Maximize Your Company’s Selling Price

With the current credit crunch precipitated by the COVID-19 pandemic, you may not realize that middle market-deals ranging in size from $25 million to $500 million-are still being completed regularly! The key to a winning transaction in this environment, however, is not getting the deal done, it is maximizing the return to you and the other selling shareholders. To achieve this success, you must accomplish the following:

  • More than one potential acquirer must be at the table. Sellers wish to maximize their return, while buyers desire to purchase a company as inexpensively as possible. A confidential silent auction will maximize your selling price. You need to create competition and you accomplish this by bringing multiple parties to the other side of the table!
  • What you want for yourself is the determining factor in the type of buyers you should approach. If your plan includes staying on and running the business for an additional three to five years, a private equity group is a good buyer. You’ll receive considerable cash at closing and the opportunity to continue running the business while maintaining a significant amount of equity. Private equity groups have over $1.45 trillion in available capital to invest and with less leverage available from banks, they are putting much more equity into deals.

Alternatively, if your goal is to exit your business quickly and maximize your return, a strong strategic buyer makes a good choice. Strategic acquirers, both domestic and foreign, have realized outstanding financial performance in the last several years. They have strong cash reserves and are looking for acquisitions that build on their core business competencies or that expand the strengths of their current divisions. Despite current market conditions, certain strategic acquirers are thriving during this difficult time and they are aggressively buying middle market businesses because they see great opportunity to grow in this tough economy.

  • Consider the effects of economic variables: end of federal assistance and stimulus, credit scarcities, and recession. While these factors may be largely out of your control, others aren’t. Choosing when to sell your company and to whom is within your control. It is therefore critical to present your company in the best light, especially in difficult times. Enhance your odds of getting a good price by having accurate knowledge of your business’s worth provided by an expert valuator.
  • Timing is everything. Now is the time to sell, before the market becomes flooded with troubled companies. Good businesses always sell-they sell better when timed and marketed well.

Allegiance Capital, as a premier middle market investment bank, recognizes this market presents unique challenges and real opportunities for sellers. Having been in business since 1998, we’ve seen the good times and the bad. We consider all factors and work with you to achieve a deal uniquely suited to your vision of success. Allegiance Capital undertakes all of its client engagement’s with the highest ethical standards. We also understand that no business owner wants its competitors, customers or employees to know they may be contemplating a sale, so our process assures you complete confidentiality.