Timing and value are both important
An old proverb comes to mind this time of year. “Make hay while the sun shines.” Take advantage of clear weather. Capitalize on opportunities. Avoid the rain.
The same can be said for business. Take action while times are good. If a sale is in the near future, best not to wait for any clouds to gather. A key first step is a valuation, and there are several available.
Business valuations are typically based on three main methods:
With a market approach, we place more weight on recent sales involving comparable entities. This tends to provide the best insight on how the market views deals at this time. We also keep a pulse on the market in general to understand trends and buyer sentiment. The result is a valuation more in line with market realities.
With the income approach, valuation professionals often use the discounted cash flow formula which includes estimated future growth trends. These forecasts are subjective. They depend on what the company sees over the horizon.
In an asset approach, the fundamentals of a business are valued. The focus is on hard assets such as the facility and the equipment. This can be very helpful if financing is the goal. But assets alone don’t necessarily translate into income for an acquisition.
Each approach has its place, depending on the purpose, the industry, and certain business characteristics. Give us a call and we can discuss what makes the most sense for your situation.
If you are considering a sale, as an M&A advisor, we encourage you to take advantage of what remains a seller’s market. In general, we are seeing strong values and eager buyers especially for highly profitable entities.
"The entire process went smoothly and professionally. The BTS team kept me fully informed at every step. They worked hard and were effective in bringing the deal home."
"Skip and I continue to be grateful for all you have done to make the sale of Pure Flow come to fruition."
"BTS’s level of expertise in the process and close attention to detail enabled us to successfully navigate the deal."
"These types of transactions are often long and complicated and I doubt it could have been successfully completed without your close ongoing involvement."
"The outside objective point of view that you have brought us has been invaluable as we prepare for the rapid growth."
"John then found the right buyer and coordinated a seamless transition—he doesn’t miss a single detail."
"John immediately identified our strengths and experiences and discussed a business that ultimately was more in line with our goals."
"The BTS team came in, evaluated everything in a professional and thankfully non-threatening manner."
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Changes by owners helped a sale
Owners considering selling can look at the experience of a N.H. company for ideas of what to do to increase their chances for a good transition.
Precision Machining Company
Initially, liquidation was a serious consideration. It would offer a quick exit but would hurt loyal employees and disrupt the customers who had come to rely on its quality production.
Green Product Company
Our client owners could dig in for the long haul…However, this would take five years or more. Owners simply lacked the horsepower to do it.
Water Purification Company and Young Buyers
Owners decided they wanted to retire. They also wanted to be fair to the staff who had been loyal to them. Could the company be sold, the staff retained and the facility remain in use?
Magnetics Company with High Profile Customers
(T)he manufacturer would need to focus on growing EBITDA to capture interest from major strategic buyers and achieve a higher multiple of earnings.