A New EBITDA Adjustment to Drive Business Selling Price (a short video)

THE EXIT STRATEGIST

A New EBITDA Adjustment to Drive Business Selling Price (a short video)

Click Here to Watch Our Short Video          The Key to driving strategic value in the sale of a technology company is to move buyers up from their starting price based on a conservative Cash Flow multiple. As a  seller, you must first earn your strategic value by building a great company. In your business sale, that must be captured and articulated in a competitive M&A process in order to unleash your optimized selling price.  In this series of videos we will present 7 factors that we use to drive maximum strategic value.

Another arrow in our valuation driving quiver for our sellers is we restate historical financials using the pricing power of the brand name acquirer. 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.”

It turns out that our client was having to discount his product license fee by 50% in order to compete for sales with the large, brand name competitor.  We did an analysis where we re-priced our smaller client's product sales as if they were at the same pricing level as the large company competitor.  We were literally 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.

We want the buyer to consider the potential value creation of your assets in their hands post acquisition and to base their price on this view, not a 5 X multiple of EBITDA. The best way to move them in our direction is to present these compelling value arguments. They are skilled and experienced negotiators and try to deflect our message. The one message that lingers is that they understand that we are making the same presentation to their competitors and our message may be resonating with them. The number one factor in realizing strategic value from a business sale is a competitive bidding process among the best buyers.

Thanks for reading! If you know someone who could benefit from this, feel free to forward it to them! Not a subscriber yet? Like what you've read? Sign up to get future issues delivered straight to you: SUBSCRIBE

Until next time!

Dave Kauppi is the author of "Selling Your Software Company - an Insider's Guide to Achieving Strategic Value, editor of The Exit Strategist Newsletter, a Merger and Acquisition Advisor and President of MidMarket Capital, Inc. MMC is a private investment banking and business broker firm specializing in providing corporate finance and business intermediary services to entrepreneurs and middle market corporate clients in a variety of industries. The firm counsels clients in the areas of merger and acquisition and divestitures, achieving strategic value, deal structure and terms, competitive negotiations, and Letter of Intent Consulting. Dave is a Certified Business Intermediary (CBI), is a registered financial services advisor representative and securities agent with a Series 63 license. Dave graduated with a degree in finance from the Wharton School of Business, University of Pennsylvania. For more information or a free consultation please contact Dave Kauppi at (269)231-5772, email Dave Kauppi or visit our Web page MidMarket CapitalClick Here For Our New Book on Amazon

 
 
 
 
DaveKauppi
President
MidMarket Capital
Technology Focused Investment Banking
davekauppi@midmarkcap.com
Direct (269) 231-5772

Check Out Our New Book on Amazon

Selling your Software Company - An Insider's Guide to Achieving Strategic Value

46102 Royal Avenue
Grand Beach Michigan 49117
USA


Unsubscribe   |   Change Subscriber Options

Older messages

A Business Valuation May Not Accurately Reflect a Software Company's Value

Monday, April 4, 2022

TECHNOLOGY ENTREPRENEURS - EXIT OPTIONS Business Valuation May Not Accurately Reflect a Software Company's Value I can't tell you the number of times I have talked with owners of software

Experience Trumps Smarts in the Sale of Your InformationTechnology Company

Friday, March 25, 2022

THE EXIT STRATEGIST Experience Trumps Smarts in the Sale of Your Information Technology Company People who start software and information technology companies are generally very smart people. When it

Bridging the Valuation Gap between Business Seller and Business Buyer

Tuesday, March 15, 2022

THE EXIT STRATEGIST Bridging the Valuation Gap between Business Seller and Business Buyer In an earlier article we discussed a survey that we did with the Business Broker and the Merger and Acquisition

An Alternative to Venture Capital for the Technology Entrepreneur

Saturday, March 5, 2022

THE EXIT STRATEGIST An Alternative to Venture Capital for the Technology Entrepreneur If you are an entrepreneur with a small technology based company looking to take it to the next level, this article

Technology M&A - Using an Earnout to Optimize Transaction Value

Wednesday, February 23, 2022

THE EXIT STRATEGIST Technology M&A - Using an Earnout to Optimize Transaction Value Sellers have historically viewed earn outs with suspicion as a way for buyers to get control of their companies

You Might Also Like

Overcoming ads blindness

Friday, March 29, 2024

Today's hack Why not switching from usual ads to converting your audience into email subscribers in exchange for rewards? What are you willing to see more in banner ads? 1. Sales pitches. 2. Brands

Ambani, Adani join hands in power move

Friday, March 29, 2024

Also in today's edition: India's auto export weakness; No one wants CXOs ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏

It's Time to Unlock the Vault

Friday, March 29, 2024

The ability to shortcut your way to profits is finally here View in browser ClickBank Hand holding a microphone You need to know this, There is an opportunity to shortcut your way to profits as an

🔍 Ryan Trahan & Joyride's Launch Playbook

Friday, March 29, 2024

What they did. How they did it. And what to learn from it. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Help Micronesian Seminar

Friday, March 29, 2024

Weekender #43 ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏

🎙️ New Episode of The Dime Todd Harrison: Chewing Through Noise in The Cannabis Industry with a Focus on Catalysts

Thursday, March 28, 2024

​ Listen here 🎙️ Todd Harrison: Chewing Through Noise in The Cannabis Industry with a Focus on Catalysts​ Imagine this: warm, sunny Florida. Rescheduling has just been announced, and you're eager

Wealthy people don't cover their windows

Thursday, March 28, 2024

Plus the real cost of self funded searches, the math behind renting vs buying & more. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

🤯 [$50 an hour] Remote Flutter Jobs, Zapier Freelancer, Junior Dev Jobs and more!

Thursday, March 28, 2024

March 28, 2024 | Read Online 🤯 [$50 an hour] Remote Flutter Jobs, Zapier Freelancer, Junior Dev Jobs and more! fb tw in email Welcome to another CrackedDevs Daily, this time with some hot new jobs! 🚀 1

Discovery Phase for Coinbase SEC Lawsuit

Thursday, March 28, 2024

Plus UK's FCA Targets Memecoin Influencers ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

🧠 Indie Hacker Earning 30K Per Month

Thursday, March 28, 2024

How this founder is solving a niche problem in a fast growing and highly-profitable industry ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌