GW Equity

Private Company M&A Brief

3 out of 4 of sellers leave significant value on the table

Getting paid for the PAST, not the FUTURE

• Often, when inexperienced sellers negotiate the sale of their company, they base valuation discussions on the historical performance of their company. While the historical performance of a company is important, the future earnings and potential growth of the seller is more important to the buyer.
• During the M&A process, it is therefore important to base valuation discussions on realistic future cash flows and earnings of the business.
• After all, buyers are not paying for past financial results, but instead the value they can derive from that business in the future.

Selling to the wrong buyer

• Often, private companies will sell to professional or personal acquaintances, including employees, family members or competitors.
• However, these sellers fail to recognize that premium buyers often come from unlikely sources, locations or industries.
• Acquisitive premium buyers exist that actively purchase companies to sustain earnings growth.
• Without running a comprehensive and thorough buyer identification and solicitation process, sellers that fail to retain an advisor often forego the opportunity to engage premium buyers.

Selling at the wrong time

• In M&A, timing is everything. Selling a company at an inopportune time can result in leaving significant money on the table. Key factors when considering M&A timing include the economic climate, the overall deal climate, interest rates, as well as the current tax and regulatory environment.

Structuring the wrong deal

• Often, sellers become fixated solely on the purchase price while neglecting the importance of overall deal structure. Creatively structuring a deal around the needs and preferences of the seller will generate the maximum value for the owner while minimizing tax liabilities.

GW Equity aggressively advocates our clients' positions in order to ensure that no money is left on the table

• GW Equity's associates offer extensive experience in positioning, marketing, timing and structuring transactions that maximize value for our clients.