Financial Structures: Net Working Capital
The math behind Net Working Capital seems straightforward, but agreeing on this number is often the most contentious part of doing a transaction. Why is there so much nuance and why is getting this number right so critically important? This episode dives in to this crucial negotiation point and we share how we almost lost our first deal because of it! Discussion with Brent Beshore and Emily Holdman starts @ 1:35.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Financial Structures: Fees Buyers Charge
While it's common for Private Equity firms to charge fees as part of the transaction, these fees can take on many forms. Some firms are transparent and only charge enough to cover their expenses, others not so much. In this episode, we cover fee types and structures, as well as things you should watch out for when examining the fees your potential buyer plans to assess. Discussion with Brent Beshore and Emily Holdman starts @ 1:43.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Financial Structures: Employee Option Pools
Done well, Employee Option Pools present compelling incentives for the employees running the company post-close. As with most components of a deal, the structure and the math matter. In this episode, we talk about potential pitfalls and the hallmarks of a well-constructed employee compensation plan. Discussion with Brent Beshore and Emily Holdman starts @ 1:09.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Financial Structures: Reps & Warranties
Reps and warranties. Indemnification. Caps and baskets. Are you still awake? In this episode, we break down the legalese into digestible concepts and walk through how this section of a contract can be used to protect yourself and communicate critical information to a potential buyer. Discussion with Brent Beshore and Emily Holdman starts @ 2:34.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Financial Structures: Real Estate & Cap Rates
Many company owners own real estate associated with their business in order to expand their returns. As part of a potential transaction, buyers will be interested in the relationship between the real estate and the company and it is likely that real estate will be part of the deal terms in some form. In this episode, we step through the terminology and calculations used around real estate in transactions and the conversations you should be prepared to have with potential buyers as you negotiate a deal. Discussion with Brent Beshore and Emily Holdman starts @ 2:36.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Financial Structures: Owner Post-Close Employment & Consulting
What will your role look like post-close? Do you plan to exit immediately or stay on indefinitely? And how do you want to be compensated in this next phase of your business? In this episode, we examine the different employment structures available and their potential impact on you, your personal finances, and your company. Discussion with Brent Beshore and Emily Holdman starts @ 1:50.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Negotiating: The First Move
Buyers commonly make the first move in a transaction. As a seller, this often catches us off guard (in a good or bad way). In this episode, we discuss how to digest an initial offer and the importance of communicating our expectations clearly and transparently. Discussion with Brent Beshore and Emily Holdman starts @ 1:34.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Negotiating: "You Set The Price, I'll Set The Terms"
As a seller, it can be easy to fixate on the valuation and cash at close numbers, especially when they are some of the largest you've seen in your lifetime. But the structure and terms of the deal are equally important. In this episode, we explore how to work with your potential buyer to make sure the structure of your deal is a reflection of your needs and expectations. Discussion with Brent Beshore and Emily Holdman starts @ 3:02.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Negotiating: Formulaic vs. Numerical Deal Value
Prospective buyers will express their valuation of your company in different ways. While some will give you a set valuation number, others may use a multiple of earnings or an even more complex formula to be calculated at a predetermined time before close. In this episode, we examine the pros and cons of each method and important considerations as a seller as you contemplate an offer. Discussion with Brent Beshore and Emily Holdman starts @ 2:10.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Negotiating: Walking In The Buyer's Shoes
All buyers have one thing in common: they expect a return on their investment. So what is the best way to market your company to buyers knowing they won't invest if they don't see growth potential? This episode hits on some important do's and don'ts as you present your business to prospective buyers. Discussion with Brent Beshore and Emily Holdman starts @ 2:05.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Negotiating: Identifying a BATNA
What the heck is a BATNA? It's an industry acronym for Best Alternative To a Negotiated Agreement. In other words, what's your backup plan if negotiations with a prospective buyer fall through? In this episode, we talk about the importance of developing a solid BATNA and the role it plays in your conversations with buyers. Discussion with Brent Beshore and Emily Holdman starts @ 1:15.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Negotiating: Tips
We all have our own negotiating style and most of them can be effective... if you stick to it. Whatever method you choose, you're best served knowing as much as you can about the buyer's motivations. In this episode, we give you a list of questions that will help you prepare to represent your needs and your company in the most effective way. Discussion with Brent Beshore and Emily Holdman starts @ 2:21.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Paperwork: Deal Paperwork & Lease Agreements
Drafting the deal documents is expensive and time-consuming, but also can be a good indicator of progress in negotiations and the buyer's interest in continuing the process. In this episode, we step through the various documents necessary to close a deal and the players and factors that impact this crucial part of the dealmaking process. Discussion with Brent Beshore and Emily Holdman starts @ 1:57.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Paperwork: Outlining The Purchase Agreement, Seller Note, And Employment Agreement
Continuing from our prior episode, we dissect another set of deal documents and how they impact you as an owner. Discussion with Brent Beshore and Emily Holdman starts @ 5:16.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Fees and Costs: Deal Fees & Costs
If you're used to spending a minimal amount on legal and accounting issues, transaction fees can be a real shocker. But resist the temptation to drive fees as low as possible - the best intermediaries and advisors will often command a higher fee but save you money in the final accounting. In this episode we set expectations on ranges of fees and the levels of service you should expect based on what you pay. Discussion with Brent Beshore and Emily Holdman starts @ 6:03.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
The Process: Creating A Market of Buyers
Now that you've pulled together your marketing materials, it's time to find a buyer. While there are multiple ways to build a market for your company, they each come with tradeoffs. In this episode, we take a look at broad market auctions to hyper-targeting as well as solutions in between and discuss the key considerations for each method. Discussion with Brent Beshore and Emily Holdman starts @ 3:37.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
The Process: Initial Buyer Outreach...And Rejection
You've decided on a buyer or group of buyers to whom you'd like to pitch your company. How do you kick-off the process? And once you do, how should you think about rejection if they decide to pass? In this episode, we give you very practical steps on how to reach your potential buyers of choice and how you should think about a buyer passing on your business. Discussion with Brent Beshore and Emily Holdman starts @ 3:47.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
The Process: Fielding Offers: Ballpart Valuation, Site Visits, Indications of Interest, Buyer Qualification & Letters of Intent
You've generated some interest in your business from prospective buyers. What will their next steps be? In this episode, we walk through the typical process a buyer will follow between the initial expression of interest and the draft of an official Letter of Intent. Discussion with Brent Beshore and Emily Holdman starts @ 5:08.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
The Process: Getting Serious: Letter of Intent & Due Diligence
There's a joke in private equity that each deal is won and lost at least three times during due diligence. In fact, in the part of the market we cover, the ratio of companies that close after Letter of Intent is reported to be less than 25%! Why is this part of the process so fraught and difficult? In this episode we unpack the practical and emotional components of the due diligence process, including a helpful list of questions to ask your prospective buyer to gauge their ability to diligence well. Discussion with Brent Beshore and Emily Holdman starts @ 6:24.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.
Post Close: The New Normal
Congratulations, you've sold your business! The day after you close, you'll be waking up in a brand new world. This episode covers what you can expect - how to communicate your transaction, what it feels like to have "a boss," and even how to deal with seller's remorse. Discussion with Brent Beshore and Emily Holdman starts @ 6:32.
Book: The Messy Marketplace
To learn more, follow us on Twitter and LinkedIn.
Don't forget to subscribe to the Permanent Playbook newsletter.