Have Business Valuation Multiples Plateaued?

/ Saybrook Capital Advisors, LLC/

According to the November GF Data® report, middle-market1 deal valuations continued to show signs of plateauing in the third quarter of 2018. GF Data®, which tracked 63 completed transactions in the $10 million to $250 million total Enterprise Value2 (TEV) range, said “there is still some forward momentum in some niche sectors, but more broadly, we see froth coming out of the market.” In other words, valuations may be at the beginning of a downward trend.

Read More

Business Valuation Multiples Move Higher

/ Saybrook Capital Advisors, LLC/

According to GF Data, ® valuations of middle-market companies in Q3 eclipsed previous highs with an average Total Enterprise Value/Adjusted EBITDA multiple of 7.5x on deals with an Enterprise Value 1 of $10 million to $250 million. Year-to-date average valuation multiples are 7.1x (see Chart A). While the number of completed middle-market deals year-to-date is down from the comparable 2016 period, demand for companies with above average financial performance remains very strong. This demand in conjunction with the availability and use of higher leverage by buyers, is largely responsible for the record high valuation multiples.

Read More

Business Valuation Multiples at Record Highs

/

According to GF Data, ® valuations of middle-market companies in Q3 eclipsed previous highs with an average Total Enterprise Value/Adjusted EBITDA multiple of 7.5x on deals with an Enterprise Value 1 of $10 million to $250 million. Year-to-date average valuation multiples are 7.1x (see Chart A). While the number of completed middle-market deals year-to-date is down from the comparable 2016 period, demand for companies with above average financial performance remains very strong. This demand in conjunction with the availability and use of higher leverage by buyers, is largely responsible for the record high valuation multiples.

Read More

Beware of Unsolicited Buyers for Your Company

/

Having been in business for more than 20 years, you recently started thinking about when to sell your company. As business owner or CEO, you get a phone call out of the blue from a reputable company that has targeted your organization as a prime acquisition or merger candidate. You’re intrigued with the buyer’s initial pitch. The phone chemistry was good. And upon brief contemplation, you decide to pursue this seemingly once-in-a-lifetime opportunity. It’s flattering to be pursued and before you know it, you’ve divulged information about your company – maybe too much information. Have you made a huge mistake? It’s important for business owners to be prepared to respond to unsolicited buyers, especially when they’ve begun to consider selling their company.

Read More

Perspectives From a Business Seller: An Interview with Dave Otfinoski

/

Dave Otfinoski is the founder and former CEO of MedKnowledge

Bill: What emotions and concerns did you face as you contemplated the sale of your business and how did you overcome them?

Dave: In the back of my mind I always pictured one of my children taking over the business one day. So when I considered the idea of selling the business a little part of me felt I was being disloyal to my kid’s future. However, I ultimately realized that by selling, I was enabling myself to take out some of the value from the sale of the business and put that money away for my family’s future. At the same time, I realized the business needed an owner with more means than I had so that the business could reach its potential. I also came to realize that my children really needed (and wanted) to do something they loved and were passionate about, which very well may not mean working in dad’s business.

Read More

Selling Your Business: Advice from Private Equity Firms

/

The Role of Private Equity Firms

When it comes to selling a business with revenues of $10 to $250 million, where would some of these middle-market business owners be if it weren’t for the rise of Private Equity firms as buyers? The reality is, they would either still be running their business, have liquidated their business or potentially sold their business for a lesser sum with perhaps significantly less cash at closing.

Read More

The Leading Causes of Seller's Remorse in a Business Sale Transaction

/

Seller's remorse is a common emotional reaction that can occur prior to or after the sale of a business. It is a frequent reason transactions fail to close and can cause significant seller anxiety post-closing. After decades of hard work, many business owners find selling and walking away from their business to be a difficult and emotionally charged decision regardless of the monetary consideration received. This article presents the leading causes of seller's remorse and what a business owner can do to deal with them.

Read More