Beacon Equity Advisors

Question: What is the timeframe for a business sale these days? Answer: We tell people it is 7 / 7 / 70. Seven weeks to prepare the CIM (confidential information memorandum), seven months to find a buyer and negotiate a deal, and 70 days to close once you have a signed LOI. While it can go faster, even much faster, this is typically the time frame for an owner who desire to sell for the premium value and is not under pressure to sell. --- During the 2024 Managing and Accounting Practice (MAP) Conference hosted by the Massachusetts Society of CPAs (MassCPAs), Beacon Equity Advisors presented an AMA (Ask Me Anything) to the CPA firm partners attending. We thought we would share some of their questions and our answers. #mergersandacquisitions #valuation #privateequity #beaconequityadvisors #manufacturing

Question: Any tips on reading an LOI (Letter of Intent)? Answer: Yes, always remember the team which wrote the LOI is professional. They have likely written dozens if not hundreds of LOIs. The LOI will be written to sound interesting and exciting to the seller while covering their risks in the short term. The devil is in the details and may well include value-add payments to the seller which will likely never be reached even when everything goes well. We had a deal this fall where the LOI referenced the seller being granted shares of stock based on the holding company having a value of $25 million (pre acquisition). A value nowhere near realistic. --- During the 2024 Managing and Accounting Practice (MAP) Conference hosted by the Massachusetts Society of CPAs (MassCPAs), Beacon Equity Advisors presented an AMA (Ask Me Anything) to the CPA firm partners attending. We thought we would share some of their questions and our answers. #mergersandacquisitions #valuation #privateequity #beaconequityadvisors #manufacturing

Question:?When is the right time / best time to sell? Answer:?Obviously, the answer depends, but let me say this, I believe based on what I have seen in the marketplace – too many owners hold on too long.?They choose to sell based on their age, and not what is going on in the marketplace, their industry or the needs of the business.?A financial advisor would never tell a client to buy X stock when they are 40 and decree the best time to sell the stock is when the client reaches 68 years.?No, the advisor is going to reevaluate this holding regularly and make an assessment.?Why would we not take this approach with what is for many is their most valuable retirement asset? --- During the 2024 Managing and Accounting Practice (MAP) Conference hosted by the Massachusetts Society of CPAs (MassCPAs), Beacon Equity Advisors presented an AMA (Ask Me Anything) to the CPA firm partners attending. We thought we would share some of their questions and our answers. #mergersandacquisitions #valuation #privateequity #beaconequityadvisors #manufacturing

Question: How early do I need to begin to prepare to sell my business? Answer: There is an adage to be ready to sell from the very first day, as you never know when someone might walk in your door with an offer. However, a more responsive answer is three to five years before you want to sell. Note, this is before you want to sell, not before you want to retire. Remember, you may wind up working for the new owner for a period of time. A material portion of a business’ value is based on trends over the prior years. This takes some foresight to make sure your historical P&L and Balance Sheet present the way you want them too. Plus, there are somethings an owner will want to take care of in the normal course of business, such as getting a transferable lease during the regular renewal cycle. --- During the 2024 Managing and Accounting Practice (MAP) Conference hosted by the Massachusetts Society of CPAs (MassCPAs), Beacon Equity Advisors presented an AMA (Ask Me Anything) to the CPA firm partners attending. We thought we would share some of their questions and our answers. #mergersandacquisitions #valuation #privateequity #beaconequityadvisors #manufacturing

Question: What do you see changing in 2025 with a new administration? Answer: I am not sure what to expect, but I do know there many small/medium sized business owners who are nervous even while some owners, specifically domestic manufacturing, are very bullish. Those who worry, are nervous about tariffs and how price increase may impact demand for their product. They worry if imports from Canada are taxed, items such as timber and gas will increase, eroding consumer spending overall. Distributors are worried price increases because of tariffs will dampen demand and increase the capital required to stock inventory. Still others are worried about the impact of deportations. They worry deportations, without an increase in legal immigration, will reduce the workforce causing wages to rise even more. Generally, the marketplace likes stability, even when they feel the rules are unfair. When the marketplace is unstable and unclear, it is hard to make decision on hiring, investment and growth. This leads to lower investments, fewer jobs, which leads to less spending…. #mergersandacquisitions #valuation #marketanxiety #beaconequityadvisors #manufacturing --- During the 2024 Managing and Accounting Practice (MAP) Conference hosted by the Massachusetts Society of CPAs (MassCPAs), Beacon Equity Advisors presented an AMA (Ask Me Anything) to the CPA firm partners attending. We thought we would share some of their questions and our answers.

Question: As a dealmaker who sees all types of sellers, what makes a someone a better seller? Answer: I suggest there are three attributes of a strong seller:?First is the owner’s ability to speak to a buyer without injecting their bias into the answer.?Buyers often have a vison for the future of the business very different from the current ownership.?Just go with it.?They are buying the business and paying to be able to run it their way.?Second, the ability to clearly articulate why the business is necessary in the marketplace, even if it is narrow and niche.?Third, a vision of how they might grow the company if they were 20 years younger.?This may be different from the buyer’s vison but shows the buyer you see a future and are not getting out before a downfall. --- During the 2024 Managing and Accounting Practice (MAP) Conference hosted by the Massachusetts Society of CPAs (MassCPAs), Beacon Equity Advisors presented an AMA (Ask Me Anything) to the CPA firm partners attending. We thought we would share some of their questions and our answers. #mergersandacquisitions #valuation #privateequity #beaconequityadvisors #manufacturing

Question: How accurate are the valuation software programs? Answer: There are several websites and/or programs which purport to value a business. A user tends to input data regarding the industry as well as several years of historical financial data and the program computes a value. It seems simple enough, but here is the challenge; These inputs tend to be quantitative. There are numerous qualitative aspects of a business which move the needle such as: competitors moving into the area, the personal dynamics of the owner, and even the ability to grow in the existing facility. Sometimes a business owner is not keeping up with technology or reinvesting in equipment which can artificially inflate profits. These softer attributes can have a material impact on value. As such, one likely needs to be careful relying on these programs. Lastly, the data the program uses comes from the sale of others in the industry. The data cannot tell you if competitor A sold for a high multiple due to new clients and growth and competitor B sold for a low multiple due to health issues. A trained appraiser is likely to be able to offer you a more accurate valuation of your business. --- During the 2024 Managing and Accounting Practice (MAP) Conference hosted by the Massachusetts Society of CPAs (MassCPAs), Beacon Equity Advisors presented an AMA (Ask Me Anything) to the CPA firm partners attending. We thought we would share some of their questions and our answers. #mergersandacquisitions #valuation #privateequity #BeaconEquityAdvisors #manufacturing

Question: Do you have any tips for owners who might sell in next five years?? Answer: Think as if you were going to buy your competitor.?What would you want to see in their business before you spent your hard-earned dollars??This would likely include an in-place team not about to retire in the next few years.?You would want to see a growing business, not shrinking revenues; you want to see the business grow with proportional or decreasing levels of capital equipment and working capital.?Lastly, for the moment, you would want to see a host of reports on customers concentration, product trends, etc.?Think of what data you might like to see, and make sure you have your team track these items in your business. --- During the 2024 Managing and Accounting Practice (MAP) Conference hosted by the Massachusetts Society of CPAs (MassCPAs), Beacon Equity Advisors presented an AMA (Ask Me Anything) to the CPA firm partners attending. We thought we would share some of their questions and our answers. #mergersandacquisitions #valuation #privateequity #beaconequityadvisors #manufacturing