By Carroll D. Hurst, CPA, Director
In the article “Timing right for business owners looking to sell”, by Carol Hazard, Richmond Times-Dispatch, several of Richmond’s leading business advisors discuss the current favorable market for selling a business.
Carroll Hurst, a founding partner and leader in Keiter’s Mergers & Acquisitions team, shared his insights in the article:
…”In many cases, business owners would like their managers to buy their companies, but management teams often cannot compete with private equity firms”… Read the article.
Not discussed in the article but important to note is that smaller companies as well as companies in more commoditized industries would generally be valued comparatively lower than larger companies and those with recurring revenues or those operating in less price sensitive industries. Because of valuation factors and size, these companies with lower valuations may be able to be more easily financed by management teams who are interested in acquiring the companies they work for. Options for financing these smaller acquisitions could include SBA financing, senior debt financing provided by commercial banks, a combination of senior debt from banks and subordinated debt financing from mezzanine funds, or unitranche financing issued by funds similar in structure to mezzanine funds.
About the Author
Carroll D. Hurst, CPA, Director
Carroll Hurst represents numerous closely-held businesses in the foodservice distribution, manufacturing, construction, retail, wholesale, and service industries, as well as private equity and venture capital funds. Many of these businesses are second and third generation family owned and operated businesses. Carroll’s services in the mergers and acquisitions area include valuation, interaction with investment banking firms and law firms during all stages of negotiations, structuring transactions, tax planning and modeling of after-tax cash flows from various transaction structures, due diligence assistance, and negotiation of various terms of the transaction.
More Insights from Carroll D. HurstThe information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.
