Term of the Day

Exit Channels

Exit channels refer to the various methods available to an entrepreneur who is seeking to monetize his/her investment in the company. Not all exit channels available may make sense. Some may require that... (Read on)

Past Terms: Sell SideCatalystIndicative Offer

How Selling to Private Equity Worked for Me

In this Q&A, we learn from an entrepreneur who built his business from scratch, grew it the old fashioned way by taking care of his customers and employees, and finally partnered with the right private equity-backed platform company.
What Would You Like Your Business Value to Be?

There are a number of different applicable valuation concepts depending on the specific situation. Learn which concept is most appropriate when.
The #1 Reason Business Sellers Leave Chips on the Table

We asked seasoned exit planning professionals how to avoid leaving wealth behind when selling a company. Their answers educated and inspired us.
Acquisition Synergies (An Automotive Aftermarket Case Study)

Consolidation in the entire automotive aftermarket industry will likely continue due to both financial and strategic components. Here's how identifying synergies plays a part in the consideration of such acquisitions.
How Does Working Capital Impact the Value of Your Business?

Working capital is a contentious issue over the course of a transaction as the buyer and seller will often have divergent views. If it's not positioned properly, a business owner may sell at a discount, not even realizing money left on the table.
Kids Taking Over the Business? 8 Things to Consider

Transferring ownership of a business is difficult. Transferring it to a family member makes it even more complicated. Here are eight things to know about transferring your business to your kids.
Like Rodney Dangerfield, Earnouts Just Don't Get Any Respect

No one seems to like earnouts. Why? Are they evil traps invented by buyers ... or are they just misunderstood? Let's take a look behind the bad rap.
Mid-Market Report: M&A Outlook for North America in 2016

What should we expect for the North American M&A mid-market in 2016? Firmex and Mergermarket polled experts in their latest report and we've summarized it for you here.
What is an Acceptable Range of Deferred Payment in a Business Sale?

Rarely is a mid-market business sold entirely for cash proceeds. The purchase price is usually comprised of cash and some sort of deferred payment such as a seller's note or earnout.
Questions and Answers with John K. Paglia, Ph.D. - A Divestopedia Exclusive

In this article, we have a candid Q&A with John K. Paglia Ph.D. John gives us his thoughts on topics ranging from emotional preparation to the availability of private capital in the market.
When is the Best Time to Sell My Business?

If you are selling your business, there is always a right time and a wrong time. This article tells you why waiting until the right time make sense and what to do while you wait.
Is Your Management Team the Right Exit Channel for You?

A management buy-out or buy-in can be an excellent alternative to selling your company. Here are three steps to help you evaluate if selling to your management team is right for you.
Find a Family Successor for Your Business

A traditional estate or succession plan for a family or closely held business should encompass and be part of the estate plan, the financial plan and the strategic plan. Every closely held and family business company should have an exit strategy.
An Estate Freeze Is Only the Tip of the Iceberg in Succession Planning

An estate freeze is just the tip of the iceberg in family business succession planning. Follow these best practices to prevent family members from being left out in the cold.
The ABC's of Earnouts

Learn about the advantages and disadvantages of this structuring tool used primarily to bridge a valuation gap.
I've Helped Sell Over 100 Businesses; Here's My Advice

The sale process is the moment of truth when you convert all of your hard work into cold hard cash. Most entrepreneurs only get the chance to do it once. Here is an opportunity to learn from a professional who has been through the process over 100 times.
Activities That Create the Highest Business Value

Business owners should be spending time on activities that can add the greatest value to their businesses. Rob Slee, renown value creation expert, breaks down key areas to focus on.
Avoiding the Exclusive Negotiations Trap

Competitive tension is essential to exert control over the sale process and present an enforceable timeline to bidders.
A Guide to Building Family Legacy and Wealth

Many middle market entrepreneurs work hard every day to build up their business value. This podcast takes a different spin and educates business owners on family wealth building, preservation and transfers between generations.
Private Capital Markets 101

Rules followed by the Public Capital Markets do not necessarily apply to the Private Capital Markets. Here is a summary of what you need to know about how they are different.
The First Question in Exit Planning: Who is Going to Own Your Company?

The most important question that business owners need to answer is who is going to own their business in a few years. Based on their answer, certain planning steps should be engaged.
Six Critical KPIs That Drive Business Value in the Automotive Aftermarket Industry

Drilling down to the nuts and bolts of financial management analysis offers significant insight on driving business value.
Tying the Knot: Getting to 'I Do' with the Right Private Equity Partner

Partnering with a private equity firm is a bit like getting married. Here is some advice on how to choose "the one."
How to Perform a Successful Competitor Analysis (and Use it to Your Advantage) to Maximize Value

The results of a competitor analysis can ultimately help your business to maximize its value through the eyes of a potential acquirer. Here's how to perform one.
28 Skeletons You Must Air Out to Avoid Problems Selling Your Business

Companies are better off understanding their financial skeletons and airing them out, rather than sweeping them under the carpet. Here are 28 skeletons you should definitely air out.
How to Increase the Probability of a Successful Exit

Have you defined what a "successful" exit actually looks like? Do you have a realistic goal for when you want to sell the company and how much you want to sell it for?
Work Smarter Not Harder at Creating Business Value

Excerpts from the book Time Really Is Money: How To Work For $5,000 Per Hour, Burn the Boats Press.
How Industry Consolidation Can Impact a Business Exit

Have you considered the stage of consolidation in your industry and how that might impact your plans for an exit?
A Closer Look at What Drives and Influences Business Valuations

Business valuations are extremely complex and time-consuming, with many possible outcomes. See how your company stacks up against these drivers of valuation that are most important to buyers.
The Exclusive Negotiations Fallacy

It is a common fallacy that an exclusively negotiated deal is faster, easier and quieter than a structured process. In reality, the acquirer with exclusivity rarely moves with urgency.
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The private equity secondary market is where previously issued equity from a firm is bought or sold and new investor commitments are made.Private equity investments... Read more

Return on assets (ROA), also referred to as return on total assets or return on investment (ROI), is a ratio that measures how a company increases net profit by... Read more

A transformational deal is a deal that changes the very nature and operations of a company. Some examples include acquisition of new markets, channels or products;... Read more

Interest coverage ratio (ICR) is ratio of a companies total interest expense to its earning before interest and taxes (EBIT).The formula for calculating interest... Read more

Capitalization factor is the multiple or divisor that is used to convert the income expected from an investment into a value metric. This factor is mostly used to... Read more
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