Selling into an inflationary market
As always happens, we will cycle out of a down market and use the lessons learned to grow even more valuable companies in the future.
Parsing out deal elements as a percent of TEV
Buyers of LBM businesses are overwhelmingly private equity groups, and they think of deal elements (like senior debt, subordinate debt, seller’s notes, earn-outs, and escrows) as a percent of the total they pay for your company.
Congrats are in order! Your GPMs held steady!
A curious question has come up among some buyers we deal with who are acquiring LBM businesses.
Anatomy of a deal
There can be as many as four deal elements that make up an offer to acquire your company.
Five types of EBITDA
EBITDA is a term with a time-worn, clinical definition. It stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.
Three types of acquirers
There are three general classes of buyers that might acquire your company: 1) A Strategic Buyer (strategic), 2) a pure Private Equity Group (PEG), 3) a Merchant’s Bank.
The value of a good CPA
Fact is, a good CPA is worth their weight in gold, and well worth the expense to retain one.
Mind the spread between OPEX and EBITDA
A (hypothetical) Mr. Coyle started two identical lumber dealerships years ago in a thriving area of New England. When he retired, he gave one location to one son, named Mark, and one to another son, Chris.
Roll-up acquisitions: How they work
The term “roll-up” describes a financial engineering process used by private equity and strategic investors, where multiple smaller companies, typically in the same market sector, are acquired and merged.
How an acquisition’s working capital peg is calculated
As an acquisition closes, the investment banker representing the seller calculates the working capital peg.