April 2024 Newsletter
The ROI and Benefits of an M&A Advisor
- Let’s delve into the Return on Investment (ROI) by the CEO or business owner of a small to mid-size business from contracting with a Mergers and Acquisitions (M&A) Advisor. CEO Advisor, Inc. has decades of mergers and acquisitions experience and our expertise is the catalyst to realizing your goals through a successful sale of your company. We are also experts in all aspects of preparing your business for an optimal sale.
- Once you decide to sell your company, the goal should be to:
- A) Optimize your price and terms
- B) Get a transaction done.
- You could sell the company yourself especially when you figure in the fee for hiring an investment banker or M&A Advisor and the success fee upon a completed transaction. The urge to do it yourself is a strong one, but the truth is that hiring the right M&A Advisor yields a high financial payoff. Truthfully, if you wouldn't sell your own home (a very straight forward transaction consisting of a one day inspection, standard real estate contract and closing), why would you try to locate a buyer(s) and then face up against a seasoned, professional buyer in a very complex transaction of a fluid business, complicated Letter of Intent (LOI), month long Due Diligence process and buyer-provided lengthy, custom legal contracts requiring both business and legal negotiations?
- A study involving thousands of transactions over a 20-year period estimated that sellers who hired an M&A Advisor received valuation premiums of approximately 25 percent. This study also found that nearly 99 percent of the business sales by sophisticated sellers involved an M&A Advisor.
- Another study by the Northern Trust Business Advisory Services analyzed over 4,000 transactions and found that sellers represented by an M&A Advisor secured an average EBITDA multiple 1.5x higher than without an M&A Advisor.
- Expertise = Value
- M&A Advisors are experts in the process of selling businesses. Most business owners have never sold a business before so why tackle a complex, time-consuming sale of your company when you have little or no experience in selling a business.
- Seasoned experts with a wealth of expertise in managing the entire sale process will help in getting a transaction completed successfully for the largest financial transaction of your life. CEO Advisor, Inc. can be your seasoned, trusted M&A Advisor through the entire sale process with hands-on work and total transparency with the expertise you need.
- Aside from the total purchase price, here are the key benefits that CEO and business owners can gain by engaging with an M&A Advisor:
- Higher Purchase Price
- Far Greater Terms of the Sale (just as important as the purchase price)
- Greater Amount of Cash Paid Upfront at Closing
- Increased Probability of Completing a Successful Transaction
- Seasoned M&A Advisor by Your Side Every Step of the Way
- You Can Stay Focused on Running Your Business
- Buyers Know that you have Knowledgeable, Credible Representation and Will Treat You More Fairly (not try to low-ball you on price and will understand that you are running a competitive sale process.)
- Eliminate the Trial & Error, Stress, Wasted Time and Lost Opportunities to get a Transaction Done Timely and Efficiently
- Expert Negotiations Tied to an Extremely Complex Sale Process
- Managing the Sales Process From Start to Finish
Bottom Line: Don’t Go It Alone and Get the M&A Advisor and Expertise You Need
There are a thousand variables with respect to selling your company - from preparation, to target buyer list creation, to outreach to buyers. to negotiating the offer, to the due diligence process, to legal and business contract negotiations, to closing. One misstep can cost you millions or tens of millions of dollars.
For all your questions and mergers and acquisitions needs, contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370 by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
There are a thousand variables with respect to selling your company - from preparation, to target buyer list creation, to outreach to buyers. to negotiating the offer, to the due diligence process, to legal and business contract negotiations, to closing. One misstep can cost you millions or tens of millions of dollars.
For all your questions and mergers and acquisitions needs, contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370 by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Maximize Growth and Profits in 2024
- Most CEOs perform annual planning to grow their business and increase sales and profits, as well as, the increase the value of their business. However, there are certain methods companies must use for implementing a growth strategy. As growth and M&A Advisors to CEOs and business owners of small and mid-size businesses, CEO Advisor, Inc. focuses on optimizing the growth and value of a business long before an owner decides to sell.
- A growth strategy to expand your business is critical to accelerating its growth and should be a primary focus of the CEO and management team. Common growth strategies include, 1) Market Penetration, 2) Market Expansion, 3) Product Expansion, 4) Diversification and 5) Acquisition.
- Market Penetration. One growth strategy in business is Market Penetration. A small to mid-size business uses a Market Penetration strategy when it decides to scale its existing products and services within the same market. The only way to grow using existing products and markets is to increase market share. Market share is the percent of unit and dollar sales a company holds within a certain market vs. all other competitors. This requires a strong sales strategy, can include hiring a larger sales team, implementing a reseller channel, and effective marketing.
- Market Expansion. A Market Expansion growth strategy involves selling current products and services in new markets either in new industries or new geographic markets or both. There are several reasons why companies consider a Market Expansion strategy. First, the competition may be such that there is little room for growth within the current market. If a business does not find new markets for its products, it cannot grow or increase sales and profits - in fact, profits will decline over time. A business may also use a Market Expansion strategy if it finds new uses for its product and services and sometimes this can occur at higher margins based on a higher utility of the products/services.
- Product Expansion. A business may also expand its product line or add new features to increase its sales and profits. When companies employ a Product Expansion growth strategy they continue selling within the existing market. A Product Expansion growth strategy often works well when technology starts to change and greater demand for its products and services materializes in a more mature market. A business may also be forced to add new products as older ones become obsolete.
- Diversification or New Products to New Markets. Growth strategies in business also include Diversification where a company will sell new products to new markets. This type of strategy can be risky and companies will need to plan carefully when using a Diversification growth strategy. Market research is essential because a company will need to determine if customers in the new market will potentially like, need and purchase the new products or services.
- Acquisition. The above growth strategies focus on organic growth, and most CEOs and business owners focus solely on this strategy. Growth strategies in business can also include inorganic growth through Acquisitions. With Acquisitions, a company purchases the stock of another company, or purchases the assets of a company without taking on the liabilities to expand and grow. A business may also use this type of strategy to expand its product line or technology products, enter new markets, gain a valuable sales team or an established reseller channel, as well as, acquire needed talent and deeper management team.
- An Acquisition growth strategy can be risky, but not as risky as a Diversification strategy. One reason is that the products and market are already established and you are acquiring contracted customers and Revenue. A company must know exactly what it wants to achieve when using an Acquisition strategy, mainly because of the investment required to implement it.
- CEO Advisor, Inc. specializes in advising and implementing growth strategies to grow small and mid-size businesses to the next level. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
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