Around the Web: A Week in Summary
A recent article from Smart Business Network entitled “There’s a lot of value in using professional expertise to sell your business” explains the benefits of hiring an expert to assist in the sale of a company.
Once an ideal buyer has been identified, or an offer has been made, it can be tempting for business owners to jump into a deal hastily. Even if the proposed purchase price seems appealing, this could be a mistake. A business transaction professional is equipped with the tools and experience to negotiate and inspect the details of a business transaction in order to generate the best outcome for the owner. Failing to hire a professional to consult you in the process could result in leaving large amounts of money on the table.
A recent article from Axial entitled “8 Expert Tips for New Strategic Buyers” explains 8 different ways in which buyers can improve their chances of success after an acquisition.
Statistics show that a large number of M&A deals either never go through or end up destroying shareholder value after the sale. As a new strategic acquirer, these outcomes are obviously less than desirable. Follow these expert tips to beat the odds:
- Hire a buy-side advisor – experience and expertise go a long way.
- Articulate your strategy – be clear on your reason for acquisition and groom your company for the merge.
- Educate yourself on the basics – coming to the plate prepared makes a world of difference in the smoothness and success of a deal.
- If it’s not a clear yes, it’s a no.
- Think about integration early – and start building relationships during the due diligence process.
- People are paramount – don’t underestimate the value of people.
- Trust your instincts – don’t overlook red flags.
- Understand that merging is different from running.
A recent article from Business Sale Report entitled “What financing options do I have to support my next acquisition?” breaks down the different options available to buyers for funding the purchase of a business.
With an abundance of funding options available today, it’s important to understand the ins and outs of each type so that you can choose the best option for you. Some of the most popular options are:
- Loans – There are two options here: secured and unsecured. An unsecured loan means a higher interest rate since the lender, usually a private investor or a bank, has nothing to guarantee payment should you default on the loan. A secured loan requires some kind of collateral and usually has lower interest rates.
- Asset-based loans – Similar to a secured loan, this style of lending requires you to place an asset or a group of assets against your loan. In the event that you default, the assets will be seized by your lender. Some lenders will allow you to use the assets of the business you are buying to secure the loan.
- Peer-to-peer – With peer-to-peer lending, there are a number of investors involved in producing the funds necessary to make a purchase. Typically this is carried out by requesting a specific amount of money which you agree to pay back over a specified period at a set interest rate. In some cases, like crowdfunding, the investors will receive benefits regarding the company for contributing.
- Equity funding – This requires you to approach investors directly and pitch a proposal that explains why you’ll succeed running the business. Often these investors expect a large return on their investment.
- Your own money – This is the easiest and least expensive way to fund an acquisition. It can be carried out through the use of savings, pension, property equity, etc. The more of your business you can fund with your own money, the less interest you will be paying, but the higher the risk of capital loss as well.