Business Transactions Articles of Interest

The following are recommended articles that we have published in recent newsletters. Each discusses important issues in valuation.

Startups: A value conundrum - Startups are unlike other businesses. They have limited operating histories but promise investors enormous growth. Most have never turned a profit. In fact, some early-stage startups are based solely on an undeveloped concept or idea.

M&A risks - A valuator can help evaluate whether a deal makes sense - Mergers and acquisitions often make sense on paper. Purchasing a competitor may provide the buyer with an inorganic way to expand into new geographic markets or offer a broader product mix. Beyond increasing market share, the buyer may pursue a transaction to supplant operational weaknesses or to acquire talented workers in a scarce labor market.

The future is now - Many business owners inadequately address succession planning - For business owners everywhere, and particularly baby boomers approaching retirement, succession planning is an important issue. A formal plan is critical to ensuring that ownership of the company passes smoothly when the owner leaves and, ultimately, to preserving the stability of the business.

Preparing a business for sale - Homebuyers pay a premium for modern upgrades and move-in condition. Similarly, businesses that operate at optimal performance are more likely to sell at top value. Is your business move-in ready? Or does it require repair and capital reinvestment? Here’s how proactive owners plan to maximize their financial gains.

Is the price right? - Cover all the bases with a fairness opinion - When a company is about to embark on a major transaction — such as a merger or acquisition — having an objective outsider review the numbers to ensure management has covered all of the bases is key. Fairness opinions do exactly that. They state whether the price offered in a transaction falls within a range of fairness — from a financial point of view.