Tag: In-house Analysis

The Purpose of Representations and Warranties Insurance in an M&A Transaction

R&W insurance provides private equity firms, strategic and corporate buyers, risk managers, and other stakeholders with a risk mitigation solution for uncertainties in a merger or acquisition. The policy is available to either the buyer or seller and provides protection against financial loss, including defense costs for certain unintentional or unknown seller breaches.

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The Relationship Between Deposits and Net Working Capital

In a previous article, we discussed Net Working Capital (NWC) and its significant role in transactions. To recap, NWC is defined as a company’s current assets minus its current liabilities. This post will address one component of NWC that is often misunderstood and mishandled in the sale of a company: deposits.

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Understanding Net Working Capital and its Importance in a Transaction

Net Working Capital (NWC) is one of the most important negotiations in a transaction, often having the greatest economic effect compared to other terms in a deal. NWC is also
one of the levers buyers can use to potentially lower the price they pay for an acquisition. Why then, does NWC so rarely get discussed until the transaction is almost complete? The answer to that question, and the topic of NWC in general, can be complicated. However, a
good advisor should be able to simplify the explanation and act as an advocate to ensure the seller receives fair treatment. In this article, we will take a look at what NWC is, how it
is used, and the benefits an investment banker can provide to sellers by negotiating its value.

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Breaking Down a Purchase Agreement

For business owners currently engaged in or contemplating an M&A process, the importance of the purchase agreement is critical. Beyond the legal intricacies, this document serves as a basis of trust, transparency, and collaboration between buyers and sellers. To navigate this pivotal phase of the M&A process, prudent business owners are well-advised to engage the services of experienced investment bankers and M&A attorneys.

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10 Reasons Business Owners Should Perform a Quality of Earnings Analysis When Selling Their Company

Whether a company is undergoing its first financial review or has a history of accounting oversight, the decision to engage in a Quality of Earnings (QofE) analysis is crucial, especially for those contemplating a sale. A QofE analysis focuses on the accuracy and sustainability of earnings, helps sellers better understand how buyers are going to evaluate their business, and provides a deeper understanding of the true earning potential of a business.

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What is business succession planning and why is it often overlooked by business owners?  

Business succession planning needs to be an integral part of any private or family-owned business.  It is an important and evolving process that requires thoughtfulness and ongoing attention from the owner. This is not a task to be put off until later. To be done successfully, it needs to be a consistent part of a company’s business strategy and operations. Doing so can increase the confidence of buyers and potentially maximize the amount they are willing to pay for the company.

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