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Stephen Goldberg brings over 25 years of merger and acquisition experience to the helm of Sun Mergers & Acquisitions, LLC.
In 1985 he was an original member of a NJ based acquisitions firm and subsequently founded Sun M&A to more narrowly focus on the exit strategy goals of family and entrepreneurially owned middle market clients. Since then, Sun has emerged as one of the leading regional players in the field. In addition to his work as a Certified Business Intermediary, Stephen is a frequent lecturer on business sale, business valuation and value enhancement topics.
Sun Mergers & Acquisitions is also affiliated with Sun Business Valuations, LLC, which provides business valuation services used in shareholder buyouts and litigation support, gifting and estate planning and other purposes for Attorneys, CPAs, Investment Advisors, Consultants, and Business Owners.
MO: What tips would you give to an entrepreneur considering selling their business?
Stephen: It is crucial to anticipate what the realistic valuation, transaction terms, and tax implications are before getting started with the business sale process. It is key to confirm that your objectives are in line with what is achievable. Working with a professional and experienced intermediary can help you avoid an expensive learning curve with something that is so critical to your future and where there is so much money at stake.
MO: What are some of the advantages of retaining an equity stake in a business?
Stephen: A shareholder can find it exciting to sell a portion of the company for liquidity or estate planning purposes while retaining equity ownership to participate in the company’s future upside potential. This structure allows the owner to achieve personal liquidity; eliminate personal guarantees; retain significant operational input and responsibility; and, gain a financial partner to help capitalize on strategic expansion opportunities. An owner can diversify financially and take a significant amount of money “off the table”. By retaining some equity ownership, the Seller can have the opportunity to take a “second bite at the apple” in the future by selling their smaller remaining stake in a much larger company. It is not unusual for the retained minority interest to yield a greater value than the original sale due to the expansion of the company.
MO: What are some ways that a business can get the best possible valuation? Is there anything that they can do to improve or enhance the value of their company?
Stephen: When going through the sale process, you will enhance value by presenting the company in its best light. Generally speaking, the most direct way to enhance value is to build a company’s earnings. It is also important to work on positioning the business so you eliminate the risk factors associated with concentration, dependency and other uncertainties that can negatively impact business value. For example, you can focus on building value by reducing the businesses dependency on a key customer or a particular vendor. Also, a good management team is critical to eliminating the company’s reliance on the shareholder. An M&A advisor can help maximize the presentation of the company as well as generate interest from multiple potential suitors. It is important to have discussions with multiple potential acquirers as opposed to speaking with one party that feels they have leverage since they are the “only game in town”.
MO: What are some of the reasons that sales fail and how can these issues be avoided?
Stephen: The biggest reasons business sales fail is lack of preparation. It is important to properly organize the financial and operational data that will always be requested by an acquirer. If the business is not presented in the right way, potential acquirers will not appreciate its intangible value. Many transaction also fail for emotional reasons having to do with seller remorse. Lack of familarity with the process and fear of change many times trigger seller remorse and causes a seller to build road blocks into a business sale negotiation that can crater a transaction.
MO: Can you talk about some of the unique considerations or challenges that a family business faces when it comes to selling?
Stephen: Family businesses have inherent challenges that arise out of the strained relationships that commonly exist between certain family factions. When you introduce the outside pressures brought about by the business sale process, the existing relationships and current disparities can be escalated. The primary challenge families face is that more times than not, there are multiple agendas present. Some are motivated by maximizing cash at closing and leaving as soon as possible, while some are not prepared to leave the business. It is common that certain members favor a sale while others are not interested. When there are multiple family members involved, it is very difficult to get everyone on the same page. It is important to address these issues up front before they interfere with the ability to achieve a successful transaction.
MO: Why is emotional intelligence useful during the sale of a company?
Stephen: A key role of an M&A advisor is to provide guidance, manage expectations and handle the selling process from a non-emotional perspective. This protects the client from the emotional rollercoaster that can hamper the process or from a break in focus from properly managing the business. Being able to manage the emotions that will arise throughout the process of selling a business will avoid sabotaging all other preparations made for a successful exit. A business owner cannot predict how they will feel during and after the sale of their company, but they can and should utilize professionals who understand the sale process and are trained to best control the emotions of all parties involved.
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