Author Archives: Rick Krebs, CPA - M&A Advisor
Business Sales Group Completes Buy-side Mandate
Business Sales Group is pleased to announce the completion of a Buy-Side Mandate for the acquisition of an internet lead generation Company located in Utah. Business Sales Group provided advisory services to the Buyer for the successful acquisition of the target Company. The Company won the prestigious Top 25 Under 5 Award presented by Utah Venture Entrepreneur Forum in 2013. This rapidly expanding Company is capturing market share nationwide in the internet marketing space by achieving high conversion rates on SEO, PPC, and Social Media campaigns. Congratulations to Bret, the new owner and his management team.
Business Sales Group Completes Buy-side Mandate
Just Sold – Manufacturing Business
Business Sales Group is pleased to announce the sale of a Specialty Manufacturing Business. Congratulations to Judson and Ron!! This business is unique because they manufacturer products in the USA. Not only do they sell products domestically, they EXPORT their products, which is unusual in this day and age.
Click HERE for a complete list of businesses for sale at Business Sales Group.
Click HERE for the 8 things you should know before selling a business.
New Listing – Heavy Haul Trucking Company
Business Sales Group is pleased to announce the listing of a Heavy Haul Trucking Business. Annual Revenue is over $10 Million and EBITDA is $4 Million. They have an excellent reputation and have locations in Wyoming and Colorado. Contact Heather at: Heather@Bsalesgroup.com for details.
Just Sold – Medicaid Certified Home Health Business
Congratulations to the old and new owners of the Home Health Care Business we just sold. They are medicaid-certified home health company operating in Salt Lake County. The Company provides home health for personal care. They provide care to individuals (usually seniors) who need assistance while they remain in the comfort of their own homes. Demand remains high for non-medical home care and it is expected to increase. The sale included the transfer of the valuable licenses and aprovals.
The Company is dedicated to giving loved ones the care and help they deserve. They are a fully licensed and insured personal care agency. As a family-oriented company they go above and beyond home care. Services include:
- Housekeeping
- Laundry
- Home organization
- Meal preparation/feeding
- Medication reminders
- Hygiene/grooming
- Bathing/dressing
- Companionship
TYPES OF BUYERS YOU WILL ENCOUNTER WHILE SELLING YOUR BUSINESS
TYPES OF BUYERS
As a Seller of a business it is important to know the types of buyers you will encounter in the sales process. Selling a business successfully requires the help of a M&A advisor who “knows the ropes” and has dealt with each type of buyer.
Financial – Financial buyers like to base their buying decisions on the numbers. It is all about the numbers, multiples, and financials (both historical and projected). They tend to be industry agnostic because it doesn’t matter what type of business it is; it matters what numbers the business can produce. I would call them the “bean counter” guys. Bankers and business appraisers usually are enlisted to provide comfort and figures for the transaction. It’s all about how the numbers look, particularly the EBITDA numbers. They buy based on a multiple of EBITDA with the idea of growing the business. Financials buyers tend to like businesses that have had a strong, steady growth over the past 3 years versus a jump in sales the past year because they like to average the numbers over a 3 year period. Financials buyers like stability and reliability.
Strategic – Strategic buyers tend to be less about the numbers and more about the opportunity provided by the acquisition. They care about numbers, don’t get me wrong, but in the back or their mind they care more about how this business will help their existing business plans. As an example, if you had a piece of real estate that was only 5 acres, but was surrounded by real estate owned by a developer who wanted to develop the whole piece including yours, your 5 acres would most likely be worth much more because it was the final cog in his plans. He would pay a premium for your 5 acres. Strategic buyers tend to pay more because the business is worth more to them as it fits into their overall strategic plans.
Partner – A partner could be either strategic or financial. Partners generally want the Seller to hold equity post-close. Partners generally acquire 20-90% of a business and work with the Seller to grow the business post-closing. Partners can provide financial support, management oversight and guidance that the Seller of a business lacks.
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Rick Krebs – Mergers and Acquisitions, Professional Business Broker
Rick brings a unique blend of sales, entrepreneurial, and financial experience to Business Sales Group. He began his career as a CPA, working in Nevada and Utah where valuable financial experience was gained. He uses those skills every day. He graduated with a Master’s of Science Degree and Bachelor’s Degree from Utah State University. As a business owner he started Liberty Mortgage, a mortgage bank licensed in 23 states nationwide. He eventually sold the successful company to an investor from California. He has been in the M&A space helping people sell their businesses since July, 2010. During his first year as a business broker with BRC, he listed and sold more businesses than the entire office combined.
As a sale-side advisor for Mergers and Acquisitions transactions Rick’s advisory, accounting, and management skills are invaluable when advising sellers as they maneuver the intricate details of the deal through closing. Rick is also a CNA (Certified Negotiation Expert) which helps him negotiate the most favorable terms for clients in a transaction.
NEW LISTING – GAS AND OIL SPILL CLEANUP, REMEDIATION AND SALES BUSINESS
Multi-state operation with headquarters in Wyoming and Texas. They opened in 2006. They are the industry leader in their areas for oil spill cleanup and remediation services. As a seller of cleanup detergent, they have protected sales areas in Texas and Wyoming.
The Company operates in the production side of the Oil and Gas Industry. Because of this, the recent drop in oil prices hasn’t affected their business. The financials will show a steady revenue stream over the past years. They have 3 main sources of revenue:
Production Equipment Maintenance & Roustabout
On-site Oil Spill Cleanup & Remediation
Product Sales of Remediation Agents & Screens
Offering includes over 5 acres of Real Estate and over 6,300 square feet of buildings in two locations.
See for details: http://www.bsalesgroup.com/our-listings/
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Rick brings a unique blend of sales, entrepreneurial, and financial experience to Business Sales Group. He began his career as a CPA, working in Nevada and Utah where valuable financial experience was gained. He uses those skills every day. He graduated with a Master’s of Science Degree and Bachelor’s Degree from Utah State University. As a business owner he started Liberty Mortgage, a mortgage bank licensed in 23 states nationwide. He eventually sold the successful company to an investor from California. He has been in the M&A space helping people sell their businesses since July, 2010. During his first year as a business broker with BRC, he listed and sold more businesses than the entire office combined.
As a sale-side advisor for Mergers and Acquisitions transactions he brings a unique blend of financial, advisory, accounting, and management skills to the table helping sellers maneuver the intricate details of the deal through closing. Rick is a CNA (Certified Negotiation Expert) which helps him negotiate favorable terms for clients in a transaction.
USING ATTORNEYS EFFECTIVELY WHEN CLOSING A M&A DEAL
USING ATTORNEYS EFFECTIVELY WHEN CLOSING A M&A DEAL
Once again, you have worked for months to get a deal done. The Buyer and Seller are excited, a LOI has been drafted and it is time for the legal work to start. Once again, the theme of the transaction turns from excitement to adversarial. Once again, after many hours of hard work and negotiation, you get the deal closed in spite of the attorneys involved. Has this scenario ever happened to you?
Attorneys sometimes approach deals like court; you ask for and get as much as you possibly can on every issue. This approach works well in a court case, but fails miserably in an acquisition. Attorneys are generally used to scrapping. They like to fight. They operate in a world where you fight and claw your way in the battle and get every advantage you possibly can, giving up nothing without a fight because winning is about gaining every possible advantage over your adversary that you possibly can through the process. Unfortunately, the wrong attorney will use this approach to an M&A deal and it fails miserably. As an M&A professional, you need to know how to effectively use attorneys in the process. This article will help you as you maneuver the sometimes treacherous waters of using attorneys to draft the closing documents.
THE APPROACH
Tackle small issues first, then move on to large issues. Give generously on small issues in the beginning then you can hold back with important issues later. This strategy works for getting the important things you want and showing the buyer you are willing to work with him.
People want to work with people who are workable. Do not take “hard lines” on anything at first, but wait to hear from the other party about their thoughts before making demands. Using your M&A advisor during this phase is helpful.
Ask: What is my risk? If I accept the proposed changes, what is the downside? What do I give up? What is the likelihood this event will happen? Am I willing to accept this risk? What dollars would it cost?
Ask: How important is this issue? There may be a time when you are willing to accept the risk and leave the documents alone.
BEFORE YOU START
Make sure attorneys know:
- Share your approach and strategy for the transaction. The approach and strategy is much different in a business sale than other transactions because the relationship of the Buyer and Seller will have post-closing.
- Buyer and Seller have to work together post closing – need to be fair and meet in the middle sometimes. If they carry battle wounds from the negotiations, they are less likely to get along post-close.
- Inform everyone that no one ever gets 100% of what they want. Both sides need to acquiesce in order to get the deal done and negotiate a favorable outcome for both sides.
- Itemize a list of your concerns and the concerns identified by the attorney both before you start and during the drafting of the documents. Once you have a list, prioritize each item on a scale of 1-10. As you negotiate the deal knowing beforehand which items are important and less important helps you get favorable results.
- What we need to know from the attorney is:
- How important are the issues identified by the attorney in the paperwork as problematic?
- What is downside for the Seller for each of these issues?
- What do the documents lack? What needs to be changed/corrected?
- We’ve worked hard to get to this point and we need you to do everything you can to NOT KILL the deal.
- Make sure they know of timelines and they agree to meet them, even if it requires after-hours work.
- The documents do not favor one party over the other as a general rule. The documents are designed to protect parties and outline duties, warrants, and responsibilities of each party.
Remember, attorneys are experts in law and not business. Use them for what they do best. If they start giving business advice, beware of that advice. It may not be that good. A wise man once said: “don’t take financial advice from someone who makes less money than you do”.
Sale Completed – Electrical Services Company
We are pleased to announce that our M&A Team has just successfully completed the sale of the Electrical Services Company we had listed for sale. Business Sales Group provided sale-side advisory services for the transaction. The Company sold for full Asking Price. It was a debt-structured buyout with favorable terms for the Sellers and Purchasers. Congratulations to the New Owners. Sincere appreciation to Brian Lloyd of Parr Brown Gee & Loveless, Mark Hendry of Mountain View Title, Boyce Coombs of Caldwell, Coombs, and Foley, and Chris Adams of US Bank, and Jed Labrum for all of their hard work on this project.
2 New Business for Sale – Just Listed.
We just listed 2 new businesses for sale.
HOME HEALTH AND REHABILITATION COMPANY. They do physical therapy services and have valuable contracts with the insurance carriers. Have been open 11 years.
Asking: $1.2 Million
Adjusted Income: $290,000
EBITDA: $396,000
COURIER SERVICE BUSINESS
Established customers and long-time employees.
Leading provider of same-day courier services in Utah.
Asking $2.3 Million
Adjusted Income: $506,674
Call Heather at 801-201-6866 or email at Heather@Bsalesgroup.com for details
Recent Transactions
I’ve been asked repeatedly about the type of deals we typically do, so I’ve provided a list of the deal flow for the past 18 months.
Summary of M&A deal flow in the past 18 months
Trucking and oil rig moving company: Utah, Sales price $15-20 million. Company has 100 employees and offices in Wyoming and Utah. They provide trucking services to clients in Colorado, Utah, and Wyoming and are licensed in all 50 states. Acquired by strategic investor who utilized multiple arbitrage to enhance and increase company value.
Oil field contracting services: Colorado (under contract), Sales price $10-15 million Company has 90 employees and has offices in northern Colorado. They provide construction and trucking services to the oil field and construction industries in Colorado and Wyoming. Set to close in January, 2015.
Equipment rental and electrical services company: Utah, Sales price $8-12 million. Company has offices in North Dakota, New Mexico, Colorado, Utah and Wyoming. Purchased by a financial investor who is a private equity group.
Logistics Company: Oklahoma, Purchase price $8-12 million. Represented buyer for the acquisition of a logistics and transportation company. Business is currently shuttered and value of the equipment and real estate acquired is $11.6 million. Set to close in November.
Materials handling company: Utah, Sales price under $5 million. The largest non-mechanized materials handling company in Utah. Has dealer distribution network in Idaho, Montana, Utah, and Wyoming. Had one retail location in Salt Lake City.
Equipment rental company: (under contract) Utah, Sales price under $5 million. Company has an office in Utah and 2 employees. Has doubled sales in the last 3 months. Rapidly expanding company with huge growth potential. Set to close in November.
Rick Krebs - Business Broker / M&A Professional 