ENTREPRENEURSHIP THROUGH ACQUISITION
A Reliable Alternative To Chasing Unicorns
The Pros and Cons of LinkedIn for Connecting with Buyers and Sellers
Is LinkedIn a valuable platform for legitimate M&A deal origination? See what the community had to say.
For businesses, LinkedIn is one of the most powerful online communities out there. With over 300 million monthly active users, LinkedIn is the perfect place to connect with potential buyers and sellers, business brokers, M&A advisors, and more.
To learn more about LinkedIn and its value, we asked the BizNexus community to share their thoughts on LinkedIn and its pros and cons.
How do you feel about LinkedIn as a valuable platform for identifying potential buyers & sellers? What are the strengths & weaknesses?
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
The Most Common M&A Mistakes Owners and Sellers Make
The M&A process is complex, and the exit process is often rife with challenges and potential mistakes. Before you begin the process, it helps to get familiar with some of the most common errors here so you can take steps to avoid them and learn from the mistakes of others.
The M&A process is complex, and the exit process is often rife with challenges and potential mistakes. Before you begin the process, it helps to get familiar with some of the most common errors here so you can take steps to avoid them and learn from the mistakes of others.
To get you started, we asked the BizNexus community to share some of the most common mistakes they see owners and sellers making during the M&A journey.
What is the #1 mistake you see owners/sellers make over and over again?
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Strategies for minimizing taxes for exit planning strategy
How much equity should you give to key employees?
How can you get your financing lined up?
What about confidentiality? How can you flesh out your options without compromising a potential alternative exit option?
What are the best strategies currently available for minimizing taxes heading into a transaction?
We recently asked our community of M&A Advisors and related exit planning professionals about tax strategies related to the sell-side transaction and how to sell a business.
Here are some of the highlight answers from the pros:
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
How To Sell a Business To Your Management Team
How much equity should you give to key employees?
How can you get your financing lined up?
What about confidentiality? How can you flesh out your options without compromising a potential alternative exit option?
Selling your business to your existing management team is a common choice for many owners.
There are lots of benefits to handing your business over to people you know and trust, and who understand the ins and outs of working there along with your goals, values, challenges, and vision.
At the same time, this kind of transaction comes with its own set of unique challenges. Some questions you might want to answer are:
How much equity should you give to key employees?
How can you get your financing lined up?
What about confidentiality? How can you flesh out your options without compromising a potential alternative exit option?
What about your customers? How do you transition them over to the team? How do you keep them on board with your transition plans?
We asked the BizNexus community to share their thoughts on selling your business to your management team and their key considerations. Check out their responses below.
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
How to Finance a Management Buyout
So you want to sell your business to your management team.....
Or at least, in an ideal world, you'd love to pass along the business to the troops who have helped you along the way, and who are already trained and qualified to take your baby to the next level, over the next decade and beyond, while you move on to fine-tune that backswing.
So, you want to sell your business to your management team.
In an ideal world, you would love to pass along the business to the troops who have helped you along the way. These individuals are already trained and qualified to take your baby to the next level while you move on to fine-tune that backswing.
More often than not, the problem is capital.
Your management team most likely doesn't have cash on hand to finance your retirement goals, -to cash you out.
So what are your options?
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
How long should you expect your engagement with a business broker to last?
It's different for every intermediary, but generally speaking, you should expect your relationship with your business broker (i.e. your contract) to last at least 12 months, as it takes a long time to sell a business properly.
It's different for every intermediary, but generally speaking, you should expect your relationship with your business broker (i.e. your contract) to last at least 12 months, as it takes a long time to sell a business properly.
Like any contract, key terms can usually be negotiated depending on the positioning of your company and the current market environment for acquisition.
What constitutes a relationship with a prospective buyer?
How will your intermediary facilitate the transaction and negotiations post-LOI?
These are all questions you should flesh out during open discussions with your intermediary prior to moving forward with a long-term engagement, so both parties can be clear on expectations and responsibilities moving forward.
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
What are the best ways to choose your exit options?
You can't reach your goals if you don't have a clear target, and assessing your exit options as soon as possible helps you to start coordinating your operations and business efforts to align with your ideal exit option goals.
The first part of the exit process is knowing your options.
You can't reach your goals if you don't have a clear target, and assessing your exit options as soon as possible helps you to start coordinating your operations and business efforts to align with your ideal exit option goals.
We asked our community members what they thought were the best ways to figure out exit options. Even if you’re fairly early on in the process, it’s important to get clear on this as soon as possible, as it will give you greater clarity and direction as you move forward.
Take a look at our community members’ responses here.
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Things to consider when choosing an intermediary
It's crazy how many entrepreneurs out there, after so many years of running their business according to plan, simply don't plan the exit process, or simply wing it when it comes to choosing the right professionals to help manage the exit process for their baby.
A good intermediary can be an invaluable component to a successful transaction, so it's important you know what to look for when choosing this type of advisor to help guide and coach you through a successful exit.
Choose wisely.
It's crazy how many entrepreneurs out there, after so many years of running their business according to plan, simply don't plan the exit process, or simply wing it when it comes to choosing the right professionals to help manage the exit process for their baby.
A good intermediary can be an invaluable component to a successful transaction, so it's important you know what to look for when choosing this type of advisor to help guide and coach you through a successful exit.
Join the Conversation
The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Valuation Methods Potential Buyers Use
It's important to be on top of the types of valuation methods potential buyers might use to put a number on your business.
If you're not familiar with the different types of approaches used in the current market, check out what the pros had to say about the most common methods acquirers are using to start the discussion and frame their potential offer.
It's important to be on top of the types of valuation methods potential buyers might use to put a number on your business.
If you're not familiar with the different types of approaches used in the current market, check out what the pros had to say about the most common methods acquirers are using to start the discussion and frame their potential offer.
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Most Common Motivation for Owners Selling their Businesses in this Market
In a seller's market, there are countless reasons business owners decide to pull the trigger and take their baby to market.
Maybe they've been cold-called by a buyer.
Maybe they just want to get out while the getting is good.
Maybe their risk tolerance has decreased and it's time to diversify.
In a seller's market, there are countless reasons business owners decide to pull the trigger and take their baby to market.
Maybe they've been cold-called by a buyer.
Maybe they just want to get out while the getting is good.
Maybe their risk tolerance has decreased and it's time to diversify.
Check out the answers from our community to get some first-hand stories from the professionals who have their fingers on the pulse of the "why" when it comes to owners taking that first step towards an exit.
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Deal Team 101 - The Role of The Accountant
Having an accountant on your deal team is a great sanity-check for your company valuation before you go to market.
Be careful, as accountants don't typically have their fingers on the pulse of the actual buyer market.... -what the most likely, most attractive potential buyers of your business will actually pay.
Having an accountant on your deal team is a great sanity-check for your company valuation before you go to market.
Be careful, as accountants don't typically have their fingers on the pulse of the actual buyer market.... -what the most likely, most attractive potential buyers of your business will actually pay.
Accountants will often set valuation expectations with an owner over the course of their preexisting relationship working together throughout the operation of the business leading up to an exit.
When it comes time to exit, and to put a concreate asking price or price range on your business (whether you disclose that or not, you should know it), you'll want to make sure you're not only relying on your accountant for their evaluation of your business as they see it based on multiples and comps, but you'll probably want to check with some front-line intermediaries with relevant experience in your space, -in your geographic area, or industry or deal size, -who can give you their take on what valuation you'll most likely land on to get the deal done.
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THE BIZNEXUS COMMUNITY
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Things to consider when choosing an attorney
What questions should you ask when choosing a potential attorney to represent you as you move towards selling a business?
What relevant experience should your attorney have to be considered best "qualified" to represent you and your business through to the transaction close and beyond?
What questions should you ask when choosing a potential attorney to represent you as you move towards selling a business? It’s a big decision to make. The right attorney can make the transaction process much smoother and more successful, while the wrong one can create countless problems.
What relevant experience should your attorney have to be considered best qualified to represent you and your business through to the transaction close and beyond?
A few things to consider could be:
Relevant industry experience?
Experience handling transaction sizes similar to yours
Do they have a dedicated M&A focus and team within the practice or are they more of a generalist firm?
We asked the BizNexus community to share some of their own ideas about what to look for in an M&A attorney. See what they said below:
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Exit Strategies Through SPAC
An increasingly popular and controversial exit option for companies with enough marketable traction is the Special Purpose Acquisition Company (SPAC).
An increasingly popular (and controversial) exit option for companies with enough marketable traction is the Special Purpose Acquisition Company (SPAC).
A SPAC is a essentially a shell company formed with the sole purpose of acquiring a to-be-determined unidentified, operational business using funds raised in an initial public offering (IPO). So in a nutshell:
A public shell company (SPAC) is formed through IPO $$, with the purpose of identifying and acquiring a to-be-determined private, real, live operational company.
The clock starts ticking and the public SPAC needs to make an acquisition, otherwise give the money back to investors.
Shell company (SPAC) finds said real, private, live operational company and acquires it
Acquired private company Abra Ka Dabra becomes publicly traded, without the associated diligence & "under the hood" investigation typically associated with the IPO process (Think WeWork flameout)
Entrepreneurs / founders get liquidity (i.e. $$$), jobs and equity.
So, we asked our BizNexus Community M&A professionals how they felt about the 2022 SPAC exit strategy trend. Here’s what they had to say:
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THE BIZNEXUS COMMUNITY
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
The Top Issues That Can Make or Break a Successful Transaction
Clean financials?
Dummy-proof, transferable processes that a new business owner can quickly understand, implement and run with?
Clean financials?
Dummy-proof, transferable processes that a new business owner can quickly understand, implement and run with?
What about the management team? Is it any good? Willing to stay on board with a new owner or are they likely to bail? What assurances can a potential buyer have?
Same for customers... Will they stick around? Are you overly reliant on one or a few monster clients, and can you assure they'll stay strong with a new owner?
We've seen it all when it comes to last-minute deal breakers, and so have the experts who make up our community.
Click below to read more and browse through the first-hand tips and war stories from the M&A professionals themselves about what the top issues are that can typically railroad your exit transaction.
The BizNexus Community brings together entrepreneurs, investors and M&A experts to master the process of getting your business acquired or recapitalized, so you can learn how to set up a great deal team, financing and exit plan from a network of industry professionals & advisors.
Sell Your Business With The Perfect Match
Most Common Approaches To Business Valuation
We've gone through the common approaches to valuation, but what should you expect to encounter in the real world when you start conversations with buyers?
Most first phone calls with a private equity professional will zero in on EBITDA and what multiple range to simply slap on top of that, prior to potentially digging deeper and moving towards LOI.
We've gone through the common approaches to valuation, but what should you expect to encounter in the real world when you start conversations with buyers?
Most first phone calls with a private equity professional, will zero in on EBITDA and what multiple range to simply slap on top of that, prior to potentially digging deeper and moving towards LOI.
Conversations with a freshly minted MBA or or corporate finance professional turned business acquirer, might lead towards discounted cash flow and information they'll want for their excel models etc.
It's important to know what to expect, and what type of buyer is likely to lead with what type of valuation methodology, so you can be prepared and not get caught off-guard.
The BizNexus Community is for entrepreneurs, M&A professionals & enthusiasts and exists to network & master best practices for optimizing your business for buyer / investor interest, valuation, and transferability.
Each day we ask questions to help you learn how to best position your company in the eyes of potential investors or acquirers.
Start thinking about your business from the standpoint of a potential investor, lender or buyer, with tips & tricks from colleagues just like you, and learn from the pros who do this on a daily basis.
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
A Rundown of the most popular tools used for business valuation
Leveraging comparable transactions to help you negotiate an acquisition price for your business is a GREAT way to put a $$$ on your baby.
Working with a knowledgeable intermediary in your company niche, one who knows the comparable transactions and buyer valuations intimately, from firsthand experience day-in, day-out is invaluable.
Our community is all about learning how to exit your business the right way, with the right team to guide you.
Every day we ask our community for guidance on a key topic related to exit planning, valuation & sale, and we share the answers with you in our community workshops and blog.
Leveraging comparable transactions to help you negotiate an acquisition price for your business is a GREAT way to put a $$$ on your baby.
Working with a knowledgeable intermediary in your company niche, one who knows the comparable transactions and buyer valuations intimately, from firsthand experience day-in, day-out is invaluable.
We asked our community of M&A advisors and transaction specialists what their favorite valuation and industry comp tools and services are.
Always interesting to get the updated pulse from the experts in the trenches, -if you see an answer the hits home for you we suggest you reach out for a chat.
What tools & services do the experts use for their industry comparables?
Check out all of the submitted answers from our community of M&A experts here:
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.