Business Acquisitions & Divestitures

Conn Valuation Services Ltd. has consulted in the purchase / sale  of numerous businesses and specializes in the placement of privately-traded firms  with gross annual revenues ranging between $5 and $50 million.  Typically, the scenario is that target firm  has been owner-managed, often by the original founder who is now seeking a  means of divesting of his/her interest for retirement.

Divestitures 

Conn Valuation Services Ltd. can assist with your business sale in two ways –  initially in a consulting capacity in the overall assessment of business worth  and creation of an accretive divestiture strategy.  Once this assessment has been completed,  we can take on the traditional role of business broker, assisting in the  overall marketing of the business and actively pursuing potential buyers.

Initial Assessment:  This phase of the divestiture process need not always include a comprehensive valuation of the business.  However, sufficient analysis must be completed in order to formulate an effective marketing strategy and gain a preliminary understanding of the range of value. 

The Vendor’s personal goals are integrated with the divestiture strategy.  Vendors who are willing to partially participate either in the financial risks or management direction of the firm past the sale closing date may be able to reduce the Purchaser’s acquisition risk, thereby improving the Vendor’s bargaining position at the negotiation table.

Fees charged for the initial assessment phase are based upon actual time invested at competitive hourly rates plus all disbursements for sub-contracted professional services.

Business Brokerage

Once the business has been analyzed and the optimal divestiture strategy has been identified, at this stage we will;

  • Identify the general universe of potential purchasers
  • Assess those acquirers who might enjoy above-normal synergies in the acquisition – and thereby be willing to pay in excess of the non-synergistic price
  • Develop a marketing strategy that is sensitive to the confidentiality requirements of the transaction
  • Act as an intermediary in making initial contact with potential purchasers for an expression of interest without necessarily disclosing the exact identity of the vendor / target business
  • Assist in the negotiation process
  • Identify those asset transfer strategies that seek to achieve the best balance of; vendor tax reduction; mitigation of the purchaser’s risk (which serves to increase the vendor’s overall return); most advantageous allocation of post-purchase contingency adjustments

Fees charged for the Business Brokerage phase of the service are a commission on the final imputed sales price, and contingent upon the completion of the transaction.     

Acquisitions

You may have been approached by a key competitor, supplier or customer as to your interest in taking on an ownership role in their business.  Such an opportunity could offer a substantial growth potential – provided that:

  • The asset is not overpaid for
  • There are no undisclosed contingent liabilities
  • Sufficient investigation of the target has been completed in order to properly assess post-purchase net free cash flows

Conn Valuation Services Ltd. can assist in dealing with these  potential roadblocks to an otherwise advantageous acquisition and ensure that  you have all the relevant facts necessary to be negotiating from a position of  strength. 

Finding the Optimal Deal Structure – Acquisitions may be completed through a number of alternative legal entities.  The form and source of financing will vary widely depending upon the purchaser’s resources, tax position and willingness to share an equity position with other parties.  Finally the purchase price itself may best be contingent upon various post-purchase performance criteria or other Vendor guarantees.  Legal Form, Financing and Post-Purchase Warranties are all elements of deal structure that are particular to the needs of each individual purchaser.  We  will assess your specific needs in the proposed transaction and recommend a range of deal structure options that represent the best overall balance of for those needs.

 

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