Making the deal

New market realities have changed what buyers, sellers and investors think is most important in making deals, including valuations, risk, planning adjustments and managing transaction expectations

Yet, the fundamentals of getting transactions done – buying, selling or raising capital – are largely consistent.

A business owner in selling mode is looking for a fair price and an exit strategy. A buyer is looking for a company that adds value – to an existing company or a portfolio – where the risks are accounted for and priced into the deal. There must be a partnership between capital sources and the business.

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What you need to know about making the deal

What affects deal activity?

Possible federal tax changes
Value opportunity for sellers
Uncertain times driving bullish buyers
Market consolidation
Boom in baby boomer retirements
Balance sheet improvements

What to consider when determining whether to sell?

Year over year quality cash flows
Resilience through the pandemic
Whether you are running a lifestyle business or a value business
Retention of key talent
Avoid the rush to sell
Exit planning mindset
Possibility of waiting until next year

How do family business owners know they are ready to sell?

I’m done – Many owners no longer want to bear the effort and risks of their business.
Vacation home effect – Some owners who have spent time working remotely have enjoyed their flexible schedules and time with family and friends.
Death and taxes – Many owners are at or near retirement and are concerned about the potential for higher corporate, personal income, capital gains and dividend taxes.
How much is enough? – The wealth accumulated in private companies is illiquid and many owners have determined the after tax proceeds from a sale will last for an extended period of time.
What’s next? – Owners are wary of the next “crisis” and how it could affect their companies.

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