Mass Mutual Life Insurance Company provided the following survey results based on family-owned businesses. Although the survey was conducted several years ago, the results are still quite revealing, and still applicable.
• Four out of five companies are still controlled by the founders.
• 30% of family-owned companies will change leadership within the next five years.
• 55% of companies fail...Read More
New accounting rules may require that acquirers and acquiring companies report earnout agreements as liabilities.
Joel Johnson, president of Orchard Partners Inc., in his article, “Earnouts,” published by Valuation Strategies, states: “In a given year, 2% – 3% of announced mergers and acquisition agreements involve earnouts. These figures probably understate their prevalence....Read More
The following are situations where the price was not the deciding issue in the successful sell of a business. The ultimate buyer may be the only one who really understands the situation. A business intermediary really understands the issues and can lead the buyer and seller to a successful resolution.
• One seller had 60 shareholders who needed to walk away from the deal. The losing buyer...Read More
A solid, factual and compelling offering memorandum maximizes the chances of not only selling a business, but obtaining the highest possible price. An offering memorandum is also referred to as the selling memorandum, a confidential descriptive memorandum, or simply as “the book.” The memorandum, regardless of the terminology used, must be as factual as possible, but the Executive Summary...Read More
A January 2004 survey conducted by the DAK Group/Rutgers found the following breakdown of why businesses are for sale:
Reasons To Sell
Risk reduction 44%
Competition or market changes 41%
External pressures 27%
Lifestyle factors (age, health, etc.) 14%
Lack of capital 9%
Ownership/management issues 07%
Note: Multiple responses allowed; Source: DAK Group/Rutgers
It is...Read More
