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VR Franchise Opportunity, VR Office Location

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

How VR Can Assist in an M&A Transaction

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. 

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

Vulnerability is a normal feeling for any buyer and seller that’s involved in an early M&A transaction. There are many variables that are potential risks to any transaction such as conflict of interest, confidentiality breaches and the overstepping of legal boundaries.  

It’s important to remember when in negotiations for a deal that you have to walk a fine line between obtaining and distributing information. Any improper handling of information can take a potential partner that you may have in a deal and turn him or her into a better-informed competitor before you can blink. This is why having a professional and skilled team in place is critical in facilitating the complexities of an M&A transaction; and it starts with using VR Mergers & Acquisitions.   

Securing Confidentiality

At VR, we take confidentiality seriously and understand the threat of potential disclosure, which can cause the end of a transaction. For anyone that’s familiar with medical and computer science, a “clean room” is sealed off to prevent contamination. What we do is conduct a feasibility analysis on competitive and other confidential data to determine all the benefits of the transaction. We will present the analysis to both the buyer and seller parties on an OK-to-know basis, in effect creating dual “clean room”.

There will be a governance structure in place for how everyone will operate, which will include outlined instructions and protocols for handling sensitive information during negotiations.

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By Tejan Kapoor, Strategy & Operations at Axial

Devising your Exit Timeline: Start with your Ideal Exit Date

If you’re a business owner, there’s one thing we’re sure you subscribe to:

Every goal needs to be accompanied by a deadline.  

Deadlines are the vehicle that turns goals & strategies into plans. They promote:

• Accountability 
• Urgency 
• Measurability 
• Focus and Prioritization 
• Commitment Level

Planning for your exit should be no different. 

A great exit outcome requires a great plan. And a great plan requires deadlines that map to each planning milestone. 

Our advice: craft an exit timeline with the end in mind. 

And start by establishing your ideal exit date. 

Your ideal exit date is the date by which you want to sell your business. It may represent when you want to retire. Or it may represent when you ideally want to move on to your next, more promising opportunity.

Most importantly, it characterizes how you think about the opportunity cost of your time. And the opportunity cost of indecision. 

Owners that have an ideal exit date & an associated exit timeline:

• Are psychologically more prepared for the sale process
• Exude credibility with their motivation and commitment level
• Can use the timeline to keep every relevant stakeholder aligned 

Business owners we speak with often overlook this vital, initial step. They haven’t spent the time to think critically about their ideal exit date. What are the implications of retiring 6 months – 3 years later? What is the cost of elongating this sale process?

Even if you are simply ‘exploring’ an exit to see if you can get the right price, having a firm date by which you hope to reach a firm decision will prevent you from drawing out the evaluation process. 

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A Nanofiber Filter Media Manufacturer Business in Richmond, VA

The company provides a patented platform for the rapid and cost-effective production of high-performance nanofiber media. Using a proprietary, completely green process, they manufacture nanofibers without solvents. This solvent-free technology enables a highly scalable manufacturing process. Committed to excellence, sustainability, and innovation, their unique technology spins various polymers into versatile, high-performance products. These products serve a wide range of applications, including medical packaging, filtration systems, advanced textiles, and eco-friendly construction materials. The company is at the forefront of delivering next-generation solutions across multiple industries.

For more information contact: Todd Furbee

Thinking of selling your business or looking for an established 

business to purchase? Contact a VR Office Near You!

VR Office in Orlando, FL Sold a Child-Care Service Company

A childcare service company provides essential support to families by offering safe, nurturing, and educational environments for children aged 3 months to 12 years old. This company is DCF licensed, ensuring that they meet high standards of safety and quality for children from 24 months up to 12 years of age in their care. They employ trained caregivers who focus on the developmental needs of children, providing personalized attention and care. Their services often include a variety of activities designed to promote physical, emotional, and cognitive growth, such as play-based learning, social interaction, and early education programs. By partnering with parents, they help create a balanced and supportive upbringing for children, allowing parents to pursue their professional and personal goals with peace of mind.

Congratulations to Mario Capaldo  for your successful closing.

Why Tax Expertise Becomes a Deal Maker, Especially in Cross-Border M&A Transactions

by Gundo Kahle, CEO CBA Cross Borders Associates

Tax knowledge is critical in cross-border mergers and acquisitions as it has a direct impact on the financial viability, structuring, and post-transaction success of transactions. 

When companies engage in cross-border mergers and acquisitions, they navigate a complex tax landscape that encompasses multiple jurisdictions, each with its own rules, treaties, and regulations. 

A thorough understanding of these tax implications can influence the choice of acquisition structure, whether through share purchase, asset purchase, or merger. 

The structure affects the taxation of income, the availability of tax deductions, and the potential for double taxation.

In addition, knowledge of tax treaties between countries is essential as these treaties can significantly affect withholding tax rates on dividends, interest, and royalties. This changes the cash flow projections and the overall cost of the transaction. For example, a lack of knowledge about the benefits of treaties can lead to higher withholding taxes, which reduces the expected returns for investors. In addition, different countries have different rules for the treatment of goodwill.

Cross-border transactions also harbor risks, such as the possibility of triggering anti-abuse rules, e.g. the controlled foreign company (CFC) rules or transfer pricing adjustments, which can increase a company’s tax liability. Without tax knowledge, companies can overlook the intricacies of local tax laws, which can lead to significant tax burdens or disputes with the tax authorities or disputes with the tax authorities, resulting in penalties or costly litigation. 

Understanding the tax rules also contributes to better planning for the repatriation of cash, as companies need to develop a strategy on how to repatriate profits to the parent company without incurring excessive tax liabilities.

Tax knowledge is also important during due diligence, where it is important to understand potential tax liabilities, such as unpaid taxes or possible tax risks in the target country. 

This ensures a more accurate valuation of the target company and prevents unpleasant surprises after the takeover. It also allows companies to take advantage of favorable tax opportunities such as tax exemptions, loss carryforwards, or preferential tax treatment in certain countries. 

Ultimately, this understanding not only affects the financial performance of the business but can also be a competitive advantage in negotiations, as a company that has a clear picture of tax liabilities and benefits can make more attractive offers while managing the risks.

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

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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