Competitive Intelligence is Key to Smart Acquisitions Part of growth is acquisition.  To do smart acquisitions, you need insight into a business owner’s thoughts—specifically, her concerns vis-à-vis selling the businesses. These are not questions with simple yes or no answers; it’s more critical to figure out what an owner thought was missing in previous acquisition overtures. What, aside from price, will i ...

Myths about Middle Market Valuation Multiples Sometimes it seems as if the only requirements to be an investment banker are the ability to multiply two, usually single-digit numbers together and write your name. Hence, upon finishing the second grade, everyone is qualified. For example, take an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $10MM and the median lower middle mark ...

PE firms have recently begun to negotiate smaller equity contributions as borrowings increase, reports Matthew Sheahan at Mergers & Acquisitions.   LBO activity came to a screeching halt last summer; there were $19.7 billion issued via 34 deals to back buyouts for all of 2011, but so far this year, nine high-yield bond deals totaling $8.3 billion have been issued to back LBOs. Banks and other creditors ...

You can’t hold back the demographic tide. In the U.S., another baby boomer turns 60 every eight seconds. This translates into a leadership change in the near future at many CPA firms. In an important article in the Journal of Accountancy last year, John F. Raspante, CPA, and Joseph A. Tarasco, CPA explain:  Thousands of partners are at or reaching retirement age now and in the next five years, putting a tre ...

From attempting to recast the public image of private equity to trying to forge a new investment firm, 10 individuals profiled in the June issue of Mergers & Acquisitions are making their marks on middle-market investing, Tamika Cody, Mary Kathleen Flynn and Danielle Fugazy report.  From the intro: To highlight a few: Pam Hendrickson, chief operating officer of the Riverside Co. and a director of the gl ...

A relatively unexplored area of family business research is the role that an active, independent board of directors can play in perpetuating the family business from one generation to the next.  David Thayne Liebell reports at Trusts & Estates that a  recently published book, Building A Successful Family Business Board, seeks to close that research gap. In fact, according to the book’s authors, an activ ...

Top Ten Deal Killers! It’s an too familiar story line in the deal business. After months of hard work and, in many cases, hundreds of thousands of dollars in legal fees and expenses, the deal blows up. Most of the time it’s solely the fault of the participants—usually the seller—but sometimes external factors can add to the risk of deal failure. The really unfortunate thing about these bad outcomes is that ...

Why PE and the Middle Market Tied the Knot Robert Teitelman at The Deal explains:  . . . This is the first of six special issues The Deal magazine will dedicate to the middle market in 2012, with a particular emphasis on a participant that, over the past four decades, emerged from that vast and diverse pool of midmarket companies: private equity. The current political debate tends to overlook the fact that ...

Accounting for Nuts:  Blame a misalignment of incentives for the scandal at Diamond Foods.    The Wall Street Journal's Holman Jenkins opines:  "Business people talk about "alignment of incentives." The lesson here may concern a peculiar misalignment of incentives."  He explains: Here's the executive summary: Diamond was a cooperative owned by California walnut growers until it became a publicly traded comp ...

The Bankruptcy Files: A Big Start to 2012 At AM Law Daily, Brian Baxter reports: Signs that the economy is improving notwithstanding, the number and size of large corporate bankruptcies could double in 2012, according to a new Fitch Ratings report covered by CNNMoney. Fitch predicts that corporate bond defaults will hit 3 percent this year—more than double last year's 1.4 percent and 2010's 1.3 percent. Mid ...

M&A Will Likely Pick Up in New Year An Ernst & Young survey indicates longer term appetite for deals has increased, reports Anthony Noto at Mergers & Acquisitions. Private equity firms are more confident in the worldwide economy, suggesting an increase in M&A activity for the New Year, according to a report Ernst & Young released Wednesday. In the longer term, the appetite for M&A in ...

Visualizing the Middle Market The Middle Market not only accounts for a third of private sector GDP and jobs, but over the last four years it’s been leading the way in terms of viability, resilience and growth, according to a new study from GE Capital. When it comes to economic development and employment growth, people tend to focus on either small local businesses or large multi-national corporations. But ...

Lessons from a Dying Business   Redbox has built a successful DVD kiosk business, but its days are numbered. Here's why that's not such a bad thing, report Karl Stark and Bill Stewart at Inc.com.  You’re probably familiar with Redbox, owner of those DVD-rental kiosks that you see parked outside of just about every neighborhood grocery store or pharmacy. Redbox is an excellent example of how to create growth ...

A First: Law Firm Finds New Life, Not Death, in Bankruptcy  The Wall Street Journal's Law Blog Jacqueline Palank reports: A South Florida law firm recently used bankruptcy to do something no one in the legal industry has done before: sell itself to another firm. Companies across corporate America, from Blockbuster to General Motors, have sought court protection while they try to sell continuing businesses t ...

The Exit Planning Institute Opens Northeast Ohio Chapter  The Exit Planning Institute (EPI), NACVA's Exit Planning partner and issuer of the Certified Exit Planning Advisor (CEPA) credential, has opened a new chapter that will be serving the Cleveland and Akron region in Northeast Ohio. The chapter president will be Christopher M. Snider, a partner at Aspire Management in Cleveland. Christopher M. Snider, C ...

Chart:  The Cost of Buying Small Business Companies Scott Shane at Small Business Trends reports: Many people think buying a business is expensive. But, actually, the typical private company sells at a low price. According to BIZCOMPS, Business Valuation’s data base of private company sales, the median price of the 12,022 companies sold since 1995 on which Business Valuation has data was $166,000, less than ...

Buying an Established Business The Wall Street Journal's "Running a Business" blog analyzes the benefits of buying vs. building: If you're interested in entrepreneurship, but lack ideas or time to create a new business, buying an established company may be a wise alternative. You'll inherit a working infrastructure complete with resources you'd otherwise have to secure on your own, such as equipment and emp ...

Business-For-Sale Market Heats Up So writes Angus Loden at The Wall Street Journal blog In Charge: On the challenges of entrepreneurs managing their businesses. Sales of small businesses rose 8% in the second quarter over the same period last year, hitting the highest level since the closing months of 2008, with a growing number of smaller firms finding buyers, according to business-broker data. Getty Image ...

SEC Wakes Up to Reverse Merger Companies Weeks after several Chinese reverse-merger companies have stopped trading in the US amid widespread fraud allegations, the Securities and Exchange Commission has issued a warning that, hey, maybe investors ought to think twice about those reverse-merger companies.  Okey doke!  Mark Gongloff relays from the Wall Street Journal Law Blog.  The Securities and Exchange Co ...