Understanding Financial Metrics

Financial Metrics, George & Company, Worcester, MAA company’s job is to provide a service in exchange for money. This income of money into a business—is its cash flow—is the lynchpin on which a company turns. The amount of money that flows into and out of your business not only allows it to grow but to provide a gateway to more funding by showing the profitability of your business to investors. And if you want to sell your business (or buy someone else’s), having this data is vital to making the sale. [Read more…]

Price Dictates Terms and Terms Dictate Price

Business Valuation, George & Company, Worcester, MAWhile business valuation has its roots in complicated appraisal metrics, the real world of business valuation has roots in practicality. Imagine that you were recently laid off by downsizing corporate America. You have 2 kids in college and a significant mortgage on your home. You were earning $150,000 plus bonus per year but after severance that income stream is going away. Your executive talents are great but the work place does not have a job for you at your salary expectations/needs. Enter the real world of buying a business. The goal is to find a company that suits your vocational talents, is within a suitable geography and will be something you would be proud to own. [Read more…]

How to Value a Company: Part 2

How to Value a Company, George & Company, Worcester, MAWelcome back to our study of the different kinds of valuations for a company. Last time we talked about Asset Valuation, Capitalization of Income Valuation, and the Market Approach Valuation. You can read Part 1 of How to Value a Company here. This time we’ll be talking about an additional four types of valuation. [Read more…]

How to Value a Company: Part 1

How to Value a Company, George & Company, Worcester, MAWhat is it worth? Whether you’re buying or selling, this is the million dollar question—as well as the sticking point for many in an M&A negotiation. Many times the seller won’t provide a starting price, which means it’s up to you to figure out the initial offering. As a seller, without a clear idea of how much your company is worth you can encounter two problems: under-estimating your company’s value, which throws away your hard work and leaves cash on the table or overestimating the value of your business, which can lead to no buyers and maybe, no sale. This is why companies undergo professional valuations. [Read more…]

What is Middle Market Business?

Are small businesses really the engine of the economy? Are gigantic corporations the movers and the shakers? Politicians, economic professors, and media personalities will debate these questions for endless hours. In order to understand the different perspectives, it’s important to know what types of businesses there are. Businesses can be classified in a multitude of ways. However, there are three basic categories of businesses as it pertains to size: small, middle, and large market. Placing a company into one of these categories is usually determined by revenue, selling price, or number of employees. If someone uses the term middle market, it is important to distinguish exactly what metrics they are using. [Read more…]

Nip & Tuck: Bolt-On Acquisitions

Evolve or die. It’s a statement you’ve heard multiple times in your life and applied to various fields. The world loves innovators, and it’s this progress that turns the wheels of the world. In the business community, companies are continuous growing: and one of the major ways is through mergers and acquisitions. It’s a surge of new revenue, personnel, and experience, but also something even more important: change. One of the largest players in this field are the acquirers of niche companies in a process known as bolt-on acquisitions. [Read more…]

What is Amortization? You’re Probably Already Using It

All things end: some for the better, some for the worse. Planning and tracking that decay in accounting is known as Amortization: the decreasing of an amount over a length of time. The amount that is decreasing could be owned money–such as in the form of debt–or the deprecation of an asset of a company without a fixed price–an intangible asset. There are examples of amortization in the buyouts of companies for many times their worth, to your very own personal debts. [Read more…]

Understanding the M&A Engagement Letter

The M&A process requires the creation of a number of important documents, including the Letter of Intent, purchase agreement, and non-disclosure agreement. However, the primary agreement document is the engagement letter, which is an agreement between the M&A intermediary and their client (most often the seller.) This document determines the fee structure for the advisor as well as their duties to their client. It is a superb opportunity for the intermediary and the seller to discuss objectives for selling the business and lay the groundwork for the process. [Read more…]

Why Your Competitor Might Make the Best Business Buyer

When considering the sale of one’s business, choosing a competitor as the buyer may be the last option to come to one’s mind. It might feel like selling out. Or perhaps it may be unclear what a competitor would have to gain from buying a similar business. However, sometimes one’s competitor is actually the best person to buy the business. [Read more…]

Running the Business During the Due Diligence Process

An M&A deal can be a lengthy ordeal, especially the due diligence portion of the process. During due diligence, the buyer examines all of the business’s financial documents in order to ensure that everything is as previously represented. Due diligence assists the buyer in determining whether or not the target is in fact one that they truly want to buy. [Read more…]