Mergers & Acquisitions

Readers of this column know that adjustments to EBITDA are one of my favorite topics.

OPEX % is a key performance indicator, and every buyer analyzes it closely.

Selling your business in an inflationary period doesn’t necessarily mean selling it at a discount.

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.

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.

A curious question has come up among some buyers we deal with who are acquiring LBM businesses.

There can be as many as four deal elements that make up an offer to acquire your company.

EBITDA is a term with a time-worn, clinical definition. It stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.

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.

Fact is, a good CPA is worth their weight in gold, and well worth the expense to retain one.