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Business Exit Stories
51 minutes | Oct 18, 2021
From Making Money as a Side Hustle to a $19M Business Losing Money
A chemist that solves a problem his wife had with some of her hair and cosmetic beauty products line while working full time. His side hustle turned into a business that exploded into a $19M business virtually overnight. Hyper growth when scaling nearly forced an early exit and disaster was averted. An absentee owner business was acquired and how leverage was used to get a 10X return when properly managed. A high school graduate that made money mowing lawns turned this part time job into a multi-million dollar exit by smartly building his business a day at a time and planning his exit like a pro. An entrepreneur deciding not to go to medical school was probably a smart financial decision. While most doctors were finishing up their residency and beginning their medical practice, this entrepreneur had banked over $15M on the sale of his medical tech company. Matt Wochele & J. SnyppPreferred Brokers, Inc.Atlanta, GeorgiaVisit WebsiteSend E-mail The post From Making Money as a Side Hustle to a $19M Business Losing Money appeared first on Business Exit Stories.
49 minutes | Oct 4, 2021
Going from a Meager Six Figure Walk Away Exit Offer to Millions Plus a Second Bite of the Apple on a Subsequent Sale
A specialty heavy equipment company that dominated a highly profitable niche decided to sell. A private equity firm suggested by the M&A advisor expressed interest and made a generous offer. However, the seller’s attorney had dealt with this Private Equity from before and had formed some opinions on them. What shouldn’t have happened, ended up happening and it derailed the deal. How 50/50 partners had taken over a company from the founder’s family and although they were good at their jobs in the company, they weren’t naturally born entrepreneurs and make rookie mistakes as new owners that brought the company to the brink of insolvency. Yet they went from a few hundred thousand dollars to delaying their exit and selling the business for millions and retaining equity in the company that was later sold for millions more. How a creative deal structure can take a company with multiple revenue streams and package each of these revenue streams to different buyers with an agreement for future collaboration. This resulted in an exit value being worth more than if the company with all of its revenue streams had been sold to a single buyer. Joseph GuarinoLINKLancaster, PennsylvaniaVisit WebsiteSend E-mail The post Going from a Meager Six Figure Walk Away Exit Offer to Millions Plus a Second Bite of the Apple on a Subsequent Sale appeared first on Business Exit Stories.
54 minutes | Sep 6, 2021
How the IRS Can Kill a Deal Without Breaking a Sweat
A business owner’s lack of transparency with his M&A Advisor ended up taking his business sale from a sure deal to zero and the IRS killed this deal without breaking a sweat. A buyer walked away from a deal allowing the seller to re-sell the business again in a matter of months and keep all the sales proceeds from the first deal in a practice called double dipping. If you are growing your business through acquisitions, regardless of how messy an acquisition is, these can become your most profitable deals. Taking reasonable risk in selling your business can turn out well for all parties if you manage this type of risk prudently. Eric GagnonWe Sell RestaurantsPalm Coast, FloridaVisit WebsiteSend E-mail The post How the IRS Can Kill a Deal Without Breaking a Sweat appeared first on Business Exit Stories.
51 minutes | Aug 16, 2021
How A Business Went From $50 Million In Sales To Ceasing Operations And Still Got Sold.
Why working capital requirements can often be used strategically by buyers as they are designed to reduce the effective sales price of a business. Unaware sellers can be surprised when they end up with a lot less than they anticipated because they allowed the working capital to be manipulated either by how working capital was defined or the amount required. A business went from $50M in sales to ceasing operations and was still sold for a considerable sum. When you know where the intrinsic value in a business is, the business can still be monetized, even as a non-operating entity. A tool that every entrepreneur and their advisors should use as they evaluate offers to gain insights on what the net after tax proceeds are going to be after the sale. Using multi-state tax arbitrage to reduce taxation on sale proceeds if you can do advanced tax planning. This is especially important if you live and operate in a high taxation state. Roman BasiAdvanced AccountingLambertville, MichiganVisit WebsiteSend E-mail The post How A Business Went From $50 Million In Sales To Ceasing Operations And Still Got Sold. appeared first on Business Exit Stories.
45 minutes | Aug 2, 2021
How A Tax Plan Can Save Millions In A Business Sale
Although a comprehensive tax plan was painstakingly crafted and designed, a client went dark for nearly nine months. Less than a week before the sale was to take place the client called and asked if everything was ready to go. A significant portion of the tax planning strategies that had been crafted couldn’t be executed or implemented in a matter of days. Four partners in an Amazon e-commerce business positioned their business for sale, it was discovered that they had no written partnership agreement and only a handshake gentleman’s agreement. As the business moved towards the sale the lack of a decision making mechanism became problematic. A husband and wife team that had started a business as a side hustle eventually turned it into a full-time business and eventually an eight figure exit. They had done extensive tax planning for their estate and had planned on leaving a bulk of their estate to their favorite charity. What they didn’t realize is they could do the same while they were living and save millions of dollars in taxes when they sold their business, and then have those tax savings benefit their charity. A young woman who was 22 years old and a freshman in college started a business targeting her peer group. After growing her business for a few years she wanted to sell her business and go back to college. An exit strategy and a tax plan was crafted to eliminate all $87,000 worth of taxes and use those savings to fund her college education. Shanyn StewartAdvanced AccountingLambertville, MichiganVisit WebsiteSend E-mail The post How A Tax Plan Can Save Millions In A Business Sale appeared first on Business Exit Stories.
38 minutes | Jul 19, 2021
How A Nearly Impossible To Sell Business Sold Quickly For Double Its Value
A transactional story of an infrastructure construction company that was equipment intensive and had accumulated nearly five times more equipment on the books than it needed. While the company has strong free cash flow, the amount of equipment on the books made it a difficult to capture anything above the equipment book value on the balance sheet. How it was positioned while nearly impossible to sell to literally doubling the business value and getting it sold quickly, far quicker than the seller ever thought possible. A retailer that had 75% more inventory than it needed, making the business difficult to sell. How a strategy called an owner financed floor plan allowed both the buyer and sell to make out like bandits. How any business owner that has deals in the pipeline should structure their sales allowing them to capture some of this future revenue as well as benefiting the buyer with free financing. An entrepreneur who made it a practice to always take a significant amount of cash out of the business by not reporting cash sales, and how after he sold the business, this practice literally got him seven years in the state penitentiary. Bob RossFuller-Ross GroupPlano, TexasVisit WebsiteSend E-mail The post How A Nearly Impossible To Sell Business Sold Quickly For Double Its Value appeared first on Business Exit Stories.
38 minutes | Jul 5, 2021
How an Entrepreneur Was Able to Jack Up Profits Only to Be Sued After the Business Sold
A commercial janitorial business dramatically increased their gross margins and profitability the year before it sold. However, the source of the profits wasn’t from excellent execution or dramatically increases sales. When the buyers found out why the performance was so good, they sued the seller. A juvenile based sports manufacturing and import company had multiple offers on the table but decided to aggressively the countered all the offers. The counteroffers were all rejected. A year later the business was sold for the book value of inventory. Get multiple strategic bidders at the table and interesting things can happen. Sometimes being in the right place at the right time just happens. You can’t plan for it, but when it happens you need to focus on not doing something that will screw the sale up. Ian MacLachlanBTI GroupSanta Cruz, CaliforniaVisit WebsiteSend E-mail The post How an Entrepreneur Was Able to Jack Up Profits Only to Be Sued After the Business Sold appeared first on Business Exit Stories.
57 minutes | Jun 21, 2021
How to Make a $28M Highly Profitable Company Worth Nothing and Unsaleable in One Easy Step
A highly profitable business services company that has five highly qualified partners in the business handling the key functions of the company. These partners were committed to the business and worked 70-80 hours per week for years. Yet even though this company was highly profitable, it turned out to be unsellable. A $35M tortilla company with millions in profits company that couldn’t be sold due to critical strategic mistakes that the entrepreneur made. The wrong attorney nearly crashed a deal and only when the attorney was fired, did the deal close. How having the right advisor that positions the company properly generated ten offers with the competition for the deal heating up, causing the offering price to escalate and the terms get better for the seller. Gerald KongTrinity Transaction Advisory, LLCDallas, TexasVisit WebsiteSend E-mail The post How to Make a $28M Highly Profitable Company Worth Nothing and Unsaleable in One Easy Step appeared first on Business Exit Stories.
48 minutes | Jun 7, 2021
How Holding on to Your Business Too Long and Not Selling Can Cost Millions
Why the FBI, DEA, and state regulatory agencies descended on a business and why this didn’t bother the right buyer. How the wrong business intermediary can create mistrust and derail a deal in the blink of an eye, making it impossible for a buyer to acquire the business, even though it was a great business. A multi-million-dollar liability that the seller didn’t know existed was uncovered in due diligence and how the buyer structured the deal to mitigate this liability to get an impossible deal done. A deal went from the first phone call to closing in 10 days flat. Why motivation is the grease that oils the skids to get deals done when there is a deadline. Dennis BuckChapman & AssociatesBaltimore City, MarylandVisit WebsiteSend E-mail The post How Holding on to Your Business Too Long and Not Selling Can Cost Millions appeared first on Business Exit Stories.
47 minutes | May 24, 2021
50/50 Is Not Always Nifty – Partnerships That Don’t Work
A family operation with three kids never had a disagreement while mom, the matriarch of the family, was around. However, when she unexpectedly passed away, the kids spent the next 10 yrs. and $5M in legal fees trying to sort out their differences. A rags to riches saga where a family business, again with three kids, was devastated when the US Gov’t facilitated the confiscation of their business. Sometimes succession planning is just not possible because of the personalities that exit within the family – and in this case, how a sociopath can create a literal wall to getting any succession planning done. Why 50/50 partnerships are not so nifty and how to avoid a deadlocked decision-making situation that can destroy a business. Lloyd & Champ RawlsRawls GroupOrlando, FLVisit WebsiteSend E-mail The post 50/50 Is Not Always Nifty – Partnerships That Don’t Work appeared first on Business Exit Stories.
42 minutes | May 10, 2021
How a Competitor’s Business Card Dramatically Increased the Value of an Acquisition
A business card in a shirt pocket that was visible to others, helped dramatically increase the value of a deal when one of the buyer’s realized that their major competitor was bidding on their deal. Within 24 hours after they realized this, an offer was submitted that was substantially higher than anticipated. How Covid has altered how deals are getting done and how smart sellers are stepping back and realizing that it is a different day today and that deals can still get done if you can work through deal structures that are tailored for both buyers and sellers. How smaller companies can add huge strategy value to larger companies with their value proposition and why it’s important to understand what value you bring to the table because this understanding can dramatically increase your company’s value. Why it’s important for sellers to realize what they do well and not so well and if what they don’t do well can be done better by someone else, it may be time to sell. David KauppiMidMarket Capital Inc.Chicago, IllinoisVisit WebsiteSend E-mail The post How a Competitor’s Business Card Dramatically Increased the Value of an Acquisition appeared first on Business Exit Stories.
46 minutes | Apr 26, 2021
How a 4th Generation Business Doubled Their Sales After It Was Sold
A 4th generation business started in the 1890’s. As you listen to this deal story you will learn how the new owner was able to double the business in less than a year. A lower valuation on a business appraisal can dramatically change the economics of a deal, but how, if you understand the reasons an appraisal comes in lower than anticipated, you can actually get the appraiser to change their valuation, something that rarely happens. Knowing how the valuation was arrived at can actually help you in presenting a case for a higher valuation. One of the things that all sellers and buyers need to be aware of when selling or acquiring a franchise business. Knowing some of these issues in advance can actually avoid a lot of problems when dealing with a franchise business during the sales process. A business that was acquired seven years earlier as an asset sale, which means that the business was purchased for pennies on the dollar for the discounted value of assets, and how the owner returned seven years later with a business that had grown 100x in sales and sold to a buyer who was going to take the business to the next level again. Haroon BhattiCapital Business BrokerageFarmington Hills, MichiganVisit WebsiteSend E-mail The post How a 4th Generation Business Doubled Their Sales After It Was Sold appeared first on Business Exit Stories.
46 minutes | Apr 12, 2021
From Flying High to Bankruptcy to a Successful Exit
A family run business with decades of a history with an elite clientele that provided cleaning concierge service for Broadway theaters by cleaning stage garments and costumes for all of the theaters in the Broadway Theater district. The family grew the business to a nearly 8-figure a year business and was flying high until COVID hit and most of their clientele left the city and all of the theaters closed. The pandemic hit the business hard eventually forcing it into bankruptcy. Yet with the right help a deal was structured to not only salvage the business from the brink of extinction, but to generate millions for the family on the sale of the business. The importance of having a management structure in place can facilitate a deal by creating a demand for the business. A transaction that created millions of additional value by structuring a deal that not only increased the initial exit value of the business but double that amount again by allowing for the preverbal second bite. This was made possible by having the right buyer and structuring and aligning the interests of all parties to achieve the eventual exit of a private equity buyer. We often hear of sad stories that are driven by the unexpected illness or death of a business owners that don’t turn out well. In this case, because of the skill of an attorney that was able to convince a family to retain an M&A Advisor, they were able to create an exit versus closing the business. Anthony CitroloThe NYBB GroupManhattan, New York CityVisit WebsiteSend E-mail The post From Flying High to Bankruptcy to a Successful Exit appeared first on Business Exit Stories.
42 minutes | Mar 29, 2021
What Do You Mean My Business Is Not Worth This?
A founder who was selling his business had the absolute criteria that he did not want to remain working in the business after it was sold. He was burnt out and wanted to move on. So, what do you think happened and what you should be prepared for when you sell your business? How important the terms outline in a Letter of Intent are and if a key deal point is included may save your deal, if you get it right, and if you don’t, may derail your deal. What not to do when you have a buyer at the closing table that has you made a good offer. Too often entrepreneurs get greedy and try to squeeze a little more out of the deal. Why business owners insist that their business is worth a lot more than what all of the offers presented. There is an accounting term called “Sunk Costs” that these sellers didn’t understand. Dave MarxFront Runner ConsultingCincinnati, OhioVisit WebsiteSend E-mail The post What Do You Mean My Business Is Not Worth This? appeared first on Business Exit Stories.
48 minutes | Mar 15, 2021
How Partners that Couldn’t Stand Each Other Managed to Sell Their Business
How buyers will often research a market segment to identify companies in a specific industry or niche that is under served or has consolidation opportunities and then decide to create a platform. Building a platform is a strategy that is becoming more popular today for buyers as they seek out companies to acquire. Small insignificant revenue sources can become a big headache in deals as well as how regulatory issues need to be taken into consideration when positioning a company for sale Timing is a crucial issue when thinking of selling a business and how 50/50 partners that couldn’t stand each other and in fact were at a point in their relationship where they wouldn’t be in the same room together managed to sell their business. Bob ZelingerHinckley, Allen & Snyder LLPHartford, ConnecticutVisit WebsiteSend E-mail The post How Partners that Couldn’t Stand Each Other Managed to Sell Their Business appeared first on Business Exit Stories.
53 minutes | Feb 15, 2021
How Does a Deal Go From $20M to $120M Without Breaking a Sweat?
A financial services company that was a few weeks away from being sold. As the final draft of the Letter of Intent was being reviewed, after all of the terms and conditions had been agreed to by the buyer, there was just one more term to discuss with the client – a term the client wouldn’t agree to. A technology company founded by a tech genius got right up to the closing table with all of the terms agreed to that created an opportunity for generational wealth for the founder and his family, but then the buyer and seller went out for diner to celebrate consummating the deal. That dinner turned out to be a game changer for the founder. An entrepreneur founder was approached by a strategic acquirer. It took months for the founder to negotiate a deal only to have his attorney suggest talking to Jim before doing anything. That conversation turned out to be the most profitable phone call he ever made. How a business worth less than $20M turned into a cash deal of $120M. You won’t want to miss this story. Jim AfinowichIBG BusinessScottsdale, ArizonaVisit WebsiteSend E-mail The post How Does a Deal Go From $20M to $120M Without Breaking a Sweat? appeared first on Business Exit Stories.
39 minutes | Jan 25, 2021
Are You a Seller or a Seller? How to Know Which You Are.
A transaction involving a successful residential HVAC company, which is one of those industries that hasn’t been impacted a lot by the pandemic because people still need their furnaces and air conditioners. The business had a number of offers but when it came time to close, the seller had a change of heart. A great idea doesn’t always translate into value that can easily be monetized. A retired military serviceman started a business and hit a home run. Interestingly, the real home run was not in the actual business that was listed for sale but in what happened during the sales process. It isn’t what you might expect from a deal that didn’t initially get done. A transaction where the seller was talked out of selling, which doesn’t happen all that often because the job of an advisor is to help entrepreneurs sell their business. This decision resulted in tripling the exit value a few years later when it finally was the proper time to sell. Mike FeinmanTexas Business BrokersAustin, TexasVisit WebsiteSend E-mail The post Are You a Seller or a Seller? How to Know Which You Are. appeared first on Business Exit Stories.
54 minutes | Jan 11, 2021
Why an Earnout Turned Out to Be Nearly 40% Better Than a Cash Deal
An acquisition of a firm where the founder had a long-term strategic vision and how they wanted to exit. Because of this vision, he turned down a cash buyer. While most of the episodes on this podcast place price as an important consideration but not the only consideration, it’s rare to have a cash deal turned down and to accept 80% carry back plus an earnout. A blockbuster deal where a firm could have acquired a billion-dollar company that was over three times the size of his firm and why it didn’t work out. Walking away from a deal that was months in the making and where there was a lot of hard work and due diligence expense and time invested into the deal. Everything pointed to this being great fit for an acquisition but there was just one thing that wasn’t quite right. One of his smallest acquisitions turned out to be one of the best and by far the most profitable. Tom HineCapital Wealth Management, LLCGlastonbury, ConnecticutVisit WebsiteSend E-mail The post Why an Earnout Turned Out to Be Nearly 40% Better Than a Cash Deal appeared first on Business Exit Stories.
56 minutes | Dec 28, 2020
What to Be Aware of with Private Equity and Search Fund Buyers
In a transaction that involved a Private Equity group, the deal was structured in a way that the seller was very focused on getting his price for the sale of his business. Sophisticated buyers pick up on this and structure a deal to play to this emotional need and then build in other terms that may well take away the upfront give on the price. A transaction that involved a different type of buyer known in the industry as a Search Fund Buyer. How search funds are structured and some of the good and bad elements of dealing with this type of buyer. How a lack of inventory control can raise havoc on the sale of a business as well as how buyer and seller trust in another transaction made for a sweetheart deal. Carol ShinInbar Group Inc.Greenwich, ConnecticutVisit WebsiteSend E-mail The post What to Be Aware of with Private Equity and Search Fund Buyers appeared first on Business Exit Stories.
48 minutes | Dec 14, 2020
How a Medical Billing Company Was Able to Generate over 500 Interested Parties Creating a Feeding Frenzy to Buy the Business
A second-generation family owned business started in the 1950’s where there was no succession plan in place had a sales price number that they needed to get for the sale of the business. Fear surrounding being able to get that number dictated how decisions were made in trying to sell the business. A Medical Billing company where the partners had disagreements that landed them in court and where the judge, through a court order, forced the business to be sold as a way to resolve their dispute. Their company had figured out a way to build a better mouse trap that was highly valued in the market. A strategic buyer entered the picture and what happened during the negotiations and how the actual business was not what the buyer was primarily looking to buy. An electrical contractor was able to head off attempts by a buyer to drive down the price of business. A buyer’s big vision was in alignment with a seller’s willingness to help the buyer achieve this vision and why this concept of alignment is so important for buyers and sellers to understand. Eric GallEdison Business AdvisorsTampa Bay, FloridaVisit WebsiteSend E-mail The post How a Medical Billing Company Was Able to Generate over 500 Interested Parties Creating a Feeding Frenzy to Buy the Business appeared first on Business Exit Stories.
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