties win, and the process usually runs most smoothly.READ MORE >>
As the owner of a Software as a Service (SaaS) company, there are several strategic steps you can implement in order to drive growth and maximize the value of your business.
1. Expand GeographicallyREAD MORE >>
If you are considering selling your company, you should be aware of a certain menace that could have you in its crosshairs. There are direct buyers out there who intentionally prey on business owners, attempting to acquire a company by blindsiding its owner with big promises and, more importantly, taking advantage of their lack of guidance from a seasoned M&A professional. These buyers purposely look to avoid competition for a company because competition drives valuations higher, and they want to make an acquisition on the cheap—in addition to other shady maneuvers.
Bait & Switch
Some buyers will attempt to pull “bait & switch” tactics. To initially intrigue a seller, the buyer will present a high dollar amount. As they conduct due diligence and get the target more and more committed to the deal, they begin chipping away at the value until they reach a price and terms that are far more favorable for the buyer. This is typically an exhausting process for the seller and can lead to plenty of regret. If the deal falls apart, the seller may be reluctant to restart the process with another buyer, thinking the process will just be the same. In reality, it could have been completely different for the seller if they had a reputable M&A specialist on their side from the beginning.
On April 30th, 2021, Benchmark International facilitated the sale of CPR Plus, LLC (serving the Greater St. Louis area) to Allied 100, LLC of Madison, WI.
The seller, CPR Plus, provides life-saving skills training to more than 100,000 individuals for close to 30 years in the St. Louis area. Their comprehensive and convenient CPR training courses are accredited by the American Heart Association and administered by friendly instructors with extensive experience.
In the GAMECHANGERS (ACQ5) 2021 GLOBAL AWARDS, Gregory P. Jackson, CEO of Benchmark International, has been named CEO of The Year in the area of Corporate Finance.
The ACQ is a leading corporate news publication serving the sector since 2003, with a global audience of more than 261,000 subscribers. The GAMECHANGERS (ACQ5) GLOBAL AWARDS celebrate achievement, innovation, and brilliance, recognizing the world's most outstanding organizations and professionals.
In the GAMECHANGERS (ACQ5) 2021 GLOBAL AWARDS, Benchmark International has been named the International Mid-Market Corporate Finance Advisory of The Year.
The ACQ is a leading corporate news publication serving the sector since 2003, with a global audience of more than 261,000 subscribers. The GAMECHANGERS (ACQ5) GLOBAL AWARDS celebrate achievement, innovation and brilliance, recognizing the most outstanding organizations and professionals in the world.READ MORE >>
It’s no surprise that the COVID-19 pandemic slowed M&A deal activity overall in 2020. According to data from PitchBook, more than 2,000 transactions closed for a value of $336.8 billion in Q2 of last year. That represents a 41 percent decline in the number of deals from Q1. Yet, deals did pick up in the second half of the year, which is likely to continue, as businesses are poised for improved economic conditions that leave COVID-19 in the rearview mirror.READ MORE >>
Benchmark International is pleased to announce the transaction between ASAP Group (“ASAP”) and Terratest Group (“Terratest”).
Founded in 2006, ASAP is a leading foundation company specializing in a broad variety of shoring and foundation support methods, with a unique patented Sheetpiler™ technology that makes ASAP one of the premier shoring companies in Florida.
As a business owner, maybe you haven’t given much thought to selling your company. Or maybe you’ve bounced the idea around but not too seriously. It’s pretty common for business owners to think, “I have years before I plan on selling my business. Why would I worry about that now?” Well, here’s the thing. Life is unpredictable. Just look at how prepared the world was for the COVID-19 pandemic. We think it’s safe to say that no business owner was prepared for that.
But being prepared for the unexpected isn’t the only reason that it is important to have your business in “sale ready” shape at all times, even if you’re not ready to sell. If the company is not in ready condition, it could cost you financially. And it goes beyond that. Always operating your company as if you are ready to sell accomplishes several very beneficial objectives. It ensures that you are operating at peak performance with a focus on profitability at all times, and it helps you avoid being too late to the game to make the necessary changes to be ready to sell. A person’s priorities in life can change quickly or even gradually over a span of years, and you might not have the time to correct any issues that would impact the valuation of your company and, ultimately, its sale price. It’s important to remember that properly preparing a company to go to market can take years. When push comes to shove, if you end up in a situation where you need to sell, not being ready can be a costly mistake.READ MORE >>
The value of a company extends beyond the amount of revenue it generates. As a business owner, you should be monitoring the value of your company at all times, but it is especially important if you are considering exiting or retiring within the next several years, or even up to a decade from now.
Company valuations are based on far more factors than just financial statements and multiples. The process involves the forecasting of the future of the business based on several key value drivers. Sometimes these can be sector-specific, but there are many core drivers that apply to any type of business, as outlined below.READ MORE >>
Have you always dreamt of owning your own business? What about having your boss’ job? If you are in management and in a privately owned company, it might be possible for you to be the boss and the owner one day. However, many mid-level managers do not know how to accomplish their dream of owning a company that currently employs them. The good news is that your dream can become a reality.
One of the challenges of transitioning from an employee to a business owner is thinking like a business owner. As an employee, your manager/owner provides guidance, and often you may not question the guidance. As a business owner, you make all the decisions, set goals, and create a plan that will drive the future of the company. Then, you will be the one that has to drive and financially fund the vision. Yes, you will develop mentors around you, but as a business owner, you are the one that benefits and suffers from the positive and negative outcomes of your decisions.
While you may work long hours currently, be prepared for a more immense workload and additional hours. Employees have a work schedule, and business owners that operate the company do not have work schedules. You are on call 24/7, and it is hard to get away from the business as you always carry that burden with you. Vacations are interrupted and weekends are often spent at the business. However, if you are in a place in your life where you can dedicate the required time, mentally and physically, to the business, the long term pay-off, whether it be financial or time freedom, can be significant.
Interview your owner and shadow him/her if possible. Ask the company owner for insight into their day. Understand the stresses that the business owner deals with daily. Some of the stresses will be confidential, such as employee issues or financial issues, so anticipate that your receiving limited insight.
Then commit to making your dream a reality. Ask the business owner their exit strategy. Some owners may be open to a slow exit where you can purchase the company over a few years, or they may want a clean exit where you have the option to purchase the company immediately and the current owner walks away after a short handover period. Having an introductory conversation about your interest in purchasing the company is going to be important. Once you understand the business owner's personal goals regarding their exit, it will allow you to structure a deal to achieve both parties' goals.
It is important to prepare your financing so you know how much you can afford. This knowledge is key to structuring an offer. The business owner will need to share the information around the business' performance for a bank to underwrite an acquisition. The company's current banker might be a good starting point. After your conversation with the business owner, ask if they would be open to making an introduction to the company’s banker. The banker understands the business and risk as they have underwritten the business previously. Their goal would be to underwrite the business to incorporate the new ownership.
Be patient and ask for help when needed. Purchasing any business can be an emotional process. If you have never been through the process previously, you may need to seek help from your advisers or hire an experienced buyer side M&A advisor. There are many resources available to you to help with the purchase.READ MORE >>
Working capital, also referred to as net working capital, is the measure of a company's liquidity, operational efficiency, and short-term financial status. It is the difference between a business’s current assets, its inventory of materials and goods, and its existing liabilities. Net operating working capital is the difference between current assets and non-interest-bearing current liabilities. Typically, they are both calculated similarly, by deducting current liabilities from the current assets. So, essentially, if a business’s current assets total $500,000 and its current liabilities are $100,000, then its working capital is $400,000. But there are a few variations on the calculation formula based on what a financial analyst wants to include or exclude:READ MORE >>
Maybe you’re not sure if you are ready to sell your business, but you’re curious about what you could learn if you put it on the market. You can always put your company on the market at any time, but you should understand the right way to do it, and everything that you need to consider.READ MORE >>
What Does It Take to Complete 52 Transactions in 52 Weeks?
2020 brought us all a huge amount of uncertainty. From an unexpected global pandemic to an election year, business owners tooling with the idea of a transaction were skeptical of success and market interest. With immense challenges presenting themselves, Benchmark International US offices took the year by the horns and hit another record year of completed transactions.
Following their 2019 accomplishment of 40 successful deals, Benchmark International’s US transaction teams saw the opportunity to take it one step further, completing 52 domestic deals. This is a 33% growth rate in the midst of one of the most trying economic environments to date.
The question here is: What does it take to complete an average of one deal per week, every week, in the midst of a global pandemic?
Keep the Consistency
The five US transaction teams showed consistency when working with our clients, no matter the deal size or time on market. Being industry agnostic allowed Benchmark International to bring a wide range of companies to market in 2020; from quick deals to major transactions, the team displayed prodigious work ethic to find the perfect fit for their clients.
COVID-19 tested global corporate environments, but Benchmark International adapted to the temporary work from home changes with ease. Distractions while working from home could have easily altered the company's success, but with virtual communication and determination to find the best for our clients, the team proved resilient. Benchmark International’s 2019 modernization of its tech systems, from top to bottom, paid off handsomely. A new CRM, the move to cloud-based storage, and widespread adoption of Microsoft Teams for inter-office communications all occurred in the first months of 2020, just in time to a two-month work from home period, a minor annoyance as opposed to a hinderance.
Both buyers and sellers saw a shift in focus when COVID-19 hit challenging the way M&A firms traditionally go about business. It took tedious due diligence amongst the five transaction teams to ensure the value of the companies represented was preserved.
2020 financial concerns are guaranteed to be on business owners' minds when moving into conversations regarding a full/partial sale in 2021. There is not yet a "market standard" on COVID-19 "add backs." However, owing to the breadth of its transaction experience both domestically and globally over the last year, Benchmark International is helping to shape that emerging standard, pushing for fairness to sellers wherever possible and reminding buyers that their true interest lies in determining how the business will perform under normal circumstances..
Stick True to the Foundation of Benchmark International
Benchmark International was formed on the ideology that every business is a family business. The dedication demonstrated by everyone at the firm (from analysts to directors to executive leadership) is what stands this team apart from their competitors. Sticking to the robust business model originally set forth by the founders, Benchmark International was ready and able to handle challenges that were unrecognizable prior to the year 2020.
As Benchmark International continues to set records statewide, the notable accomplishments extend beyond that; for SIX years in a row, the company as a whole completed 100+ transactions per year. This shows that geographical location, although important, doesn't outweigh work ethic, consistency, and resilience amongst a team like Benchmark International.READ MORE >>
The COVID-19 pandemic has impacted businesses of all sizes, affecting the value of many of those businesses. The Coronavirus Aid, Relief, and Economic Security (CARES) Act was created by the U.S. government to get businesses through the pandemic, and includes the Paycheck Protection Program (PPP), which is designed to give private businesses access to cash so that they can continue to pay employees and cover other expenses, such as health insurance, rent/mortgages, and utilities, over a 24-week period. The loans contain provisions for forgiveness as long as the company meets certain requirements and certifications. The PPP loan and its associated forgiveness have impacted how company valuations should be determined for the recipients.
For company valuation purposes, there needs to be an understanding of the reasons that the business got the PPP loan. The loan could indicate that the company has been under duress. Because of this, past financial statements may not accurately represent the future of the business.READ MORE >>
Strategic partnerships can be game-changers for SaaS (Software as a Service) companies. Sales revenue is clearly of vital importance, but it takes more than just those numbers to make things happen on a larger scale. Relationships are the bedrock of business. If you are looking to drive growth, a strategic partnership can be a very powerful tool to help your company increase its audience, build upon the brand, and tap into new markets. All of this, in turn, can prop up your sales team and boost your overall growth.READ MORE >>
When a company is sold, it can have major effects on employees, customers, clients, and suppliers. Uncertainty stokes fear in most people, as they wonder about their security and their futures. Even top management can feel as though they failed at their jobs when the company is being bought out. For these reasons, it is important that the messaging and transition planning is handled very carefully and thoughtfully leading up to an acquisition—especially considering that the majority of acquisitions fall through. Announcing the news too early can cause widespread unrest over a deal that never happens
Communication is everything in this situation, but it needs to be planned. Before announcing a single word about the sale of the company, you should have a solid plan in place. A consistent message is critical and the distribution of the information should be carefully coordinated both internally and externally to avoid misinformation and confusion. Your plan should clearly outline intentions, steps, timelines and how the process will affect all parties. Predetermine what will be conveyed by whom and when. Figure out how to address questions that you are unable to answer and consider all potential scenarios for all parties involved. And always remember how critical confidentiality is during this time. You do not want details leaking to the press before you are ready to go public.READ MORE >>