Firm Overview

Bridgepoint Merchant Banking is a lower and middle market investment banking firm that serves clients over their corporate lifecycles by providing merger and acquisition and corporate finance advisory services.

Bridgepoint Principals have over 117 years of combined investment banking experience spanning more than 169 completed transactions exceeding $158 billion in total transaction value. Bridgepoint provides investment banking services with the high quality analysis and presentation of our large national investment banking competitors, coupled with highly personalized service, accountability and Midwestern values.

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5 Things to Consider Before Selling Your Company

Selling a company is no easy feat. Just like running a business, the selling process can be full of ups, downs and everything in between. However, working with company owners in the sales process for over 25 years has revealed to us several key themes that owners should consider before starting the selling process. Before you take that next step, keep these five considerations in mind:

1. Revenue Trends

Is the trend line of your company rising, flat or falling? While you may think that only companies with rising trend lines would sell, there are potential buyers that would be interested in all three scenarios. However, it is true that companies with a positive trend line are most desirable, as it will drive a better valuation for you as a seller.

2. EBITDA

Most company owners are worried about cashflow – but also be prepared to be measured on EBITDA. Simply put, EBITDA is an accounting method of leveling the playing field. Ask your CPA, an investment banker or a valuation firm to run some calculations to determine your number. Most firms are sold on a multiple of EBITDA, so it is important to be mindful of what your number is.

3. Client Concentration

We once engaged with a seller that was proud of the fact that they had a single client representing 50% of their revenue. Unfortunately for them, that could be a deal killer (depending on the industry). If this single, huge customer did not care for the buyer, the entire sale could be lost. To avoid this, it is in your best interest to review your customer base and product offering to ensure any given sector is not over-concentrated.

4. Partners and Family

It may have seemed like a good idea to go into business with family or your best buddy from 6th grade – but when it comes time to sell, family and friends sometimes have differing agendas. Timing might be different, needs might be different, etc. How do you resolve that? Look for a firm that deals with family coaching and strategic planning. They can help work through the challenges and find a strategy that every partner can agree on.

5. Your Story

Take a second and ask yourself: what is your story? Are you selling for health reasons or are you ready to retire? Is it because demand in your industry is declining, or because you truly believe that the timing is right? Think through your story and make sure it is marketable.

While there are certainly many other factors to consider, use these five as a basis to ensure you are starting out on the right track. Think ahead, ask questions, invest the time, and expect the unexpected. Through planning and engaging help from the right professionals, you will be able to successfully sell your company – as well as reap the benefits that come with it.

Want to learn more about Bridgepoint? Check out our services or get in touch here.

Author: Mike Anderson

About Bridgepoint Merchant Banking

Bridgepoint Merchant Banking is a middle market investment banking firm that serves clients over their corporate life cycles by providing merger and acquisition and corporate finance advisory services. Bridgepoint Merchant Banking is a division of Bridgepoint Holdings, LLC. In order to offer securities-related Investment Banking Services discussed herein, to include M&A and institutional capital raising, certain Managing Principals of Bridgepoint are registered representatives of M&A Securities Group, Inc., an unaffiliated broker-dealer and member FINRA/SIPC.

The Bank Said No More Money

For many business owners, the majority of original loans and funding will traditionally come from a bank (usually after initial funding from friends and family). As the years go on, the working capital line continues to grow with the business. But in some cases, due to a lack of hard assets or limitations at the bank due to their size, the banker needs to put a cap on the borrowing limits. So now what?

Great news: you have options. Check out the list below to learn more about different actions you can take to ensure you (and your company) receive the necessary guidance and assistance during this crucial point in time.

Another Bank

One solution is to use a different bank. If you are with a community bank, a regional bank may have different lending capacity/limits, guidelines and/or restrictions that better fit your needs. Additionally, your business might be in a space that the new bank considers a niche – meaning you may qualify for a higher lending limit/tolerance. These types of business or commercial bankers are readily available in the market and are willing to try and “bank” your business.

Money Center Banks

Large national or money center banks also often have different guidelines and limits, and may be able to meet your changing needs. However, the challenge with this option is that you must have the time to call all of them individually, essentially “working the switchboards” until you find the correct person to help you.

Private Equity Firms

Most decent size companies have been contacted by at least one or more private equity firms. While PE firms have money available, the downside is that you, the owner, will have to give up ownership – and at least some control – to receive funding. However, most owners are reluctant to give up control or significant ownership of their company, making this option relatively unfavorable.

Investment Bankers

While the word “investment” is in the title, investment bankers don’t actually invest in businesses. They first review the goals of the firm, examine the company ownership structure and assess the money raise/capital needs. Next a financial review is completed to better understand your business, financial needs and your future use of proceeds. The investment banker then acts as your agent and “markets” your needs to debt funds, money center banks and private equity firms. Because the investment banker spends all day interacting with these types of firms on multiple deals and opportunities, they already have existing contacts with the funder firms, which saves owners time, prevents possible missteps, and expands future options for the company. These options can allow for dividends/liquidity, growth capex, collateral-light fundings, removal of personal guaranties and limited amortization structures, to name a few. The key here is that the investment banker will contact as many of the right types of firms as needed in order to secure the best possible terms to meet you and your company’s needs.

No matter which route you chose to take, one thing is for sure: there are companies and individuals readily available to help you ensure your company’s continued success. How those goals are reached, however, is up to you.

Want to learn more about Bridgepoint? Check out our services or get in touch here.

Author: Mike Anderson

About Bridgepoint Merchant Banking

Bridgepoint Merchant Banking is a middle market investment banking and private equity firm that serves clients over their corporate life cycles by providing merger and acquisition and corporate finance advisory services. Bridgepoint Merchant Banking is a division of Bridgepoint Holdings, LLC. In order to offer securities-related Investment Banking Services discussed herein, to include M&A and institutional capital raising, certain Managing Principals of Bridgepoint are registered representatives of M&A Securities Group, Inc., an unaffiliated broker-dealer and member FINRA/SIPC.

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