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By JoAnn Lombardi, President VR Business Brokers/Mergers & Acquisitions
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Experienced entrepreneurs who have bought a business before will have an advantage over a business owner who is experiencing selling their business for the first time. Most buyers have a very difficult task because the due diligence portion of the transaction is typically an area that they have no prior experience with performing. The facts must be uncovered through a comprehensive investigation. At VR, we will assist you in identifying items that should be scrutinized.
Reviewing the Industry
When you consult with a VR business intermediary, they review the industries that closely match your interests and background through what is referred to as a SWOT (Strength, Weakness, Opportunity, and Threat) analysis. Here, you will review an industry’s strengths, weaknesses, opportunities, and threats. We will determine through the SWOT analysis the type of customers and vendors for an industry that you will find the most success.
Examining Profit Margin
Buying a business with a high profit is important. You should perform a thorough examination of the books to discover the reasons. For example, a business with a high-profit margin may have a low overhead and employees who receive marginal compensation and no benefits.
You have to ask yourself whether there will be a need to:
- Increase employee pay
- Include medical insurance in employee benefits
- Make improvements to the business location
- Replacing machinery and equipment
- Change vendors
Click Here to Read Full Article
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If you’ve achieved some success in your startup’s first product, how do you keep growing? What should you do if an upstart gives your customers a product that delivers more bang for the buck than yours? How do you know when the needs of your customers are changing and adapt to those changes effectively? How should you alter your startup’s business strategy to use new technology?
I’ve seen startups use all kinds of strategies to stay ahead of changing customer needs, new competitors, and evolving technology. One CEO acted as chief customer service officer, visiting each customer after the sale to ask for feedback and adjust offerings as needed. Another wrote press releases three years into the future to create a vision of what the company should be doing three years from now.
Both of these approaches have their benefits — providing motivation to move forward and a clearer vision into the future. But what if your vision of the future is not the best one for your startup or your current customer doesn’t represent your future target customer?
Click Here to Read Full Article
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There are several types of exit strategies for small businesses, each requiring careful planning. Options include initial public offerings (IPO), management buyouts, and last-resort measures like bankruptcy or liquidation.
In this post, we focus on developing an exit strategy to sell your business through the mergers and acquisitions (M&A) process. This approach aims to maximize value and negotiate terms that align with your personal and financial goals.
In this post, we cover:
- Exit planning, where you clarify your exit objectives and ensure your business is fully prepared for a successful sale.
- Finding the best-fit M&A advisor who has the right experience to help you sell your business and to successfully execute your exit with guidance.
- Executing the M&A process, which involves working with your advisor to obtain an accurate business valuation, create marketing materials, target buyers, evaluate buyer interest, negotiate sale terms, and structure and close the deal.
Your Small Business Exit Strategy: 3 Key Steps
Step One: Exit Planning
- When we surveyed investment bankers about common reasons business sales fall through, they listed a lack of formal exit planning as a major factor. This makes sense, as during exit planning, you’re defining what an ideal exit looks like to you and preparing your business for that exit.
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Medical Device and Service Company in San Antonio, TX
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The company brings over four decades of expertise in providing health monitoring solutions and comprehensive service agreements to a wide range of industries across 48 states. Trusted by leading organizations, including Fortune 500 companies, municipalities, school districts, and independent businesses, the company supports a recurring monthly client base. A strong presence in high-demand sectors such as retail, manufacturing, and corporate wellness programs underscores its adaptability and industry relevance. Tailored leasing and service agreements ensure prompt maintenance and cost-effective solutions for clients, emphasizing reliability and value. Guided by a commitment to innovation and operational excellence, the company fosters long-term client relationships and delivers consistently high levels of customer satisfaction.
For more information contact: Omar Garcia
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VR Office Located in Charlotte, NC Facilitated the Sale of a Aerospace Distributor Company
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Situation
This aerospace wholesaler and distribution business was started back in 2007 and was well positioned for growth. The two primary shareholders sought to retire and were referred to Adam Petricoff to facilitate the sale by a business valuation professional whom they knew.
Business Broker and Managing Director Adam Petricoff prepared the Confidential Business Review (CBR) to take the distributor to market. With opportunities identified for future growth and a strong customer base of more than 100 active customers, the business was poised for growth and success in a multi-billion industry.
Our Proven Process to Go Effectively from LOI down to Negotiated Agreement
Petricoff actively marketed the distributor to attract both strategic buyers and individuals. Significant early interest resulted in more than 100 non-disclosure agreements (NDAs) signed. Eight letters of intent (LOIs) were submitted with Petricoff carefully and thoroughly analyzing each offer, interviewing each prospective buyer and verifying their qualifications.
With solid prospective buyers identified, Petricoff and his transaction manager, Lauren Stewart, managed each phase of the process to then enable each vetted prospective buyer to submit questions to the sellers. Petricoff & Stewart organized all submitted questions and managed the process of all responses being prepared, finalized, and made available in a secure, virtual ‘Data Room’ for the prospective buyers to review responses and move forward in negotiations. While highly efficient, this step also enabled interested buyers to review responses to other submitted questions, ascertaining the level of interest in this aerospace distributor in Winston-Salem, North Carolina.
At the conclusion of this step in the business brokerage process, several prospective buyers opted out while strong prospective buyers emerged as clear, well-qualified parties to acquire the business. Management meetings were then completed and both primary shareholders and business broker Petricoff agreed to the front runners.
The Result
The buyers were business partners, one leaving a role in Corporate America and the other owning other businesses. Together they were attracted to the opportunity to add the business to their holdings while running and growing the business. They leveraged an SBA loan financed through Huntington Bank as part of the deal structure and agreed to have the minority owner remain in the business along with keeping the employees. The two primary shareholders remain for a short transition period, enabling them to happily shift to retirement.
Congratulations Adam Petricoff on your successful closing.
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M&A Opportunities in Times of Recession
by Gundo Kahle, CEO CBA Cross Borders Associates
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With discussions of a recession looming in Europe, business owners may display concerns about the timing of going to market to sell, asserting that the economic downturn will not be beneficial if they were to go to market. In fact, acquisition opportunities present a significant value creation prospect for private equity groups, which tend to increase mergers and acquisitions during a recession for various reasons.
Cross-border mergers and acquisitions during recessions present both challenges and opportunities. Economic downturns typically lead to lower asset valuations, creating favourable conditions for well-capitalized companies to acquire businesses at discounted prices. At the same time, heightened risks such as economic uncertainty, reduced consumer demand, and increased regulatory scrutiny can complicate the process.
Companies pursuing cross-border acquisitions in a recession must carefully assess a target firm’s financial health to avoid excessive liabilities or operational weaknesses that could become liabilities during an economic slump. Financing also becomes more complex as credit markets tighten, making it essential for buyers to have strong cash reserves or alternative funding sources. Strategic acquirers with a long-term vision often benefit the most, leveraging downturns to expand market share and strengthen their competitive position.
Regulatory and political factors also play a significant role. Governments may impose restrictions on foreign takeovers to protect national interests, particularly in industries such as technology, healthcare, and infrastructure. Exchange rate fluctuations add another layer of complexity, affecting deal valuations and financing costs. Additionally, cultural differences and operational integration challenges become even more pronounced in uncertain economic conditions, making thorough due diligence and post-merger planning critical for success.
Despite these hurdles, recessions can serve as a catalyst for transformative cross-border M&A deals. Companies that execute well-planned acquisitions during challenging times often emerge stronger, with enhanced efficiencies, synergies, and access to new markets that position them for growth when economic conditions improve.
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VR is the Only Remaining Founding Firm of The International Business Brokers Association (“IBBA”).
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Have You Ever Considered Selling Businesses?
Small businesses make up over 56% of the annual U.S. GDP and every year a large amount of them change hands. VR is the industry leader in facilitating such transactions. Click here for more information on how to join VR.
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