This week marks the beginning of a new running series on the Axial blog, in which we’ll highlight the top 5 or so articles from across the web that relate to buying, selling, and building successful private businesses.
Because Axial serves the full range of private market professionals (entrepreneurs & business owners, CFOs, M&A Advisors, bankers, lawyers, corporate development & private equity professionals), we’ll be sure to profile great articles for all our members each week, though some articles might be geared for specific audiences.
If there’s an article out there or a blog that you read that you LOVE and want us to consider for inclusion, email us anytime at firstname.lastname@example.org; we’ll always consider your submission/suggestion for the following week(s).
And with that, we present the first edition of the “Top Private Business Finance Articles of the Week”!
Author: Joel Fleischman
Here’s a look at the M&A process from an entrepreneur whose firm looks to make acquisitions to fuel growth. Joel Fleischman is the owner of Cambellsport Building Supply in Cambellsport, Wis., and he’s made 3 acquisitions in the past 10 years. His strategy is simple: to “buy other supply stores when they’re on their last legs.”
This approach has afforded him the benefit of “fire sale prices”, but failing stores are usually failing for a reason, meaning that Fleischman typically has his work cut out for him post-transaction. Rather than work to integrate the target company with his own, Fleischman tears down and builds from the ground up:
“When we take on a store that is failing, we essentially wipe away the old corporate culture and replace it with our own. Why bother trying to merge something that works with something that has proven not to?”
Click through to the article to learn more about Fleischman’s successful integration strategy.
In tough lending times, financing a growing business can be one of the greatest challenges facing business owners. We’ve written in the past about alternative financing options for growth companies, but author Gwen Moran examines one particularly unconventional option that we did not cover: an equity swap.
Essentially, an equity swap is a process in which business owners exchange a portion of ownership in their company for much needed goods or services. Moran highlights the story of entrepreneur Tony Marrero, who traded 9% of his growing soccer retail and apparel company (www.soccerpro.com) in exchange for professional online marketing services.
Although it worked out well in Marrero’s case, business owners should tread lightly here. See the full article for a full list of considerations to take into account.
We discussed last week some tips for how to successfully select an investment banker; in this article, author John Warrilow elaborates on some of the issues we discussed in our blog post and reinforces the importance for entrepreneurs of selecting a qualified M&A professional to help sell their business.
Warrilow argues that, without professional representation, the business owner will be stretched to run their business and manage the sale process – which ends up being sub-optimal for both the buyer and seller.
His conclusion: Retaining a qualified M&A professional may be considered “expensive”, but not nearly as expensive as entering into negotiations alone while trying to run your business at the same time.
Author: Elizabeth Wasserman
This article from Elizabeth Wasserman at Inc.com contains some highly practical advice for business owners who are contemplating the future of their company and its leadership after they depart. Wasserman advocates for all business owners to have a rock-solid succession plan in place, regardless of their exit timeline.
This is a tricky issue to get right in smaller companies, given the centralization of ownership and the intricacies of family business relationships. Wasserman suggests that only 30% of family-owned businesses survive the transition from first to second generation – and that only half of those that make it that far make it one generation further.
Those aren’t great odds: check out the article for a full overview of what you can do to maximize your chances of success.
Photo courtesy of indi.ca.