The Secrets To Selling A Business: A DEEPER Dive: Valuation and Negotiations
This Week On How2Exit, Chatting With An Expert Advisor About The Secrets to Selling A Business- DEEPER - Valuation and Negotiations
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This week on How2Exit:
Kirk Michie, founder of Candor Advisors, discusses the evolution of his company and their expertise in transaction advisory services. Candor Advisors started by helping clients find the right investment bankers and attorneys for potential sales, but they expanded their services to become a boutique investment bank due to increasing demand. Their true specialty lies in working with entrepreneurs who are willing to collaborate and follow their advice to achieve their goals.
Michie highlights the oversaturation of the cannabis market and the challenges of regulating licenses in the industry. He emphasizes the need for better regulation and compares the potency of cannabis to that of wine, emphasizing the importance of adjusting regulations accordingly.
Candor Advisors has worked in various industries, including automotive, fitness equipment, life sciences, manufacturing, distribution, recycling, and food ingredients. They have completed nearly a billion dollars worth of transactions, mostly selling large private companies to public companies in the US and Europe. Their focus is on founder-led businesses, where they can connect with the founder and guide them towards the right outcome.
According to Michie, the six secrets to selling a business are finding your why, matching your buyer with your why, professionalizing the financials, not giving up too much too soon, not trying to do it yourself, and managing seller expectations. Understanding the motivations and needs of both the buyer and the seller is crucial to avoiding unmet expectations and ensuring a successful transaction.
Candor Advisors is a trusted partner for entrepreneurs looking to exit their businesses successfully. They offer a range of options, including ESOPs, private equity, and strategic buyers, and work collaboratively to ensure the best outcome for the seller. Taking the advice of experienced advisors can help entrepreneurs avoid risks and maximize the value of their transactions.
Michie emphasizes the importance of having advisors on both sides of the transaction to handle due diligence and legal matters. He acknowledges the limitations of his expertise and the need for specialized professionals. Properly navigating legal and tax implications, as well as risk transfer and asset ownership, requires the expertise of attorneys and a thorough process. Michie highlights the importance of involving attorneys and going through a comprehensive process to ensure a successful transaction.
When it comes to selling a business, Michie advises business owners to consider the timing and quality of their financials. Buyers may expect a discount if financials are disorganized or incomplete. Understanding the motivations of both buyers and sellers is crucial to negotiating a successful deal.
(57:06) Listen Here
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This week’s “DEEPER” Dive: Valuation and Negotiations
Valuation models play a crucial role in pricing a business and are the starting point for Negotiations
Valuation models play a crucial role in pricing a business for sale, providing insights into its worth and helping buyers and sellers determine a fair market value.
It is difficult to provide an exact estimate of the total number of valuation models, as the field of valuation is constantly evolving and new models can be developed based on specific contexts or industries. However, considering the various approaches, methods, and techniques that can be applied in valuation, it is safe to say that there are hundreds, if not thousands, of different valuation models in practice. These models may range from simple calculations based on financial ratios to complex quantitative models incorporating advanced mathematical algorithms. The diversity of valuation models allows for flexibility in analyzing different types of businesses and situations, catering to the specific needs and requirements of the valuation process.
While there are many valuation approaches available, three prominent models are commonly used:
Let’s get into them and the negotiations after valuation:
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Disclaimer: This newsletter is provided for informational & educational purposes only, and should not be relied upon as legal, business, investment, or tax advice. We are not attorneys, tax, or financial advisors and not qualified to give any such advice.
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