Many of small business owners get emails that start something like this: “Have you thought about selling your company? I have a client who is interested in buying your company at a strategic value…” Your first thought maybe to start to dream alittle; is now the time to sell my company for that big payday…
Unfortunately, not every Letter of Intent (LOI) that my clients sign results in the sale of their company. In my experience, 25% of deals fall through based on their original terms. That means either that get “retraded” down to a lower price or the deal falls through. Here are common things that happen: Financial Statements…
The Dealmaker conferences bring together various players in the mergers and acquisition business. In the sessions I attended, here are the top things I heard:
This past year was a more difficult environment to sell your small business with valuations on public companies down with the fall of the stock market. For 2022, valuations were especially down in technology based small businesses from 2 to 5 times sales. This is very different than 2021 where I saw companies in the…
What a difference a year makes in valuations of small businesses. I came across some interesting data from Cooley on pre-money valuations of private companies between Q4 2021 and Q4 2022. These are pre-money valuations between the two years: Series D and later $1.3 billion vs. $290 million (-78%) Series C $331 million vs. $228…
As a merger and acquisition advisor, I attended ASU+GSV this year- the annual EdTech conference in San Diego with 7,000 other people. Here is what I heard: Investment over the last few years in EdTech was unprecedented because of funding by the government as a result of the COVID pandemic. Revenue and valuations for most…
Many times, when I sell a company, we get multiple offers at a variety of prices. It is easy to choose if there is a large difference in what is being offered. But what if the offers are similar? Who do you choose? It is important that you choose carefully because if it does not…
A lot of companies that have been around for 5 years and perhaps have $1 to $5M in sales can’t raise additional equity. Perhaps their sales or profit results have not been stellar, or the market is bad for raising money. Many founders then decide to use venture debt as a solution to their working…
The market for selling or investing in your small business has changed since April 2022 when the public bull stock market collapsed. For the companies that I sell, values have gone from 7- 17 times sales to 3-7 times sales. Now these buyers and investors are no longer valuing just growth at any cost. Here…
Sellers hate earnouts. They hate them because they do not get their money upfront and they must hit performance or retention goals to get that earnout. Sellers always feel that after the transaction, the buyers will figure out a way to make sure they don’t get the earnout or trim some of their return. The…
