[writeup] **Warning: Tag "br" was not closed and has been forced closed at the end of the p block [writeup] **Warning: Problems were found**
This month’s issue of the monthly executive brief providing M&A market insight for C-level management and their professional advisors.
Middle market business owners often arrive at a crossroads when considering the sale of their company: to stay or to go. Will your business exit plan include retaining the senior management team? Will you keep an equity position in the company? Or will you ride off into the sunset and leave the new owners to run the day-to-day operations of your former company? How you answer these questions may make a difference in just how much your business is worth.
The impact on valuations of retained senior management has been reported on for nearly two years by G.F. Data, a research firm specializing in middle market data. Statistics show that valuations in general been on the rise; however, when management stays, a distinct value advantage has been demonstrated, especially if the seller is a strategic seller or a family business.
A partial sale, whereby the owner maintains an equity position in the company, is something to be seriously considered when looking to sell. Taking chips off the table, retaining an equity stake in the business, and looking toward a second liquidity event years down the road can make sense for all parties. The new owners know you still have a stake in the success of the business. They believe that with the existing management team in place, the trends leading to the acquisition are not likely to unravel post-close. The valuation of your business is likely to be higher, putting more money in your pocket with the partial sale. With the right new partner in place, you have time to get ready for that final business exit and ease into your golden years.
For more information contact:
Douglas Nix, CPA, CA | Vice Chairman CFA
905 845 4340 ext. 211