Call

(949) 629-2520

CEO Advisor® Newsletter
November 2019
Top 10 Reasons Why Not to Sell Your Own Company
It can be very appealing for a CEO or business owner to sell their business on their own to a strategic buyer, especially when the CEO has been approached by the strategic buyer. There are other options to selling your business such as selling to a Private Equity firm, but we are going to focus on strategic buyers only in this article.  
When a buyer approaches a company directly, the business owner may feel they can avoid some of the work and time involved in preparing to put the business on the market. The CEO may be able to maintain the confidentiality of the sale by dealing with only one buyer. The business owner may also feel he/she can save on the fee to an M&A advisor or intermediary. 
 
As with most major issues such as selling a business, there is a real price that a CEO or business owner pays when going down this path solo, including having no competitive bidders resulting in disadvantageous terms that can be extremely costly.  Your business may be your most valuable asset and is a very dynamic, complex thing to sell requiring a lot of knowledge, preparation and experience. If you would not sell your own home, you certainly do not want to go into a 6 to 9 month process to prepare, market and sell your own business.
Here are some critical issues to remember when dealing with a strategic buyer: 
It takes time to sell a business and it takes even more time to deal with multiple buyers. The original Information Request from the strategic buyer coupled with a Letter of Intent may seem manageable by some CEOs, but the subsequent Due Diligence process will be extremely time consuming and taxing at a time when you need to stay focused on your business and continue to drive sales.
Even the prep work of supplying the initial set of information to the prospective buyer and negotiating the Letter of Intent can be overwhelming to a first or second time seller. Hire a professional to sell your business. Don't risk taking time away from it to "do it yourself" and have the sales and profits of your business falter as a result, which could jeopardize the price or completing the sale altogether.
Don't get lured into discussions and believe the strategic buyer. More importantly, don't get your advice from the buyer. The buyer is not looking out for your best interests and there are many issues and questions you want to avoid that will tip your hand on price and terms that you don't want to divulge. Remember that they are pros at buying companies and you will be at a distinct disadvantage if this is your first time experiencing this movie play out.
Check the buyer's credit and get a confidentiality agreement signed before you deal with strategic buyers. Don't give them any information about your business beyond your marketing materials or other publicly available information until an NDA is signed.
Get a team of strong advisors looking out for your interests - an M&A advisor like CEO Advisor, Inc., a seasoned corporate/transaction attorney, and a CPA/tax advisor that regularly handles mergers and acquisitions transactions. This is money well spent and may be one of the best investments you will make.
Have your M&A advisor provide comparable sales information in order to be knowledgeable about your approximate business valuation. A strategic buyer that has bought a number of businesses in your industry in the past doesn't mean that they are paying good prices for them or know the full value of your business. You need a professional opinion of what your business should sell for and professionally prepared information about your business to optimize the value and to increase the probability of an attractive offer.
A purchase price based solely on an Earn Out is not a standard way to sell a business. An Earn Out is where the price is based on how the business performs after the purchase based on how well the seller runs the business. Any aspect of the sale price that includes an Earn Out should be well defined and a specific way to track and get paid on the Earn Out portion of the sale, if any, from a financially strong buyer. Cash is king and you want a substantial amount of your purchase price in cash.
Don't deal with only one buyer. In this situation, the buyer tends to hold the upper hand, particularly after an offer to buy the business is accepted. If an M&A advisor is handling the sale, buyers understand that there are most likely other buyers that will buy the business if they make unreasonable demands.
One of the benefits of selling to a strategic buyer is that the buyer may be willing to pay more for the business than a financial buyer such as a Private Equity firm, because doing so will increase their sales or profits by more than the two businesses do separately. Using an M&A process to sell the business with professionally prepared information in a Data Room and multiple interested buyers from a large list of targeted buyers is the best method to obtain the highest price and get a transaction completed.  
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
It can be very appealing for a CEO or business owner to sell their business on their own to a strategic buyer, especially when the CEO has been approached by the strategic buyer. There are other options to selling your business such as selling to a Private Equity firm, but we are going to focus on strategic buyers only in this article.  
When a buyer approaches a company directly, the business owner may feel they can avoid some of the work and time involved in preparing to put the business on the market. The CEO may be able to maintain the confidentiality of the sale by dealing with only one buyer. The business owner may also feel he/she can save on the fee to an M&A advisor or intermediary. 
 
As with most major issues such as selling a business, there is a real price that a CEO or business owner pays when going down this path solo, including having no competitive bidders resulting in disadvantageous terms that can be extremely costly.  Your business may be your most valuable asset and is a very dynamic, complex thing to sell requiring a lot of knowledge, preparation and experience. If you would not sell your own home, you certainly do not want to go into a 6 to 9 month process to prepare, market and sell your own business.
Here are some critical issues to remember when dealing with a strategic buyer: 
It takes time to sell a business and it takes even more time to deal with multiple buyers. The original Information Request from the strategic buyer coupled with a Letter of Intent may seem manageable by some CEOs, but the subsequent Due Diligence process will be extremely time consuming and taxing at a time when you need to stay focused on your business and continue to drive sales.
Even the prep work of supplying the initial set of information to the prospective buyer and negotiating the Letter of Intent can be overwhelming to a first or second time seller. Hire a professional to sell your business. Don't risk taking time away from it to "do it yourself" and have the sales and profits of your business falter as a result, which could jeopardize the price or completing the sale altogether.
Don't get lured into discussions and believe the strategic buyer. More importantly, don't get your advice from the buyer. The buyer is not looking out for your best interests and there are many issues and questions you want to avoid that will tip your hand on price and terms that you don't want to divulge. Remember that they are pros at buying companies and you will be at a distinct disadvantage if this is your first time experiencing this movie play out.
Check the buyer's credit and get a confidentiality agreement signed before you deal with strategic buyers. Don't give them any information about your business beyond your marketing materials or other publicly available information until an NDA is signed.
Get a team of strong advisors looking out for your interests - an M&A advisor like CEO Advisor, Inc., a seasoned corporate/transaction attorney, and a CPA/tax advisor that regularly handles mergers and acquisitions transactions. This is money well spent and may be one of the best investments you will make.
Have your M&A advisor provide comparable sales information in order to be knowledgeable about your approximate business valuation. A strategic buyer that has bought a number of businesses in your industry in the past doesn't mean that they are paying good prices for them or know the full value of your business. You need a professional opinion of what your business should sell for and professionally prepared information about your business to optimize the value and to increase the probability of an attractive offer.
A purchase price based solely on an Earn Out is not a standard way to sell a business. An Earn Out is where the price is based on how the business performs after the purchase based on how well the seller runs the business. Any aspect of the sale price that includes an Earn Out should be well defined and a specific way to track and get paid on the Earn Out portion of the sale, if any, from a financially strong buyer. Cash is king and you want a substantial amount of your purchase price in cash.
Don't deal with only one buyer. In this situation, the buyer tends to hold the upper hand, particularly after an offer to buy the business is accepted. If an M&A advisor is handling the sale, buyers understand that there are most likely other buyers that will buy the business if they make unreasonable demands.
One of the benefits of selling to a strategic buyer is that the buyer may be willing to pay more for the business than a financial buyer such as a Private Equity firm, because doing so will increase their sales or profits by more than the two businesses do separately. Using an M&A process to sell the business with professionally prepared information in a Data Room and multiple interested buyers from a large list of targeted buyers is the best method to obtain the highest price and get a transaction completed.  
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more informationContact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
It can be very appealing for a CEO or business owner to sell their business on their own to a strategic buyer, especially when the CEO has been approached by the strategic buyer. There are other options to selling your business such as selling to a Private Equity firm, but we are going to focus on strategic buyers only in this article.  
When a buyer approaches a company directly, the business owner may feel they can avoid some of the work and time involved in preparing to put the business on the market. The CEO may be able to maintain the confidentiality of the sale by dealing with only one buyer. The business owner may also feel he/she can save on the fee to an M&A advisor or intermediary. 
 
As with most major issues such as selling a business, there is a real price that a CEO or business owner pays when going down this path solo, including having no competitive bidders resulting in disadvantageous terms that can be extremely costly.  Your business may be your most valuable asset and is a very dynamic, complex thing to sell requiring a lot of knowledge, preparation and experience. If you would not sell your own home, you certainly do not want to go into a 6 to 9 month process to prepare, market and sell your own business.
Here are some critical issues to remember when dealing with a strategic buyer: 
It takes time to sell a business and it takes even more time to deal with multiple buyers. The original Information Request from the strategic buyer coupled with a Letter of Intent may seem manageable by some CEOs, but the subsequent Due Diligence process will be extremely time consuming and taxing at a time when you need to stay focused on your business and continue to drive sales.
Even the prep work of supplying the initial set of information to the prospective buyer and negotiating the Letter of Intent can be overwhelming to a first or second time seller. Hire a professional to sell your business. Don't risk taking time away from it to "do it yourself" and have the sales and profits of your business falter as a result, which could jeopardize the price or completing the sale altogether.
Don't get lured into discussions and believe the strategic buyer. More importantly, don't get your advice from the buyer. The buyer is not looking out for your best interests and there are many issues and questions you want to avoid that will tip your hand on price and terms that you don't want to divulge. Remember that they are pros at buying companies and you will be at a distinct disadvantage if this is your first time experiencing this movie play out.
Check the buyer's credit and get a confidentiality agreement signed before you deal with strategic buyers. Don't give them any information about your business beyond your marketing materials or other publicly available information until an NDA is signed.
Get a team of strong advisors looking out for your interests - an M&A advisor like CEO Advisor, Inc., a seasoned corporate/transaction attorney, and a CPA/tax advisor that regularly handles mergers and acquisitions transactions. This is money well spent and may be one of the best investments you will make.
Have your M&A advisor provide comparable sales information in order to be knowledgeable about your approximate business valuation. A strategic buyer that has bought a number of businesses in your industry in the past doesn't mean that they are paying good prices for them or know the full value of your business. You need a professional opinion of what your business should sell for and professionally prepared information about your business to optimize the value and to increase the probability of an attractive offer.
A purchase price based solely on an Earn Out is not a standard way to sell a business. An Earn Out is where the price is based on how the business performs after the purchase based on how well the seller runs the business. Any aspect of the sale price that includes an Earn Out should be well defined and a specific way to track and get paid on the Earn Out portion of the sale, if any, from a financially strong buyer. Cash is king and you want a substantial amount of your purchase price in cash.
Don't deal with only one buyer. In this situation, the buyer tends to hold the upper hand, particularly after an offer to buy the business is accepted. If an M&A advisor is handling the sale, buyers understand that there are most likely other buyers that will buy the business if they make unreasonable demands.
One of the benefits of selling to a strategic buyer is that the buyer may be willing to pay more for the business than a financial buyer such as a Private Equity firm, because doing so will increase their sales or profits by more than the two businesses do separately. Using an M&A process to sell the business with professionally prepared information in a Data Room and multiple interested buyers from a large list of targeted buyers is the best method to obtain the highest price and get a transaction completed.  
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
CEOs and business owners are a motivated, driven, self-sufficient group. You have built your business by doing things your way and learning how to save money along the way. You've also developed a lot of self-confidence and feel that you can do almost anything.
But when it comes to selling a business that you've worked so long and hard to build, it's not only prudent, but very cost-effective to hire a professional mergers and acquisitions (M&A) advisor.  Invest in a professional who has the expertise and experience to get the sale done and get it done at the optimal price and terms. There is too much at stake to risk making it a sale by owner project. 
Selling your business is extremely complex, requires a tremendous amount of time, preparation and follow through, organization and skill, and is one of those things that requires the experience of a business, finance, and M&A professional all in one.
Here are 10 reasons why you shouldn't attempt to do it yourself:
10. Maintaining Confidentiality. 
Maintaining a certain level of confidentiality across 75 to 100 targeted buyers is essential when selling your business. How do you maintain confidentiality while marketing to your potential buyers? You can't. You need an intermediary between you and the buyer. An M&A professional who is not involved with the business, contacts your targeted buyers, qualifies buyers, provides select amount of information and puts you in a strong, competitive position to sell.
9. You May Not be Dealing with the Optimal Buyers. 
Because of the large task of selling your company, many business owners selling their own business are dealing with buyers who happen to approach them. In many cases, these buyers are savvy business owners, in the same industry, looking to buy a business on the cheap or are very experienced at buying businesses. These types of buyers typically do not make the best offer nor are they financially qualified to buy the business.
8. It Involves an Extensive Amount of Time Better Spent Running Your Business. 
Selling a business takes a tremendous amount of time, organization, and a sale process that generates results. The  preparation alone to launch the process and generate multiple offers takes a lot of time (and expertise). Dealing with multiple potential buyers takes time. Meanwhile, you're trying to run the business and live your life. Do you really have the extra time to spend your precious hours selling your business when an expert should do it for you?
7. You Lack the Expertise and Experience in Selling a Business.  
Selling your business is not as simple as selling a property, and a business requires several types of expertise. You need to prepare information and reporting, and be very knowledgeable about financial statements and how businesses are valued. You need to know how to conduct the Due Diligence process and assist in the many business and tax issues that arise in the legal process when selling a business. You need to know what you can do, what your M&A advisor should do, what your tax advisor should do and what your corporate/transaction attorney should do to keep the buyer engaged and on track to get the deal completed.
You may have a very good attorney and accountant, but they do not have the same expertise as an M&A advisor to prepare the needed information to initiate the sale process, solicit offers from a pool of many selected potential buyers, secure offers from these buyers and conduct the Due Diligence process when it comes to selling a business.
6. Representing and Selling Yourself Typically Backfires. 
If you don't have the time, expertise, experience, great organization and sales skills, you definitely should not be selling your own business. But, even if you are a good salesperson, there is another good reason not to sell your own business. The more you pursue a buyer, the more you are sending a message that you are anxious or desperate to sell, which will tend to make the buyer think that they can pay less for the business. Since it is an M&A advisor's job to pursue buyers, doing so doesn't send the same message.
5. Your Sale Process and Marketing Doesn't Stack Up to an M&A Advisor. 
Sure, you can entertain a single offer from a company that contacts you but they will know that they are the only interested party, which puts you in a very disadvantageous negotiating position. You can also advertise on a few of the Internet business-for-sale websites, but a strong, experienced M&A advisor has a very disciplined, targeted approach with many pre-existing contacts and a staff to research and pinpoint all of the top potential buyers of your business. The result is that an M&A advisor will reach far more buyers resulting in a much higher probability of a completed sale, a faster sale and at a higher price with better terms.
4. An M&A Advisor Acts as a Buffer. 
Buying or selling a business is very stressful, takes hundreds of steps and may be the most valuable asset that you own. During the sale process, the buyer and seller are likely to get upset with each other and things may be said that would kill the deal if they were said directly to the other party. The M&A advisor is a buffer between the parties that prevents these deal-killers by implementing an element of Good Cop (you) and Bad Cop (M&A advisor) to perform the tougher negotiations and keep you in a strong standing with the buyer and your future boss.
3. The Sale Process is Much More Than a Couple of Meetings and Accepting an Offer. 
Accepting an offer to sell your business is only one aspect of the sale process and closing the sale. The sale process includes a plan, researching and documenting the potential buyers, creating and housing all of the preparation materials that will attract and secure a strong offer, negotiating and finalizing the offer, a complete Due Diligence process, overcoming any tax issues, typically negotiating a lease with the landlord, and working through all of the purchase agreement and employment agreement issues.
2. You Need a Trusted Advisor. 
Your attorney and accountant may be very skilled and knowledgeable, but most don't commit the needed time, don't focus on a goal of securing multiple offers, and don't have the knowledge about the marketplace and selling businesses that is needed to be successful.  
Attorneys and accountants react to an offer that is secured. A hands-on M&A advisor will advise you throughout the process and help you avoid making a major mistake that will cost you a ton of money or that will jeopardize the sale altogether. Also, a buyer is more willing to accept what an M&A advisor recommends since the prospective buyer will have developed a relationship with the M&A advisor from the first phone call initiated to the buyer, rather than what your attorney or accountant desire, who are typically pressing on a legal or tax issue.
1. Selling Your Business Faster For the Best Price. 
This reason alone should be enough to move any seller to using an M&A advisor. Selling a business is both tedious and stressful, and the only reason to undertake such an endeavor on your own would be to save money. But when it comes to selling a business, do-it-yourselfers typically get a lower price for their business and most don't get a transaction done at all. Why is that? An M&A advisor will reach a greater number of prospective buyers who know they must compete on price. Because they widen the field, an M&A advisor more than makes up for their fees with a proven sale process, higher sales price and better terms, providing the seller with a higher take-home figure.
Some sellers attempt to sell their own business, only to find the sale process is much more complicated and time consuming than they anticipated. Business deals are complex transactions that require expertise well beyond what the typical CEO or business owner has.
An M&A advisor is an expert and your trusted business advisor, your marketing team, and your expert negotiator all wrapped up in one.
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
CEOs and business owners are a motivated, driven, self-sufficient group. You have built your business by doing things your way and learning how to save money along the way. You've also developed a lot of self-confidence and feel that you can do almost anything.

But when it comes to selling a business that you've worked so long and hard to build, it's not only prudent, but very cost-effective to hire a professional mergers and acquisitions (M&A) advisor.  Invest in a professional who has the expertise and experience to get the sale done and get it done at the optimal price and terms. There is too much at stake to risk making it a sale by owner project. 

Selling your business is extremely complex, requires a tremendous amount of time, preparation and follow through, organization and skill, and is one of those things that requires the experience of a business, finance, and M&A professional all in one.

Here are 10 reasons why you shouldn't attempt to do it yourself:

10. Maintaining Confidentiality. 
Maintaining a certain level of confidentiality across 75 to 100 targeted buyers is essential when selling your business. How do you maintain confidentiality while marketing to your potential buyers? You can't. You need an intermediary between you and the buyer. An M&A professional who is not involved with the business, contacts your targeted buyers, qualifies buyers, provides select amount of information and puts you in a strong, competitive position to sell.

9. You May Not be Dealing with the Optimal Buyers. 
Because of the large task of selling your company, many business owners selling their own business are dealing with buyers who happen to approach them. In many cases, these buyers are savvy business owners, in the same industry, looking to buy a business on the cheap or are very experienced at buying businesses. These types of buyers typically do not make the best offer nor are they financially qualified to buy the business.

8. It Involves an Extensive Amount of Time Better Spent Running Your Business. 
Selling a business takes a tremendous amount of time, organization, and a sale process that generates results. The  preparation alone to launch the process and generate multiple offers takes a lot of time (and expertise). Dealing with multiple potential buyers takes time. Meanwhile, you're trying to run the business and live your life. Do you really have the extra time to spend your precious hours selling your business when an expert should do it for you?

7. You Lack the Expertise and Experience in Selling a Business.  
Selling your business is not as simple as selling a property, and a business requires several types of expertise. You need to prepare information and reporting, and be very knowledgeable about financial statements and how businesses are valued. You need to know how to conduct the Due Diligence process and assist in the many business and tax issues that arise in the legal process when selling a business. You need to know what you can do, what your M&A advisor should do, what your tax advisor should do and what your corporate/transaction attorney should do to keep the buyer engaged and on track to get the deal completed.

You may have a very good attorney and accountant, but they do not have the same expertise as an M&A advisor to prepare the needed information to initiate the sale process, solicit offers from a pool of many selected potential buyers, secure offers from these buyers and conduct the Due Diligence process when it comes to selling a business.

6. Representing and Selling Yourself Typically Backfires. 
If you don't have the time, expertise, experience, great organization and sales skills, you definitely should not be selling your own business. But, even if you are a good salesperson, there is another good reason not to sell your own business. The more you pursue a buyer, the more you are sending a message that you are anxious or desperate to sell, which will tend to make the buyer think that they can pay less for the business. Since it is an M&A advisor's job to pursue buyers, doing so doesn't send the same message.

5. Your Sale Process and Marketing Doesn't Stack Up to an M&A Advisor. 
Sure, you can entertain a single offer from a company that contacts you but they will know that they are the only interested party, which puts you in a very disadvantageous negotiating position. You can also advertise on a few of the Internet business-for-sale websites, but a strong, experienced M&A advisor has a very disciplined, targeted approach with many pre-existing contacts and a staff to research and pinpoint all of the top potential buyers of your business. The result is that an M&A advisor will reach far more buyers resulting in a much higher probability of a completed sale, a faster sale and at a higher price with better terms.

4. An M&A Advisor Acts as a Buffer. 
Buying or selling a business is very stressful, takes hundreds of steps and may be the most valuable asset that you own. During the sale process, the buyer and seller are likely to get upset with each other and things may be said that would kill the deal if they were said directly to the other party. The M&A advisor is a buffer between the parties that prevents these deal-killers by implementing an element of Good Cop (you) and Bad Cop (M&A advisor) to perform the tougher negotiations and keep you in a strong standing with the buyer and your future boss.

3. The Sale Process is Much More Than a Couple of Meetings and Accepting an Offer. 
Accepting an offer to sell your business is only one aspect of the sale process and closing the sale. The sale process includes a plan, researching and documenting the potential buyers, creating and housing all of the preparation materials that will attract and secure a strong offer, negotiating and finalizing the offer, a complete Due Diligence process, overcoming any tax issues, typically negotiating a lease with the landlord, and working through all of the purchase agreement and employment agreement issues.

2. You Need a Trusted Advisor. 
Your attorney and accountant may be very skilled and knowledgeable, but most don't commit the needed time, don't focus on a goal of securing multiple offers, and don't have the knowledge about the marketplace and selling businesses that is needed to be successful.  

Attorneys and accountants react to an offer that is secured. A hands-on M&A advisor will advise you throughout the process and help you avoid making a major mistake that will cost you a ton of money or that will jeopardize the sale altogether. Also, a buyer is more willing to accept what an M&A advisor recommends since the prospective buyer will have developed a relationship with the M&A advisor from the first phone call initiated to the buyer, rather than what your attorney or accountant desire, who are typically pressing on a legal or tax issue.

1. Selling Your Business Faster For the Best Price. 
This reason alone should be enough to move any seller to using an M&A advisor. Selling a business is both tedious and stressful, and the only reason to undertake such an endeavor on your own would be to save money. But when it comes to selling a business, do-it-yourselfers typically get a lower price for their business and most don't get a transaction done at all. Why is that? An M&A advisor will reach a greater number of prospective buyers who know they must compete on price. Because they widen the field, an M&A advisor more than makes up for their fees with a proven sale process, higher sales price and better terms, providing the seller with a higher take-home figure.

Some sellers attempt to sell their own business, only to find the sale process is much more complicated and time consuming than they anticipated. Business deals are complex transactions that require expertise well beyond what the typical CEO or business owner has.

An M&A advisor is an expert and your trusted business advisor, your marketing team, and your expert negotiator all wrapped up in one.

Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
CEOs and business owners are a motivated, driven, self-sufficient group. You have built your business by doing things your way and learning how to save money along the way. You've also developed a lot of self-confidence and feel that you can do almost anything.

But when it comes to selling a business that you've worked so long and hard to build, it's not only prudent, but very cost-effective to hire a professional mergers and acquisitions (M&A) advisor.  Invest in a professional who has the expertise and experience to get the sale done and get it done at the optimal price and terms. There is too much at stake to risk making it a sale by owner project. 

Selling your business is extremely complex, requires a tremendous amount of time, preparation and follow through, organization and skill, and is one of those things that requires the experience of a business, finance, and M&A professional all in one.
Here are 10 reasons why you shouldn't attempt to do it yourself:

10. Maintaining Confidentiality.
Maintaining a certain level of confidentiality across 75 to 100 targeted buyers is essential when selling your business. How do you maintain confidentiality while marketing to your potential buyers? You can't. You need an intermediary between you and the buyer. An M&A professional who is not involved with the business, contacts your targeted buyers, qualifies buyers, provides select amount of information and puts you in a strong, competitive position to sell.

9. You May Not be Dealing with the Optimal Buyers.
Because of the large task of selling your company, many business owners selling their own business are dealing with buyers who happen to approach them. In many cases, these buyers are savvy business owners, in the same industry, looking to buy a business on the cheap or are very experienced at buying businesses. These types of buyers typically do not make the best offer nor are they financially qualified to buy the business.

8. It Involves an Extensive Amount of Time Better Spent Running Your Business.
Selling a business takes a tremendous amount of time, organization, and a sale process that generates results. The  preparation alone to launch the process and generate multiple offers takes a lot of time (and expertise). Dealing with multiple potential buyers takes time. Meanwhile, you're trying to run the business and live your life. Do you really have the extra time to spend your precious hours selling your business when an expert should do it for you?

7. You Lack the Expertise and Experience in Selling a Business. 
Selling your business is not as simple as selling a property, and a business requires several types of expertise. You need to prepare information and reporting, and be very knowledgeable about financial statements and how businesses are valued. You need to know how to conduct the Due Diligence process and assist in the many business and tax issues that arise in the legal process when selling a business. You need to know what you can do, what your M&A advisor should do, what your tax advisor should do and what your corporate/transaction attorney should do to keep the buyer engaged and on track to get the deal completed.

You may have a very good attorney and accountant, but they do not have the same expertise as an M&A advisor to prepare the needed information to initiate the sale process, solicit offers from a pool of many selected potential buyers, secure offers from these buyers and conduct the Due Diligence process when it comes to selling a business.

6. Representing and Selling Yourself Typically Backfires.
If you don't have the time, expertise, experience, great organization and sales skills, you definitely should not be selling your own business. But, even if you are a good salesperson, there is another good reason not to sell your own business. The more you pursue a buyer, the more you are sending a message that you are anxious or desperate to sell, which will tend to make the buyer think that they can pay less for the business. Since it is an M&A advisor's job to pursue buyers, doing so doesn't send the same message.

5. Your Sale Process and Marketing Doesn't Stack Up to an M&A Advisor.
Sure, you can entertain a single offer from a company that contacts you but they will know that they are the only interested party, which puts you in a very disadvantageous negotiating position. You can also advertise on a few of the Internet business-for-sale websites, but a strong, experienced M&A advisor has a very disciplined, targeted approach with many pre-existing contacts and a staff to research and pinpoint all of the top potential buyers of your business. The result is that an M&A advisor will reach far more buyers resulting in a much higher probability of a completed sale, a faster sale and at a higher price with better terms.

4. An M&A Advisor Acts as a Buffer.
Buying or selling a business is very stressful, takes hundreds of steps and may be the most valuable asset that you own. During the sale process, the buyer and seller are likely to get upset with each other and things may be said that would kill the deal if they were said directly to the other party. The M&A advisor is a buffer between the parties that prevents these deal-killers by implementing an element of Good Cop (you) and Bad Cop (M&A advisor) to perform the tougher negotiations and keep you in a strong standing with the buyer and your future boss.

3. The Sale Process is Much More Than a Couple of Meetings and Accepting an Offer.
Accepting an offer to sell your business is only one aspect of the sale process and closing the sale. The sale process includes a plan, researching and documenting the potential buyers, creating and housing all of the preparation materials that will attract and secure a strong offer, negotiating and finalizing the offer, a complete Due Diligence process, overcoming any tax issues, typically negotiating a lease with the landlord, and working through all of the purchase agreement and employment agreement issues.

2. You Need a Trusted Advisor.
Your attorney and accountant may be very skilled and knowledgeable, but most don't commit the needed time, don't focus on a goal of securing multiple offers, and don't have the knowledge about the marketplace and selling businesses that is needed to be successful. 

Attorneys and accountants react to an offer that is secured. A hands-on M&A advisor will advise you throughout the process and help you avoid making a major mistake that will cost you a ton of money or that will jeopardize the sale altogether. Also, a buyer is more willing to accept what an M&A advisor recommends since the prospective buyer will have developed a relationship with the M&A advisor from the first phone call initiated to the buyer, rather than what your attorney or accountant desire, who are typically pressing on a legal or tax issue.

1. Selling Your Business Faster For the Best Price.
This reason alone should be enough to move any seller to using an M&A advisor. Selling a business is both tedious and stressful, and the only reason to undertake such an endeavor on your own would be to save money. But when it comes to selling a business, do-it-yourselfers typically get a lower price for their business and most don't get a transaction done at all. Why is that? An M&A advisor will reach a greater number of prospective buyers who know they must compete on price. Because they widen the field, an M&A advisor more than makes up for their fees with a proven sale process, higher sales price and better terms, providing the seller with a higher take-home figure.

Some sellers attempt to sell their own business, only to find the sale process is much more complicated and time consuming than they anticipated. Business deals are complex transactions that require expertise well beyond what the typical CEO or business owner has.

An M&A advisor is an expert and your trusted business advisor, your marketing team, and your expert negotiator all wrapped up in one.

Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Here are 10 reasons why you shouldn't attempt to do it yourself:
10. Maintaining Confidentiality. 
Maintaining a certain level of confidentiality across 75 to 100 targeted buyers is essential when selling your business. How do you maintain confidentiality while marketing to your potential buyers? You can't. You need an intermediary between you and the buyer. An M&A professional who is not involved with the business, contacts your targeted buyers, qualifies buyers, provides select amount of information and puts you in a strong, competitive position to sell.
Here are 10 reasons why you shouldn't attempt to do it yourself:
Here are 10 reasons why you shouldn't attempt to do it yourself:
10. Maintaining Confidentiality. 
Maintaining a certain level of confidentiality across 75 to 100 targeted buyers is essential when selling your business. How do you maintain confidentiality while marketing to your potential buyers? You can't. You need an intermediary between you and the buyer. An M&A professional who is not involved with the business, contacts your targeted buyers, qualifies buyers, provides select amount of information and puts you in a strong, competitive position to sell.
Selling your business is extremely complex, requires a tremendous amount of time, preparation and follow through, organization and skill, and is one of those things that requires the experience of a business, finance, and M&A professional all in one.
Here are 10 reasons why you shouldn't attempt to do it yourself:
10. Maintaining Confidentiality. 
Maintaining a certain level of confidentiality across 75 to 100 targeted buyers is essential when selling your business. How do you maintain confidentiality while marketing to your potential buyers? You can't. You need an intermediary between you and the buyer. An M&A professional who is not involved with the business, contacts your targeted buyers, qualifies buyers, provides select amount of information and puts you in a strong, competitive position to sell.
9. You May Not be Dealing with the Optimal Buyers. 
Because of the large task of selling your company, many business owners selling their own business are dealing with buyers who happen to approach them. In many cases, these buyers are savvy business owners, in the same industry, looking to buy a business on the cheap or are very experienced at buying businesses. These types of buyers typically do not make the best offer nor are they financially qualified to buy the business.
8. It Involves an Extensive Amount of Time Better Spent Running Your Business. 
Selling a business takes a tremendous amount of time, organization, and a sale process that generates results. The  preparation alone to launch the process and generate multiple offers takes a lot of time (and expertise). Dealing with multiple potential buyers takes time. Meanwhile, you're trying to run the business and live your life. Do you really have the extra time to spend your precious hours selling your business when an expert should do it for you?
7. You Lack the Expertise and Experience in Selling a Business.  
Selling your business is not as simple as selling a property, and a business requires several types of expertise. You need to prepare information and reporting, and be very knowledgeable about financial statements and how businesses are valued. You need to know how to conduct the Due Diligence process and assist in the many business and tax issues that arise in the legal process when selling a business. You need to know what you can do, what your M&A advisor should do, what your tax advisor should do and what your corporate/transaction attorney should do to keep the buyer engaged and on track to get the deal completed.
You may have a very good attorney and accountant, but they do not have the same expertise as an M&A advisor to prepare the needed information to initiate the sale process, solicit offers from a pool of many selected potential buyers, secure offers from these buyers and conduct the Due Diligence process when it comes to selling a business.
6. Representing and Selling Yourself Typically Backfires. 
If you don't have the time, expertise, experience, great organization and sales skills, you definitely should not be selling your own business. But, even if you are a good salesperson, there is another good reason not to sell your own business. The more you pursue a buyer, the more you are sending a message that you are anxious or desperate to sell, which will tend to make the buyer think that they can pay less for the business. Since it is an M&A advisor's job to pursue buyers, doing so doesn't send the same message.
5. Your Sale Process and Marketing Doesn't Stack Up to an M&A Advisor. 
Sure, you can entertain a single offer from a company that contacts you but they will know that they are the only interested party, which puts you in a very disadvantageous negotiating position. You can also advertise on a few of the Internet business-for-sale websites, but a strong, experienced M&A advisor has a very disciplined, targeted approach with many pre-existing contacts and a staff to research and pinpoint all of the top potential buyers of your business. The result is that an M&A advisor will reach far more buyers resulting in a much higher probability of a completed sale, a faster sale and at a higher price with better terms.
4. An M&A Advisor Acts as a Buffer. 
Buying or selling a business is very stressful, takes hundreds of steps and may be the most valuable asset that you own. During the sale process, the buyer and seller are likely to get upset with each other and things may be said that would kill the deal if they were said directly to the other party. The M&A advisor is a buffer between the parties that prevents these deal-killers by implementing an element of Good Cop (you) and Bad Cop (M&A advisor) to perform the tougher negotiations and keep you in a strong standing with the buyer and your future boss.
3. The Sale Process is Much More Than a Couple of Meetings and Accepting an Offer. 
Accepting an offer to sell your business is only one aspect of the sale process and closing the sale. The sale process includes a plan, researching and documenting the potential buyers, creating and housing all of the preparation materials that will attract and secure a strong offer, negotiating and finalizing the offer, a complete Due Diligence process, overcoming any tax issues, typically negotiating a lease with the landlord, and working through all of the purchase agreement and employment agreement issues.
2. You Need a Trusted Advisor. 
Your attorney and accountant may be very skilled and knowledgeable, but most don't commit the needed time, don't focus on a goal of securing multiple offers, and don't have the knowledge about the marketplace and selling businesses that is needed to be successful.  
Attorneys and accountants react to an offer that is secured. A hands-on M&A advisor will advise you throughout the process and help you avoid making a major mistake that will cost you a ton of money or that will jeopardize the sale altogether. Also, a buyer is more willing to accept what an M&A advisor recommends since the prospective buyer will have developed a relationship with the M&A advisor from the first phone call initiated to the buyer, rather than what your attorney or accountant desire, who are typically pressing on a legal or tax issue.
1. Selling Your Business Faster For the Best Price. 
This reason alone should be enough to move any seller to using an M&A advisor. Selling a business is both tedious and stressful, and the only reason to undertake such an endeavor on your own would be to save money. But when it comes to selling a business, do-it-yourselfers typically get a lower price for their business and most don't get a transaction done at all. Why is that? An M&A advisor will reach a greater number of prospective buyers who know they must compete on price. Because they widen the field, an M&A advisor more than makes up for their fees with a proven sale process, higher sales price and better terms, providing the seller with a higher take-home figure.
Some sellers attempt to sell their own business, only to find the sale process is much more complicated and time consuming than they anticipated. Business deals are complex transactions that require expertise well beyond what the typical CEO or business owner has.
An M&A advisor is an expert and your trusted business advisor, your marketing team, and your expert negotiator all wrapped up in one.
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Selling your business is extremely complex, requires a tremendous amount of time, preparation and follow through, organization and skill, and is one of those things that requires the experience of a business, finance, and M&A professional all in one.
Here are 10 reasons why you shouldn't attempt to do it yourself:
10. Maintaining Confidentiality. 
Maintaining a certain level of confidentiality across 75 to 100 targeted buyers is essential when selling your business. How do you maintain confidentiality while marketing to your potential buyers? You can't. You need an intermediary between you and the buyer. An M&A professional who is not involved with the business, contacts your targeted buyers, qualifies buyers, provides select amount of information and puts you in a strong, competitive position to sell.
9. You May Not be Dealing with the Optimal Buyers. 
Because of the large task of selling your company, many business owners selling their own business are dealing with buyers who happen to approach them. In many cases, these buyers are savvy business owners, in the same industry, looking to buy a business on the cheap or are very experienced at buying businesses. These types of buyers typically do not make the best offer nor are they financially qualified to buy the business.
8. It Involves an Extensive Amount of Time Better Spent Running Your Business. 
Selling a business takes a tremendous amount of time, organization, and a sale process that generates results. The  preparation alone to launch the process and generate multiple offers takes a lot of time (and expertise). Dealing with multiple potential buyers takes time. Meanwhile, you're trying to run the business and live your life. Do you really have the extra time to spend your precious hours selling your business when an expert should do it for you?
7. You Lack the Expertise and Experience in Selling a Business.  
Selling your business is not as simple as selling a property, and a business requires several types of expertise. You need to prepare information and reporting, and be very knowledgeable about financial statements and how businesses are valued. You need to know how to conduct the Due Diligence process and assist in the many business and tax issues that arise in the legal process when selling a business. You need to know what you can do, what your M&A advisor should do, what your tax advisor should do and what your corporate/transaction attorney should do to keep the buyer engaged and on track to get the deal completed.
You may have a very good attorney and accountant, but they do not have the same expertise as an M&A advisor to prepare the needed information to initiate the sale process, solicit offers from a pool of many selected potential buyers, secure offers from these buyers and conduct the Due Diligence process when it comes to selling a business.
6. Representing and Selling Yourself Typically Backfires. 
If you don't have the time, expertise, experience, great organization and sales skills, you definitely should not be selling your own business. But, even if you are a good salesperson, there is another good reason not to sell your own business. The more you pursue a buyer, the more you are sending a message that you are anxious or desperate to sell, which will tend to make the buyer think that they can pay less for the business. Since it is an M&A advisor's job to pursue buyers, doing so doesn't send the same message.
5. Your Sale Process and Marketing Doesn't Stack Up to an M&A Advisor. 
Sure, you can entertain a single offer from a company that contacts you but they will know that they are the only interested party, which puts you in a very disadvantageous negotiating position. You can also advertise on a few of the Internet business-for-sale websites, but a strong, experienced M&A advisor has a very disciplined, targeted approach with many pre-existing contacts and a staff to research and pinpoint all of the top potential buyers of your business. The result is that an M&A advisor will reach far more buyers resulting in a much higher probability of a completed sale, a faster sale and at a higher price with better terms.
4. An M&A Advisor Acts as a Buffer. 
Buying or selling a business is very stressful, takes hundreds of steps and may be the most valuable asset that you own. During the sale process, the buyer and seller are likely to get upset with each other and things may be said that would kill the deal if they were said directly to the other party. The M&A advisor is a buffer between the parties that prevents these deal-killers by implementing an element of Good Cop (you) and Bad Cop (M&A advisor) to perform the tougher negotiations and keep you in a strong standing with the buyer and your future boss.
3. The Sale Process is Much More Than a Couple of Meetings and Accepting an Offer. 
Accepting an offer to sell your business is only one aspect of the sale process and closing the sale. The sale process includes a plan, researching and documenting the potential buyers, creating and housing all of the preparation materials that will attract and secure a strong offer, negotiating and finalizing the offer, a complete Due Diligence process, overcoming any tax issues, typically negotiating a lease with the landlord, and working through all of the purchase agreement and employment agreement issues.
2. You Need a Trusted Advisor. 
Your attorney and accountant may be very skilled and knowledgeable, but most don't commit the needed time, don't focus on a goal of securing multiple offers, and don't have the knowledge about the marketplace and selling businesses that is needed to be successful.  
Attorneys and accountants react to an offer that is secured. A hands-on M&A advisor will advise you throughout the process and help you avoid making a major mistake that will cost you a ton of money or that will jeopardize the sale altogether. Also, a buyer is more willing to accept what an M&A advisor recommends since the prospective buyer will have developed a relationship with the M&A advisor from the first phone call initiated to the buyer, rather than what your attorney or accountant desire, who are typically pressing on a legal or tax issue.
1. Selling Your Business Faster For the Best Price. 
This reason alone should be enough to move any seller to using an M&A advisor. Selling a business is both tedious and stressful, and the only reason to undertake such an endeavor on your own would be to save money. But when it comes to selling a business, do-it-yourselfers typically get a lower price for their business and most don't get a transaction done at all. Why is that? An M&A advisor will reach a greater number of prospective buyers who know they must compete on price. Because they widen the field, an M&A advisor more than makes up for their fees with a proven sale process, higher sales price and better terms, providing the seller with a higher take-home figure.
Some sellers attempt to sell their own business, only to find the sale process is much more complicated and time consuming than they anticipated. Business deals are complex transactions that require expertise well beyond what the typical CEO or business owner has.
An M&A advisor is an expert and your trusted business advisor, your marketing team, and your expert negotiator all wrapped up in one.
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
What Every CEO Needs to Know about Mergers & Acquisitions
When you evaluate the management practices of hundreds of technology companies, here are the primary reasons they fail. 
Evaluate your own management decisions and practices and seek help from a business consultant or business advisor to address your
specific needs.
1. Lack of Market Focus
Emerging technology companies often do anything possible to generate revenue and in the process try to be all things to all people. Worried about losing business they avoid segmenting the market and refuse to focus on one to three key vertical markets. As a result, the company is unable to effectively serve any market segments effectively and management is suddenly swamped with support problems and competitors.
2. Undifferentiated Products
Most technology products and services that fail do so because of a lack of differentiation. Successful companies differentiate their product from all other products on the market. Differentiation is possible on the bases of five fundamental factors: function, time utility, problem solved, price and positioning. These five elements are critical to uniquely positioning your products and services to achieve success and profits.
3. Poor Market Research
Many companies routinely perform the wrong type of market research. Statistical surveys of customers alone do not provide the qualitative information that is needed. Because your target audience often relies as much on perceptions as on facts, qualitative research intended to identify existing needs has equal or greater value in assessing, planning and executing a company's marketing strategy.
4. Excessive Product Improvement
Technology products and services are generally used over an extended period of time, are integrated with complementary products and impose learning costs on customers. Customers require time to implement and recover their investment in high-tech products. The rapid introduction of new and improved versions can make a customer regret a previous purchase, delay all new purchases, and agonize over similar purchases in the future. Additionally, the time and costs related to excessive product development can delay product launches and delay sales opportunities and revenues.
5. Incomplete Products
Customers view products very differently than the technology companies that create or supply them. Technology companies tend to try to sell products on the basis of price, special features and technical specifications. These technical factors are often favored by the engineers who typically run technology companies. The problem is that most customers consider factors such as product support and company reputation to be more important. 
6. Failure to Establish the Right Competitive Barriers
Traditional barriers to competition are of little value in the technology industry. Patents can be effective but are very expensive, divulge trade secrets and take years to come to fruition. Conventional techniques are mostly designed to prevent market entry and tend not to work in technology-based businesses. The most effective competitive barriers in high-tech are the perceptions held by customers and prospects of product differentiation and first to market with a specialization in a market segment.
7. Using Price Alone to Drive Market Transformation
It is easy to misinterpret the role price plays in the market. And it is a mistake to believe that a technology product or service would be widely used and purchased if its cost was low enough. Price is a function of value and utility, and products and services should be positioned and marketed accordingly.
8. Improper Marketing
Marketing is both an art and a science. Positioning, pricing, sales strategy, target vertical markets and other factors contribute to the success or failure of your products and services and the corresponding sales. A well-crafted marketing plan is critical to success. Improper marketing or lack of marketing can be a product killer or cripple your company as a whole.
9. Sales Mismanagement
There's more to sales management than most companies realize. Specific skills are required to effectively manage each type of sales channel and those skills must be developed internally starting with an effective direct sales force. Unique management challenges exist for each primary type of sales channel: direct selling, online sales, dealers, OEMs, alliance partners and value-added resellers (VARs). Seek a business consultant or business advisor to assist you in optimizing your sales strategy as a critical factor in your success.
10. Misinterpretation of the Technology Adoption Lifecycle Model
The primary technology adoption lifecycle model describes the market acceptance of new products in terms of Innovators, Early Adopters, Early Majority, Late Majority, and Laggards. The process of adoption over time is illustrated as a classic normal distribution or "bell curve".
Because the technology adoption model is expressed in terms of a standard bell curve, it means statistically, a random sample of any given market or population must contain: 2.5% Innovators, 13.5% Early Adopters, 34% Early Majority, 34% Late Majority, and 16.0% Laggards. So no matter what industry you tend to be in, there will always be a sequence of adoption by different types of buyers.
When you evaluate the management practices of hundreds of technology companies, here are the primary reasons they fail. 
Evaluate your own management decisions and practices and seek help from a business consultant or business advisor to address your
specific needs.
1. Lack of Market Focus
Emerging technology companies often do anything possible to generate revenue and in the process try to be all things to all people. Worried about losing business they avoid segmenting the market and refuse to focus on one to three key vertical markets. As a result, the company is unable to effectively serve any market segments effectively and management is suddenly swamped with support problems and competitors.
2. Undifferentiated Products
Most technology products and services that fail do so because of a lack of differentiation. Successful companies differentiate their product from all other products on the market. Differentiation is possible on the bases of five fundamental factors: function, time utility, problem solved, price and positioning. These five elements are critical to uniquely positioning your products and services to achieve success and profits.
3. Poor Market Research
Many companies routinely perform the wrong type of market research. Statistical surveys of customers alone do not provide the qualitative information that is needed. Because your target audience often relies as much on perceptions as on facts, qualitative research intended to identify existing needs has equal or greater value in assessing, planning and executing a company's marketing strategy.
4. Excessive Product Improvement
Technology products and services are generally used over an extended period of time, are integrated with complementary products and impose learning costs on customers. Customers require time to implement and recover their investment in high-tech products. The rapid introduction of new and improved versions can make a customer regret a previous purchase, delay all new purchases, and agonize over similar purchases in the future. Additionally, the time and costs related to excessive product development can delay product launches and delay sales opportunities and revenues.
5. Incomplete Products
Customers view products very differently than the technology companies that create or supply them. Technology companies tend to try to sell products on the basis of price, special features and technical specifications. These technical factors are often favored by the engineers who typically run technology companies. The problem is that most customers consider factors such as product support and company reputation to be more important. 
6. Failure to Establish the Right Competitive Barriers
Traditional barriers to competition are of little value in the technology industry. Patents can be effective but are very expensive, divulge trade secrets and take years to come to fruition. Conventional techniques are mostly designed to prevent market entry and tend not to work in technology-based businesses. The most effective competitive barriers in high-tech are the perceptions held by customers and prospects of product differentiation and first to market with a specialization in a market segment.
7. Using Price Alone to Drive Market Transformation
It is easy to misinterpret the role price plays in the market. And it is a mistake to believe that a technology product or service would be widely used and purchased if its cost was low enough. Price is a function of value and utility, and products and services should be positioned and marketed accordingly.
8. Improper Marketing
Marketing is both an art and a science. Positioning, pricing, sales strategy, target vertical markets and other factors contribute to the success or failure of your products and services and the corresponding sales. A well-crafted marketing plan is critical to success. Improper marketing or lack of marketing can be a product killer or cripple your company as a whole.
9. Sales Mismanagement
There's more to sales management than most companies realize. Specific skills are required to effectively manage each type of sales channel and those skills must be developed internally starting with an effective direct sales force. Unique management challenges exist for each primary type of sales channel: direct selling, online sales, dealers, OEMs, alliance partners and value-added resellers (VARs). Seek a business consultant or business advisor to assist you in optimizing your sales strategy as a critical factor in your success.
10. Misinterpretation of the Technology Adoption Lifecycle Model
The primary technology adoption lifecycle model describes the market acceptance of new products in terms of Innovators, Early Adopters, Early Majority, Late Majority, and Laggards. The process of adoption over time is illustrated as a classic normal distribution or "bell curve".
Because the technology adoption model is expressed in terms of a standard bell curve, it means statistically, a random sample of any given market or population must contain: 2.5% Innovators, 13.5% Early Adopters, 34% Early Majority, 34% Late Majority, and 16.0% Laggards. So no matter what industry you tend to be in, there will always be a sequence of adoption by different types of buyers.
CEO Advisor, Inc. has decades of experience in mergers and acquisitions (M&A). The following are some need to know factors about valuation and M&A.

EBITDA Multiples Drive Acquisition Deal Prices
Most acquisition deals are valued off of financial metrics and completed deal comparables. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, is the key metric for applying a multiple to derive the value of a company. Corporate mergers and acquisitions (M&A) departments (strategic buyers) and Private Equity firms (financial buyers) value deals based on EBITDA multiples. The EBITDA multiple is affected by the company's industry, size of the market, revenue growth rate, recurring revenue, gross profit margin, management team, intellectual property, EBITDA, EBITDA growth rate and other factors.

You Have to Stay On
M&A isn't a one-time cash-out, at least not anymore. Most acquisition deals have a 2-3 year retention of the owner(s) or CEO, seller notes and potentially a 2-3 year earn-out. Assume if you get acquired, you're committing to a minimum of 24 months with the acquiring company in a specific role. This is critical to getting a transaction done, and you should show a world of enthusiasm to help the buyer grow the combined business after closing the deal.

Acquiring Companies Don't Buy Low or No-Growth Companies
A ten year old company that is growing 10% per year is of little or no interest to strategic buyers. A financial buyer, such as a Private Equity firm, may be interested if a strong fit, but at a depressed valuation. It is critical to fix your deficiencies and excel in all aspects of your business to optimize your value and attract buyers. CEO Advisor, Inc. works with CEOs to accelerate growth, as well as, create an exit strategy and provide M&A advisory services to facilitate the entire sale process.

Companies Don't Buy Startups or Small Companies
There are 1,000 companies that Apple, General Electric, Microsoft, Google, Salesforce or Facebook could buy and all could make strategic sense. But that's not how M&A deals happen. It's when a CEO sees a strategic gap, or a SVP sees a gap in what he/she can get done in the next 12-18 months - and fills that gap with an acquisition, right or wrong. In the end, corporate M&A departments have limited time and a very specific M&A strategy.

Smaller companies clearly enter the radar screens when they approach $10 million in sales. Your goal is to reach $10 million in sales in a profitable manner as soon as possible through organic growth or by acquiring a company. The great majority of the time M&A deals actually happen when a CEO, president or business owner has an experienced team of advisors (M&A advisor like CEO Advisor, Inc., corporate/transaction attorney and tax advisor) behind him/her working extremely hard for 6+ months to seek out a buyer and get a transaction to closing.

Knowing the "Value Drivers" is Critical
Once a Letter of Intent (LOI) is signed, the acquirer will spend a substantial amount of Due Diligence effort to identify the sources of value (Revenues, Gross Profit, Gross Profit Margin, Quality Customers on Contracts, Recurring Revenue, Technology and other Intellectual Property, Management and Personnel, Brand, EBITDA, EBITDA Growth) from the deal. It is essential for you to maximize these value drivers and present them to potential acquirers clearly and distinctly.

CEO Advisor, Inc. provides mergers and acquisitions advisory services to CEOs, presidents and business owners of small and mid-size companies. Call Mark Hartsell, MBA, President of CEO Advisor, Inc. today at (949) 629-2520, text Mark at (714) 697-3370 or email MHartsell@CEOAdvisor.com to schedule a free initial consultation.
 

Testimonial  


"Mark Hartsell and CEO Advisor provided amazing hands-on guidance from the start of the sale process through to the closing. Not having sold a company before I was not aware of the complexity, and tremendous amount of time and expertise required by someone like Mark to prepare for the sale, locate a qualified buyer, negotiate a strong offer, perform the extensive due diligence process, and drive the process through to legal contracts and closing. CEO Advisor, Inc. was the catalyst in achieving a highly successful sale."

CEO
Professional Services Company (After Their Successful Sale)

CEO/President, Engineering Services/Manufacturing Company


Whether it is growing a business to the next level, turning a distressed company around or preparing a company for an exit, Mark's firm, CEO Advisor, Inc, provides a broad range of services and Mark is there for the CEO every step of the way."

 


Partner

Haynes & Boone, LLP

Words of Wisdom


"Yesterday does not equal tomorrow. Forget the past and move towards your goals."

Tony Robbines
Motivational Speaker