Are you interested in selling your business? Yours truly on November 18 along with others will be presenting at the Enterprise Center of Johnson County.

Valuation Considerations for the Established Business   Event Description - Valuation Considerations for the Established Business Are you the owner of a going concern that needs to know more about how to value your business? Perhaps you need to determine the value of your business for financing, insurance or gifting purposes. Maybe you are considering the feasibility of an employee stock ownership plan or you want to structure a buy/sell agreement. Or, perhaps you are simply considering retirement, developing succession plans and need to determine a sale or transfer price for your business. If so, then this workshop is for you! Jeff Hanson, CPA and Certified Valuation Analyst (CVA), will share information on the following topics during the first part of the workshop: Valuation principles & standards of value Typical valuation approaches and how they might vary based on valuation need Key factors to consider when preparing for a business valuation Issues to consider in the sale of a business to outsiders, family, or employees Types of ownership transfers and the advantages/disadvantages of each The second part of the workshop will include a panel discussion between Jeff Hanson, CPA, CVA, transaction attorney Dave Seitter of Spencer Fane, and merger & acquisition specialist Mike O’Malley of O’Keeffe & O’Malley answering questions like the following: · Is there a “best time” to sell or transfer my business? · Will I get the price I want? · Who should I hire to advise me during the sale or transfer process? · Is there a deal structure most buyers prefer? · What steps should I take now to prepare for the eventual sale or transfer of my business? · Who should I sell or transfer my business to? · What are the common mistakes business owners make when selling or transferring a business? The workshop will conclude with the panel fielding questions from attendees. This workshop will be held at the Enterprise Center of Johnson County (8527 Bluejacket, Lenexa, KS 66214) on November 18th, from 11a.m.-1p.m. The registration fee is $25(includes box lunch).To register - online at www.ecjc.com, call 913-438-2282 or email Jayne Vehlewald.   Contact Information Primary Contact Jayne Vehlewald 8527 Bluejacket Street Lenexa, KS 66214 913-438-2282 913-888-6928 jvehlewald@ecjc.com   Secondary Contact ,   Date & Location Date: November 18, 2008 Time: 11:00 AM to 1:00 PM Location: Enterprise Center of Johnson County COST $25

Money available to buy construction businesses

From my friend Dr. Chris Kuehl of Armada Intelligence...Venture Funds Itching to Spend Globally (biotechnology, medical devices, health care, Internet based services and alternative fuels helped to drive the increase in capital investments in businesses last year to $25.75 billion) and Venture Funds are Flush and Hungry (2007 will pick up where 2006 left off) causes me to again think that now is the time to look at positioning your business for a non-strategic buyer as a viability option for the sale of your business if you are one of the folks without a succession plan. It would appear there are far more companies chasing deals then there are opportunities right now!

Time to prepare a Term Sheet and portfolio concerning your company....I have found several companies from the Midwest (insert Ohio here) who are interested in construction companies......

Most Business Owners Plan to Sell Within Three Years?

Help me here.............an article in the September 8, 2006 Inc. magazine suggest that 80% of business owners in the U.S. are not considering selling their firms. Of this group, 75% are anticipating doing so within the next three years.

Now the survey was conducted with 200 business owners with revenue between $1 million and $150 million. This article also notes a 45% jump in worldwide deal volume for the first quarter of 2006. The survey also indicates that 82% of all business owners have been approached to sell their business.

So...........is this the legacy of Harry Dent from his book, The Roaring 2000's, now coming home to roost? Are the baby boomers cashing out?

"Why Some Sellers Get More Cash"

Ran across a great article by Craig Herron and Kevin Short from the Exit Planning Review for Advisors website owned and operated by John H. Brown. I am a very active follower of Mr. Brown and think his information is top notch:

"How do business owners get the most cash when they sell? Three areas influence the cash received as a percentage of the purchase price: tax status (C versus S or LLC); structure (stock versus asset); and the Buyer’s financial strength.

A company’s size directly impacts all three. Companies with EBITDA (earnings before interest, taxes, depreciation and amortization) greater than $5 million sell for a higher percentage of after-tax cash proceeds.

There are over 3,000 private equity firms with in excess of $150 billion in capital to invest and thousands of corporations looking for strategic acquisitions. However, few invest in companies below a threshold of $3 to $5 million of EBITDA. This threshold suggests financial strength, customer breadth, strong management and a market niche, thereby lowering the Buyer’s risk. These Buyers have the equity and the banking relationships to make all cash offers (no seller financing!). And, they are more willing to acquire stock, which solves the tax issue.

Want more cash? Grow! [Emphasis Added]"

Great article....I could not have handled this better so I wanted to share it with you.

Mergers and Acquisitions

An article in yesterday's Kansas City Star reveals the current "boon" in mergers and acquisitions....yes, I am seeing the same. I have had more engagements in this area this year than in the last five so the time is good to examine the sale of a business. Venture capital firms have ventured back to our part of the world asking for "deal flow" - meaning that the "big money" is out hunting for opportunities everywhere and anywhere.............

But how long will it last? A betting man right now would argue not beyond the end of the year!

M&A Statistics....Multiples to Compute EBITDA

Another interesting fact from John H. Brown (www.exit-planner.net) and Kevin M. Short of Clayton Capital Partners......I am often asked "What is the proper multiple for my company?" Wow, tough question....I  usually point to a lower number if you have a small company that is not publically traded. Kevin would point out:

"........... sale prices of companies continue to stay high, 5.8 x EBITDA for deals less than $25 million in size and 9.1 for deals over $25 million. These multiples are expected to hold for the remainder of 2006."

Just one person opinion..............................

Current acquisition activity

Like John H. Brown (dadamson@exitplanning.com) I agree with the assessment that we are in a very, very good environment to consider selling a business. I have been working on five acquisitions over the last three months and believe I will be working on many, many more this year.

But I am asked why this is going on? Clearly the money that has been on the sideline for the last few years after 2001 has entered the game. One venture capital company told me recently that they were among 5 players that made a presentation to a Texas based business...a business that has gross sales of $15mm! Now more than ever the "big" money is dipping down to private middle market companies. Why? Well, with the Enron\WorldCom\Sarbanes-Oxley revolution, isn't easier to move through the private sector? You bet...yet at the same time there has seemed to be a real cry for folks to have an alternative to the stock market..vis-a-vie a greater return for their money than that they are receiving from NASDAQ. Are the baby boomer owners (and investors) sensing the need to expedite the ROI on their investments given approaching retirement? Or is the middle market an untapped area of concentration? Did you know most of the business in America is of an operational size less than $50mm (or so I have been told)? As a member of the Alliance of Merger and Acquisition Advisors I continue to be stunned by the number of venture capital firms interested in the middle market for a return for their investors.....

The "Roll Ups"

It is interesting to note yet another "roll-up"....IES, Inc., a grouping of electrical companies has filed bankruptcy. Their pre-packaged bankruptcy is a restructuring and subordination of existing indebtedness.

Causes me to think....is there any "roll-up" still in existence? This device populated the construction economy of the '90's with the hope that through combined buying power, sharing of administrative functions, organizing around "best practices" plans would drive a group of private owners into the creation of huge publicly traded companies spinning off millions of dollars for stockholders, many of which were the employees of the "roll-ups", (and the venture funds who took serious financial positions in these entities).

While the motives were well placed, were there any winners in this phenomena?

M&A Forecasts for 2006

Once again I am asked if there is any market for a general contractor......I can not figure out how to sell a GC unless (1) they have a long term contract that is transferable, (2) have a specialty that keeps them out of hard bid work, (3) have a DBE or similar designation, (4) have a market niche no one else has created to date.

Does anyone else know of ANY standard by which a GC can expect to be purchased?

M&A forecast for 2006

Another interesting point.......

While the large cap mergers declined dramatically from 2000 to the present, the middle market ($100mm to $500mm) did not...the question is why? Well, most middle market entities are privately owned and the succession planning issues inherit with all family owned companies (which I am advised is around 90% of all businesses) does not follow marketing trends but the vagueries of the family dynamics.

Which means there should be significant number of companies for sale in the next ten years as the baby-boomers go "off line", especially as the multiples for companies are at a 10 year high.......at least in theory........................