Mergers & Acquisitions: An Insider's Guide to the Purchase and Sale of Middle Market Business Interests

Mergers & Acquisitions: An Insider's Guide to the Purchase and Sale of Middle Market Business Interests

Dennis J. Roberts

Language: English

Pages: 450


Format: PDF / Kindle (mobi) / ePub

This book was designed not only for owners and managers of middle market businesses but as a training text for middle market M&A investment bankers and consultants. It discusses the art and science of middle market M&A as well the all-important psychology and behind-the-scenes negotiations pursued with a particular emphasis on obtaining the absolute highest value when selling a business. Subjects addressed include valuation, taxation, negotiations, M&A conventions, among many others from the buy-side and sell-side perspectives.

Subtitled "Tales of A Deal Junkie," this serious but occasionally irreverent book tells it like it is, including anecdotes to provide a "feel" for what really goes on in middle market transactions. The author, a former practicing CPA and a business valuation expert, is a veteran M&A investment banker with years of real life experience. He also is a widely-acclaimed instructor in the M&A field and a nationally-respected practitioner who has trained thousands of investment bankers. No comparable book on the market today provides this degree of comprehensive and invaluable insight.

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multi-year earnout agreements also might include provisions allowing the buyer to “carry back” to and against prior years’ deficiencies, should the company exceed following-year performance targets. What if the company exceeds the performance target(s) that maximize the seller’s earnout? Should the seller’s earnout payment be increased beyond the agreed-upon cap? The question comes up in many earnout negotiations and the answer is ultimately derived from negotiation. In this regard, earnout

without the inclusion of cash but must never the less be adequate. To the extent that the removal of cash from the delivered balance sheet causes working capital to be inadequate either cash will need to be restored (to that extent) or a purchase price adjustment made. Let’s discuss each of these conventions and what they significance they have in the M&A world. Entities and Businesses—Redux If you and I each owned two identical businesses, but yours was owned through a corporation

$15 million sounds better at the cocktail party, but the $14 million deal puts an extra $2 million in the bank. 2 Organized after August 1993. CHAPTER 30 The Business of Middle Market Investment Banking For Consultants or Others Who Might Like to Do This Kind of Work Mamas, don’t let your babies grow up to be cowboys . . . Willie Nelson Savannah, GA—October 1989 Peter was telling me one of the saddest professional stories I had heard in a long time. At the quarterly meeting of

collateral based loans. More flexibility than a commercial bank, not governmentally regulated. Typical terms: Loan terms, depending on credit risk, and nature of loan; think in terms of big bank prime plus or minus. Pros, cons, and details: Only middle to upper end of Middle Market usually qualify (typically businesses with sales of at least $100 million and up). FACTORS Nature of the investor: Institutional investors, usually. Typical terms: Stated in terms of cost money (very,

colleague member of our firm on the West Coast: “My suggestion to you as a next step would be to call them later this coming week and highlight our related expertise, real-world management experience in the industry, tombstones, and ongoing contacts/participation at industry trade shows and conventions. As you may know, most investment bankers market their deals to the corporate development departments of prospective buyers. Because of the particular expertise we have, we take advantage, where

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