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When a buyer buys your business, they need enough gas in the tank to run it on Day 1. This “gas” is Net Working Capital (Inventory + Accounts Receivable – Accounts Payable). The “Peg” (The Target) We calculate the average…
When a buyer looks at your P&L, they aren’t just looking at how much money you make. They are looking at your revenue and how you make it. The quality, source, and predictability of those revenue streams are what truly…
In M&A, we have a saying: “The Riches are in the Niches.” Buyers love businesses that dominate a small, defensible market. Why Niches command higher multiples: Repeatable Process: If you only serve one type of client, your operations are streamlined.…
In psychology, there is a concept called the “Broken Windows Theory.” It states that visible signs of disorder (like a broken window) encourage further disorder and crime. In Mergers & Acquisitions, visible signs of disorder encourage low-ball offers. When a…
In most states, checking if a business is legal is easy. In Texas, it involves a specific dance with the Comptroller’s office regarding Successor Liability. The Myth of the Asset Sale Most people think: “I’m selling my equipment and inventory,…
In business, we love big clients, we love whale. In M&A, we fear them. To understand why, compare two hypothetical companies that both generate $5 Million in Revenue: Company A has 100 customers, each paying $50,000. Company B has 2…
Selling Your Business? Avoid the “Proprietary Deal Flow” Trap When you start the process of selling your business to professional buyers (like Private Equity groups and Search Funds), the holy grail for them is something called “Proprietary Deal Flow.” This…
Small Business Administration (SBA) loans are a popular financing option for entrepreneurs who want to buy a business. These loans are guaranteed by the SBA and offer 100% financing, which reduces the risk for lenders and makes it easier for…
There still aren’t too many ways to finance the purchase of a business. Here are the primary methods: Buyer Financing Some buyers may have the cash available to purchase the business. Some may elect to use the equity in their…