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

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

Mergers and acquisitions have become a major feature of the global financial marketplace. Deal participants include public and private companies of all sizes, investment banks, commercial banks, private equity funds, institutional investors, hedge funds, and legal and accounting firms. To track this active and diverse sector, M&A professionals watch a variety of key trends and measures to help evaluate prices, financing, and risk. 

The Economy 

The current health and direction of the economy are of tremendous importance to mergers and acquisitions. Simply put, M&A activity requires a healthy economy to thrive. Experts, therefore, keep an eye on economic indicators such as gross domestic product, job growth, unemployment rates, and others. Consumer and business spending – the main drivers of economic growth – also are important to track, as are housing starts and home sales.

The rate of inflation and the Federal Reserve’s discount rate, the interest the Fed charges banks for borrowing short-term funds, affect both the overall economy and the financial markets because they in turn set commercial interest rates. When interest rates are low, buyers can afford the credit they need to make acquisitions, whereas high-interest rates curtail deal activity by making it too expensive to be profitable. 

The Corporate Sector 

Corporations act as both buyer and seller, so their financial health merits special attention. M&A experts look at market data on the growth or decline of corporate profits, debt-to-equity ratios, price-earnings ratios, price­cash-flow ratios, and ratios of balance sheet cash to business market value for a range of business segments. These rates and ratios signal the profitability of businesses, how expensive they would be to buy, and how much cash they have available to buy other companies. 

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

As a seller, you can contribute to a successful sale in many ways. Remember your view of the business may differ from the potential buyer. Here are a few guidelines:

1. Be friendly and cooperative. If the buyer requests information, provide it as soon as possible. By responding quickly, you will help establish trust and thus give the impression that your business is well managed, and you have nothing to hide. Delays cause buyers to become very skeptical about the seriousness of a seller’s intentions.
2. Communicate openly and honestly. Many transactions are completed because trust and good chemistry exist between a buyer and a seller. This is developed through honest, open communications.
3. Be ready to disclose sensitive information. Be prepared to discuss financial information, customer/market information, product “secrets”, etc. This allows the buyer the ability to develop a deeper understanding of the operation of your business.
4. Avoid being defensive. Buyers will often ask questions that may seem a little personal, but rarely are they intended to serve any purpose other than gathering needed information for a buyer to make a decision.
5. Help the Buyer see him/herself as the new owner. Look for the potential in the Buyer and let them know they are capable of successfully managing the business.

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The 1,000 Day Exit Plan

By Nick Coetzee, Axial

Patterns have shown that business owners think the sale can happen more expediently than it actually does. 

Research indicates that a business owner should start the exit planning process about 1,000 days prior to their intended sale date – which equates to just under three years. 

Starting the planning and preparation process years in advance of the targeted exit date will allow ample time to:

Have the right conversations with family members, teammates and peers

Make the business more attractive to potential buyers

Engage in a deliberate wealth and succession planning process

Hire the right service providers to support you in the process

Avoid feeling rushed to make the biggest decision of your life

And much more…

Below is a suggested business exit timeline, broken out into stages, with focus areas for business owners at each stage.

Successful Car Rental Operation Business in North and South Carolina

The business is located in 3 prominent cities in North and South Carolina, providing convenient car rental services to a wide range of customers. Since its inception over a decade ago, the company has risen as an established leader in the Auto Rental industry, consistently delivering excellent service, cutting-edge innovation and a commitment to customer satisfaction. This business has a significant opportunity for market expansion.

For more information contact: Carlos F. Guevara

Thinking of selling your business or looking for an established 

business to purchase? Contact a VR Office Near You!

VR Office in Minneapolis, MN Sold a Home Care Nursing Business

This Home Care facility provides a supportive and compassionate environment where their nursing team assists residents in managing their medications and medical care. The outstanding housing manager is always ready to help with all the residential needs of the residents. The goal is to create a caring, nurturing, and fun-loving community that feels like home. The incredible nurses are available 24/7 to address the medical needs of the residents and respond to any questions or concerns they may have. The staff is always available and eager to help the residents just outside their door!

Congratulations to Young Bebus for your successful closing.

Artificial Intelligence in Relation to M&A Processes (Part 1) “The European Example”

by Leena Kuusniemi, CBA Associate

Some general and extraordinary aspects of Artificial Intelligence

Artificial Intelligence (“AI”) is very much the new hype, but not only a hype. Finding a verified definition has not been an easy task, since the AI has evolved through the years, in fact since 1950’s. ¹

Now, in year 2024 we have finally some legal definitions, most notably in the European Union AI Act draft:

“Article 3(1) of the draft act states that ‘artificial intelligence system’ means:

…software that is developed with [specific] techniques and approaches [listed in Annex 1] and can, for a given set of human-defined objectives, generate outputs such as content, predictions, recommendations, or decisions influencing the environments they interact with. ²

Perhaps the best guarantee of this definition is that nobody is perfectly content with it, but most stakeholders do agree that it is a good compromise. Still, there are those holding Ph.D. in Technology claiming that one should remove the “intelligence” from the concept of artificial intelligence.

An advisor to parties planning any kind of reorganization, merger or acquisition may hear very different estimates about potential AI held by the target company or companies. 

Many other countries and regions are pushing for AI regulation e.g. USA and China³, and unfortunately the definitions are not uniform. This brings additional challenges for cross-border transactions covering AI. 

One point of relief is the very first word in the AI Act draft definition, namely “software”. An approach therefore should be the same as if with any software. AI simply has some specific features and functionalities in addition to the basic layout and functionality as software.

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¹Max Roser (2022) – “The brief history of artificial intelligence: The world has changed fast – what might be next?” Published online at OurWorldInData.org. Retrieved from: ‘https://ourworldindata.org/brief-history-of-ai’ 

²European Commission, Proposal for a regulation of the European Parliament and of the Council laying down harmonized rules on artificial intelligence (artificial intelligence act) 2021/0106 (COD)

³https://techmonitor.ai/technology/ai-and-automation/the-state-of-ai-regulation-around-the-world

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