What Transaction Options are Available to Business Owners? There are four transaction options available to business owners depending upon how ready they are financially and mentally to sell all or some of their business. Our readiness matrix helps owners determine which of four options may be best for them. Below we detail the rationale of [...]
One of the main premises behind a Private Equity Group (PEG) acquisition is to use debt to amplify the returns on the equity portion of it. In layman’s terms, equity is the down payment the PEG makes for an acquisition while the rest of the funds are provided in the form of debt from [...]
In this third part of our series on Private Equity Groups (PEGs), we will examine how PEGs perceive value. But first, we must define what it is that PEGs are valuing. In almost all cases, when a PEG makes an offer for a company it is based on the Enterprise Value of the firm. [...]
In this second part of our series explaining the role Private Equity Groups (PEGs) play in the lower middle transaction market, we review how PEGs structure investments in companies. Generally, PEGs seek to make investments as one of two types; a platform investment where the company exists as a stand-alone entity that is [...]
When M&A advisory firms such as ours engage with owners to sell their business, one of the first steps of the process is to identify what type of buyer would be interested in the acquisition. In general, there are always three types of buyers; financial buyers interested solely in the returns of the opportunity, [...]
Adjusted EBITDA1 and SDE2 are common base figures used in calculating company value. Selecting which to use is imperative in determining the sale price of a business and defining what that value is. General Rules of Thumb Companies are usually valued at 3-6 times adjusted EBITDA or 1-3 times SDE. Earnings less than $1,000,000, use [...]
The best time for selling a business, at least for the foreseeable future, may be right now. For businesses valued over $3 million, a strong seller’s market has been created by private equity groups (PEGs) flooded with cash – but it won’t last forever. For those businesses under $3 million, who are generally too small [...]
