tag:blogger.com,1999:blog-85955649266234934122024-03-13T23:57:12.283-05:00Sell Your Software CompanyDave Kauppi is the editor of The Exit Strategist Newsletter and Managing Director MidMarket Capital Advisors, providing corporate finance and sell-side advisory services to entrepreneurs in information technology and other high tech businesses. Dave graduated from The Wharton School of Business, University of Pennsylvania with a BS in Economics /Finance. Our ideal client is a business seller who wants more than an EBITDA valuation Multiple.chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.comBlogger115125tag:blogger.com,1999:blog-8595564926623493412.post-67461307141847219692021-12-20T16:38:00.000-06:002021-12-20T16:38:27.816-06:00<div class="separator" style="clear: both; text-align: center;">
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<p align="center" class="normal" style="background: navy; text-align: center;"><b><i><span style="color: #f0c62c; font-family: "Arial","sans-serif"; font-size: 22.0pt; mso-fareast-font-family: Arial;">Acquisition Opportunity<o:p></o:p></span></i></b></p>
<p align="center" class="normal" style="margin-right: 5.0pt; text-align: center;"><b><span style="font-family: "Calibri","sans-serif"; font-size: 16.0pt; mso-fareast-font-family: Calibri;">Progress Software
Consulting Firm w/ Proprietary RAD Framework</span></b></p>
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<p align="center" class="normal" style="margin-right: 5.0pt; text-align: center;"><b><span style="font-family: "Arial","sans-serif"; mso-fareast-font-family: Arial;"><a href="https://app.hellosign.com/s/J1fAcJXP">Click here to eSign the CA and Receive the Memoradum</a><br /></span></b></p><p align="center" class="normal" style="margin-right: 5.0pt; text-align: center;"><b><span style="font-family: "Arial","sans-serif"; mso-fareast-font-family: Arial;">2020 Revenue: $1.3M 2020 EBITDA $</span></b><!--[if gte vml 1]><v:shape
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<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">Superior
Reputation:</span></i></b><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;"> Company has been providing Progress
Software development and consulting services for over 20 years and have a loyal
local account base. Their top 5 customers have an average 15 year relationship.<o:p></o:p></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">Leverages a
Competitive Advantage: </span></i></b><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">Company has
developed a proprietary web-based Rapid Application Development (RAD)
framework, that is utilized in the modernization of client legacy systems in
addition to new application development. Company uses this competitive advantage
to win contracts over other consulting firms.<o:p></o:p></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">Potential
for Geographic Expansion</span></i></b><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">:
As a smaller firm, they have primarily limited their business to the large and
medium sized clients in their local area. They do not have sales reps and do
limited marketing. A larger firm could leverage their expertise to capture
business in additional Progress Software stronghold locations.<o:p></o:p></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">Great
Opportunity to Monetize Company's Software:</span></i></b><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;"> Company currently does not sell its RAD Platform
Software. It enables long-term Progress Software end-users to retain their
proprietary databases and processes while modernizing business applications to
remain competitive with their software solutions. It protects clients' investments in Progress
Software while providing a modern user interface. The RAD Platform Software also
can be used by companies seeking to have new web-based business applications
designed, developed and implemented.<b><i><o:p></o:p></i></b></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">Long-Term
Skilled Employee Base: </span></i></b><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">Company's
key engineering personnel average over 15 years of company experience. They
also employ a few highly experienced sub-contractors. Clients value the
experience and high level of enterprise support.<b><i><o:p></o:p></i></b></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">Significant
Growth Potential: </span></i></b><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">Company's top
consulting business competitors either do not offer a RAD Platform solution or
their solution requires a major retooling of their clients' legacy
environments. This powerful RAD Platform could be both used to improve the
performance of a larger company's consulting practice and it could be offered
as licensed software for current Progress Software OpenEdge users.</span><b><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;"> </span></b></p>
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<p class="normal" style="margin-right: 5.0pt;"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: Calibri;">The Company
has successfully supported Progress Software products for over 2 decades. Like
so many smaller IT consulting firms, they limit their geographic reach to their
local market. Also like many other similar firms, they develop software tools
that improve the functionality of the main product. They leverage that to a
small extent by using it to win consulting engagements.</span></p>
<p class="normal" style="margin-right: 5.0pt;"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: Calibri;">After years
of product use and product enhancements, they recognize the value of their
supporting software and want to monetize their intellectual property. However,
they lack the sales and marketing resources to capitalize on the potential of
their products, and their strong and loyal customer base.</span><span style="font-family: Calibri, "sans-serif"; font-size: 10pt;"> </span></p>
<span style="font-family: Calibri, "sans-serif"; font-size: 10pt;">Their software
has been used for several years in major client engagements. It is battle
tested technology and the "technology risk" for a potential acquirer will
be minimal. It offers huge benefits to customers who have significant
investments in their Progress Software Systems, but need to modernize them,
deliver them on the Web, and greatly enhance the user interface</span><div><br /></div><div><a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href=" https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a></div>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-54670089715529536712021-05-09T11:38:00.001-05:002021-05-09T11:38:44.741-05:00<div class="separator" style="clear: both; text-align: center;">
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiU0ONB6uHLMOUttTnwo1rx8mQYtiEtSNfswVXYTV3UtL66FAxYjhPt6f4i3ve8K1Nopb_v7PQLcxOclDVg_UYux-zF-ivSslmqFzPge0av8ZZKOeBVfaNZcKB_FvHosFETTeNEe3YbI8sm/s267/Software.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="189" data-original-width="267" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiU0ONB6uHLMOUttTnwo1rx8mQYtiEtSNfswVXYTV3UtL66FAxYjhPt6f4i3ve8K1Nopb_v7PQLcxOclDVg_UYux-zF-ivSslmqFzPge0av8ZZKOeBVfaNZcKB_FvHosFETTeNEe3YbI8sm/s0/Software.jpg" /></a></div><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
<div><br /></div><div><p align="center" class="normal" style="background: navy; text-align: center;"><b><i><span face=""Arial","sans-serif"" style="color: #f0c62c; font-size: 22pt; mso-fareast-font-family: Arial;">Acquisition Opportunity<o:p></o:p></span></i></b></p>
<p align="center" class="normal" style="margin-right: 5pt; text-align: center;"><b><span face=""Calibri","sans-serif"" style="font-size: medium; mso-fareast-font-family: Calibri;">Enterprise Document
Viewing and Conversion Software Company</span></b><i><span style="font-size: 16pt;"><o:p></o:p></span></i></p>
<p class="normal" style="margin-right: 5pt;"><i><span style="font-size: 1pt;"> </span></i></p>
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</tbody></table><b><span face=""Arial","sans-serif"" style="font-size: 12pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Arial; mso-fareast-language: EN-US;">TTM Revenue: $6.0M Projected
2021 Revenues $7.0M</span></b></div><div><b><span face=""Arial","sans-serif"" style="font-size: 12pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Arial; mso-fareast-language: EN-US;"><br /></span></b></div><div><b><span face=""Arial","sans-serif"" style="font-size: 12pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Arial; mso-fareast-language: EN-US;"><a href="https://app.hellosign.com/s/APiMUGnQ">Click Here to eSign the Confidentiality Agreement</a><br /></span></b></div><div><b><br /></b></div><div><p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, sans-serif; font-size: 10pt;">Superior
Reputation:</span></i></b><span style="font-family: Calibri, sans-serif; font-size: 10pt;"> Company has been providing
document viewing and conversion software for over 25 years and have more than
300 Fortune 2000 and OEM Clients including most to US and World Banks, the
majority of the top Shipping Companies, as well as the top medical records and insurance companies
both in the US and Europe. <o:p></o:p></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, sans-serif; font-size: 10pt;">Great
Customer Diversity: </span></i></b><span style="font-family: Calibri, sans-serif; font-size: 10pt;">Company
currently serves global clients in Banking, Insurance, Government, Healthcare,
Shipping, Document Management and more. The top 7 customers comprise 23% of
total revenues.<o:p></o:p></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, sans-serif; font-size: 10pt;">Long Term
Client Relationships</span></i></b><span style="font-family: Calibri, sans-serif; font-size: 10pt;">: Their top
7 customers have been with them in size order: #1 25 years, #2 15 years, #3 20
years, #4 17 years, #5 15 years, #6 20 years, and #7 10 years. Their superior
client support and ease of use of their solution enhances client productivity
resulting in a very sticky client with dependable revenue.<o:p></o:p></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, sans-serif; font-size: 10pt;">Great
Opportunity to Leverage Blue Chip Client Base:</span></i></b><span style="font-family: Calibri, sans-serif; font-size: 10pt;"> Company serves a very desirable customer base of hundreds
of large enterprises and large OEMs allowing great cross-sell benefit to some
strategic buyers in the document repository, enterprise content management,
digital asset management or other adjacent markets..<o:p></o:p></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, sans-serif; font-size: 10pt;">Long-Term
Skilled Employee Base: </span></i></b><span style="font-family: Calibri, sans-serif; font-size: 10pt;">Company has
several key support and engineering personnel with over 15 years of company
experience. Clients value the experience and high level of enterprise support.<b><i><o:p></o:p></i></b></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, sans-serif; font-size: 10pt;">Deep
Engineering Strength:</span></i></b><i><span style="font-family: Calibri, sans-serif; font-size: 10pt;"> </span></i><span style="font-family: Calibri, sans-serif; font-size: 10pt;">The
Company's code base and libraries are developed and maintained in-house.
Expertise in Java on Unix, Windows platforms. Integrated with all of the major
document repositories and Enterprise Content Management platforms.<b><o:p></o:p></b></span></p>
<p class="normal" style="border: none; margin-bottom: 3.0pt; margin-left: .25in; margin-right: .5in; margin-top: 6.0pt; mso-border-shadow: yes; mso-list: l0 level1 lfo1; mso-padding-alt: 31.0pt 31.0pt 31.0pt 31.0pt; text-align: justify; text-indent: -.25in;"><!--[if !supportLists]--><span style="font-family: "Noto Sans Symbols"; font-size: 10pt;">●<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: Calibri, sans-serif; font-size: 10pt;">Significant
Growth Potential: </span></i></b><span style="font-family: Calibri, sans-serif; font-size: 10pt;">Company's
business has experienced a significant increase as we emerge from the Covid
pandemic. Corporate emphasis on cloud-based infrastructure services and digital
transformation </span><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: Calibri;">solutions is
accelerating. Company is expanding relationships with partners including
Alfresco/Hyland Pega IBM (FileNet & ICN) and others.<b><o:p></o:p></b></span></p></div><div><b><span face=""Arial","sans-serif"" style="font-size: 12pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Arial; mso-fareast-language: EN-US;"><br /></span></b></div><div><br /></div><div> </div><a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href=" https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>Dave Kauppihttp://www.blogger.com/profile/17485230537306066178noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-65538085873818315912021-03-23T10:18:00.000-05:002021-03-23T10:18:20.767-05:00Selling Your Business - Your M&A Advisor's Number 1 Job<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXWNGwIK7MrAJGXRQyb22soTGAHfhAvDY3CoiWFdCrZeLrcU9j3KgyUSbBjhpXWen0KOoH44gHgKSMB7t85YBflMYerr_b0MfYVZG3lv5LfNgeF78nWGGNo2lNu9i4KhpJinwvqTWiEnw/s300/Tiger+Fight.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="168" data-original-width="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXWNGwIK7MrAJGXRQyb22soTGAHfhAvDY3CoiWFdCrZeLrcU9j3KgyUSbBjhpXWen0KOoH44gHgKSMB7t85YBflMYerr_b0MfYVZG3lv5LfNgeF78nWGGNo2lNu9i4KhpJinwvqTWiEnw/s0/Tiger+Fight.jpg" /></a></div><p class="MsoNormal"><span style="color: black; font-family: arial;">Many business owners are tempted to sell their own business especially after receiving an unsolicited inquiry from a potential buyer. Why not save what could be a very expensive Success Fee from your broker or M&A advisor?</span></p><p class="MsoNormal"><span style="color: black; font-family: arial;">Think about the last time you bought a new car. Did you walk into the dealership, look at the sticker price, and then instruct the salesman, "This is great, I'll take it." Of course not. You negotiated for a better deal. A good advisor sets up a bidding competition among several buyers. A business owner managing his business sale can normally process one buyer at a time, thus no competition, no reason for the single buyer to offer a competitive price and terms, and no reason to behave during due diligence (think of price adjustments during the later stages of the process).</span></p><p class="MsoNormal"><span style="color: black; font-family: arial;">A good M&A process involves bringing several buyers to the table simultaneously. This is especially important when you are attempting to sell for strategic value like our last software company client. We had a 40% price improvement between the initial offers and the final competitive bid winner. That's earning your fee!</span></p><div><a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href=" https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a></div>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-43581726877896207082021-03-17T16:47:00.000-05:002021-03-17T16:47:01.501-05:00Proposed Capital Gains Tax Will Be a Killer to Business Sellers<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
<div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0pXn8wBx7C0IMgrPbfDm11ImV53AnVQPAXvyj1bYNLayD0jHiXDZLDKxnItFsG-jBSs-4cOIa_UcLfpVctF8QOSN-N5IWN-Ss40tCFBtwGLOupUWzXtuWv7NB04nnljakBST9kiGQGHo/s259/TAX.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="194" data-original-width="259" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0pXn8wBx7C0IMgrPbfDm11ImV53AnVQPAXvyj1bYNLayD0jHiXDZLDKxnItFsG-jBSs-4cOIa_UcLfpVctF8QOSN-N5IWN-Ss40tCFBtwGLOupUWzXtuWv7NB04nnljakBST9kiGQGHo/s0/TAX.jpg" /></a></div><div align="center">
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<p align="center" class="MsoNormal" style="mso-line-height-alt: 18.0pt; text-align: center;"><b><span style="color: #474444; font-family: "Calibri","sans-serif"; font-size: 21.0pt; mso-fareast-font-family: "Times New Roman";">Proposed Capital
Gains Tax Will Be a Killer to Business Sellers</span></b><b><span style="color: #474444; font-family: "Helvetica","sans-serif"; font-size: 18.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></b></p>
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<p style="line-height: 18.0pt; margin-bottom: 10.5pt;"><span style="color: #242020; font-family: Arial, sans-serif; font-size: 10pt;">According
to the Tax Foundation, a main target of President Biden's tax proposal is
Long Term Capital Gains Tax. He proposes taxing Long-term capital
gains and qualified dividends at the ordinary income tax rate of 39.6
percent on income above $1 million and eliminates step-up in basis for
capital gains taxation.[2]. So if your business sells for $10 million,
your tax bill will go from $2 million under current laws to $3.96 million
under the Biden plan. If you had considered selling in the next couple of
years, you may want to consider 2021 as your best exit plan year. We
believe that this tax change will not go into effect until 2022.</span></p>
<p style="line-height: 18.0pt; margin-bottom: 10.5pt;"><span style="color: #242020; font-family: "Arial","sans-serif"; font-size: 10.0pt;">The
good news is that buyer interest in software, information technology and
technology focused businesses is exploding. This is the market's
acknowledgement that this niche is the engine of economic growth. There
is too much money pursuing too few deals (meaning companies that are
formally on the market for sale). Because of this, strategic buyers and
private equity groups are actively contacting business owners directly.
They are also regularly contacting MidMarket Capital looking for deals.</span><span style="color: #242020; font-family: "Helvetica","sans-serif"; font-size: 13.5pt;"><o:p></o:p></span></p>
<p style="line-height: 18.0pt; margin-bottom: 10.5pt;"><span style="color: #242020; font-family: "Arial","sans-serif"; font-size: 10.0pt;">What
if you are not ready to retire in 2021? What if your plan was to
retire in 2023? You can move up your sale timeframe (to 2021), but
not necessarily your exit timeframe. No, I am not talking in riddles.
What I mean is that you should take your chips off the table with a sale
transaction sooner rather than later. Your eventual exit could be in 2023
after working full time for the new owner for 1 year to transition
customer relationships and intellectual property, followed by a limited
consulting engagement for one year.</span><span style="color: #242020; font-family: "Helvetica","sans-serif"; font-size: 13.5pt;"><o:p></o:p></span></p>
<p style="line-height: 18.0pt; margin-bottom: 10.5pt;"><span style="color: #242020; font-family: "Arial","sans-serif"; font-size: 10.0pt;">We
would love to confidentially discuss your situation. <a href="https://midmarkcap.com/mmc/">https://midmarkcap.com/mmc/</a>
For a free initial consultation, please email me at <a href="mailto:davekauppi@midmarkcap.com">davekauppi@midmarkcap.com</a>, or
call me at my direct office number (269) 231-5772 or on my cell at (630)
215-3994.</span><span style="color: #242020; font-family: "Helvetica","sans-serif"; font-size: 13.5pt;"><o:p></o:p></span></p>
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<p style="line-height: 19.2pt; margin-bottom: 10.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><span style="color: #242020; font-family: "Calibri","sans-serif"; font-size: 13.5pt;">Thank You,</span><span style="color: #242020; font-family: "Helvetica","sans-serif"; font-size: 10.5pt;"><o:p></o:p></span></p>
<p style="line-height: 19.2pt; margin-bottom: 10.0pt; margin-left: 0in; margin-right: 0in; margin-top: 0in;"><span style="color: #242020; font-family: "Calibri","sans-serif"; font-size: 13.5pt;">Dave Kauppi, President MidMarket Capital</span><span style="color: #242020; font-family: "Helvetica","sans-serif"; font-size: 10.5pt;"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: 19.2pt;"><span style="color: #242020; font-family: "Calibri","sans-serif"; font-size: 13.5pt; mso-fareast-font-family: "Times New Roman";">THE EXIT STRATEGIST</span><span style="color: #242020; font-family: "Helvetica","sans-serif"; font-size: 10.5pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></p>
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</tbody></table></div><a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href=" https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-91745244939174515762021-03-10T14:45:00.000-06:002021-03-10T14:45:28.667-06:00<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
<div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCJJzFXKgsnaORzut3qbK-k_gqchP1JOrhUpvbUA-swiVE2-jzw3wtr9fyH2qIUUFqUxNIDYEyPpSJfip4WXlYS7cJm2cYO5XB_oiiogIFUQcpfuMdzxt9ozyIfeUI8q9RlTAGBUfA-MY/s150/Business+Roundtable+PodCast.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="150" data-original-width="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCJJzFXKgsnaORzut3qbK-k_gqchP1JOrhUpvbUA-swiVE2-jzw3wtr9fyH2qIUUFqUxNIDYEyPpSJfip4WXlYS7cJm2cYO5XB_oiiogIFUQcpfuMdzxt9ozyIfeUI8q9RlTAGBUfA-MY/s0/Business+Roundtable+PodCast.jpg" /></a></div><br /><div><br /></div><h2 style="text-align: left;"><span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;"><b>In this 10 minute Interview Podcast Dave Kauppi discusses The M&A business of selling software and IT business'</b>. Analyzing the biggest differences of selling a traditional "Bricks and Mortar" business vs selling a technology based business. Why recurring revenue is so important for tech companies, driving up the valuation. This conflicts with business characteristics that drive down the selling price. What mistakes do business owners make when selling their business.</span></h2><br style="background-color: white; box-sizing: inherit; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px; line-height: inherit !important;" /><span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;">Mr. Kauppi also wrote a book available on Amazon - 'Selling Your Software Company'</span><br style="background-color: white; box-sizing: inherit; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px; line-height: inherit !important;" /><br style="background-color: white; box-sizing: inherit; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px; line-height: inherit !important;" /><span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;">Business Roundtable with Matt Battaglia</span><br style="background-color: white; box-sizing: inherit; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px; line-height: inherit !important;" /><span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;">The place where entrepreneurs, top business leaders, the best ideas, and the biggest stories in business meet to discuss the future of business</span><br style="background-color: white; box-sizing: inherit; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px; line-height: inherit !important;" /><span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;">Sundays at 7pm on 1100 KFNX Click Here to Listen to the Interview/</span><div><span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;"><br /></span></div><div><span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;"> Podcast </span><a data-attribute-index="1" href="https://cutt.ly/LzQtHmg" style="background: rgb(255, 255, 255); border: 0px; box-sizing: inherit; font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px; font-weight: var(--font-weight-bold); line-height: inherit !important; margin: 0px; padding: 0px; position: relative; text-decoration-line: none; touch-action: manipulation; vertical-align: baseline;">https://cutt.ly/LzQtHmg</a><span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;"> </span></div><div><br /></div><div>#strategicvalue</div><div><br /></div><div><a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href=" https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a></div>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-2355234945389550302021-02-11T12:42:00.000-06:002021-02-11T12:42:30.996-06:00Representations and Warranties in a Business Sale<div class="separator" style="clear: both; text-align: center;">
<div class="separator" style="clear: both; text-align: center;"><br /></div><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
<br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguKjVr9kSb5gnMFn-ZKKu7IR5_-n2RxiWVEEQ8vrGy4SFyjksHkN6gQ8EVTigBOZKlM1Uj6f_ROtm5WTiBT-j8T6eUfJhAyM6CZ8gk7jT60qwpmcl_Jhyphenhyphen8UR_3HCfNdnZwfN7Icst393c/s2048/I+solemnly+swear.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1330" data-original-width="2048" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguKjVr9kSb5gnMFn-ZKKu7IR5_-n2RxiWVEEQ8vrGy4SFyjksHkN6gQ8EVTigBOZKlM1Uj6f_ROtm5WTiBT-j8T6eUfJhAyM6CZ8gk7jT60qwpmcl_Jhyphenhyphen8UR_3HCfNdnZwfN7Icst393c/s320/I+solemnly+swear.jpg" width="320" /></a></div><br /><span style="font-family: arial;"><span face="Arial, sans-serif">One of the biggest surprises that
business sellers experience is when they first review the definitive purchase
agreement presented by the buyer and encounter the Reps and Warranties section.
The reactions range from shock, to fear, to disbelief to, "no way am I
signing this".</span><span face="Arial, sans-serif"> </span><span face="Arial, sans-serif">As the Eagles song
says, "Well I've got some news for you and you'll soon find out its true……"</span><span face="Arial, sans-serif"> </span><span face="Arial, sans-serif">Below is a Reps and Warranties Section for a
transaction we recently completed. As you can see, it is extensive and
far-reaching.</span></span><div><br /></div><div><p class="MsoNormal"><b><span style="font-family: "Arial","sans-serif";">Warranties and Representations of
Seller <o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-family: "Arial","sans-serif";">Except as set
forth in the correspondingly numbered Section of the Disclosure Schedules,
Seller represents and warrants to Purchaser that the statements contained in
this Article 4 are true and correct as of the date hereof.<o:p></o:p></span></p>
<p class="MsoNormal"><b><u><span style="font-family: "Arial","sans-serif";">Organization and Good Standing of
Seller</span></u></b><b><span style="font-family: "Arial","sans-serif";">.
</span></b><span style="font-family: "Arial","sans-serif"; mso-bidi-font-weight: bold;">Seller is an individual residing in the state of <b>XXXXX</b>, and has
full power and authority to own, operate or lease the properties and assets now
owned, operated or leased by him and to carry on the Business as currently
conducted. Section 4.01<u> of the Disclosure Schedules</u> sets forth each
jurisdiction in which Seller is licensed or qualified to do business, and
Seller is duly licensed or qualified to do business and is in good standing in
each jurisdiction in which the ownership of the Purchased Assets or the
operation of the Business as currently conducted makes such licensing or
qualification necessary.</span><b><span style="font-family: "Arial","sans-serif";"> <o:p></o:p></span></b></p>
<p class="MsoNormal"><b><u><span style="font-family: "Arial","sans-serif";">Authorization</span></u></b><b><span style="font-family: "Arial","sans-serif";">. </span></b><a name="_Hlk59367253"><span style="font-family: "Arial","sans-serif"; mso-bidi-font-weight: bold;">Seller has
full power and authority to enter into this Agreement and the Ancillary
Documents to which Seller is a party, to carry out his obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by Seller of this Agreement and any
Ancillary Document to which Seller is a party, the performance by Seller of his
obligations hereunder and thereunder and the consummation by Seller of the
transactions contemplated hereby and thereby have been duly authorized by
Seller. This Agreement has been duly executed and delivered by Seller, and
(assuming due authorization, execution and delivery by Purchaser) this
Agreement constitutes a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms. When each Ancillary
Document to which Seller is or will be a party has been duly executed and
delivered by Seller (assuming due authorization, execution and delivery by each
other party thereto), such Ancillary Document will constitute a legal and
binding obligation of Seller enforceable against it in accordance with its
terms.</span></a><b><span style="font-family: "Arial","sans-serif";"><o:p></o:p></span></b></p><p class="MsoNormal"><a name="_Hlk59367253"></a></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdIAGi27DjH1-NGhltPDKC7F0ha_B8gWD1RcPn11AH5dkQH-ggx7LmsXy0_U_cO7OgongdKJTi4yoYmn0NeuxV6zdcwq3YhJ2YKFzgQSVZI4lGW4niseRlTDOlbRoGpvHfV5DMCBL2qN4/s700/Financial+Leverage.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="410" data-original-width="700" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdIAGi27DjH1-NGhltPDKC7F0ha_B8gWD1RcPn11AH5dkQH-ggx7LmsXy0_U_cO7OgongdKJTi4yoYmn0NeuxV6zdcwq3YhJ2YKFzgQSVZI4lGW4niseRlTDOlbRoGpvHfV5DMCBL2qN4/s320/Financial+Leverage.jpg" width="320" /></a></div><p></p><p class="MsoNormal"><span style="font-family: arial;"><b><u>Ownership and
Sufficiency of Purchased Assets</u>.</b> Seller has good title to the Purchased Assets
being transferred to Purchaser, free and clear of all encumbrances, security
interests, liens, charges, conditional sales agreements or claims by any person
of any kind, whether known or unknown, except the Assumed Liabilities. None of the Purchased Assets are subject to
any commitment or other arrangement for their sale or use by Seller or third
parties. The Purchased Assets constitute
all of the Purchased Assets of the Seller used in the Business and are in good
condition and are sufficient to permit the conduct of the Business as it has
and will be conducted up to the Closing and constitute all of the rights,
property and assets necessary to conduct the Business as currently conducted.</span></p><p class="MsoNormal"><span style="font-family: arial;"><b><u>Litigation and
Adverse Claims</u>. </b>There are no actions, suits, arbitrations,
regulatory proceedings or other litigation, pending or, to the knowledge of
Seller, threatened against Seller or any of its employees or agents in their
capacity as such, or any of its properties or businesses. Seller is not subject
to any order, judgment, decree, injunction, or consent order of or with any
court or other governmental agency.<b><o:p></o:p></b></span></p>
<p class="MsoNormal"><span style="font-family: arial;"><b><u>Restrictions on
Transfer</u>. </b>Seller is not subject to any agreement,
judgment or decree, restriction or instrument of any kind which would prevent
the consummation of any of the transactions provided in this Agreement,
terminate or modify any agreement to which Seller is a party, or prevent the
execution of this Agreement.</span></p><p class="MsoNormal"><span style="font-family: arial;"> </span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxpSpwRbXAtbMC2xwoq-Zvklz96IbNuIUpICk-17qxJqqXPffQrlfvMetomOZQNkinq6TiGHZ4sfADc33iYFVtgLLF18AJXEPfScErAZmlZKi0PYCmLxZZeRnaLZON76CRwUuIyudKk94/s2048/Due+Diligence+Concept+on+File+Label.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><span style="font-family: arial;"><img border="0" data-original-height="1150" data-original-width="2048" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxpSpwRbXAtbMC2xwoq-Zvklz96IbNuIUpICk-17qxJqqXPffQrlfvMetomOZQNkinq6TiGHZ4sfADc33iYFVtgLLF18AJXEPfScErAZmlZKi0PYCmLxZZeRnaLZON76CRwUuIyudKk94/s320/Due+Diligence+Concept+on+File+Label.jpg" width="320" /></span></a></div><p></p><p class="MsoNormal"><span style="font-family: arial;"><b> <u>Financial Statements</u>. </b>Complete
copies of the unaudited financial statements consisting of the income
statements of the Business for the periods ending December 31 in each of the years
2019, 2018 and 2017 (the “<b>Unaudited
Financial Statements</b>”), and
unaudited financial statements consisting of the income statement of the
Business for the period ending December 8, 2020 (the “<b>Interim Financial Statements</b>” and together with the Unaudited Financial
Statements, the “<b>Financial
Statements</b>”), as well as sole
proprietorship tax information for the years 2017, 2018, and 2019, have been
delivered to Purchaser. The Financial Statements have been prepared in
accordance with Seller’s customary accounting practices applied on a consistent
basis throughout the periods involved, subject, in the case of the Interim
Financial Statements, to normal and recurring year-end adjustments (the effect
of which will not be materially adverse). The Financial Statements are based on
and are consistent with the books and records of the Seller’s customary
non-GAAP accounting practices with respect to the Financial Statements detailed
herein shall be detailed in <u>Exhibit J</u> and fairly reflect the financial condition of the Business. <o:p></o:p></span></p><p class="MsoNormal"><span style="font-family: arial;"><a name="_Toc511335443"><b>Undisclosed
Liabilities</b></a><b><span style="display: none; mso-hide: all;"><o:p></o:p></span></b></span></p><p class="MsoNormal">
<b><span style="font-family: arial;"><o:p></o:p></span></b></p><p class="MsoNormal"><span style="font-family: arial;"><b>. </b>Seller has no
Liabilities with respect to the Business, except those which have been incurred
in the ordinary course of business consistent with past practice and which are
not, individually or in the aggregate, material in amount.</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgubYKLcTe-SWa2WfU2tMg_cGl50LrF2N7A_7YAd0rJaGndqQet-_NWMlUYeuo5gubaleoRS4UCoAW3DOYR9FQKyeCA21N_UIg0gRuaaDfQUCYmdKptmzyx3moBy2mydWK54JykvxZFfao/s268/Tax+Returns+1.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><span style="font-family: arial;"><img border="0" data-original-height="188" data-original-width="268" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgubYKLcTe-SWa2WfU2tMg_cGl50LrF2N7A_7YAd0rJaGndqQet-_NWMlUYeuo5gubaleoRS4UCoAW3DOYR9FQKyeCA21N_UIg0gRuaaDfQUCYmdKptmzyx3moBy2mydWK54JykvxZFfao/s0/Tax+Returns+1.jpg" /></span></a></div><p class="MsoNormal"><span style="font-family: arial;"><a name="_Toc511335457"></a><a name="_Ref511140258"></a><a name="_Ref511140073"><b>Taxes</b></a><b><span style="display: none; mso-hide: all;"><o:p></o:p></span></b></span></p>
<p class="MsoNormal"><span style="font-family: arial;">All Tax Returns
required to be filed by Seller for any Tax period prior to Closing have been,
or will be, timely filed. Such Tax Returns are, or will be, true, complete and
correct in all respects. All Taxes due and owing by Seller (whether or not
shown on any Tax Return) have been, or will be, timely paid.</span></p><p class="MsoNormal"><span style="font-family: arial;"><a name="co_anchor_a245013_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">Seller has withheld and paid each Tax required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, customer, or other party, and complied with
all information reporting and backup withholding provisions of applicable Law.<a name="co_anchor_a676311_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="_Ref511138683"></a><a name="_1csj400"></a>No extensions or waivers of statutes of
limitations have been given or requested with respect to any Taxes of Seller<a name="co_anchor_a708355_1"></a>.</span></p>
<p class="MsoNormal"><span style="font-family: arial;">All deficiencies asserted, or assessments made, against
Seller as a result of any examinations by any taxing authority have been fully
paid.<a name="co_anchor_a476850_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">Seller is not a party to any Action by any taxing authority.
There are no pending or threatened Actions by any taxing authority.<a name="co_anchor_a734022_1"></a><a name="r2r73f"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">There are no Encumbrances for Taxes upon any of the
Purchased Assets nor, to Seller’s Knowledge, is any taxing authority in the
process of imposing any Encumbrances for Taxes on any of the Purchased Assets
(other than for current Taxes not yet due and payable).<a name="co_anchor_a631254_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">Seller is not a “foreign person” as that term is used in
Treasury Regulations Section 1.1445-2.<a name="co_anchor_a563121_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="_Toc511335454"></a><a name="_Ref511140243"></a><a name="_Ref511140055"></a><a name="_Ref511139551"><b>Environmental Matters</b></a><b><span style="display: none; mso-hide: all;"><o:p></o:p></span></b></span></p>
<p class="MsoNormal"><span style="font-family: arial;"> The operations of Seller
with respect to the Business and the Purchased Assets are currently and have
been in compliance with all Environmental Laws. Seller has not received from
any Person, with respect to the Business or the Purchased Assets, any: (i)
Environmental Notice or Environmental Claim; or (ii) written request for
information pursuant to Environmental Law, which, in each case, either remains
pending or unresolved, or is the source of ongoing obligations or requirements
as of the Closing Date.</span></p><p class="MsoNormal"><span style="font-family: arial;"><br /></span></p></div><div><div class="separator" dir="rtl" style="clear: both; text-align: center;"><p class="MsoNormal"><a name="_Toc511335449"><span style="font-family: arial;"></span></a></p><div class="separator" style="clear: both; font-weight: bold; text-align: center;"><span style="font-family: arial;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixUe4Rx3oQD3bLN0-hRds6SstRf5iz1T-YU-rdQ_h0DMjic228qJ-z-yKnYRjJ_bPI5fINm4tbHgAsJdeookxvVvdwsZcxknF-mosnNkrAcuPgEy__HsmgSjAzSjAHIUI26T8qsipOr7c/s2048/Young+Genius+Math+Formulas.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1634" data-original-width="2048" height="229" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixUe4Rx3oQD3bLN0-hRds6SstRf5iz1T-YU-rdQ_h0DMjic228qJ-z-yKnYRjJ_bPI5fINm4tbHgAsJdeookxvVvdwsZcxknF-mosnNkrAcuPgEy__HsmgSjAzSjAHIUI26T8qsipOr7c/w288-h229/Young+Genius+Math+Formulas.jpg" width="288" /></a></span></div><div style="text-align: left;"><span style="font-family: arial;"><a name="_Toc511335449" style="font-weight: bold;"><b>Intellectual
Property </b></a><u style="font-weight: bold;">Section 4.10(a) of the Disclosure Schedules</u>
contains a correct, current and complete list of: (i) all Intellectual Property
Registrations used in, arising out of, or relating to the Business as currently
and formerly conducted, specifying as to each, as applicable: the title, mark,
or design; the jurisdiction by or in which it has been issued, registered or
filed; the patent, registration or application serial number; the issue,
registration or filing date; and the current status; (ii) all unregistered
Trademarks included in the Intellectual Property Assets; (iii) all proprietary
Software included in the Intellectual Property Assets; and (iv) all other
Intellectual Property Assets that are used or held for use in the conduct of
the Business as currently conducted. All required filings and fees related to
the Intellectual Property Registrations have been timely filed with and paid to
the relevant Governmental Authorities and authorized registrars, and all
Intellectual Property Registrations are otherwise in good standing. Seller has
provided Purchaser with true and complete copies of file histories, documents,
certificates, office actions, correspondence and other materials related to all
Intellectual Property Registrations<b>.</b></span></div><p></p><p class="MsoNormal"><span style="font-family: arial;"><a name="co_anchor_a767056_1"></a></span></p>
<p class="MsoNormal" style="text-align: left;"><span style="font-family: arial;">Section<u> 4.10(b) of the
Disclosure Schedules</u> contains a correct, current and complete list of all
Intellectual Property Agreements, specifying for each the date, title and
parties thereto. Seller has provided Purchaser with true and complete copies
(or in the case of any oral agreements, a complete and correct written
description) of all such Intellectual Property Agreements, including all
modifications, amendments and supplements thereto and waivers thereunder. Each
Intellectual Property Agreement is valid and binding on Seller in accordance
with its terms and is in full force and effect. Neither Seller nor any other
party thereto is, or is alleged to be, in breach of or default under, or has
provided or received any notice of breach of, default under, or intention to
terminate (including by non-renewal), any Intellectual Property Agreement.<a name="co_anchor_a710856_1"></a></span></p>
<p class="MsoNormal" style="text-align: left;"><span style="font-family: arial;">Seller is the sole and exclusive legal and beneficial, and
with respect to the Intellectual Property Registrations, record, owner of all
right, title and interest in and to the Intellectual Property Assets, and has
the valid and enforceable right to use all other Intellectual Property used or
held for use in the Business as currently conducted, in each case, free and
clear of Encumbrances. Seller has entered into binding, valid and enforceable
written Contracts with each current and former employee and independent
contractor who is or was involved in or has contributed to the invention,
creation, or development of any Intellectual Property during the course of
employment or engagement with Seller whereby such employee or independent
contractor: (i) acknowledges Seller’s exclusive ownership of all Intellectual
Property Assets invented, created or developed by such employee or independent
contractor within the scope of his or her employment or engagement with Seller;
(ii) grants to Seller a present, irrevocable assignment of any ownership
interest such employee or independent contractor may have in or to such
Intellectual Property; and (iii) irrevocably waives any right or interest,
including any moral rights, regarding such Intellectual Property, to the extent
permitted by applicable Law. Seller has provided Purchaser with true and
complete copies of all such Contracts.<a name="co_anchor_a663507_1"></a><a name="24ufcor"></a></span></p>
<p class="MsoNormal" style="text-align: left;"><span style="font-family: arial;">Neither the execution, delivery or performance of this
Agreement, nor the consummation of the transactions contemplated hereunder,
will result in the loss or impairment of or payment of any additional amounts
with respect to, nor require the consent of any other Person in respect of, the
Purchaser’s right to own or use any Intellectual Property Assets or any
Intellectual Property subject to any Intellectual Property Agreement.<a name="co_anchor_a114507_1"></a><a name="jzpmwk"></a></span></p>
<p class="MsoNormal" style="text-align: left;"><span style="font-family: arial;">All of the Intellectual Property Assets are valid and
enforceable, and all Intellectual Property</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEd7ZKUL3zb-Hs2Fd_4JtXu5LSPwWgvmq-aZI5q92sGbVGEaSkCq5X9I94gmXlhZlcjIJXWydhX4kWWyyqKmxEUMC-PlniTu7iBFAbaprDPd0o_ybliWC6-zM0CPE_pWVUxlcDkIykrXs/s780/software+binary+strip.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><span style="font-family: arial;"><img border="0" data-original-height="585" data-original-width="780" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEd7ZKUL3zb-Hs2Fd_4JtXu5LSPwWgvmq-aZI5q92sGbVGEaSkCq5X9I94gmXlhZlcjIJXWydhX4kWWyyqKmxEUMC-PlniTu7iBFAbaprDPd0o_ybliWC6-zM0CPE_pWVUxlcDkIykrXs/s320/software+binary+strip.jpg" width="320" /></span></a></div><span style="font-family: arial;"><br /> Registrations are subsisting and in
full force and effect. Seller has taken all reasonable and necessary steps to
maintain and enforce the Intellectual Property Assets and to preserve the
confidentiality of all Trade Secrets included in the Intellectual Property
Assets, including by requiring all Persons having access thereto to execute
binding, written non-disclosure agreements.<a name="co_anchor_a770099_1"></a></span><p></p>
<p class="MsoNormal" style="text-align: left;"><span style="font-family: arial;">To Seller’s Knowledge, the conduct of the Business as
currently and formerly conducted, including the use of the Intellectual
Property Assets and the Intellectual Property licensed under the Intellectual
Property Agreements in connection therewith, and the products, processes, and
services of the Business have not infringed, misappropriated, or otherwise
violated. To Seller’s Knowledge, no Person has infringed, misappropriated, or
otherwise violated any Intellectual Property Assets or the Intellectual
Property licensed under the Intellectual Property Agreement.</span></p>
<p class="MsoNormal" style="text-align: left;"><span style="font-family: arial;">There are no Actions (including any opposition,
cancellation, revocation, review, or other proceeding) settled, pending or
threatened (including in the form of offers to obtain a license): (i) alleging
any infringement, misappropriation, or other violation of the Intellectual
Property of any Person by Seller in the conduct of the Business; (ii)
challenging the validity, enforceability, registrability, patentability, or
ownership of any Intellectual Property Assets; or (iii) by Seller or any other
Person alleging any infringement, misappropriation, or violation by any Person
of any Intellectual Property Assets. Seller is not aware of any facts or circumstances
that could reasonably be expected to give rise to any such Action. Seller is
not subject to any outstanding or prospective Governmental Order (including any
motion or petition therefor) that does or could reasonably be expected to
restrict or impair the use of any Intellectual Property Assets</span></p></div></div><div><div><p class="MsoNormal"><b><span style="font-family: arial;"> Material Contracts</span></b></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="co_anchor_a843167_1"></a><u>Section 4.11 of the
Disclosure Schedules</u> lists each of the following Contracts (x) by which any
of the Purchased Assets are bound or affected or (y) to which Seller is a party
or by which it is bound in connection with the Business or the Purchased Assets
(such Contracts and all Intellectual Property Agreements set forth in Section
4.11<u> of the Disclosure Schedules</u>, being “<b>Material Contracts</b>”):</span></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="_Ref511138654"></a><a name="co_anchor_a836531_1"></a><a name="_2b6jogx"></a>all Contracts
involving aggregate consideration in excess of $25,000 and which, in each case,
cannot be cancelled without penalty or without more than 90 days’ notice;<a name="co_anchor_a756207_1"></a><a name="qbtyoq"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">all Contracts that require Seller to purchase or sell a
stated portion of the requirements or outputs of the Business or that contain
“take or pay” provisions;<a name="co_anchor_a1058358_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">all Contracts that provide for the indemnification of any
Person or the assumption of any Tax, environmental or other Liability of any
Person;<a name="co_anchor_a943319_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">all Contracts that relate to the acquisition or disposition
of any business, a material amount of stock or assets of any other Person or
any real property (whether by merger, sale of stock, sale of assets or
otherwise);</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-C8tJq_be96vDN7G3atip842Qwerl_aqclLQ3hPdvKmPDrpPTq4LhiidJGmkTICoMlKVqT-ZDkDJc001N4Lsm7OH7JhVl-NM0a08rjr7E4BVycv-GTC8gr-nmyefonxqh_9hEd3H4A6Q/s2048/Pen+signature+Contract.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><span style="font-family: arial;"><img border="0" data-original-height="1365" data-original-width="2048" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-C8tJq_be96vDN7G3atip842Qwerl_aqclLQ3hPdvKmPDrpPTq4LhiidJGmkTICoMlKVqT-ZDkDJc001N4Lsm7OH7JhVl-NM0a08rjr7E4BVycv-GTC8gr-nmyefonxqh_9hEd3H4A6Q/s320/Pen+signature+Contract.jpg" width="320" /></span></a></div><span style="font-family: arial;"><br /><a name="co_anchor_a590861_1"></a></span><p></p>
<p class="MsoNormal"><span style="font-family: arial;">all broker, distributor, dealer, manufacturer’s
representative, franchise, agency, sales promotion, market research, marketing
consulting and advertising Contracts;<a name="co_anchor_a593452_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">all employment agreements and Contracts with independent
contractors or consultants (or similar arrangements) and which are not
cancellable without material penalty or without more than 90 days’ notice;<a name="co_anchor_a116838_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">except for Contracts relating to trade receivables, all
Contracts relating to indebtedness (including, without limitation, guarantees);<a name="co_anchor_a281103_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="_Ref511138480"></a><a name="_22vxnjd"></a>all Contracts with any Governmental
Authority (“<b>Government Contracts</b>”);<a name="co_anchor_a522728_1"></a><a name="i17xr6"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">all Contracts that limit or purport to limit the ability of
Seller to compete in any line of business or with any Person or in any
geographic area or during any period of time;<a name="co_anchor_a63431_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">all joint venture, partnership or similar Contracts;<a name="co_anchor_a217183_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">all Contracts for the sale of any of the Purchased Assets or
for the grant to any Person of any option, right of first refusal or
preferential or similar right to purchase any of the Purchased Assets;<a name="co_anchor_a149293_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">all powers of attorney with respect to the Business or any
Purchased Asset;<a name="co_anchor_a42068_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">all collective bargaining agreements or Contracts with any
Union; and<a name="co_anchor_a411472_1"></a><a name="vgdtq7"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;">all other Contracts that are material to the Purchased
Assets or the operation of the Business and not previously disclosed pursuant
to this <u>Section
4.11</u><!--[if gte mso 9]><xml>
<w:data>08D0C9EA79F9BACE118C8200AA004BA90B02000000080000000E0000005F005200650066003500310031003100330039003400320031000000</w:data>
</xml><![endif]--><u>.</u></span></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="co_anchor_a505410_1"></a>Each Material Contract is
valid and binding on Seller in accordance with its terms and is in full force
and effect. None of Seller or, to Seller’s knowledge, any other party thereto
is in breach of or default under (or is alleged to be in breach of or default
under) in any material respect, or has provided or received any notice of any
intention to terminate, any Material Contract. Except as set forth in <u>Section
4.11 of the Disclosure Schedules</u>, no event or circumstance has occurred
that, with notice or lapse of time or both, would constitute an event of
default under any Material Contract or result in a termination thereof or would
cause or permit the acceleration or other changes of any right or obligation or
the loss of any benefit thereunder. Complete and correct copies of each
Material Contract (including all modifications, amendments and supplements
thereto and waivers thereunder) have been made available to Purchaser. There
are no material disputes pending or threatened under any Contract included in
the Purchased Assets.</span></p></div><div><p class="MsoNormal"><a name="_Toc511335450"><b><span style="font-family: arial;">Customers
and Suppliers</span></b></a></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="_Ref511222563"></a><a name="co_anchor_a385577_1"></a><u>Section 4.12(a) of the Disclosure
Schedules</u> sets forth with respect to the Business (i) each customer who has
paid aggregate consideration to Seller for goods or services rendered in an
amount greater than or equal to $50,000 for each of the two most recent fiscal
years (collectively, the “<b>Material
Customers</b>”); and (ii) the amount of consideration paid by each Material
Customer during such periods. Except as set forth in <u>Section 4.12(a) of the
Disclosure</u> <u>Schedules</u>, Seller has not received any notice, and has no
reason to believe, that any of the Material Customers has ceased, or intends to
cease after the Closing, to use the goods or services of the Business or to
otherwise terminate or materially reduce its relationship with the Business.<a name="co_anchor_a945739_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="_Ref511222570"></a><a name="_2vor4mt"></a><u></u></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-family: arial;"><u><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCBNSquz67uULD-KAe5XNgnFvIHzFmgkv32u0cNzOH0PuFk-cl0aWk8TkpdbZDYRYi_C2AV7RxObZkhFIjvKJwfTil3TXcZJzgYoFQNNejs_w2E13SVegh4w4qJ4MDxxUdkkp8gxOmDL8/s2524/Software+Vertical+Industry+Warehouse+Logistics.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1246" data-original-width="2524" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgCBNSquz67uULD-KAe5XNgnFvIHzFmgkv32u0cNzOH0PuFk-cl0aWk8TkpdbZDYRYi_C2AV7RxObZkhFIjvKJwfTil3TXcZJzgYoFQNNejs_w2E13SVegh4w4qJ4MDxxUdkkp8gxOmDL8/s320/Software+Vertical+Industry+Warehouse+Logistics.jpg" width="320" /></a></u></span></div><span style="font-family: arial;"><u><br />Section 4.12(b) of the Disclosure
Schedules</u> sets forth with respect to the Business (i) each supplier to whom
Seller has paid consideration for goods or services rendered in an amount
greater than or equal to $50,000 for each of the two most recent fiscal years
(collectively, the “<b>Material Suppliers</b>”);
and (ii) the amount of purchases from each Material Supplier during such
periods. Except as set forth in <u>Section 4.12(b) of the Disclosure</u> <u>Schedules</u>,
Seller has not received any notice, and has no reason to believe, that any of
the Material Suppliers has ceased, or intends to cease, to supply goods or
services to the Business or to otherwise terminate or materially reduce its
relationship with the Business.</span><p></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="_Toc511335453"></a><a name="_Ref511138536"><b>Compliance
With Laws</b></a><b><span style="display: none; mso-hide: all;"><o:p></o:p></span></b></span></p>
<p class="MsoNormal"><span style="font-family: arial;">Seller has complied, and
is now complying, with all Laws applicable to the conduct of the Business as
currently conducted or the ownership and use of the Purchased Assets.<a name="co_anchor_a638191_1"></a></span></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="_Toc511335458"></a><a name="_Ref511140267"></a><a name="_Ref511140014"></a><a name="co_anchor_a849804_1"></a><a name="_2pcmsun"></a><b>Brokers</b><b><span style="display: none; mso-hide: all;"><o:p></o:p></span></b></span></p>
<p class="MsoNormal"><span style="font-family: arial;">Except as set forth on <u>Schedule 4.14</u>,
no broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions
contemplated by this Agreement or any Ancillary Document based upon
arrangements made by or on behalf of Seller.</span></p>
<p class="MsoNormal"><span style="font-family: arial;"><a name="_Toc511335459"></a><a name="_14hx32g"></a><b>Full
Disclosure</b><b><span style="display: none; mso-hide: all;"><o:p></o:p></span></b></span></p>
<p class="MsoNormal"><span style="font-family: arial;">No
representation or warranty by Seller in this Agreement and no statement
contained in the Disclosure Schedules to this Agreement and the Seller’s
Closing Certificate contains any untrue statement of a material fact, or omits
to state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they are made, not misleading. <b><i>End
or Reps and Warranties Section<o:p></o:p></i></b></span></p>
<p class="MsoNormal"><span style="font-family: arial;">This is one of the areas of the contract where there is very
little wiggle room for negotiations on the part of the seller. The instructions
of the larger company's transaction team are to protect the mother ship. They
do not want to acquire unknown liabilities that could put the buying company in
financial or legal difficulty. They will ask for the Reps and Warranties to
last for long periods, often including language such as, "will last for
the statute of limitations or six years, whichever is longer". We
generally are able to negotiate the period down to the 3-4 year range. It does
not matter what your agreement's rep and warranty period is on taxes, because
the government is not bound by your agreement and will come after you to the
full extent of the statute of limitations period. </span></p>
<p class="MsoNormal"><span style="font-family: arial;">This language was extracted from a Software Company deal. Please
note the extensive attention paid to the full and complete ownership of the
intellectual property. I warn our software clients that the buyers will spend
the most time in due diligence on this very issue, because this is the value
they are buying.</span></p>
<span style="line-height: 115%;"><span style="font-family: arial;">As a Business Seller, you may think this is
overkill, but the buyers will stand fast on this issue. A business acquisition
is, by its very nature, a risky transaction based on integration with the
buying company, synergies, customer churn, employee defections, etc. They will
do whatever possible to limit their risk from inherited hidden liabilities
and/or misinformation. So as a Seller, focus your energies to negotiating the
best price and terms for your sale and to being totally transparent in the due
diligence process.</span></span></div><div><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><br /></span></div><div><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><br /></span></div><div><a href="mailto:davekauppi@midmarkcap.com">Dave </a><a href="mailto:davekauppi@midmarkcap.com">Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href=" https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a></div></div>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-41809496909749393612021-02-06T14:08:00.002-06:002021-02-06T14:08:29.844-06:00M&A Deal Announcement - Software Driven Audit Recovery Firm<div class="separator" style="clear: both; text-align: center;">
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<b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">2018 Revenue: $1.93M 2018
EBITDA: $223K<o:p></o:p></span></b></div>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"><a href="https://midmarkcap.com/mmc/wp-content/uploads/62202-M-Profile.pdf">CLICK HERE TO SIGN CONFIDENTIALITY AGREEMENT</a></span></b></div>
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
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Company
was founded in 1999 and has extended its
system to a SAAS model for easier rollout and support. The
Primary Company offers a number of patent protected transportation
informatics and access control solutions within the Intelligent Transportation
Systems space to State DOT (75% of Company
2018 revenue), City or County Public Works (15%), and other agencies (10%).</div>
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<span style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: "Times New Roman"; mso-no-proof: yes;">Its Sister Company
provides software products and consulting services that are used by public
agency and private sector clients to manage infrastructure systems including
county roads, city streets, sidewalks, curb and gutter, signs and signals,
bridges, parking lots, wastewater and storm drainage systems, water pipelines,
park features, and other miscellaneous assets.</span><span style="color: white; font-family: "Arial","sans-serif";"><o:p></o:p></span></div>
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</span></span><!--[endif]-->Strong Client Relationships: <span class="Style2Char">The
Company is proud of its strong ties to clients. Evidence of these relationships
is shown in the 85% rate of repeat business. The Company verified client
success stories help to easily acquire new business.</span></div>
<div class="BulletList2" style="margin-bottom: 6.0pt; margin-left: .5in; margin-right: .25in; margin-top: 6.0pt; mso-list: l1 level1 lfo1; tab-stops: list .5in;">
<!--[if !supportLists]--><span style="font-family: Wingdings;">§<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]-->Outstanding
Growth Opportunities: There exist several
opportunities for the Company to significantly increase revenue and profit,
including leveraging the Company’s proven reputation, patent protection, and
increased infrastructure spending to pursue and penetrate new and existing
markets.<o:p></o:p></div>
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<!--[if !supportLists]--><span style="font-family: Wingdings;">§<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><!--[endif]-->Hold
Patents in the First Position: On critical and
pervasive transportation informatics reporting systems currently in use by
other companies. <o:p></o:p></div>
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<span style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: "Times New Roman"; mso-no-proof: yes;"><br /></span></div>
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<span style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: "Times New Roman"; mso-no-proof: yes;"><br /></span></div>
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<span style="color: white; font-family: "Arial","sans-serif"; font-size: 12.0pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;"><br clear="all" style="mso-break-type: section-break; page-break-before: always;" /></span><a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>Dave Kauppihttp://www.blogger.com/profile/17485230537306066178noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-19389884180915523242019-09-29T11:15:00.003-05:002019-09-29T11:15:50.045-05:00Marketing & Presentation Software for Insurance Agents and Financial Advisors - Company for Sale<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
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<b><span style="font-family: "Arial","sans-serif";">2018
Revenue: $1.1 M 22% Growth Rate 42.5% EBITDA Margin<o:p></o:p></span></b></div>
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<b><span style="font-family: "Arial","sans-serif";"><a href="https://midmarkcap.com/mmc/wp-content/uploads/61151-SW-Profile-and-Confidentiality-Agreement-2019.pdf">Click Here to Sign the Confidentiality Agreement</a></span></b></div>
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<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-bidi-font-family: "Times New Roman"; mso-no-proof: yes;">Headquartered in Kentucky, Company offers marketing and sales
presentation software for insurance agents and other financial advisor
professionals. The software and associated materials support tax-advantaged
savings programs using the Indexed Universal Life Insurance product. <o:p></o:p></span></div>
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<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-bidi-font-family: "Times New Roman"; mso-no-proof: yes;">The product package was effectively established for one
larger client in approximately 2012, and officially introduced to other clients
in late 2015. Market feedback has been very positive, with revenues growing
from $160,000 in 2014 to over $1,095,000 in 2018.<o:p></o:p></span></div>
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<a href="mailto:davekauppi@midmarkcap.com"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">The suite of products is offered on a recurring subscription
basis, and is website-accessed by its customers .The site enables financial
advisors to create and manage a variety of customized, compliance-approved
client reports that streamline the complex IUL product.</span><span style="font-family: Calibri, sans-serif; font-size: 11pt;"> </span><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Client reports are accompanied by complete
marketing programs that support member advisors from the prospecting phase
through the close of the sale. </span><span style="font-family: Calibri, sans-serif; font-size: 11pt;"> </span><span style="font-family: Calibri, sans-serif; font-size: 11pt;">IUL is
one of the fastest growing products in the life insurance industry, where it is
used as a tax-advantaged cash value accumulation tool. A rapidly-growing number
of advisors use IUL for retirement planning with their clients.</span></a><br />
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<div class="Bullet">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span class="SWOTHeadingChar"><span style="font-family: "Calibri","sans-serif"; font-size: 12.0pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 11.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Growing Market for the Company’s Services:</span></span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 11.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> Main
product is an illustration software for Indexed Universal Life. </span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">IUL’s emerging
popularity with insurance agents and financial advisors, along with retirement
savings wealth trends in general, support strong momentum for Company's market
opportunity.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-style: italic; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i><span style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: "Times New Roman";">Proprietary Financial Product
Development: </span></i></b><span style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-style: italic; mso-bidi-font-weight: bold;">Company occupies a very
unique segment in the retirement savings industry, has hundreds of agent and
carrier contacts, and understands the underlying actuarial and marketing
aspects of insurance-oriented savings products. All materials and product names
are copyrighted.<o:p></o:p></span></div>
<a href="mailto:davekauppi@midmarkcap.com"><span style="font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><b><i><span style="font-family: "Calibri","sans-serif"; font-size: 12.0pt; mso-bidi-font-family: "Times New Roman";">Track
Record/Proven Product Acceptance:</span></i></b><span style="font-family: Calibri, sans-serif; font-size: 12pt;"> Company </span><span style="font-family: Calibri, sans-serif; font-size: 12pt;">has increased its year-over-year sales to one of the largest
IMOs in the industry since inception, and now has other IMOs participating, as
well as other market participants interested. Great growth potential with
expanded marketing resources.</span></a><br />
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>Dave Kauppihttp://www.blogger.com/profile/17485230537306066178noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-39492275502732107322019-09-29T11:05:00.001-05:002019-09-29T11:05:39.817-05:00ORGANIC SEARCH ENGINE TRAFFIC GENERATION SOFTWARE COMPANY -Company for Sale<div class="separator" style="clear: both; text-align: center;">
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<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<div style="text-align: center;">
<a href="https://midmarkcap.com/mmc/wp-content/uploads/190828-K-Profile-and-CA.pdf"><b>Click Here to Sign the Confidentiality Agreement</b></a></div>
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com"></a><br />
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<b><span style="font-family: "Arial","sans-serif";">2019
Revenue: $900 K proj Gross Margins > 90%<o:p></o:p></span></b></div>
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<span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: "Times New Roman"; mso-no-proof: yes;">With over 10 years of combined research and development, the
software and technology have been fine-tuned and extensively tested. The
software has many built-in SEO features that can be customized at will. These features, along with other strategies
incorporated in their website production process, have allowed the company to
create a portfolio of websites that generate 100% organic search traffic.<o:p></o:p></span></div>
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<span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: "Times New Roman"; mso-no-proof: yes;">Currently, the company’s websites receive approximately 6.5
million unique visitors/year, all of which is organic search engine traffic
from the major search engines. As such, the company does not have the need to pay
for marketing or SEO of any kind, giving it a large competitive advantage over
its competition.<o:p></o:p></span></div>
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<a href="mailto:davekauppi@midmarkcap.com"><span style="font-family: Calibri, sans-serif; font-size: 10pt;">The owners have created a cutting-edge software program and
website production technology hat has
almost unlimited potential in the right hands. We lack the management team,
staff, and resources to gain broad implementation and distribution.</span><span style="font-family: Arial, sans-serif;"> </span><span style="font-family: Calibri, sans-serif; font-size: 10pt;">We seek to be acquired by a company that can help our product
reach its full potential.</span></a><br />
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
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</span></span><!--[endif]--><span class="SWOTHeadingChar"><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Proven Methodology:</span></span><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;"> The company’s
websites receive approximately 6.5 million unique visitors/year, all of which
is organic search engine traffic from the major search engines.<o:p></o:p></span></div>
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</span></span><!--[endif]--><b><i><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Proven Technology</span></i></b><b><i><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;"> </span></i></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">The company uses its proprietary software and
website production technology to create robust websites (in a semi-automated
fashion) that target large numbers of geographically-based keywords in a
variety of verticals. <o:p></o:p></span></div>
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</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Great Growth
Potential</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">:
Owners operate this as a very profitable life-style business and have limited
growth. Their sites routinely outrank billion-dollar companies for very
expensive keywords in high-competition verticals like drug addiction rehab. The
Company is just scratching the surface for growth and income.<o:p></o:p></span></div>
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</span></span><!--[endif]--><b><i><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Powerful Geo-Targeting Technology:</span></i></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;"> The ability to go
after geo-targeted longtail keywords on a large scale is another key feature. Company
can target thousands of combinations of longtail keywords on each site it
produces. This allows for flexibility, uniqueness among multiple sites, and the
ability to attack a niche from several different angles.<o:p></o:p></span></div>
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</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Scalability: </span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">The software and
semi-automated website production process allows for quick turnaround time. An
organization with the proper staff in place could easily produce 100+
websites/month, and there are dozens upon dozens of niches that can be
targeted, most of which the company has yet to explore in detail.<o:p></o:p></span></div>
<div class="Bullet">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Superior Cost
Performance to Paid Search and SEO Services:</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;"> Their business model that targets Pay
Per Call lead buying companies <a href="https://www.blogger.com/null" name="_GoBack"></a>and uses highly effective
organic traffic generation far outperforms the paid search models especially on
the very expensive and competitive keywords.<o:p></o:p></span></div>
<div class="Bullet">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Secure and Protected</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">: The software code
is fully encrypted and cannot be copied to any other site without a license.
The software is highly secure and hacker-proof and their websites have ever
been hacked. <o:p></o:p></span></div>
<div class="Bullet">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Scales Rapidly:</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;"> Company sites
generate organic traffic with virtually no time delay. Websites that depend on
SEO for traffic are highly dependent on budget and time allowances for web
traffic to materialize. Not only do we get purely organic traffic, our traffic
converts. <o:p></o:p></span></div>
<div class="Bullet">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Superior ROI:</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;"> The total cost for
Company to produce a website from start to finish is usually $500 or less, and
full production can be accomplished in less than a day. This allows for a fast return on investment.<o:p></o:p></span></div>
<a href="mailto:davekauppi@midmarkcap.com">
</a><br />
<div class="Bullet">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;">Flexible Integration:</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;"> The software can be installed on any existing
website, including Wordpress blogs. Installing the software would allow
business owners and blog owners to expand their geographical search potential.<o:p></o:p></span></div>
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>Dave Kauppihttp://www.blogger.com/profile/17485230537306066178noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-2725969878209674762019-09-29T10:55:00.000-05:002019-09-29T10:55:50.917-05:00All-in-one SIP Enabled Contact Center as a Service Provider - Company for Sale<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEuvwJCGspwE0XG1ZKcdYMYEbYnn8Mf20OtSrOiGWmbbp6RjWP5wIKOXcjXRd7eMpOHSreBtFjKHLkbmxIfTxLkb8HA7HjyrUtuyg4x3maJXo0iJoiRnWdhLcc3fRsfmE8Iu41yM9Hk6yx/s1600/Call+Center+2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="182" data-original-width="273" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEuvwJCGspwE0XG1ZKcdYMYEbYnn8Mf20OtSrOiGWmbbp6RjWP5wIKOXcjXRd7eMpOHSreBtFjKHLkbmxIfTxLkb8HA7HjyrUtuyg4x3maJXo0iJoiRnWdhLcc3fRsfmE8Iu41yM9Hk6yx/s1600/Call+Center+2.jpg" /></a></div>
<a href="mailto:davekauppi@midmarkcap.com"></a><br />
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<b><span style="font-family: "Arial","sans-serif";">2018
Revenue: $1.7M Gross Margins > 90%<o:p></o:p></span></b></div>
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<b><span style="font-family: "Arial","sans-serif";"><br /></span></b></div>
<div style="text-align: center;">
<a href="https://midmarkcap.com/mmc/wp-content/uploads/190816-B-Profile-and-Confidentiality-Agreement.pdf">Click Here to Sign the Confidentiality Agreement</a></div>
<div style="text-align: center;">
<a href="mailto:davekauppi@midmarkcap.com"><b><br /></b></a></div>
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<span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: "Times New Roman"; mso-no-proof: yes;"> Their offering is a robust
Multichannel Contact Center and Workforce Management solution for mid-market
and Enterprise customers. It is a multichannel skills based routing contact
center and scales from 5 to 1250 agents per location. The base “Select”
software includes skills based routing, flexible announcements, agent and
supervisor software with presence, call control, queue monitoring, scrolling
marquee, IM text messaging, supervisory advanced monitoring and agent control
and historical call reporting. <o:p></o:p></span></div>
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<span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: "Times New Roman"; mso-no-proof: yes;">Advanced add-on options can complement the “Select” base
package. These options include: Call back number queuing, Customer post-call
surveys, VoIP voice and screen recording, Blended E-mail, Webchat and SMS queuing, CRM
and customer database integration with data dip for smart routing and call
coordinated screen pop, Blended automatic outdial campaigns with power/preview/progressive
and predictive auto dialer. <o:p></o:p></span></div>
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<span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; mso-bidi-font-family: "Times New Roman"; mso-no-proof: yes;">The founders<span style="color: red;"> </span>have been running
the company for more than 23 years. They are skilled software engineers
and that is the strength of the company. They feel that they could greatly
benefit from an acquisition by a larger company with the resources and sales
and marketing expertise to capitalize on the explosive growth in this unified
communications space. </span><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt;"><o:p></o:p></span></b></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-style: italic; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span class="SWOTHeadingChar"><span style="font-family: "Calibri","sans-serif"; font-size: 12.0pt; mso-ascii-theme-font: minor-latin; mso-bidi-font-size: 11.0pt; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Robust Product Set:</span></span> Contact Center suite includes multichannel
inbound, outbound, IVR, virtual queue, surveys, screen pops, recording and
Workforce Management (WFM) and Workforce Optimization (WFO).<span style="font-family: "Calibri","sans-serif"; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-style: italic; mso-bidi-font-weight: bold;"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i>Attractive SaaS Business Model: </i></b>Company
has been delivering call center software solutions since 1996 and has captured
that intellectual property and expertise in their proven SaaS offering - Call
Center as a Service.</div>
<div class="Bullet">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b>Great
Growth Potential</b>: Globally, the cloud-based contact center market is
expected to grow from $6.47 billion in 2017 to $24.11 billion by 2023, at a
CAGR of 25% during the forecast period according to Market Research Future. </div>
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<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-style: italic; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><i>Strong Product Adjacencies:</i></b><span style="font-size: 12.0pt;"> </span>With UCaaS (Unified Communications as a
Service) which is accelerating at an annual rate of 29%, according to a Synergy
Research Group.<b><i> <o:p></o:p></i></b></div>
<div class="Bullet">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b>Relationship
With a Major UCaaS Provider: </b>Company has established a relationship with a
major UCaaS provider with their Channel Partners including Company's Contact
Center module where appropriate.<b><o:p></o:p></b></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b>Expanding
Interest in the UCCaaS Space:</b> Several Major UCaaS providers are either
developing or acquiring Contact Center Capabilities. Ring Central acquired
Connect First, Nextiva released their own Cloud Contact Center solution,
and Talkdesk, the fastest growing Contact Center as a Service provider, completed
a $100 million in Series B funding in 2018. Vonage acquired New Voice Media.<b><o:p></o:p></b></div>
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</span></span><!--[endif]-->Software integrates with SIP Enabled hardware and
software systems<a href="https://www.blogger.com/null" name="_GoBack"></a></div>
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</span></span><!--[endif]-->Very Competitive on Price and Features </div>
</div>
<a href="mailto:davekauppi@midmarkcap.com">
<b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;"><br clear="all" style="mso-break-type: section-break; page-break-before: always;" /></span></b></a><br />
<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>Dave Kauppihttp://www.blogger.com/profile/17485230537306066178noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-16833646100153002692019-03-08T10:19:00.000-06:002019-03-08T10:19:13.931-06:00SaaS Mergers and Acquisitions Deal Announcement<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
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<a href="mailto:davekauppi@midmarkcap.com">#M&A #MergersandAcquisitions #SaaS #InvestmentBanker #softwareM&A #sellsoftwarecompany</a><br />
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-15626449961073163812019-02-28T09:42:00.000-06:002019-02-28T09:42:12.086-06:00When an EBITDA Multiple Doesn’t Work for a Valuation<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
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<a href="mailto:davekauppi@midmarkcap.com"><span style="background: 0px 0px rgb(255, 255, 255); border: 0px; box-sizing: border-box; color: #666666; font-family: "Open Sans", Arial, sans-serif; font-size: 14px; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-align: justify; text-size-adjust: 100%; vertical-align: baseline;">Takeaway: </span><span style="background-color: white; color: #666666; font-family: "Open Sans", Arial, sans-serif; font-size: 14px; text-align: justify;">In our </span></a><a href="https://midmarkcap.com/mmc/industry-practice-areas/" style="background: 0px 0px rgb(255, 255, 255); border: 0px; box-sizing: border-box; color: #2ea3f2; font-family: "Open Sans", Arial, sans-serif; font-size: 14px; margin: 0px; outline: 0px; padding: 0px; text-align: justify; text-decoration-line: none; text-size-adjust: 100%; vertical-align: baseline;">technology focused mergers and acquisitions</a><span style="background-color: white; color: #666666; font-family: "Open Sans", Arial, sans-serif; font-size: 14px; text-align: justify;"> practice we are often approached by an entrepreneur saying, “I want to sell my company for strategic value.” This article explores what strategic value means and why a buyer would pay more than an EBITDA multiple for a seller’s company.</span><br />
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<span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">Rule of Thumb Valuations</span></div>
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In the world of <a href="https://midmarkcap.com/mmc/mergers-acquisition-process/" style="background: 0px 0px; border: 0px; box-sizing: border-box; color: #2ea3f2; margin: 0px; outline: 0px; padding: 0px; text-decoration-line: none; text-size-adjust: 100%; vertical-align: baseline;">mergers and acquisitions</a>, sophisticated buyers, private equity firms, and business valuation firms establish some “rules of thumb” valuation multiples. The <em style="background: 0px 0px; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">International Glossary of Business Valuation Terms</em> defines “rule of thumb” as “a mathematical formula developed from the relationship between price and certain variables based on experience, observation, hearsay, or a combination of these; usually industry specific.” For one industry it might be a multiple of revenue, for another it is based on assets and capacity like the hotel industry at $25,000 per available room, or Revenue Per Available Seat Mile (RASM) for airlines or for other industries, monthly active users or subscribers, an EBITDA multiple, or a value based on discounted cash flow.</div>
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<span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">The Pros and Cons of Rules of Thumb Multiples</span></div>
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Rules of thumb multiples are very convenient and a great starting point for a valuation discussion or analysis, but we view them as just that, a starting point. Valuing a business is far more complex than valuing a piece of commercial real estate (discounted cash flow) or a single family home. For a home there are very accurate comparables based on the number of bedrooms, the number of bathrooms, school district, distance to public transportation, square footage, and a few others. The value of a business, however, is subject to the interpretation of the buyers that evaluate it. A <a href="https://midmarkcap.com/mmc/faqs/" style="background: 0px 0px; border: 0px; box-sizing: border-box; color: #2ea3f2; margin: 0px; outline: 0px; padding: 0px; text-decoration-line: none; text-size-adjust: 100%; vertical-align: baseline;">strategic buyer </a>will evaluate a potential acquisition based on the value that can be created after the assets of the target are combined with buyer’s assets. This points to two critical elements of your business sale; 1. Capture and articulate your company’s strategic value drivers in your business sale marketing documents and, 2. Get as many opinions from the market as possible.</div>
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<span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">Capture and Articulate Your Company’s Strategic Value</span></div>
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Below are some of the most powerful drivers of strategic value:</div>
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<span style="background-color: transparent; font-family: "Times New Roman";"><span style="font-family: Open Sans, Arial, sans-serif;">1. </span><span style="font-family: Arial, sans-serif; font-weight: bold;">Contractually recurring revenue </span></span><span style="background-color: transparent; font-family: Arial, sans-serif;">– This is exactly why most major software companies are moving away from a one-time licensing fee to a software as a service (SaaS) offering. Microsoft and Adobe recently changed their business model to this approach and their market values are soaring. Salesforce.com launched their business using the subscription model, and they have been a huge success. The time and materials IT service model is disappearing and being replaced with a managed services offering. Contractually recurring revenue tremendously reduces the risk for a business buyer and they will pay up for it both in purchase price and the percentage of cash at closing versus earnouts and deferred contingent payments.</span></div>
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<ol start="3" style="background: 0px 0px rgb(255, 255, 255); border: 0px; box-sizing: border-box; color: #666666; font-family: "Open Sans", Arial, sans-serif; font-size: 14px; line-height: 26px; list-style-image: initial; list-style-position: inside; margin: 0px; outline: 0px; padding: 0px 0px 23px; text-size-adjust: 100%; vertical-align: baseline;">
<li style="background: 0px 0px; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; text-align: justify; text-size-adjust: 100%; vertical-align: baseline;"><span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">Time to Market and First Mover Advantage</span> – Most business buyers could develop the sought-after technology themselves, but we suggest they analyze the cost of their time to market delay. <img alt="" class="wp-image-2039 alignright size-full" height="194" src="https://midmarkcap.com/mmc/wp-content/uploads/9-3.jpg" style="background: 0px 0px; border: 0px; box-sizing: border-box; display: inline; float: right; height: auto; margin: 0px 0px 0px 15px; max-width: 100%; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;" width="274" />Believe me, with first mover advantage from a competitor or, worse, customer defections, there is a very real cost of not having your new strategic product today. We were able to convince one buyer that they would be able to justify our seller’s entire purchase price based on the number of client defections their acquisition would prevent. Think of the difference today between first mover Gatorade and the distant number 2, PowerAde.</li>
<li style="background: 0px 0px; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; text-align: justify; text-size-adjust: 100%; vertical-align: baseline;"><span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">Companion Products and Similar Customer Base</span> – There is an old salesman saying, “It is ten times easier to sell an additional product to an installed account than it is to open a new account.” If you product or service is viewed as a logical add-on to the buying company’s product suite it can produce some stunning post acquisition sales growth. Similarly, if the buyer’s and seller’s customer base is similar, great value can be achieved by cross-selling to one another’s customer base. The market may provide you with value expansion because you have an installed base of difficult to penetrate blue-chip accounts.</li>
<li style="background: 0px 0px; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; text-align: justify; text-size-adjust: 100%; vertical-align: baseline;"><span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">Removing Barriers to Entry</span> – If your company has already broken the code to federal government business or even more importantly security clearance, this can be quite valuable to a buying company that is anxious to penetrate that client.</li>
<li style="background: 0px 0px; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; text-align: justify; text-size-adjust: 100%; vertical-align: baseline;"><span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">A Superior Business Model</span> – For the <a href="https://midmarkcap.com/mmc/faqs/" style="background: 0px 0px; border: 0px; box-sizing: border-box; color: #2ea3f2; margin: 0px; outline: 0px; padding: 0px; text-decoration-line: none; text-size-adjust: 100%; vertical-align: baseline;">selling company</a>, of course, their main product, service, and intellectual property are valuable. Often what is overlooked, however, is the value of a better sales system, or social media approach, or the use of outside contractors. The buying company might be thinking that if we implemented the seller’s sales system across our entire sales force, could improve our productivity by 10% across the board. If you have developed a particular strength, make sure your potential buyers know about it and value it.</li>
<li style="background: 0px 0px; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; text-align: justify; text-size-adjust: 100%; vertical-align: baseline;"><span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">Improve the Core Product Offering of the Buyer</span> – We represented a seller who had developed a database and algorithm to help hospitals establish the proper level of nurse staffing for the various hospital units. The two final bidders were both major providers of human resources and staffing software for hospitals. Often these software systems would sell for a half million dollars and up. Our client’s product was viewed as an important module that would improve the competitiveness of the buyers’ main system. The selling price ended up being way higher than even an aggressive multiple of EBITDA.</li>
<li style="background: 0px 0px; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; text-align: justify; text-size-adjust: 100%; vertical-align: baseline;"><span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">Restate Financials to Reflect the Buyer’s Pricing Power</span> – For small technology companies selling into the enterprise, there is often a <img alt="" class="wp-image-2040 alignright size-medium" height="189" sizes="(max-width: 300px) 100vw, 300px" src="https://midmarkcap.com/mmc/wp-content/uploads/10-3-300x189.jpg" srcset="https://midmarkcap.com/mmc/wp-content/uploads/10-3-300x189.jpg 300w, https://midmarkcap.com/mmc/wp-content/uploads/10-3.jpg 311w" style="background: 0px 0px; border: 0px; box-sizing: border-box; display: inline; float: left; height: auto; margin: 0px 0px 0px 15px; max-width: 100%; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;" width="300" />substantial required pricing discount when competing with the big legacy provider. In one <a href="https://midmarkcap.com/mmc/chicago-business-brokers-midmarket-capital-inc/management-team/" style="background: 0px 0px; border: 0px; box-sizing: border-box; color: #2ea3f2; margin: 0px; outline: 0px; padding: 0px; text-decoration-line: none; text-size-adjust: 100%; vertical-align: baseline;">M&A deal</a> we restated our seller’s historical financials using the pricing power of the brand name acquirer. This client was a small IT company that had developed a fine piece of software that compared favorably with a large, publicly traded company’s solution. Our product had the same functionality, ease of use, and open systems platform, but there was one very important difference. The end-user customer’s perception of risk was far greater with the little IT company that could be “out of business tomorrow.”</li>
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By applying the pricing model of the buying company to our client’s income statement, we were able to double the financial performance of our client on paper and present a compelling argument to the big company buyer that those economics would be immediately available to him post acquisition. It certainly was not GAP Accounting, but it was effective as a tool to drive transaction value.</div>
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<li style="background: 0px 0px; border: 0px; box-sizing: border-box; margin: 0px; outline: 0px; padding: 0px; text-align: justify; text-size-adjust: 100%; vertical-align: baseline;"><span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">Defensive Response to M&A Activity in the Market</span> – This dynamic can drive company selling price beyond traditional valuation models. We have a number of potential sellers in our pipeline that have contacted us well in advance of taking their company to market. They just wanted to make a connection and to get advice on how to prepare their company for their eventual optimal exit.<img alt="" class="wp-image-2041 alignright size-full" height="238" src="https://midmarkcap.com/mmc/wp-content/uploads/11-3.jpg" style="background: 0px 0px; border: 0px; box-sizing: border-box; display: inline; float: right; height: auto; margin: 0px 0px 0px 15px; max-width: 100%; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;" width="234" /> When we hear about a completed acquisition of one of our prospective client’s competitors, we pick up the phone. This deal announcement will normally elicit a competitive response from the marketplace in the form of several other acquisitions from the buyer’s competitors. You see it all the time. If Merck buys a biotech company with a promising cancer drug pipeline, you can be pretty sure that Novartis, Pfizer and others will soon follow suit. The same goes for the tech industry if Google buys an Artificial Intelligence company. Microsoft and Adobe will be close behind. This produces an arbitrage opportunity and company selling prices shoot up until the competitive demand is satisfied.</li>
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<span style="background: 0px 0px; border: 0px; box-sizing: border-box; font-weight: 700; margin: 0px; outline: 0px; padding: 0px; text-size-adjust: 100%; vertical-align: baseline;">Sell to Your Strengths</span></div>
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This list is by no means exhaustive. You are in the best position to recognize your company’s <a href="https://midmarkcap.com/mmc/seller-resources/" style="background: 0px 0px; border: 0px; box-sizing: border-box; color: #2ea3f2; margin: 0px; outline: 0px; padding: 0px; text-decoration-line: none; text-size-adjust: 100%; vertical-align: baseline;">strategic value</a> components. As you engage with the various potential buyers, try to envision how your two companies would combine and how they could leverage your assets to produce performance well beyond 1 + 1 = 2. You can even take this one step further. Try to quantify this synergy and use that in your selling approach. Your value proposition is unique to each individual buying company so it is important that you maximize your exposure to the market and invite as many opinions as possible.</div>
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<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-51621075944954810202019-02-25T14:20:00.001-06:002019-02-25T14:23:47.731-06:00Acquisition Opportunity - Managed IT Services & IP Telephony Provider SMB<div class="separator" style="clear: both; text-align: center;">
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<b>2018 Revenue:
$4.77MM 2018
EBITDA: $1.12MM</b></div>
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§ Recurring Revenue Business Model Focus: Steadily
increasing company's revenues generated from managed services contracts (48% of
annual sales) with enhanced sales resource and focus.</div>
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§ Diversified Customer Base: With over 275 clients, no
single customer represents more than 3.5% of annual revenue, and the top 5
customers represented 15% of sales in 2018. Their customer base is also well
diversified across several industries.</div>
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§ Growth in Revenues and in Profitability: The Company
has achieved a 69% sales growth from 2015 - 2018 while steadily increasing
EBITDA margins from 19% to over 23% over the same period.<br />
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The Company offers data, voice, and interconnect services as
well as managed services, premise and cloud phone systems, and cloud services.
The Company provides IT Support such as technical helpdesk support, computer
support, and consulting to small and medium-sized businesses. Company's Managed
Service Plan ensures proactive care, round-the-clock maintenance, and live
(24x7x365) help desk support. In 2018, revenue was derived from hardware and software
sales (33.8%), recurring revenue (service agreements and circuit commissions)
(48%), and break/fix and ad hoc services (18.6%). </div>
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<a href="https://generational.tfaforms.net/4660083?DealID=a1LA0000003zpV7">Click Here to eSign the Confidentiality Agreement</a></div>
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Company differentiates itself from the competition on many
fronts including: a proprietary process for evaluating and solving technology
needs; a comprehensive approach based on years of experience with and a
market-leading position in both data and voice technologies; and a full suite
of services ranging from infrastructure to cloud services, which is
unparalleled in the Company’s market segment.</div>
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<br /></div>
<div class="MsoNormal">
Company differentiates itself from the competition on many
fronts including: a proprietary process for evaluating and solving technology
needs; a comprehensive approach based on years of experience with and a
market-leading position in both data and voice technologies; and a full suite
of services ranging from infrastructure to cloud services, which is
unparalleled in the Company’s market segment.</div>
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<br /></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpeHRi2h2AYAEwnwq4GsRuo-dKiSkiGMsPF5B30EnAAFVemlf9DoybNPk0h8lOrp4Jreb1TEDkkjjR4fMtXSnrUq7TgMpuwRMNVP7_sKZsduu8QubqxLyRZwSdkp2FHJe7bgYYlhqhaAM/s1600/Financial+Table.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="466" data-original-width="1354" height="135" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpeHRi2h2AYAEwnwq4GsRuo-dKiSkiGMsPF5B30EnAAFVemlf9DoybNPk0h8lOrp4Jreb1TEDkkjjR4fMtXSnrUq7TgMpuwRMNVP7_sKZsduu8QubqxLyRZwSdkp2FHJe7bgYYlhqhaAM/s400/Financial+Table.jpg" width="400" /></a></div>
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<div>
Dave Kauppi is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a></div>
chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-64244731683598997462018-12-31T14:38:00.000-06:002018-12-31T14:38:03.210-06:00How a Letter of Intent to Buy Your Company is Like an Apartment Lease<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAeFWnGpJtN-S_8A9OSJul-suFhao9sOpy_bj5eC9gxGIgCz72FvB34frpP4kK4q0CnFlmJSmwa_jBu4gzldy_jCFcx19k47BtQjOaZdNxuPEdjPHv8cnML2RmIa1Wp1hLyU7O_8BEG-Y/s1600/Letter+of+Intent.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1067" data-original-width="1600" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAeFWnGpJtN-S_8A9OSJul-suFhao9sOpy_bj5eC9gxGIgCz72FvB34frpP4kK4q0CnFlmJSmwa_jBu4gzldy_jCFcx19k47BtQjOaZdNxuPEdjPHv8cnML2RmIa1Wp1hLyU7O_8BEG-Y/s320/Letter+of+Intent.jpg" width="320" /></a></div>
<a href="mailto:davekauppi@midmarkcap.com">This is our latest article published on Divestopedia.</a><br />
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<br />
<div class="MsoNormal">
<b>Takeaway:</b> <i>In a business purchase letter of
intent, just like in an apartment lease, the party producing the document will
attempt to stack the deck in their favor.<o:p></o:p></i></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Surprisingly, there are many similarities between signing an
apartment lease and a <a href="https://midmarkcap.com/mmc/letter-of-intent-consulting/">letter of intent</a>.
They relate to risk reduction, the balance of power between the parties to the
transaction and the level of experience of the buyer and seller.</div>
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<b><br /></b></div>
<div class="MsoNormal">
<b>Why Would I Sign This Document?<o:p></o:p></b></div>
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<br /></div>
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As a seasoned business owner, If you were to read an
apartment lease today, your reaction would probably be, "Why would I sign
this document with everything possible favoring the landlord?” Thinking from
that perspective, let's compare this to an <a href="https://midmarkcap.com/mmc/get-a-letter-of-intent-prior-to-going-through-due-diligence/">unsolicited letter
of intent</a> to buy your company.</div>
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</div>
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<br /></div>
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<br /></div>
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<b>It's All About Risk Reduction<o:p></o:p></b></div>
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<b><br /></b></div>
<div class="MsoNormal">
The apartment lease accounts for everything that could
possibly go wrong between landlord and tenant and makes the contractual outcome
favor the landlord in every case. From rent late fees to security deposits to
notice requirements to stains on the carpet, these agreements cover it all. The
landlord is completely protected for every eventuality and bears very little
risk from this relationship — to the extent that the landlord writes the
contract to reduce her risk, the tenant is the recipient of this risk.</div>
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<br /></div>
<div class="MsoNormal">
<b>Business Buyers Have the Experience<o:p></o:p></b></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtLvRRg3BCpq_Vej0Apr2geU7obLPoie2m-zOuHTOd0SlA9-UTdEvwOsdUDZSqmEToHe1GfQGVesY17eXrl_ExaHyeh2oX8a1CzB8P7Du8CdV-SF5oKmW5ltfnMvn6cMc6nJu1qbWmR08/s1600/business+man+writing+experience+concept.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="1500" data-original-width="1600" height="187" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtLvRRg3BCpq_Vej0Apr2geU7obLPoie2m-zOuHTOd0SlA9-UTdEvwOsdUDZSqmEToHe1GfQGVesY17eXrl_ExaHyeh2oX8a1CzB8P7Du8CdV-SF5oKmW5ltfnMvn6cMc6nJu1qbWmR08/s200/business+man+writing+experience+concept.jpg" width="200" /></a></div>
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<b><br /></b></div>
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<b><br /></b></div>
<div class="MsoNormal">
Just like the apartment lease, the letter of intent is
written by the experienced party. The landlord has completed hundreds of
successful rentals, while the renter is a novice. The buyer has likely acquired
several companies and attempted to acquire dozens more, while this is likely
the owner’s first sale. So just like the apartment lease favors the landlord,
the letter of intent is written to the advantage of the buyer.</div>
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<br /></div>
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<b>A Non-Binding LOI Provides the Buyer Plenty of Wiggle
Room<o:p></o:p></b></div>
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<b><br /></b></div>
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The first clue is that it is a non-binding letter of intent.
During the early stages of the <a href="https://midmarkcap.com/mmc/mergers-acquisition-process/">mergers and
acquisitions process</a>, limited financial data and high level customer
information is exchanged. This enables the buyer to judge whether or not the
company is a good fit and meets their acquisition criteria. If the buyer wants
to proceed further, they produce a letter of intent that requires a buyer
sign-off and guarantees that the seller will not shop the deal while <a href="https://midmarkcap.com/mmc/get-a-letter-of-intent-prior-to-going-through-due-diligence/">due
diligence</a> is completed. This is fair, because both parties will invest
significant resources going through due diligence. The due diligence period
typically lasts from 45 to 90 days and is exhaustive. The principal of the
letter of intent is to spell out the terms and conditions for the
acquisition, pending no due diligence surprises that are material to either the
value or the risk of the transaction.</div>
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<br /></div>
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<b>Buyers Often Abuse the Due Diligence Process</b></div>
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<b></b></div>
<b><o:p></o:p></b><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUpxT5sNxONwfE5rDrQnwXsWSYOCanHYN8LZ7A7itSaAlUOiji82boumC4AtdpYT8MyKVAHxukHeAgh8IxT_EDH08QPmbgKJuqu4kC2iQ2yravwyzURUSx8A2kzq3jogyKTH0SGOTABb8/s1600/Card+up+Sleeve.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1067" data-original-width="1600" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUpxT5sNxONwfE5rDrQnwXsWSYOCanHYN8LZ7A7itSaAlUOiji82boumC4AtdpYT8MyKVAHxukHeAgh8IxT_EDH08QPmbgKJuqu4kC2iQ2yravwyzURUSx8A2kzq3jogyKTH0SGOTABb8/s320/Card+up+Sleeve.jpg" width="320" /></a></div>
Buyers have their team of experts, usually consisting of
internal resources, plus an outside accounting firm and legal counsel. They
instruct their outside accountants to perform a <a href="https://midmarkcap.com/mmc/in-a-business-sale-the-process-favors-the-buyer/">quality
of earnings report</a>. This is where the abuse comes in. In its purest form,
the quality of earnings report is a check and validation that the information
they based their purchase offer upon is accurate and correct. At its most
unsavory, it is the buyer instructing the accounting firm to render opinions that
are designed to attack the value and terms originally set forth in the letter
of intent. Deep into this exhaustive process where the <a href="https://midmarkcap.com/mmc/selling-a-technology-business-a-single-buyer-is-a-prescription-for-failure/">competitive
bidders</a> are long gone and the seller is experiencing deal fatigue,
the buyer will use these "expert opinions" to require price
adjustments to the deal.</div>
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<br /></div>
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On top of that, they play brinkmanship: If you don't agree,
we walk away. These professional buyers are <a href="https://midmarkcap.com/mmc/business-buyers-negotiating-tactics/">emotionally
detached from this transaction</a>, unlike the sellers. They will just move on
to the next one if they don't get what they want. The seller can either cave in
and take a haircut or walk away from a deal they have invested six months of
emotion and effort into.</div>
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<b>The Buyer's "Experts"<o:p></o:p></b></div>
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<b><br /></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9yxTPBo0h95JcF8D_qb4KTOw9JfxUr589kCC18Sk-lN5fOCKIrybY175pIXK4cuwg2Bft1JxXs77UI726xO_SssXGaBDK3WB26bu_lr3tRj5UH84nZYuPtXfXajhzicVgDuRo05Y3zc0/s1600/Ask+the+Experts.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="898" data-original-width="1600" height="111" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9yxTPBo0h95JcF8D_qb4KTOw9JfxUr589kCC18Sk-lN5fOCKIrybY175pIXK4cuwg2Bft1JxXs77UI726xO_SssXGaBDK3WB26bu_lr3tRj5UH84nZYuPtXfXajhzicVgDuRo05Y3zc0/s200/Ask+the+Experts.jpg" width="200" /></a>One quality of earnings report we experienced was an opinion
that the benefits package for the employees was below market. To get it up to
market would cost $100,000 and, since our purchase price was based on a <a href="https://midmarkcap.com/mmc/business-buyers-are-valuation-experts/">5 X
EBITDA multiple</a>, we are dropping the purchase price by $500K. It was
completely arbitrary and not accurate to compare our small market client with
the Boston market compensation package. Our client's benefits package was
reasonable and customary for their current market. On another transaction, the
quality of earnings opinion was that last year's growth was unusual so we are
just going to <a href="https://midmarkcap.com/mmc/business-buyers-are-savvy-shoppers/">normalize EBITDA</a> over
the last 3 years to take a $750 K adjustment to our current purchase offer.
Forgive my French, but total arbitrary BS.</div>
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<br /></div>
<div class="MsoNormal">
<b>The Power of Options<o:p></o:p></b></div>
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<b><br /></b></div>
<div class="MsoNormal">
Back to our apartment lease comparison. Why this behavior?
The landlord has plenty of other renters waiting in line for the apartment. The
buyers typically have multiple acquisition interests in process at any one
time. If you don't like our terms…. Next!</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>Counter Offer With Precise Language<o:p></o:p></b></div>
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<b><br /></b></div>
<div class="MsoNormal">
Much of this balance of power trouble for the business
seller can be avoided with an intelligently worded letter of intent <a href="https://midmarkcap.com/mmc/understanding-the-letter-of-intent-loi-in-the-sale-of-a-business/">negotiated</a> prior
to agreeing to dual signing it and taking your company off the market. Once the
LOI is signed, the price and terms never improve for the seller — they only go
in one direction that favors the buyer. So, oftentimes during due diligence,
the performance of the business will suffer because the owner and CFO are
distracted by all of the demands of the deal. The experienced buyer will often
demand a change in purchase price based on this drop in performance.</div>
<div class="MsoNormal">
If they are going to operate this way, why not turn the
tables around? You could counter offer the language in the letter of intent
with, "The purchase price is based on a multiple of EBITDA of 5.34 times.
Based on the September 30th trailing twelve months that reference
purchase value based on $1.0 million of EBITDA is $5.34 million. For the final
purchase price, we will use the trailing twelve months to the <a href="https://midmarkcap.com/mmc/how-to-increase-the-selling-price-of-your-business-by-40-or-more/">closing
date</a> EBITDA X 5.34.” The buyer should not be able to reasonably
disagree with this. It is like a mutual NDA: What is good for one is good
for both.</div>
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<br /></div>
<div class="MsoNormal">
<b>Net Working Capital Is a Key Buyer Target<o:p></o:p></b></div>
<div class="MsoNormal">
<b><br /></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeCIxujZiOyywbFDNx1oUtLd-xBQAUD3_9mNpmEtVkpJNFkWcGebzm7ykzo53XBCmxB6jM0sN9JWJnmY937Ot8dyrRtdjAcMuEkY85GP5jHdLAACPLiUdEe0foQLwLWMRpJ0MvPF0ChsE/s1600/Concept+of+risk+and+crisis+in+business.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1068" data-original-width="1600" height="133" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeCIxujZiOyywbFDNx1oUtLd-xBQAUD3_9mNpmEtVkpJNFkWcGebzm7ykzo53XBCmxB6jM0sN9JWJnmY937Ot8dyrRtdjAcMuEkY85GP5jHdLAACPLiUdEe0foQLwLWMRpJ0MvPF0ChsE/s200/Concept+of+risk+and+crisis+in+business.jpg" width="200" /></a></div>
<div class="MsoNormal">
Another poorly worded clause (in favor of the buyer and to
the detriment of the seller) in the letter of intent is about setting the level
of net <a href="https://midmarkcap.com/mmc/in-a-business-sale-the-process-favors-the-buyer/">working
capital</a>. The typical LOI clause prepared by the buyer's experts is: This
proposal assumes a cash free, debt free balance sheet and a normalized level of
working capital at closing. And, of course, they try to leave this open so that
they have huge wiggle room for their quality of earnings report opinion which
may set the level arbitrarily at $600,000 late in the due diligence process.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Being a savvy seller, you’re going to enter competitive
negotiations and give a counter proposal of $200,000, for example, and define
how you will calculate it. Tips and tricks like this can be learned (over time
and with some cost) or can be hired out in the form of an advisor; either way,
the seller has more options than the buyer wants you to think!</div>
<div class="MsoNormal">
<br /></div>
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<b>Be Careful With Earn Outs<o:p></o:p></b></div>
<div class="MsoNormal">
<b><br /></b></div>
<div class="MsoNormal">
Another area where the sellers potentially get their pockets
picked is clever expert language. It has to do with <a href="https://midmarkcap.com/mmc/bridging-the-valuation-gap-between-business-seller-and-business-buyer/">earnouts</a>.
Often the buyers will put an all-or-nothing earnout condition that says, for
example, the seller must grow revenues by 10% per year to get the earnout and
if the seller falls short, she receives nothing. A better way for the seller is
to calculate a factor to multiply each year's revenues by in order to arrive at
the earnout payment for that year. For example, total revenues X 0.11.</div>
<div class="MsoNormal">
One additional earnout trap is the multiple conditions
earnout. You have to achieve a specific revenue growth target plus a profit
goal in order to receive the earnout. This is terrible for the seller because,
first, a multiple condition earnout is very hard to consistently hit and,
second, once you sell your company, controlling the profitability is much more
difficult due to such factors as corporate overhead allocation.</div>
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<b>Final Thoughts<o:p></o:p></b></div>
<div class="MsoNormal">
<b><br /></b></div>
<a href="mailto:davekauppi@midmarkcap.com">So if you are negotiating the sale of your company, try to
change the dynamic from that of an apartment renter to one of a commercial real
estate lessee. You can balance the power by seeking several competitive bids,
employing experts who know the industry norms and the market, and through the
use of counter offers that add clarity and precision to the terms and
conditions written into the original letter of intent by the buyer's team of
experts.<span style="font-family: "calibri" , sans-serif;"><span style="font-size: 14.6667px;"><b> </b></span></span></a><br />
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-90227929690743361062018-11-26T17:33:00.003-06:002018-11-26T17:33:58.369-06:00How to Play the M&A Game: De-Risking,Building Value and Selling a Company (an Interview Podcast)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
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<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com"><span class="ember-view" id="ember1318" style="background: 0px 0px rgb(255, 255, 255); border: 0px; box-sizing: inherit; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px; line-height: inherit !important; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline; white-space: pre-wrap;"><span style="background: 0px 0px; border: 0px; box-sizing: inherit; line-height: inherit !important; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">We had a blast doing this Interview/Podcast. We cover a broad range of subjects that help you view your company as a potential buyer might:
Powerful valuation metrics including a multiple of EBITDA and Recurring Revenue.
How business buyers stack the deck in their favor with their Letter of Intent
How to position your company to sell for strategic value.
Defending your deal value through due diligence and closing.
Mistakes to avoid in earn outs </span></span></a><br />
<a href="mailto:davekauppi@midmarkcap.com"><span class="ember-view" style="background: 0px 0px rgb(255, 255, 255); border: 0px; box-sizing: inherit; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px; line-height: inherit !important; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline; white-space: pre-wrap;"><span style="background: 0px 0px; border: 0px; box-sizing: inherit; line-height: inherit !important; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">
To listen to the Podcast click here </span></span></a><br />
<br />
<a href="https://www.gexpcollaborative.com/podcast/play-ma-game-de-risking-building-value-selling-company/">How to Play the M&A Game Podcast with Dave Kauppi</a><br />
<br />
<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>Dave Kauppihttp://www.blogger.com/profile/17485230537306066178noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-61028444181548133502018-10-24T12:51:00.002-05:002018-10-24T12:51:48.537-05:00The Art of Getting Strategic Value for Software Companies<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
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<b>Takeaway:</b> <i>If you want to get top dollar for
your software company, you need to think strategically and entice the right
buyer with the right information. Below is our latest published article on Divestopedia.</i></div>
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One of the most challenging aspects of selling a software or
information technology company is coming up with a business valuation.
Sometimes the selling prices of these technology companies are far higher in
terms of valuation metrics (i.e., EBITDA multiple or price to sales)
than those for a manufacturing company, for example. This article discusses how
information technology business sellers can properly position their company to
the right buyers in order to achieve a strategic transaction value.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoxpS0ej0J7NG-gLYBHWn8lE467thgDpsfeqwCE6u0EK642PcWVsOph0QgilrDsJTABxL6cZHyGvik2TAIXXCwILWs4-UNTpz8RBZFPTK_oahyiJ-h5ZUpleJqjW8omulLngAkuM7rlWg/s1600/Coins+under+magnifying+glass.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1124" data-original-width="1600" height="224" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoxpS0ej0J7NG-gLYBHWn8lE467thgDpsfeqwCE6u0EK642PcWVsOph0QgilrDsJTABxL6cZHyGvik2TAIXXCwILWs4-UNTpz8RBZFPTK_oahyiJ-h5ZUpleJqjW8omulLngAkuM7rlWg/s320/Coins+under+magnifying+glass.jpg" width="320" /></a></div>
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<b>Why are some of these software company valuations so
high?</b></div>
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It is because of the profitability leverage a
technology company can generate. Here's a simple example to illustrate. What is
Microsoft's incremental cost to produce the next copy of Office Professional?
It is probably $1.20 for three CDs and 80 cents for packaging. Let's say the
license cost is $400. The gross margin is north of 99%. The same goes for
Google with their Ad Words platform that is "self service" for the
businesses buying the paid search placement. The majority of content on
Facebook is provided by users, making that business model very profitable. That
does not happen in manufacturing or services or retail or most other
industries.</div>
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<b>Fill the Valuation Gap<o:p></o:p></b></div>
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One problem in selling a small technology company is that
they are a relatively unproven commodity compared to their large, brand name
competitors. So, on their own, they cannot create this profitability leverage.
The acquiring company, however, does not want to compensate the small seller
for the post-acquisition results that are directly attributable to the buyer's
market presence. This is what we refer to as the valuation gap. The
potential is there, but the battle is about what percentage of future results
gets allocated to the seller and what percentage gets allocated to the buyer.</div>
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The business seller wants to artfully help the buyer justify
paying a much higher price than a pre-acquisition financial valuation of the
target company. In other words, the seller wants to get strategic value from
the buyer. An important thing to keep in mind is that the effectiveness of this
strategy goes up exponentially based on the number of qualified buyers that
are vying for the acquisition when it is time to submit letters of intent. The
reason for this is that some of the acquisition benefits we present will
resonate with some and not with others. The more buyers involved, the greater
the chances of one or more of the benefits creating a favorable impression of
post-acquisition business value creation.</div>
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<b>Tips on Positioning Your Software Business for Maximum
Price:<o:p></o:p></b></div>
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<b>Cost for the buyer to write the
code internally</b> — Many years ago, Barry Boehm, in his book, <i>Software
Engineering Economics</i>, developed a constructive cost model for projecting
the programming costs for writing computer code. He called it the COCOMO model.
It was quite detailed and complex, but I have boiled it down and simplified it
for our purposes. We have the advantage of estimating the "projects"
retrospectively because we already know the number of lines of code comprising
our client's products. This information is designed to help us understand what
it might cost the buyer to develop it internally so that he starts his own
build versus buy analysis.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8st3gBVotBIdqJ2HFPuY4drhwQ35njSL3Glahh3hEUb5kSPWVabw4tFm3yqGrde44MXXeBqDEGV_JZL62XRvreavxCkUeXzP2E2h6sPLyg5Wnh6R7cyN3ZcF_8bMuQiTJs3eFXKljR6k/s1600/Software+Development.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="300" data-original-width="450" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8st3gBVotBIdqJ2HFPuY4drhwQ35njSL3Glahh3hEUb5kSPWVabw4tFm3yqGrde44MXXeBqDEGV_JZL62XRvreavxCkUeXzP2E2h6sPLyg5Wnh6R7cyN3ZcF_8bMuQiTJs3eFXKljR6k/s320/Software+Development.jpg" width="320" /></a></div>
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Most acquirers could write the
code themselves, but we suggest they analyze the cost of their
time-to-market delay. Believe me, with first-mover advantage from a competitor
or, worse, customer defections, there is a very real cost of not having your
product today. We were able to convince one buyer that they would be able to
justify our seller's entire purchase price based on the number of client
defections their acquisition would prevent. Think of the difference today
between first-mover Gatorade and the distant number two, Powerade.<br />
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<b>Restate historical financials
using the pricing power of the brand name acquirer.</b> We had one client
that was a small IT company that had developed a fine piece of software that
compared favorably with a large, publicly traded company's solution. Our
product had the same functionality, ease of use and open systems platform, but
there was one very important difference: The end-user customer's perception of
risk was far greater with the little IT company that could be "out of
business tomorrow."<br />
<br />
We were able to double the financial performance of our client on paper and
present a compelling argument to the big company buyer that those economics
would be immediately available to him post-acquisition. It certainly was not
GAAP accounting, but it was effective as a tool to drive transaction value.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVveKs6cE7DXg3XwG9xGsQz6mqwgujrOQcSiBYcV-qAttT0tYXKIDUyiosere27WsI_TS3gwpD2KvpuLirsldQpotAfL2TiPnyJj95BO0S8oKxsnR5kzTz_-VAPgrV6K9HYGQ5MVw2NEU/s1600/MRR.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="194" data-original-width="259" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVveKs6cE7DXg3XwG9xGsQz6mqwgujrOQcSiBYcV-qAttT0tYXKIDUyiosere27WsI_TS3gwpD2KvpuLirsldQpotAfL2TiPnyJj95BO0S8oKxsnR5kzTz_-VAPgrV6K9HYGQ5MVw2NEU/s1600/MRR.jpg" /></a></div>
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<b>Financials are important so we
have to acknowledge this aspect of buyer valuation as well.</b> We generally like
to build in a baseline value (before we start adding the strategic value
components) of 2 X contractually recurring revenue during the current year.
So, for example, if the company has monthly maintenance contracts of $100,000
times 12 months = $1.2 million X 2 = $2.4 million as a baseline company value
component. Again, this financial analysis is to establish a baseline, before we
pile on the strategic value components.<br />
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<b>We try to assign values for
miscellaneous assets that the seller is providing to the buyer.</b> Don't overlook
the strategic value of Blue Chip Accounts. Those accounts become a
platform for the buyer's entire product suite being sold post-acquisition into
an "installed account." It is far easier to sell add-on applications
and products into an existing account than it is to open up that new account.
These strategic accounts can have huge value to a buyer. Value that can be
created for the buyer is important when the selling company has developed a
superior sales system or highly effective business model that could be
implemented in the buying company.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhKh_bhiyySpRxAcwlWUZGCbLB-Oy3kLRKnNXAkwgelzOAkCvgY2aSjmUA7U1aFGC4vg7YeujZX_YCVrCIzGlxYVV3CDBnZd5yWtLyzpKad_cpM8trVHygBOYI4iMmkr7Ho4poeWuwCds/s1600/Assets+on+Story+Board.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="353" data-original-width="450" height="251" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhKh_bhiyySpRxAcwlWUZGCbLB-Oy3kLRKnNXAkwgelzOAkCvgY2aSjmUA7U1aFGC4vg7YeujZX_YCVrCIzGlxYVV3CDBnZd5yWtLyzpKad_cpM8trVHygBOYI4iMmkr7Ho4poeWuwCds/s320/Assets+on+Story+Board.jpg" width="320" /></a></div>
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<b>Finally, we use a customer
acquisition cost model to drive value in the eyes of a potential buyer.</b>
Let's say that your sales person at 100% of quota earns total salary and
commissions of $125,000 and sells five net new accounts. That would mean that
your base customer acquisition cost per account was $25,000. Add a 20% company
overhead for the 85 accounts, for example, and the company value using this
methodology would be $2,550,000.</div>
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<b>Conclusion<o:p></o:p></b></div>
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You think this is a little far-fetched. However, these
components do have real value — that value is just open to a broad
interpretation by the marketplace. We are attempting to assign metrics to a
very subjective set of components. The buyers are smart and experienced in the
M&A process. They'll try to deflect these artistic approaches to driving up
their financial outlay.</div>
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The best leverage point we have is that those buyers know
that we are presenting the same analysis to their competitors and they don't
know which component or components of value will resonate with their
competition. You need to provide the buyers some reasonable explanation for
their board of directors to justify paying far more than a financial multiple
for our client's company.</div>
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-11742855430485493002018-10-17T15:46:00.001-05:002018-10-17T15:46:21.923-05:00Letting the Market Bridge the Valuation Gap in Your Business Sale<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
Below is our latest Article <a href="https://www.divestopedia.com/2/5255/sale-process/negotiation/letting-the-market-bridge-the-valuation-gap">Dave Kauppi Article on Divestopedia</a><br />
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com"><span style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px; font-weight: 700;">Takeaway:</span><span style="background-color: white; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;"> </span><i itemprop="description" style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;">Using fair market value to help business owners bridge the gap between the valuation they feel they deserve and that which they're likely to receive increases the likelihood of a transaction.</i></a><br />
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<i itemprop="description" style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkM5S4JB2gqnyw7k_LjABTOKvmj3oS1Wq7pN43PSV33e9HyeS3ixPcHAvv7phnWG0x5DiO39TNWnzopkWo23dVvgW20W3UA1fijENsIu3RgQiMVvzTZmXSfYS5itGWLXE68EudpqBEWOs/s1600/1017+Divestopedia+Bridge.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="483" data-original-width="724" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkM5S4JB2gqnyw7k_LjABTOKvmj3oS1Wq7pN43PSV33e9HyeS3ixPcHAvv7phnWG0x5DiO39TNWnzopkWo23dVvgW20W3UA1fijENsIu3RgQiMVvzTZmXSfYS5itGWLXE68EudpqBEWOs/s320/1017+Divestopedia+Bridge.jpg" width="320" /></a></i></div>
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<a href="mailto:davekauppi@midmarkcap.com"><i itemprop="description" style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;"><br /></i></a>
<div style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px; margin-bottom: 11px;">
Statistics show that a surprisingly low percentage of businesses for sale actually sell on the first attempt. The major reason for the lack of sales is the <a href="https://www.divestopedia.com/definition/1065/valuation-gap" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_self">valuation gap</a>between the buyers and the seller. This article discusses how that gap can be breached, resulting in completed business sale transactions.</div>
<div style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px; margin-bottom: 11px;">
In a survey that we conducted with <a href="https://www.divestopedia.com/definition/845/business-broker" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_self">business brokers</a> and <a href="https://www.divestopedia.com/2/4672/sale-process/investment-bankers/a-guide-to-merger-and-acquisition-designations" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_self">merger and acquisition professionals</a>, 68.9% of respondents felt that their top challenge was dealing with their seller client's valuation expectations. This is the number one reason that, as one national <a href="https://www.divestopedia.com/definition/878/investment-bank-ib" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">investment banking</a> firm estimates, only 10% of businesses that are for sale will actually close within three years of going to market. That is a 90% failure rate!</div>
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<a href="mailto:davekauppi@midmarkcap.com"><i itemprop="description" style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;"></i></a><br />
<h2 style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 18px; line-height: 1.1; margin-bottom: 11px; margin-top: 22px;">
Setting Value Expectations for Business Owners</h2>
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<span style="background-color: white; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;">As we look to improve the performance of our practice, we looked for ways to </span><a href="https://www.divestopedia.com/2/858/valuation/valuation-methods/magic-tricks-to-help-you-get-the-valuation-you-want" style="background-color: white; box-sizing: border-box; color: #0063dc; font-family: Open-sans, sans-serif; font-size: 16px;" target="_self">judge the valuation expectations</a><span style="background-color: white; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;"> and reasonableness of our potential client. An </span><a href="https://www.divestopedia.com/definition/981/mergers-and-acquisitions-ma" style="background-color: white; box-sizing: border-box; color: #0063dc; font-family: Open-sans, sans-serif; font-size: 16px;">M&A</a><span style="background-color: white; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;"> firm that fails to complete the sale of a client, even if they charged an up-front or monthly fee, suffers a financial loss along with their client. Those fees are not enough to cover the amount of work devoted to these projects. We determined that having clients with reasonable value expectations was a key success factor.</span></div>
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To give our clients an idea of the kind of offers they would receive for their business as-is, we prepared a mock <a href="https://www.divestopedia.com/definition/894/letter-of-intent-loi" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">letter of intent</a> for them after analyzing their business. This mock LOI included not only transaction value, but also the amount of cash at <a href="https://www.divestopedia.com/definition/926/closing" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">closing</a>, <a href="https://www.divestopedia.com/definition/724/earnout" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">earnouts</a>, <a href="https://www.divestopedia.com/definition/883/seller-note" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">seller notes</a> and other factors we felt would be components of a real market offer.</div>
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If you can believe it, that mock LOI was generally not well received! Clients couldn't believe <a href="https://www.divestopedia.com/definition/5085/value-to-owner" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">the value they gave their company</a> wasn't reflected in our analysis. For example, one client was a service business and had no recurring revenue contracts in place — in other words, their next year's revenues had to be sold and delivered next year. Their assets were their people, and their people walked out the door every night. Our mock LOI included a deal structure that proposed 70% of transaction value would be based on a percentage of the next four years of revenue performance as an earnout payment. Our client was adamant that this structure would be a non-starter. Fast forward nine months and 30 buyers that had signed <a href="https://www.divestopedia.com/definition/904/non-disclosure-agreement-nda" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_self">confidentiality agreements</a>and reviewed the <a href="https://www.divestopedia.com/definition/898/confidential-information-memorandum-cim" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_self">confidential information memorandum</a> withdrew from the buying process. It was only after that level of market feedback was the client was willing to consider the message of the market.</div>
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We decided to eliminate this approach because it put us sideways with our client early in the <a href="https://www.divestopedia.com/6/5382/sale-process/the-sales-process-from-preparation-to-closing" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_self">M&A process</a>. The clients viewed our attempted dose of reality as not being on their side. No one likes to hear that you have an ugly baby. We found the reaction from our clients almost that pronounced.</div>
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We tried probing into our clients' rationale for their <a href="https://www.divestopedia.com/definition/993/valuation" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">valuation</a> expectations and we would hear such comments as, "This is how much we need in order to retire and maintain our lifestyle," or "I heard that Acme Consulting sold for 1x revenues" or "We invested $3 million in developing this product, so we should get at least $4.5 million."</div>
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Unfortunately, the market doesn't care <a href="https://www.divestopedia.com/2/4506/how-much-money-do-you-need-from-an-exit" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">what you need to retire</a>. It doesn't care how much you invested in the product. The market does care about valuation <a href="https://www.divestopedia.com/definition/848/multiple" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">multiples</a>, but timing, company characteristics and circumstances are all unique and different. We often hear examples like "IBM bought XYZ Software Company for 2X revenues so we should get <a href="https://www.divestopedia.com/definition/848/multiple" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_self">2X revenues</a>." However, it is simply not appropriate to draw a conclusion about your value when compared to an IBM-acquired company. You have revenues of $6 million; they had $300 million in revenue, were in business for 28 years, had 2,000 installed customers, were <a href="https://www.divestopedia.com/definition/835/free-cash-flow-fcf" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">cash flowing</a> $85 million annually and are a recognized brand name. Larger companies carry a <a href="https://www.divestopedia.com/definition/975/valuation-premium" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_self">valuation premium</a> compared to smaller companies.</div>
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The Price and Terms of a Sale Are Based On Several Key Business Characteristics</h3>
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1. Contractually Recurring Revenue — by far the most powerful factor for driving favorable price and terms. You just need to look at Microsoft's stock price since the new CEO changed their business model from a one-time software license sale to a subscription model. Revenues went down short-term, but over the longer term, revenues have accelerated and the stock price has responded beautifully.</div>
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This characteristic is why all of the major software firms are converting to the <a href="https://www.divestopedia.com/build-your-recurring-revenue-before-you-sell-your-software-company/2/5259" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">SaaS (Software as a Service) Model</a>.</div>
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For a business buyer, this significantly de-risks the transaction. The longer the contracts, the better. It is predictable revenue and the risk of large customer defections post-acquisition is greatly reduced. This is much more highly valued than a business that is driven by having to sell new business as the bulk of their revenue. So, the greater the percentage of revenue that is contractually recurring revenue, the higher the selling price for your business. The greater the contractually recurring revenue, the greater percentage of transaction value that will be payable in cash at closing. The lower the contractually recurring revenue, the greater the transaction value that will be shifted to a seller earnout, seller financing or both.</div>
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Also, the greater the percentage of contractually recurring revenue, generally the term of owner involvement in the business will be reduced. So if you have very little recurring revenue and you want to exit shortly after sale, good luck. The new owners will want you around to help transition the business and the customers.</div>
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2. Durable Competitive Advantage — There is a reason <a href="https://www.divestopedia.com/buy-side-ma-strategy-success/2/8260" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">Warren Buffett</a> is such a successful investor. He looks for businesses that have a <a href="https://www.divestopedia.com/definition/1015/barriers-to-entry" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">competitive moat</a> around them and that are not commodities. They have pricing power. This is a powerful driver of selling price and a meaningful factor in risk reduction.</div>
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3. Growth Rate — This is an area where the current <a href="https://www.divestopedia.com/definition/722/earnings-before-interest-taxes-depreciation-and-amortization-ebitda" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">EBITDA</a> valuation model falls short. A firm growing revenue at 30% per year should be valued far higher than another firm with the same EBITDA growing at only 10% per year. Wall Street has accounted for this with their price/earnings/growth multiple. Growth rate is valued by business buyers, but they will try to use the EBITDA model to justify their price if you let them.</div>
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4. Customer Concentration — This is a value killer and a terms killer. <a href="https://www.divestopedia.com/2/1060/maximize-value/company-premium/increase-customer-diversity-increase-business-value" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">If you have 40% of your business with one client</a> and that client goes away, you do not have a business. That is exactly how a buyer looks at it and it normally scares them away. But if there is a transaction, it will be characterized with a very large percentage of the deal as an earnout and a much smaller percentage in cash at closing. The buyer will want the owner be involved for a long period of time to ensure these necessary customers stay.</div>
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The Valuation Challenge of Intellectual Property and Software Businesses</h3>
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This issue becomes even more difficult when the business is heavily based on <a href="https://www.divestopedia.com/definition/862/intangible-asset" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">intellectual property</a>, such as a software or information technology firm. These companies face a much broader interpretation by the market than more traditional brick-and-mortar firms. With <a href="https://www.divestopedia.com/definition/1028/asset-based-approach" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">asset-based businesses</a> we can present comparables that provide us and our clients a range of possibilities. If a business is to sell outside of the usual parameters, there must be some compelling value creator like a coveted customer list, proprietary intellectual property, unusual profitability, rapid growth, significant barriers to entry or something that is not easily duplicated.</div>
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For an information technology, computer technology or healthcare company, comparables are helpful and are appropriate for gift and estate valuations, <a href="https://www.divestopedia.com/definition/8388/key-person-insurance" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">key man insurance</a> and for a starting point for a company sale. However, because the market often values these kinds of companies very generously in a competitive bid process, we recommend just that when trying to determine value in a company sale. The value is significantly impacted by the professional M&A process. In these companies where there can be broad interpretation of value by the market, it is essential to conduct the right process to unlock all of the value.</div>
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Letting the Market Decide Value</h3>
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How do we handle value expectations in these technology based company situations? M&A professionals are not the right authority on our client’s value, the market is. If the client feels like his broker or <a href="https://www.divestopedia.com/definition/878/investment-bank-ib" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">investment banker</a> is just trying to get him to accept the first deal so that the representative can earn his <a href="https://www.divestopedia.com/definition/885/success-fee" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">success fee</a>, there will be no trust and probably no deal.</div>
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If the client sees his representatives bring multiple qualified buyers to the table, present the opportunity intelligently and strategically, fight for <a href="https://www.divestopedia.com/2/5788/maximize-value/exit-planning/the-myth-of-value-creation" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">value creation</a>, and provide buyer feedback, that process creates credibility and trust. The client may not be totally satisfied with the value the market is communicating, but he or she can see the reality of the situation. The likelihood of a completed transaction increases dramatically after this.</div>
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The client is now faced with a very difficult decision and a test of reasonableness. Can he or she interpret the market feedback, balance that against the potential disappointment resulting from his or her preconceived value expectations and complete a transaction?</div>
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<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a><br />
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<br />chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-64814822327644759572018-03-19T12:07:00.000-05:002018-03-19T12:07:11.024-05:00BizCast Video Announcing our New Approach to the Unsolicited Offer<div class="separator" style="clear: both; text-align: center;">
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We are really excited that BizCast interviewed us about our new product offering for Business Owners that have been approached by a buyer with an unsolicited offer. Please check out the brief interview.<br />
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<a href="http://bizcasthq.com/video/why-president-dave-kauppi-is-continually-revamping-his-business-model/">BizCast Interview with MidMarket Capital President Dave Kauppi</a><br />
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
Dave Kauppi is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>Dave Kauppihttp://www.blogger.com/profile/17485230537306066178noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-12274889212515599802018-03-10T11:28:00.000-06:002018-03-10T11:28:47.131-06:00Announcing Letter of Intent Consulting - an M&A Service Offering from MidMarket Capital<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFcn9mVkuB4pAYKGHlR2bUU8rwuPZhckH_ZUpbFRO9BsTbBY80fELa0XZ-w_F_5tv3UuTtgoDrFB0EWRXqfsprrguTEJMSZwLsA5z38vs40ar1Pl7GzmPh7niXiAS1q9wlt7h6Lh4iAoQ/s1600/close+up+of+a+Letter+of+Intent.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1067" data-original-width="1600" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFcn9mVkuB4pAYKGHlR2bUU8rwuPZhckH_ZUpbFRO9BsTbBY80fELa0XZ-w_F_5tv3UuTtgoDrFB0EWRXqfsprrguTEJMSZwLsA5z38vs40ar1Pl7GzmPh7niXiAS1q9wlt7h6Lh4iAoQ/s320/close+up+of+a+Letter+of+Intent.jpg" width="320" /></a></div>
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Since publishing our Book, <b>Selling your Software Company - An Insider's Guide to Achieving
Strategic Value </b><a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_4?ie=UTF8&qid=1477671365&sr=8-4&keywords=sell+a+software+company"><b>Click Here For Our New Book on Amazon</b></a><b> </b>our volume of inbound inquiries has
more than doubled. What has surprised us is the number of calls we are
receiving where the business owner either has a <b>Letter of Intent (LOI) </b>or is
about to receive a letter of intent from the buyer. Their emotions go from giddy anticipation to
anxiety as they look at a document that is complex and technical and contains
several terms that the business owner is not familiar with. Such thoughts as,
"Am I getting a fair deal?"
What is a subordinated seller note?
What does a cash free, debt free transaction mean? How is a net working
capital surplus calculated and what are the implications for what I receive at
closing. What are all of these reps and warranties? Is a non-compete standard
procedure? </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-ieTkkOqfq8mVaDFINzdATBIdx8ZhZ31chS_vhFr4BuBJS9ZyaKGCLpX8ep03Bx6Alo0KuIeRf3yWguY6ftG7FgwiCuPYe7ds8h1SdoqYM4yS2gT5QBVonHA_XStfJCbnGrYoo-4b6x4/s1600/Sharks+Circling+Businessman.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1065" data-original-width="1600" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-ieTkkOqfq8mVaDFINzdATBIdx8ZhZ31chS_vhFr4BuBJS9ZyaKGCLpX8ep03Bx6Alo0KuIeRf3yWguY6ftG7FgwiCuPYe7ds8h1SdoqYM4yS2gT5QBVonHA_XStfJCbnGrYoo-4b6x4/s320/Sharks+Circling+Businessman.jpg" width="320" /></a></div>
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Mistakes in negotiating this very important document can
cause the seller to lose $ hundreds of thousands, to $millions depending on the
size of the transaction. The other result is that after three months of
grueling due diligence, the buyer interprets loose wording in the LOI,
intentionally in their favor, and then calls in their very expensive CPA firm
and Law Firm to support their claim. The business owner faces a big haircut as
these interpretations are captured in the purchase agreement. What very often
happens, however, is the owner walks away from the deal. This is a big loss for
everybody.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtpzzQFa-q3Q41PU_LAsKVRBKzm3ROb0N0Aze-opV-IphyphenhyphenbypNaXna1Qcuux1wOVwz6DTXYzxIFhkW_8nXGBbheYWC0NN7Rp52E8MUdEjx2I4mrwhXtzI5fB7Da3CPrHsjG95tJ6iaWQQ/s1600/Experience.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1067" data-original-width="1600" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtpzzQFa-q3Q41PU_LAsKVRBKzm3ROb0N0Aze-opV-IphyphenhyphenbypNaXna1Qcuux1wOVwz6DTXYzxIFhkW_8nXGBbheYWC0NN7Rp52E8MUdEjx2I4mrwhXtzI5fB7Da3CPrHsjG95tJ6iaWQQ/s320/Experience.jpg" width="320" /></a></div>
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Our hourly consulting service is based on 20 years of
experience in negotiating deals with the toughest buyers in the world, Private
Equity Buyers. We help to balance the deal experience scale between the buyer's
team and the seller's team. Our approach is to negotiate the LOI so that there
are no unexpected surprises or haircuts at the end of due diligence. We
incorporate very specific wording with formulas and examples that cannot be
interpreted in the buyer's favor no matter what big 5 accounting firm or major
law firm they bring in. This results in the terms and conditions negotiated in
the Letter of Intent become the terms and conditions translated into the
purchase agreement. We help get good deals across the finish line.</div>
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If this sounds familiar to your situation, please email me
at davekauppi@midmarkcap.com, or call me at my direct office number (630)
325-0123 or on my cell at (630) 215-3994 </div>
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-64169165970931500302018-01-29T17:39:00.001-06:002018-01-29T17:39:38.671-06:00Traditional Valuation Techniques May not Apply for an Information Technology Company<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
<br /><a href="https://www.divestopedia.com/traditional-valuation-techniques-may-not-apply-for-an-information-technology-company/2/5253">Our latest article published in Divestopedia</a><br />
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<span style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px; font-weight: 700;">Takeaway:</span><span style="background-color: white; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;"> </span><i itemprop="description" style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;">Learn why more traditional valuation methods may not be the best for your IT company.</i><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBRrYXkTs65aOTMYBFGrbTTBWmYqJUoGCHMTDaQyGJ38nBkKUovCmVFp31U65QAAwa_THa30s3LHoaO-o1LUlCAGX0tDClresFe3rz_nCrORE7crhVP-sX0JVdJaRDtp2Z6Lr59unhUuk/s1600/Divestopedia+Picture+1-29-18.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="483" data-original-width="724" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBRrYXkTs65aOTMYBFGrbTTBWmYqJUoGCHMTDaQyGJ38nBkKUovCmVFp31U65QAAwa_THa30s3LHoaO-o1LUlCAGX0tDClresFe3rz_nCrORE7crhVP-sX0JVdJaRDtp2Z6Lr59unhUuk/s320/Divestopedia+Picture+1-29-18.jpg" width="320" /></a></div>
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Business <a href="http://www.divestopedia.com/definition/993/valuation" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">valuations</a> of software companies use proven <a href="http://www.divestopedia.com/definition/907/valuation-approach" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">methodologies</a> to arrive at an indication of value. If the technology is one in demand, however, the valuations provided by the markets can be off the charts. This article discusses how the pros value software companies and the limitations to their approach.</div>
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The Influence of High-Profile Tech Deals</h2>
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Software company owners looking to sell their companies are often inspired to start the process after reading about the latest high profile, stratospheric acquisition price paid by a large tech bell weather company. The transaction <a href="https://www.divestopedia.com/7/5932/pre-sale/preparation/what-are-the-most-important-financial-metrics-to-monitor-when-planning-for-an-exit" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">metrics</a> (i.e., transaction value to sales or transaction value to <a href="http://www.divestopedia.com/definition/4917/earnings-before-interest-and-taxes-ebit" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">EBIT</a>) sometimes defy all logic.</div>
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The new, would-be seller applies these metrics to his company's sales and <a href="https://www.divestopedia.com/2/1077/valuation/valuation-methods/ebit-or-ebitda-sometimes-the-da-in-ebitda-really-does-matter" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">EBIT</a> and determines that IBM, Microsoft, Google, Oracle, Cisco, etc. should be ready to get into a bidding war over his $5 million in revenue, game changing, best-in-breed software company for a value of <a href="https://www.divestopedia.com/2/4542/valuation/multiple/i-sold-my-business-at-10x-multiple-a-multiple-of-what-and-when" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">8X revenue</a>.</div>
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Let's break down the methodology that professional business valuation firms use as their standard in arriving at a company's indicated value. Their approach calls for a triangulation of three valuation methodologies.</div>
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Public Company Comps</h2>
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The first is a comparison to publicly traded companies in the same category. It is very interesting to look at the lists that the <a href="https://www.divestopedia.com/2/7864/valuation/enterprise-value/for-high-tech-ma-strategic-value-is-not-automatic" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">valuators</a> come up with. Technically they are all software companies with SIC Code 5734-01, but they are as alike as apples, coconuts, watermelons and blueberries. True, they are all fruit; but that is where the similarity ends.</div>
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Next, they take the valuation metrics of these publicly traded companies. The most commonly used are sales to <a href="http://www.divestopedia.com/definition/760/enterprise-value-ev" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">enterprise value</a> and <a href="https://www.divestopedia.com/definition/958/ntm-evebitda" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">EBIT to enterprise value</a>. Next they come up with the median value (one half of the companies are above the value and one half are below). They then apply what is best described as an arbitrary discount factor to account for the value differential between public companies and small, closely-held companies. They come up with their adjusted metrics then apply them to the <a href="https://www.divestopedia.com/definition/5160/target-company" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">target company</a> and voila: you have one of the valuation legs completed.</div>
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Completed Private Company Transactions</h2>
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The valuation analyst next applies the same approach to actual completed transactions. If the buyer was a public company, then the metrics are publicly available. If the transaction is between two <a href="https://www.divestopedia.com/definition/846/private-equity" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">privately held companies</a>, the metrics are only available on a voluntary basis. Maybe 10% of these participants release information about these transactions. These unreported deals are probably the best fit in terms of comparables, unfortunately.</div>
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In order to get a meaningful number of transactions, the analyst often is forced to use transactions from a 5-10 year period. Do you know how to say tech bubble or tech meltdown? This is not a simple process.</div>
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The Old Reliable — Discounted Cash Flow</h2>
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Wait, maybe we can add some much-needed precision with the third valuation technique, the <a href="http://www.divestopedia.com/definition/855/discounted-cash-flow-dcf" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">discounted cash flow method</a>. First, calculate a risk-adjusted <a href="http://www.divestopedia.com/definition/5039/discount-rate" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">discount rate</a>. After three pages of explanation, you'll usually arrive at a discount rate of between 24–30%. Next, project the after-tax cash flow for the next five years and discount it to <a href="https://www.divestopedia.com/6/5384/valuation/business-valuation-in-theory-and-practice/10" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">present value</a>.</div>
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They then calculate the <a href="http://www.divestopedia.com/definition/4827/terminal-value" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">terminal value</a> of the company (five years of year five cash flow discounted by the risk-adjusted rate less the projected growth rate). They discount that number to present value and add that to the discounted cash flow to create the third leg of the valuation stool.</div>
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How many software companies are not projecting <a href="http://www.divestopedia.com/definition/1002/hockey-stick-projection" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">hockey stick growth</a> during the valuation period in question? Not only are these projections very aggressive, but cash flow margins are projected to improve by a factor of three times during this same period.</div>
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The Seller's Research Helps Set Valuation Expectations</h2>
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Now our <a href="https://www.divestopedia.com/definition/5106/reverse-due-diligence" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">seller is armed and dangerous</a> with his company's value. That becomes his minimal acceptable offer and it must all be in cash at <a href="http://www.divestopedia.com/definition/926/closing" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">closing</a>. To use a Wall Street saying, this company is priced for perfection. We often discover during a <a href="http://www.divestopedia.com/definition/1095/sell-side" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">sell-side</a> engagement that these projections are not just missed, but they are missed by a large margin. In spite of this, the <a href="https://www.divestopedia.com/2/6299/sale-process/negotiation/factors-that-sellers-weigh-in-a-deal-beyond-valuation" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">seller's valuation</a> expectations remain the same.</div>
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All is not lost, however. One of the unique aspects of selling a software company is that if the technology is fresh (think <a href="https://www.divestopedia.com/how-to-get-your-online-business-ready-for-sale/2/8313" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">SaaS</a>, mobile apps, virtualization, cloud computing), financial <a href="http://www.divestopedia.com/definition/848/multiple" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">multiples</a> are often not the driving force in the buyer's valuation equation.</div>
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For Some Tech Companies, the Market Exceeds Expectations</h2>
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One thing that we have learned in the representation of software companies for sale is that the <a href="https://www.divestopedia.com/2/4611/valuation/goodwill/a-valuation-is-not-always-the-best-way-to-measure-value" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">value is subject to broad interpretation</a> by the market. We find that <a href="http://www.divestopedia.com/definition/800/strategic-buyer" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">strategic buyers</a> in this space are driven by such considerations as <a href="http://www.divestopedia.com/definition/5024/first-mover-advantage" style="background-color: transparent; box-sizing: border-box; color: #0063dc;" target="_blank">first mover advantage</a>, <a href="https://www.divestopedia.com/17/9413/maximize-value/forecasting/video-reducing-time-to-market-creates-strategic-value" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">time to market</a>, development costs, customer acquisition costs, customer defections and enhancing an existing product suite.</div>
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The better the target company addresses these issues, the greater the post acquisition value creation potential. <a href="https://www.divestopedia.com/definition/4583/prospective-buyer-list" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">If the right buyer is located</a> and recognizes the seller's potential when integrated with the new owner's distribution channel and customer base, we may find an even bigger hockey stick then our very optimistic sellers. If two or three buyers recognize a similar dynamic, then the valuations can become very exciting.</div>
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<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>chicagobusinessbrokerhttp://www.blogger.com/profile/09095263219056394555noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-3392091214986469802017-12-20T17:12:00.002-06:002017-12-20T17:12:51.282-06:00Private Equity Groups Can Recognize Strategic Value in a Tech Company Acquisition<div class="separator" style="clear: both; text-align: center;">
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<a href="https://www.divestopedia.com/private-equity-groups-can-recognize-strategic-value-in-a-tech-company-acquisition/2/8407">Latest Article Published on Divestopedia</a><br />
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<span style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px; font-weight: 700;">Takeaway:</span><span style="background-color: white; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;"> </span><i itemprop="description" style="background-color: white; box-sizing: border-box; color: #333333; font-family: Open-sans, sans-serif; font-size: 16px;">There has been a surge in acquisition interest in technology-related companies from private equity. This article examines the change in approach that was required in order for them to compete with strategic buyers.</i><br />
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The majority of our <a href="https://www.divestopedia.com/definition/1095/sell-side" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">sell-side</a> <a href="https://www.divestopedia.com/definition/981/mergers-and-acquisitions-ma" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">M&A</a> engagements are in representing software, information technology, healthcare technology and other tech firms where a good deal of their value may not be reflected in their financial statements alone. Owners of these types of companies want to receive value in excess of the standard <a href="https://www.divestopedia.com/definition/722/earnings-before-interest-taxes-depreciation-and-amortization-ebitda" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">EBITDA</a> <a href="https://www.divestopedia.com/definition/848/multiple" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">multiple</a> based on owning intellectual property that could be <a href="https://www.divestopedia.com/definition/4939/leverage" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">leveraged</a> by a larger company with greater distribution capabilities.</div>
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I must admit that, in my earlier years, my perception of <a href="https://www.divestopedia.com/definition/4939/leverage" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">private equity</a> groups (PEGs) as being very 'by the book' in terms of company valuation discouraged me from marketing to them as aggressively as I typically approached a <a href="https://www.divestopedia.com/definition/800/strategic-buyer" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">strategic buyer</a>. I always felt that my strategic positioning fell on deaf ears and they just wanted to see the numbers.</div>
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PEGs Are Changing the Way They Look at Tech Companies</h2>
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There has definitely been a shift in the approach that PEGs are taking to evaluating, bidding on and ultimately buying tech companies. PEGs are already formidable bidders because of their deep pockets and financing capabilities. Now that they are matching or exceeding the bids of strategic industry players, they are winning more deals in the technology space. So the availability of funds risk is largely removed for the anxious seller who may receive a similar <a href="https://www.divestopedia.com/definition/993/valuation" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">valuation</a> from a strategic industry buyer, but questions whether the PEG can come up with the cash.</div>
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Tech Deals Provide Growth Opportunities for Private Equity Buyers</h2>
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The interest of private equity groups in technology companies recognizes that there is tremendous potential for growth. In the old days, PEGs would <a href="https://www.divestopedia.com/definition/882/negotiated-sale" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">negotiate</a> and attempt to paint all their acquisitions with the EBITDA multiple brush. This is a totally inadequate valuation methodology when comparing a slow growing bricks-and-mortar company to a rapidly growing digital company. In fact, Wall Street has developed an improvement on the PE multiple with the PEG multiple. It stands for the price/earnings/growth multiple, and attempts to quantify the value of rapid growth into the valuation metric. It helps explain why a rapidly growing company like Facebook or Google sells for a higher PE multiple than a more mature, slow and steady grower like Xerox or Walgreens.</div>
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PEGs Are Involving Their Platform Companies in Tech Acquisitions</h2>
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Another subtle shift in the PEGs' behavior is that they are involving their tech platform companies in the acquisition very early in the process. In the past, this involvement was more behind the scenes and more of a division of functions. The attitude of the PEG was that they are the experts on acquiring businesses and their platform company was the provider of operational excellence.</div>
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I suspect that after numerous deal losses at the hands of the strategic industry buyers, the PEGs had to become more like an industry buyer by involving their subject matter experts from their technology platform company. This has had an amazing impact on the sellers. Having someone that understands your company and its potential is much more pleasing than defending every nickel of your transaction value to a <a href="https://www.divestopedia.com/definition/801/financial-buyer" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">financial buyer</a>.</div>
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Growth Opportunity Is Supplanting Financial Engineering</h2>
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By involving the technology platform early in the process the emphasis has changed from one of <a href="https://www.divestopedia.com/definition/726/financial-engineering" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">financial engineering</a> and cutting to one of leveraging assets and synergy. This new approach is looking for the combination of strategic assets to achieve 1+1=3. By expanding their vision, PEGs are recognizing the value potential created by cross-selling to each other's client base, improving time to market on an important upgrade, an improved customer acquisition model that could be employed by the larger parent company or adding the new capability to their current offering and making it more powerful than their major competitor's offering. The financial rigor and discipline will still be there with the PEGs' involvement, but that is no longer the sole focus in the negotiations.</div>
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A Change in Acquisition Approach Was Needed</h2>
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So the new and improved PEG approach to acquiring small tech companies was necessary because they were not winning enough deals. The win percentage has gone up considerably because they are shifting their focus to growth potential and recognizing that they will have to pay for some of that potential. In our last two deals for Managed Services Providers (one in 2016 and one in 2017), the winning bidder was a PEG with an MSP as a platform company.</div>
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In a recent deal, a PEG was the winner in a competitive bid against some other PEGs and several strategic buyers. The successful PEG put their tech company CEO front and center on the deal discussions, conference calls and corporate visits with the sellers. The sellers felt understood and valued for what they had created. The buyer recognized that their small target had some valuable intellectual property, not in their technology, but in their business model. Their approach to landing new accounts was very effective and superior to the approach of the buyer. The buyer felt they would benefit by implementing this superior new account sales approach. They won the bid because they fostered this understanding and mutual feelings of respect.</div>
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Make a Little More Room for a Higher Bid</h2>
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Private equity groups have a secret weapon that should enable them to be more competitive in these deals that previously were won by the strategic buyers. It is called the large company <a href="https://www.divestopedia.com/definition/975/valuation-premium" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">premium</a> versus the small company <a href="https://www.divestopedia.com/definition/976/valuation-discount" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">discount</a>.</div>
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Their model is to originally acquire a platform company with a value of $30 million. For this example, let's say that the baseline <a href="https://www.divestopedia.com/2/4542/valuation/multiple/i-sold-my-business-at-10x-multiple-a-multiple-of-what-and-when" style="background-color: transparent; box-sizing: border-box; color: #0063dc;">EBITDA valuation is 8 X</a>. Now they go out and seek ad-ons that may be in the $3-$8 million dollar range. Those sized companies will generally sell at a discounted EBITDA multiple compared to the large company multiple. In this example, let's say that is a 5.5 X multiple. Here is where their magic happens. By virtue of acquiring the smaller company and adding it to the larger company, its EBITDA now is valued at the much higher multiple of the larger company. So if the selling company had an EBITDA of $1 million and were valued prior to the acquisition at 5.5 X, the value is $5.5 million. On the day of closing, that company (as a part of the bigger company) adds $1 million X 8 for a value of $8 million. $2.5 million in value was created out of thin air.</div>
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So he next time you are in heavy negotiations with a PEG, remember they have a built-in upside and a little more room to come up with some additional strategic value.</div>
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Dave Kauppi is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>Dave Kauppihttp://www.blogger.com/profile/17485230537306066178noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-66819221880860875212017-12-12T11:33:00.000-06:002017-12-12T11:33:13.652-06:00Available for Acquisition - Website AI Lead Capture Chat Agent<div class="separator" style="clear: both; text-align: center;">
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to Increase Lead Capture:</span></b><span style="font-family: Arial, sans-serif; font-size: 10pt;"> for a number of industry verticals by a factor of <b>2-10x</b>.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 10pt;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="font-family: Arial, sans-serif; font-size: 10pt;">Rapid Set-Up:</span></b><span style="font-family: Arial, sans-serif; font-size: 10pt;"> Allows basic version of
automated agent running in less than15 minutes for general businesses and several
vertical markets companies (company developed templates available)<o:p></o:p></span></div>
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</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt; line-height: 150%;">Chat
Highly Effective at Engaging Website Visitors</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt; line-height: 150%;">: and it is a rapidly
growing market with 52 million websites already using live chat. However, small-medium businesses do not
typically have the manpower or resources to man live chat 24x7 so an effective
automated service is highly attractive for these businesses. <o:p></o:p></span></div>
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</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt; line-height: 150%;">Focus
on Lead Generation</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt; line-height: 150%;">: focus on lead generation for small-medium
businesses. Greater than 95% of a
website’s visitors do not engage with the business – this is the main problem
we’re solving. We’ve setup our system to
engage a website visitor more effectively than live chat or simple pop-ups so
that we can capture more leads for that business. <o:p></o:p></span></div>
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</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt; line-height: 150%;">Simple
and non-technical</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt; line-height: 150%;">:
Other AI agent solutions are complex and require a higher level of
technical sophistication to setup, deploy, and maintain the agent. Our solution is simple, easy, and does not
require special technical or marketing skills.
You don’t need PhD’s to setup and maintain the system or professional
copywriters to script the agent. We’ve taken
the guesswork out. It’s turnkey.<o:p></o:p></span></div>
<a href="mailto:davekauppi@midmarkcap.com">
</a><br />
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</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt; line-height: 150%;">Modular
Technology Platform: </span></b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt; line-height: 150%;">The way we have created our tech platform we
have a type of technical ‘shell’ that lets us plug-in to more advanced AI/NLP
systems. We currently have our own NLP. However, as 3rd party specialty
NLP providers become more sophisticated those capabilities can be added to the
system. It is setup to add these providers (like Watson, Rasa.ai, etc.). A
strategic acquirer gets the benefit of having something that is ready to deploy
now and also a technical architecture that is a foundation to build upon if
they choose</span><span style="font-family: "Arial","sans-serif";">.</span><b><span style="font-family: "Arial","sans-serif"; font-size: 10.0pt; line-height: 150%;"><o:p></o:p></span></b></div>
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<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>Dave Kauppihttp://www.blogger.com/profile/17485230537306066178noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-7516811206125257282017-06-07T12:33:00.001-05:002017-06-07T12:33:53.657-05:00Company Acquisition Opportunity - Indexed Universal Life Marketing & Presentation Software for Insurance Agents and Financial Advisors<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s1600/Logo+New+C.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFLjvp8aHFkUyZI7CWDre9FZs-s5rqF3rf2LjLYdn9YPs7DvXjGUFk0KRKruJpV9rBA2AJiUoPCpQtr0uRnVGbo70Tq9_tUbsgsf85jnEfwdSlNJUu0ObgBDIUnVXByzHEumUDJIGBhD8-/s320/Logo+New+C.bmp" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6YVKLficN-TSY-yeDdOUTQIBd-aiyC23ZE09NGIXWqXYYsbPhLnqlqDuF8s8a3R4y2fz6dpOFefKwmVu3R92QiWX11MdgU7wVugld6ffgm98JO9mh5gKC5wLsx_aWpaY2pSAL3KveakDq/s1600/owner+and+wife.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="563" data-original-width="811" height="222" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6YVKLficN-TSY-yeDdOUTQIBd-aiyC23ZE09NGIXWqXYYsbPhLnqlqDuF8s8a3R4y2fz6dpOFefKwmVu3R92QiWX11MdgU7wVugld6ffgm98JO9mh5gKC5wLsx_aWpaY2pSAL3KveakDq/s320/owner+and+wife.jpg" width="320" /></a></div>
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<h2 style="text-align: center;">
<b><i>2016 Revenue: $514 K 2017 Proj Revenue: $850 K</i></b></h2>
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<i> MidMarket Capital, a Mergers and Acquisitions
Firm, is representing the Client described below for sale:<o:p></o:p></i></div>
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<b><i>Growing Market for the Company’s Services:</i></b><i> Main product is an illustration software
for Indexed Universal Life. IUL’s emerging popularity with insurance agents and
financial advisors, along with retirement savings wealth trends in general,
support strong momentum for Company's market opportunity.<o:p></o:p></i><br />
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<b><i>Proprietary Financial Product Development: </i></b><i>Company occupies a very unique
viewpoint in the retirement savings industry, has hundreds of agent and carrier
contacts, and understands the underlying actuarial and marketing aspects of
insurance-oriented savings products. All materials and product names are
copyrighted.<o:p></o:p></i></div>
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<a href="mailto:davekauppi@midmarkcap.com">
</a><br />
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<b><i>Track Record/Proven Product Acceptance:</i></b><i> Company has increased its year-over-year
sales to one of the largest IMOs in the industry since inception, and now has
other IMOs participating, as well as other market participants interested.
Great growth potential with expanded marketing resources.<o:p></o:p></i></div>
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<br /><a href="https://genequityco.na1.echosign.com/public/esignWidget?wid=CBFCIBAA3AAABLblqZhCbTzVy1d-9wuMPDkrFS5tHkRno_3wFIIzn_GDkdIPtwn_qdjRxnCo4ieOU5ejxrr8*">Click Here to eSign the Confidentiality Agreement for Client # 61151</a><br />
<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a>Dave Kauppihttp://www.blogger.com/profile/17485230537306066178noreply@blogger.com0tag:blogger.com,1999:blog-8595564926623493412.post-58954440838811098022017-05-19T17:36:00.000-05:002017-05-19T17:36:52.504-05:00Company Acquisition Opportunity Publisher of Medical and Scientific Illustrations - Expansive Digital Assets<div class="separator" style="clear: both; text-align: center;">
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<b><span style="font-family: "Arial","sans-serif";">The Company is a research and
development publishing company specializing in high-quality medical and
scientific illustrations, and educational products. Since its founding in 1998,
the company has built a library of digital anatomical, pathological, and
physiological illustrations and the text copies related to them. They are the
most consistent in the industry with a consistent look across media.</span></b><br />
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Trademarks and copyrights: The Company earns royalty fees
from previous promotional and medical publications. The Company retains the
copyright for each new product it develops and currently maintains a library of
approximately 150 copyrights.<o:p></o:p></div>
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Expansive Visual Assets: Since its founding in 1998, the
Company has amassed a catalog of over 1,000 multi-layered illustrations that
covers the majority of medical conditions and muscular and skeletal ailments
providing a comprehensive portfolio of medical and pharmaceutical education
materials to be used in a variety of publishing mediums.</div>
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Leveraging High Quality Assets: The multi-layered
illustrations can be deployed digitally for an enhanced learning experience,
capitalizing on the growth of on-line education and professional training.</div>
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<a href="https://genequityco.na1.echosign.com/public/esignWidget?wid=CBFCIBAA3AAABLblqZhCdLORjfRADM8lyNx4z5LY-JOZHdNe8lfevwx2akLLQhV-ZCrL3X6tf8ZsA_jkBc3A*">Click Here to eSign the NDA and Receive the Memorandum</a></div>
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<a href="mailto:davekauppi@midmarkcap.com"><br /></a>
<a href="mailto:davekauppi@midmarkcap.com">Dave Kauppi</a> is a Merger and Acquisition Advisor and President of <a href="http://www.midmarkcap.com/" target="_blank">MidMarket Capital</a>, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book <a href="https://www.amazon.com/Selling-Your-Software-Company-Achieving/dp/1519026374/ref=sr_1_1?ie=UTF8&qid=1479144104&sr=8-1&keywords=sell+a+software+company"> Selling your Software Company - An Insider's Guide to Achieving Strategic Value</a></div>
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