Article Summary: It's a Sellers' Market for Private Companies | Divestopedia

By Robert Napoli, July 5, 2017

I have thrifted this article down to it's key points to read the entire article, click on the link at the bottom of the summary. Eric Gall

Takeaway: There are many buyers in the market for your company. Sellers should consider all of them before signing a letter of intent.

Brent Cunningham, Sequoia Business Brokers, "there are four to five qualified buyers for every one private company we sell."  

Buyers typically fall into three categories:

• Strategic buyers - consolidating competition or adding product lines. Tend to pay higher multiples due to synergies from merging operations.
• Private equity funds - over $425 billion was raised in North America in 2012 alone and needs to be deployed. Private equity firms are looking strictly for returns.
• Individual investors - High net worth serial entrepreneurs or former executives.  They expect 25%-plus rates of return on their investment.

More than half are going to strategic buyers and a third are going to private equity funds.

Advice from Successful Buyers

• Surround yourself with reputable advisors.  A buyers’ credibility increases if they’re prepared and have a solid team of professionals supporting them, including a lawyer, accountant, broker and banker.
• Paul Hill, CEO for Advantec fund recently bought four companies.  Hill said both sides need good brokers for project management to ensure good communication to prevent deal-breakers.
• Stewardship in addition to price can be a concern for business owners. First West Capital funded seven deals recently including family/management buyouts or deals between familiar companies. Unadvertised deals maintain seller's confidentiality, safeguard employees and ensure their legacy.
• Having a management team in place understanding how to run the business adds significant value.

Conclusion

It takes a lot of time to plan, execute and transition a business.  It can take several years to complete.  It’s a seller’s market for private company transactions.  Start succession planning now because the baby boomer retirement wave may swing the market the other way the next 10 years. 

Full Article LINK

For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall, CBI, CM&AP at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com. To search for Florida Businesses for Sale: CLICK HERE