Quick Links

VR Business Brokers, VR Mergers & Acquisitions, Buyer Alert Program,

VR Franchise Opportunity, VR Office Location

By JoAnn Lombardi, President VR Business Brokers/Mergers & Acquisitions

All businesses face risks, but some companies are riskier than others. Assessing a company’s risk is an important part of estimating its value. Risk and value are inversely related. That is, the higher a company’s risk, the lower its value.

Risk is a function of a company’s external threats and internal weaknesses, but these forces only tell part of the story. On the flip side, a business’s strengths and opportunities minimize risk and, therefore, build value.

When valuators focus exclusively on one side of the story, their conclusions are likely to be skewed. For example, to minimize an estate’s tax burden, an appraiser might unduly emphasize a company’s weaknesses and threats to justify excessive valuation discounts. Conversely, the IRS’s expert might downplay these negative elements and, instead, call attention to the business’s strengths and opportunities.

Framework for Evaluating Risk

Providing a complete, accurate depiction of a company’s future performance requires the valuator to consider both positive and negative aspects of its operations. A strengths, weaknesses, opportunities, and threats (SWOT) analysis provides a four-pronged framework for analyzing risk that links a business’s internal strengths and weaknesses to the opportunities and threats in its external environment. This popular tool helps valuators organize their thoughts and provides a holistic risk assessment.

External forces: Opportunities and Threats

Before jumping headfirst into a company’s financial performance and operations, the valuator assesses the external environment in which a company operates. Opportunities are favorable conditions that — if exploited — may enhance shareholder value. Alternatively, threats are barriers that jeopardize future performance. In many cases, management has little control over these external factors.

Click Here to Read Full Article

By Peter C. King, CEO VR Business Brokers/Mergers & Acquisitions

1. SPECULATING ABOUT A SELLER’S MOTIVES

In most cases, you will never know why or when a seller will decide to sell. You just want to be on the shortlist of potential buyers when they reach that point. Even if an ideal prospect told you “no interest” a year ago, he could one day change his mind. Stay in touch and be there when he does. 

2. FAILING TO REMEMBER THAT BUYING IS SELLING

Not every company is sold to the highest bidder. Many sellers are concerned with the nature of the “fit” and the way they perceive their employees will be treated following the sale. If you aren’t courteous, and respectful during the courtship, what will they think about tying the knot? 

3. NOT USING EXPERIENCED PROFESSIONAL ADVISORS

It is a good idea to use qualified advisers. Naïve buyers and sellers often make mistakes; and mistakes cost far more than the expense of competent advisers. Some buyers think a failed acquisition effort is not worth paying for. Sometimes, however, you make far more money by not doing a deal. The objective is to do the right deals at the right price (and terms). Your advisers can keep you informed about what your competitor-buyers are doing, both from direct experience and research. Their knowledge of the market can be invaluable in helping you close deals. 

4. DISCUSSING PRICE WITHOUT AN OBJECTIVE PRICING RATIONALE

Sellers who are offered four times the earnings before interest and taxes (EBIT) in a six-times the-EBIT market may be offended. If the difference can be explained by a severe working capital deficit, be able to show that your offer is really six-and-a-half times the EBIT, less the necessary adjustment for the working capital you will have to inject in the company. In other words, be able to articulate your valuation rationale and negotiate from it, rather than merely arguing “lower” vs. “higher,” which is a loser’s game. 

Click Here to Read Full Article

Overheard at Axial – Market Insights From Top Lower Middle Market Dealmakers

By Blake Vinson, Axial

Over the past 6 months, the business development team at Axial held 5,301 calls and in-person meetings with our members across the buy and sell-side. In these conversations, we heard expert opinions on the shifting trends of the lower middle market.

This report analyzes calls with Axial’s top dealmakers and shares the rumblings of the lower middle market. The findings and insights from these conversations are summarized across a few key themes:

• The Tightening of Credit Markets
• Elevated Valuations vs. Asset Quality
• The Move Towards Highly Structured Deals
• Increased Activity From Family Offices & Independent Sponsors

The Tightening of Credit Markets

The tightening of credit markets has created significant challenges for borrowers, particularly as bank and non-bank lenders have increased rates and shortened term lengths for loans. Lenders have increasingly adopted a “risk off” mentality, becoming more cautious in their lending practices. This shift is largely in response to the anticipation of economic shifts, leading to more stringent underwriting strategies.

Click Here to Read Full Article

IT Staffing Business for Sale in San Jose, California

With over 16 years in the staffing industry, the business has firmly established itself as a reliable provider of Workforce Solutions, catering to a diverse clientele, which includes Fortune 500 corporations, as well as small and mid-sized enterprises across various sectors.

The business has consistently proven its prowess in adapting and thriving within a corporate world that is in a constant state of flux. It boasts extensive combined experience, supported by an advanced analytics platform, which uniquely positions it to address the needs of its clients, regardless of their size. The business strategically sources top-tier talent for roles that seamlessly align with both the employee’s and the employer’s distinct requirements.

For more information contact: Javier Luna

Thinking of selling your business or looking for an established 

business to purchase? Contact a VR Office Near You!

VR Office in Boca Raton, FL Sold an Established High-End General Contractor Business

The company has had the privilege of working with some of the most esteemed designers in the industry, who have helped them achieve excellence in their field. Their commitment to quality and professionalism has been recognized with the prestigious “Best General Contractor of the Year” award.

Clients who choose them can experience firsthand why they are the preferred choice of leading designers, developers, realtors, and private clients. They have built a reputation for delivering exceptional service, high-quality workmanship, and timely project completion.

With a comprehensive range of resources, including state-of-the-art technology and an experienced team of professionals, they are well-equipped to handle any project, no matter how complex. Their cutting-edge technology program ensures that clients can monitor the progress of their project in real-time through a personal login, providing complete transparency and peace of mind.

Clients can trust them to be the best choice for finishing their residences, with a proven track record of delivering outstanding results. From start to finish, they are committed to providing exceptional service, attention to detail, and a personalized experience that exceeds expectations.

Congratulations to Baris Guler for your successful closing.

M&A in Hospitality

by Gundo Kahle, CEO Cross Border Associates

Cross-border transactions in the hospitality sector play a crucial role at CBA for various reasons, and not just recently. Hotels have been a focus of our global M&A activities for some time, which eventually led to a dedicated hospitality sector on our website.

Let me highlight some key aspects and the importance of cross-border transactions in the hospitality sector. 

Globalization and Market Expansion

Cross-border transactions enable hospitality businesses to expand their market reach globally, tapping into new regions and attracting international customers. 

This globalization allows hotel chains, travel agencies, and other hospitality entities to establish a presence in different countries, diversifying their revenue streams.

Increased Revenue Opportunities

International transactions contribute to increased revenue as hospitality businesses cater to a broader and more diverse customer base. Popular tourist destinations often benefit from cross-border transactions as travelers from different countries contribute to the local economy.

Cultural Diversity and Customization

Hospitality providers can cater to the diverse needs and preferences of international guests by understanding different cultures and adapting services accordingly. Customization of services and offerings based on the preferences of guests from various cultural backgrounds can enhance customer satisfaction and loyalty.

Business Partnerships and Collaborations

Cross-border transactions often involve collaborations between hospitality businesses and international partners. Partnerships with global travel agencies, tour operators, and other businesses can lead to joint ventures and mutually beneficial relationships.

Economic impact 

Cross-border transactions contribute to the overall economic growth of a region by attracting foreign investments and promoting tourism. Hospitality businesses generate employment opportunities and stimulate local economies, especially in areas heavily dependent on tourism.

Knowledge Exchange and Innovation

Interaction with international guests and collaboration with global partners can lead to knowledge exchange and innovation within the hospitality industry. Exposure to different practices and trends from around the world can inspire new ideas and improvements in service quality.

Risk Diversification 

Engaging in cross-border transactions allows hospitality businesses to diversify their risks. Economic downturns or challenges in one region may be offset by positive performance in other markets. 

In summary, cross-border transactions are integral to the growth and success of the hospitality industry. They provide opportunities for expansion, revenue generation, cultural exchange, and innovation, contributing to the overall development of the sector on a global scale.

VR is the Only Remaining Founding Firm of The International Business Brokers Association (“IBBA”).