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CHV Group LLC January 2018 Newsletter

CHV Group LLC      |      Buying & Selling     |     Advisory    |       Meet the Team

Is the Obvious Buyer Always the Best Choice?
In our years of working as Intermediary, we are often surprised to learn how business owners are willing to sell their business to the first buyer that approaches them. The first Buyer may not be always the right fit. Below we will explain the process you should go through if you are willing to sell your business. 

We would like to start off with a story to share our viewpoint. A friend of ours approached us that he is in negotiation with a company who is very interested in purchasing his business. It makes strategic sense that his company is being looked at by the other company, so he asked us to review the proposal and help guide  him through the process. After looking at all the parties and what was negotiated, we stopped the activities as the buyer was only asking for a lot of details but did not offer a real indication of value. 

We convinced the seller to accept our help to navigate through the process. By doing so, we were able to show the real opportunity in selling the business.  Initially, we did a SWOT analysis of his company and the value as a multiple of EBITDA and DFC, as he had prospective clients under contract for 2018 and beyond. We then worked out a deal structure that would maximize his value and pay out, as well as a business plan component to address some issues that would even further the value.With an executive summary and a proposed deal structure, we approached the unsolicited buyer again, just to learn that they are no longer interested at our valuation. We then went to market and found a party that accepted our proposed value after some negotiation, with a down and upside clause for future years that was acceptable to all parties.

The moral of this story is to show that the true value is in hiring an outside party that takes the time to help provide an executive summary and proposed deal structure. This will allow you to make sure you are getting the true value of your business and not just selling to the first buyer that is interested. 

As an Intermediary, CHV Group LLC has its focus on strategically marketing a Company, as we believe just presenting a buyer does not do the seller justice in most cases. We prefer an analytical approach and do some good research about the best potential buyer and then put in the work to find them. In most of our activities, we found that the buyers are more willing to pay a premium to overcome a strategic weakness, than just to grow.

CHV Group LLC added value services: 

As part of the NEBB, we are certified Machinery and Equipment appraisers. For tangible and intangible assets, mainly Machinery and Equipment, we provide certified professional, researched Fair Market Value (FMV) Valuations for many purposes.

Interested in finding out how your financial numbers compare to your competitors? CHV Group has access to a database that provides analytical industry content to 30,000 bankers; thousands of accounting, valuation, CRE professionals and consultants; and over 200,000 business students in almost 100 universities. We are the exclusive provider of financial and industry market data services to the International Business Brokers Association. Our granular, reliable content is licensed by US and Canadian taxing agencies.

If you are considering the sale of your Business, lets talk about finding the best value buyer for you.
Millennials in the Workplace
Much discussion has been made and is ongoing in social media as well as in workforce publications about Millennials. As many opinions are split on Millennials let us remember the old days.  Fortunately they are with us and like the Baby Boomers, they will be the leaders of the future. Below is an excerpt from an interesting article I found that helps define how to work best with millennials. 

When it comes to working life, it is clear that millennials are very different from the generations that came before them. In order to support and manage this type of new talent, it is essential to address the generational differences in order to better understand their motivations and behavior in the workplace.

Millennials share a common goal: They want to make a difference at work. Given the significant motivational differences with this generation, current leaders must consider a new approach to managing millennial employees. Work forms a strong part of Generation Millennial’s identity — and this needs to be accounted for in the way they are managed in several key ways.
Lean Focus – Theory of Constraint an Introduction
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If you are unfamiliar with the Theory of Constraints (TOC) developed by Dr. Eliyahu Goldratt, you should know its a suite of management concepts and allows managers for decide what to change, what to change it to, and how to cause change.

When Dr. Goldratt was challenged to summarize TOC  in  a single  sentence." Eli replied: "never mind a sentence, I'll explain it in one word: FOCUS!"
 
Above is a graphic that showcases the Five Focusing Steps, which are also referred to as the Process of On-Going Improvement or POOGI. This graphic serves as a guidepost for the driving on-going improvement. 

Focusing Step #1: IDENTIFY the system's constraint
Strengthening any link of a chain (apart from the weakest) is a waste of time and energy. Similarly, the vast majority of efforts to "improve" something in the organization fail to result in more profits for shareholders, delight for customers, or satisfaction for employees. This is because most initiatives are not focused on the constraint of the organization. Yet it is impossible to manage a constraint until you find out what it is! And it is surprisingly easy to find, once you know how to look.


We challenge you to continue reading about the five steps in the link below and apply them to your Business where they are applicable. If you have any questions or would like our help starting this process, contact us today!


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 (864) 641-8131
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(810) 494 7140