Maximizing Value for Mid-Market Owners

Our goal is simple – to get the highest possible price for your business.

Our firm was founded with the vision of providing mid-market business owners with a predictable and successful exit strategy. Our process for advising in the sale or purchase of a business is based on our proven model.

At VR Mergers and Acquisitions located in San Francisco our advantage is our commitment is to use both our methodology and our ability to research, target and REACH Corporate and Private Equity buyers. By doing so we are able to deliver qualified, motivated purchasers to our clients.

One key difference between the small business process and the M&A process for mid-market companies is our primary buyer targets are Corporate/Strategic and Private Equity purchasers.

The author of the following content is Stephen M. Abdalla, the exclusive Hawaii franchisee of VR Mergers & Acquisitions. His bio and contact information is at: http://www.vrhi.com/about_us/hawaii_team/abdalla_steve.aspx

VR in Hawaii Web site is: http://www.vrhi.com/

The ability to accurately Assess Company Value for Financial & Strategic Buyers is key to a successful sale, for maximum value the market will bear for our mid-market business owners. Prior to taking a business to market, it is important to have an accurate estimate of the likely value. For a detailed discussion of the approaches to business valuation, key factors affecting valuation, rough rules of thumb, and more, review our in depth discussion of business valuation.

It is also important to understand the distinction between financial and strategic buyers. Financial buyers are those that are not likely to realize significant synergies from an acquisition. Generally, they are individuals or entities that do not have a business in the industry of the company being acquired, or in a closely related industry. Strategic buyers, by contrast, have business operations in the same or closely related industry, and are expected to enjoy significant synergies.

A valuation (or appraisal) of a business will estimate its fair market value, the price one would expect it to sell for under normal conditions, when both seller and buyer are fully informed and neither is acting under compulsion.

The investment value is what the business is worth to a specific buyer, and reflects anticipated synergies. If potential synergies are high, the investment value can be dramatically different from fair market value, and can vary substantially by buyer. Google, for example, was able to justify paying more ($1.6 billion) to acquire YouTube than Yahoo or Microsoft because its technology and advertising network enable it to realize more revenue from the site than the other bidders. Underestimating the value of potential synergies can leave lots of money on the table, while overestimating the value may turn off the best potential buyers. This uncertainty is one of the reasons, that for larger businesses (valued at $3-5 million and higher), it often makes sense to go to market with no stated asking price.

Once this is complete we then Evaluate the Risks & Benefits of Approaching Strategic Buyers. Strategic buyers, by definition, directly or indirectly participate in the industry of the company being sold, and may realize substantial synergies through a purchase. Some businesses may have hundreds of potential strategic buyers, while others have none.

Strategic buyers may include any the following, depending on the industry:

• Direct regional competitors
• Companies that sell similar products or services in other regions, but not in direct competition to the seller's region/li>
• Customers of the seller
• Suppliers of the seller
• Companies with complimentary products or services
• Companies with suppliers or customers in common with the seller.

The decision to approach, strategic buyers, and if so, which specific buyers is an absolutely critical one. We as your advisors understand that a mere rumors that the business is for sale can cause significant damage. Companies in the seller's industry can wreak much more havoc, since they know the key players and may be in a position to take customers, suppliers or even employees from the seller. Of course most companies conduct themselves with integrity, but one can never be sure how any particular company will act. The decision is best made on a case, by case basis, considering for each buyer:

• The magnitude of potential synergies
• Estimated ability to complete the transaction
• Expected level of interest
• Likely fallout if a deal doesn’t consummate
• The company's and key executives' reputation for integrity.

Once we, and our clients are comfortable with our target list of Strategic and Private Equity Buyers we carefully create a customized marketing plan to sell your business at the highest price. Our marketing methodology often produces a range of offers so that you can choose the one that best aligns with your goals.

We meld our extensive understanding of the needs and concerns of small and mid-market business owners together with our proven methodology and our experience in multi-million dollar transactions, to deliver success for our clients.