Tag Tim Moore

Why 2012 May Be the Year to Sell Your Business

0 comments By TRMoore Filed in Exit Strategy, General, Mergers & Acquisitions, Tax Tagged with , , , , , , , March 29th, 2012 @ 4:08 pm

by Tim Moore, Managing Partner, TR Moore & Company

As the marketplace continues to gain momentum, primarily in the manufacturing and oil and gas sectors, TR Moore & Company is seeing increased interest in exit and growth through acquisition from our client base. And with tax hikes expected for 2013 and private equity players anxious to invest, 2012 may be the year to transact. Consider these two factors working in your favor in 2012:

Buyers Are Ready

With the capital overhang that remains and urgency by private equity investors to deploy it, we expect 2012 to remain a seller’s market. Representing possibly the largest prospective pool of business buyers today, these investors are estimated to be holding some half trillion dollars in uninvested cash. Likewise, financial buyers who sat out the economic downturn are ready to begin growing through acquisitions once again.

Taxes Are Increasing

On the tax front, a potential double whammy awaits businesses in 2013:

  1. The capital gains tax rate will rise from 15 percent to 20 percent if the Bush-era tax cuts aren’t renewed at the end 2012.
  2. Additionally, a recent Tax Policy Center blog post points out that taxpayers also face a 3.8 percent tax on investment income greater than $250,000, including capital gains on transactions, as a result of 2010’s health care reform legislation.

Together, this represents a total increase from 15 percent to nearly 25 percent in capital gains tax. Consider what the potential scenarios mean for after-tax proceeds on a business sale:

As the chart illustrates, for every $1 million in proceeds, businesses selling in 2013 face an additional $38,000 in tax due to health care reform, and another $50,000 in increased capital gains taxes – a difference of nearly $100,000.

Keep in mind that these numbers are based on a perfect sale scenario – your tax may be even greater depending on factors such as your entity type, deal structure and estate planning situation.

The bottom line is that it’s a great time to sell and there are plenty of hungry buyers for your deal. We’re looking forward to helping our sellers find the right one in 2012. 

Tim Moore is managing partner at TR Moore & Company, the Houston location of top CPA firm Doeren Mayhew. Leveraging nearly 30 years experience, Tim also leads the firm’s Mergers & Acquisitions Division, specializing in building business value, marketing companies for sale, analyzing after-tax proceeds and negotiating on behalf of the client.

Securities Offered Through Grant Williams, LP. Member FINRA & SIPC.

 

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Recap: 5 Tips Surrounding an M&A Deal

0 comments By TRMoore Filed in General, Mergers & Acquisitions Tagged with , , , , , November 17th, 2011 @ 3:07 pm

“What if my competitor is trying to buy me out?” This business owner concern was among many addressed by Managing Partner Tim Moore and Certified M&A Advisor Steven Silverman during a roundtable discussion held on Nov. 11 for local entrepreneurs. Also on hand was a TR Moore & Company client who recently went through a business sell-side transaction, and shared her M&A experience and what the process entails. Insight included:

  1. Know your optimal timing. Typically, the best time to sell is when a business is on the rise. Profitability and high growth attract the buyer’s eye. In some cases, once a business has reached its peak, the buyer will begin to question how much of the business is left to grow.
  2. Be aware of perceived versus actual business value. Often when deals are on the table and the seller is experiencing rapid growth, his perception of business value changes, and deals fall through the cracks. Keep in mind that the economic and industry climates are never certain. Also, maintain accurate financial information and normalized numbers to produce a realistic valuation of the company.
  3. Always be prepared to sell. Simply said, “You never know when a buyer will come knocking with the right sale price.”  Therefore, owners should run their business in line with eventual goals to sell. Whether your timeline is 90 or 900 days, you’ll be increasing your business value to potential buyers.
  4. Consider your personal goals. There are many personal questions to ask, including, “How will selling my business contribute to my desired personal goals? Will I have enough money to live comfortably once I sell?” If you answer “yes,” then you’re ready to sell. If you answer “no,” then continue focusing on building business value.
  5. Your management team will be an important consideration. Buyers always ask, “If I buy your company, and you’re leaving, who will run the business?” Most buyers, particularly a private equity group, will want to ensure a strong management team is in place, whereas a strategic buyer may already have a team.

To be put on our invitation list for our next M&A discussion, please contact April Morgan at 713.789.7077 or via email.

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5 Personal Questions to Ask Before Considering a Business Sale

0 comments By TRMoore Filed in Exit Strategy, General, Mergers & Acquisitions Tagged with , , , , October 20th, 2011 @ 3:50 pm
by Tim Moore, Managing Partner, TR Moore & Company, A Doeren Mayhew Firm

You probably think of a business sale as a financial transaction, but have you considered the personal ramifications of selling?  Sometimes, getting the highest price must take a backseat to other priorities. Be sure to weigh the following:

  1. Do you want/need to sell quickly or are you willing to wait for higher offers to come along? Business sale timelines can vary significantly based on the industry, company size, transaction size, number of eligible buyers and economic trends, so your timing can impact your ultimate sale price as these factors fluctuate.
  2. Do you need payment in cash or will you accept stock or even be willing to partially finance the deal? In a recent GF Data report measuring private equity transactions in the middle market, 70 percent of deals had some noncash component. Consider your level of flexibility, if any, in advance.
  3. Have you made comprehensive retirement and estate plans so you know how much money you’ll need and where it will go? Having a realistic end goal is critical for aligning your business and building the value you need to reach it.
  4. Have you planned for the tax impact of your sale? You’ll want to calculate your current estimated value, then determine what the approximate after-tax proceeds will be and whether they will meet your exit objectives. If you discover your business is not quite where it needs to be to take the company to market, there are steps you can take to build its value and better meet your exit objectives.
  5. Do you plan to continue working for the company after it’s sold? Especially in the case of a private equity deal, you may be expected to remain on board to help the company continue to run smoothly post-transaction. Know where you want to be on the other end before entering the sale process.

Tim Moore is managing partner at TR Moore & Company, the Houston location of top 100 CPA and consulting firm Doeren Mayhew. Leveraging nearly 30 years experience, Tim also leads the firm’s Mergers & Acquisitions Division, specializing in building business value, marketing companies for sale, analyzing after-tax proceeds and negotiating on behalf of the client.

Securities Offered Through Grant Williams, LP. Member FINRA & SIPC.

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When is the Right Time to Sell Your Business?

1 comment By TRMoore Filed in General, Mergers & Acquisitions Tagged with , , , July 19th, 2011 @ 2:05 pm

Managing Partner Tim Moore was featured in EO's "Overdrive" global blog.

One of the toughest decisions a business owner will ever make is to sell his or her company. Sometimes sales are forced, as in the event of financial distress, bankruptcy or an owner’s unplanned departure. But in most cases, owners must carefully assess their company’s financial and competitive position and determine the best time to sell, given their own future plans. Success — a smooth transaction, good terms and a fair price — largely depends on how well you’ve prepared for this important event.

Tim Moore, managing partner and leader of the Mergers & Acquisitions Division at TR Moore & Company, reviews several internal and external factors business owners must consider when determining the right time to sell in the  Entrepreneur Organization‘s global blog, Overdrive. Read the full story here.

Securities Offered Through Grant Williams, LP. Member FINRA & SIPC.

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Tim Moore on Attracting Business Buyers

0 comments By TRMoore Filed in General, Mergers & Acquisitions Tagged with , , , July 7th, 2011 @ 12:38 pm

Managing Partner Tim Moore was featured in the June 2011 edition of EO's "Octane" magazine.

With the mergers and acquisitions marketplace on the rebound and the gap between seller and buyer pricing expectations beginning to close, entrepreneurs are asking, “Should I start thinking again about selling my business?”

Tim Moore, managing partner at Doeren Mayhew firm TR Moore & Company, addressed this question in the June 2011 edition of the  Entrepreneur Organization magazine Octane, and provided tips on how entrepreneurs can make their businesses more attractive to potential buyers. Read more below, and check out the full edition of Octane here.

In my experience, when it comes to selling a business, entrepreneurs worry that they’ll either sell too soon or wait and miss another opportunity to exit their business at maximum price. I always tell my clients to run their businesses in line with their eventual goals to sell. Whether their timeline is 90 or 900 days, they will be increasing value to potential buyers should they come knocking, which can translate into improved profits in the meantime.

Here are three more ways entrepreneurs can make their businesses more attractive for potential buyers:

  1. Understand your buyer universe. If you took your business to market, who would your potential buyers be? The more plentiful, the higher your chances of commanding a desirable bid on the business. Understanding who your potential buyers are today allows you to take measures to expand that universe, if necessary. For example, a client who services the commercial construction industry is considering expanding into residential, which would double potential buyers of the business.  
  2. Think like a potential buyer. If you were considering buying your company, what would motivate you to pay more? Conversely, what would make you ask whether the selling price is too high? Key value drivers you can focus on today to impact buyer perception tomorrow include your management team, client base, and proprietary products and services.
  3. Retain key employees. Losing critical employees during a sale can be a deal breaker because they are often integral to the new owner’s success. Keep employees in place for future buyers through employment agreements and stock options. Leading up to the consideration of a sale, maintain confidentiality to help deter panic and sudden turnover, and help the buyer keep employees on board post-sale.

It may take you anywhere from several months to several years to sell your business. In the meantime, I’ve learned that the key to the perfect sale is to preserve and build value so you can maximize price when that buyer comes knocking.

Tim Moore is managing partner at TR Moore & Company, the Houston location of top 100 CPA and consulting firm Doeren Mayhew. Leveraging nearly 30 years experience, Tim also leads the firm’s Mergers & Acquisitions Division, specializing in building business value, marketing companies for sale, analyzing after-tax proceeds and negotiating on behalf of the client.

Securities Offered Through Grant Williams, LP. Member FINRA & SIPC.

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