Making offers (IOIs and LOIs)
Making offers quickly and often in your search is critical to buying a business. As in sports, taking frequent "shots on goal" is always better than waiting for the "perfect" opening. After all, the offer…
Working Capital
In many ways, search is all about the details. A detail that cannot be overlooked is the treatment of working capital in the transaction. If saved until the final drafts of the P&S agreement, the…
Raising Bank Debt
The most substantial source of financing for your acquisition will probably be bank financing. Typically, searchers raise 30% to 70% of the transaction price through bank debt, with an additional 10-40% coming from the seller.…
Raising Equity Capital
At some point in your search process, you will need to raise capital from investors and, more importantly, propose how to pay it back with a favorable return. Raising funds can create a high level…
Due Diligence
Reaching the due diligence stage in your search is an opportunity for celebration; you have found a willing seller, negotiated acceptable terms, signed an LOI and are “driving to close." Yet, even amidst some…
Quality of Earnings
During the final stage of your search, while under LOI, you will need to verify what the seller has provided as to their financial health. This level of accounting diligence is best done by an…
Customer Concentration
How much customer concentration is too much? Less than you might think! For a searcher, the best-laid plans to acquire a business with low customer and market concentration, recurring revenues, healthy margins, and industry tail…
When your LOI falls apart
Having a transaction fall apart can be devastating in a number of ways to a searcher. Since it takes an average of LOI's, and many months, to get to closing (See blog post Getting to…
Getting to Closing
Getting to the closing date is a lot more challenging than most searchers think. Many things can happen that cause deals to fall apart. Just knowing what to expect during the closing time-frame is helpful…
Why deals fall apart
Much of the company search process is about failure; deals will fall apart, and the more you understand why, the better prepared you will be to recognize the warning signs, anticipate them, and even avoid…