Buyers Approach To A Stock Sale

January 17th, 2008

Steps that acquirers need to take in a stock sale


In most small to mid market situations, it is advantageous for acquirers to structure the business acquisition transaction as an Asset sale. However, in some cases there may be significant advantage to going the Stock sale route. Also, asset sales may not be practical in some cases for contractual or other reasons. In such cases, acquirers need to pay special attention to three key factors:

v  Indemnification Agreement: Acquirer should get a bulletproof indemnification from the seller for any potential liabilities that may have occurred before the transaction closes but only surface after you close the deal. A stock sale without a proper indemnification agreement exposes buyers to potentially damaging legal and financial risk.

v  Seller Carry: Acquirer should get a significant amount of financing from seller as part of the deal. It is best to have this spread out over a period of few years so that you will have leverage in the event a claim materializes. The seller carry can come in handy if there is a lawsuit and the seller balks at keeping his end of the bargain.

v  Corporate Structure: The structure of the corporation being acquired may have significant impact on the tax status of the acquirer. If the acquirer owns one or more corporations prior to the sale, some post acquisition structural alternatives could significantly enhance the acquisition benefits.  These alternatives need to be reviewed carefully before the close for maximum leverage.

It is essential for acquirers to incorporate these key factors in any stock sale.

Stock Sale Vs. Asset Sale

January 17th, 2008

An Overview of Tradeoffs


There are two primary ways of structuring the sale of sale of mid-market companies: Stock Sale and Asset Sale. This document compared the trade offs involved with each of these approaches. Acquirers should keep in mind that regardless of the tradeoffs shown below, asset sales may not be practical in some cases for contractual or other reasons. In such cases, stock sale is the only way to go.

Stock Sale Vs. Asset Sale Table


Asset Sale Stock Sale
Legal Risk No legal liability for the corporation prior to the purchase Legal liability for the corporation prior to the purchase can be mitigated if seller is willing to sign an indemnification agreement
Cash Flow Most of the assets purchased will be depreciable over 3-30 years with the average being approximately 10 years. This means that you may write off approximately a tenth of the purchase price every year. When you sell, you typically pay back the government for all the deductions you took.Advantage: Time value of money Low depreciable asset base means you do not get benefits of the excess depreciation you can take. On the upside, there is no depreciation recapture tax at the time of sale.
Governmental Administrative work to the extent you need to files Corporation, tax & employment application before the close of escrow. Corporation, tax & employment numbers & documentation in place – any changes can be done at a convenient time at your own pace.
Other Taxes Sales Tax on FF&E No Sales Tax
Employees Rehire employees – administrative hassle with hiring, benefits, payroll processing, etc. before the close of escrow Employee contracts continue. Any changes can me made at a convenient time and pace.
Workers Comp Workers comp rate could potentially be higher – sometimes significantly – you need to determine the impact and the net cost. Workers comp rates lower than yours? If so, you benefit from the lower cost and you may even be able to move some of your staff under this umbrella if it makes sense.
Customers May need to renew or renegotiate contracts Customer contracts likely to continue with minimum hassle
Vendors / Suppliers Re-establish contracts – negotiate transfer of leases and contracts – at the minimum you have administrative hassles and in some cases you may need to come up additional money for deposits. Vendor contracts continue. If any of the vendors offer superior services at better rates, you may move some of your existing business under the same umbrella.
Bulk Sale Need to conduct bulk sale in most cases – costs approximately $600 at current rates and takes about 20-25 days – this process delays the transaction. No need to do bulk sale – which means you close the transaction faster, cheaper and thus enjoying the benefits of the cash flow sooner. None of the creditors are aware of the transaction unless you choose to tell them.
Other Could consolidate book keeping, tax, and other regulatory filings with current entity to simplify operations. Need to continue the book keeping, tax, and other regulatory filings necessary to keep the entity in compliance.


Sellers and acquirers need to be aware that while several of these elements can be structured to the mutual benefit of both parties, some of the elements have less favorable impact to one of the parties and negations are necessary to structure a win-win deal.

Where it applies:

The intent behind establishing a type of sale (stock vs. asset) is to pick the most beneficial way to structure the transaction.

Structuring An Exit

January 17th, 2008

An Overview of Tax Beneficial Strategies


There are several possible ways to structure a deal to suit the needs of a seller. This document summarizes some commonly used strategies and the associated trade offs:

Installment Sale

Installment sale is a simple strategy where a part of the sale price is deferred. The deferred amount is paid to the seller in several installments over a period of time.

Some variants:

v  Standard Installment Sale: Payments are spread evenly over a period of time.

v  Performance Based: Payment stream is tied to metrics agreed on by the buyers & sellers

v  Self Canceling Note: Payments are spread until the seller dies.


v  Smart way to structure a sale in special situations (ex: concentrated customer base)

v  Capital gains are deferred as payments are received

v  Self Canceling Notes pull the future interest of the asset outside of the estate


v  Risk of future payments

v  Capital gains rates may rise in future

Where it applies:

v  Seller has confidence in buyer to deliver on future payments

v  Buyer requires the structure due to economic uncertainties

v  Seller has captured most of the value in the upfront payments and does not mind risking the incremental money stream

Structured Sale

Structured sale is similar to an installment sale except that the payment stream is guaranteed by a third party


v  Capital gains are deferred as payments are received

v  Secured payment stream

v  Payment stream can be structured in a very flexible way


v  Capital gains rates may rise in future

v  Time consuming and expensive for buyer to setup

Where it applies:

v  Seller may need to substantially increase take-home dollars to make the sale happen. This tax advantageous method requires a motivated buyer to setup this plan.

1031 Exchange

Allows for a seller to roll equity and debt into a new property and defer the capital gains tax until some future sale


v  Capital gains deferral

v  Can move tax deferred dollars from active management to passive management


v  Limited time: 45 day to identify replacement property and 180 days to close

v  May not be able to find a desirable property

v  Capital gains rates may rise in future

Where it applies:

Excellent technique to defer capital gains assuming availability of good investment options

1042 Exchange

Complex exit strategy where privately owned stock can be exchanged for publicly traded stock. If a highly appreciated asset is owned by a corporate entity, shares of that entity can be sold and exchanged for shares of a listed stock.


v  Defer Capital gains tax. Exchange can be made with dividend producing Blue-Chip stocks


v  Capital gains rates may increase in the future

Where it applies:     

v  Might be applicable for business-owned assets that have appreciated in value

Charitable Trusts

v  This method is only applicable if the sellers have determined what they will leave to charity at death. It is possible to make a future gift to a charity in exchange for an income stream. This method allows for an income stream comparable to what is possible with direct sale of business. It is also possible to gift the income payments to charity and have the asset revert to the estate at death.


v  Charitable Organizations do not pay capital gains tax

v  Tax deduction that is some proportion of the value of the gifted property or asset

v  Asset is removed from the estate for purposes of estate tax

v  Asset and income stream are protected from judgments, liens and bankruptcy claims


v  The asset reverts to charity at death of the grantor(s)

Where it applies:     

v  When the seller has already decided on the amount of the estate that goes to a charity

Private Annuity Trust / Deferred Sales Trust

The capital gains benefits available with a Private Annuity Trust may be discontinued. In this method: Grantor(s) establish a trust, sells the asset to the trust and the trust sells the asset to the buyer. Trust makes installment-like payments to the grantor(s) over their lifetimes. Capital gains taxes are due as installment payments are made to grantor(s). At death of grantor(s), asset passes to beneficiaries.


v  Capital gains taxes are deferred and interest is earned on taxes not paid to government

v  Trust assets can be invested in almost anything. Grantor(s) have the ability to borrow money form the trust. Trust assets can be fully withdrawn as long as capital gains taxes are paid at time of withdrawal

v  Trust is held outside of the estate for purposes of estate tax and assets in trust are protected from judgments, liens and bankruptcy claims


v  The trust needs to have a third party trustee

v  Capital gains may rise in future, but the trust can be liquated as needed

Where it applies:

The intent behind establishing a PAT should be to exchange an asset for a lifetime income, to defer capital gains taxes or to avoid estate taxes or any combination

Valuing Companies With Erratic Earnings

January 17th, 2008

What is the right metric?


A significant number of businesses that come to market do not have consistent stream of earnings. Inconsistent earnings history makes it difficult for acquirers to predict future earnings and create a valuation challenge. Using an “industry earnings multiple”, the most common metric used to value mid-market companies can be meaningless in these situations.

Which earnings number does one pick? The highest? The lowest? Most recent? The average? Weighted average?

On the surface, using weighted average may seem like an appealing answer. However, using weighted average typically leads to overvaluing or undervaluing the company by a substantial margin to the detriment of either the acquirer or the seller.

Assuming a reasonable earnings number can be picked using weighted averages, is “industry earnings multiple” a valid multiplier to arrive at a valuation? In not, how does one value these companies?  

A keen appreciation of financial methods and industry knowledge are essential to answer these questions. The first step in the process is to gain a clear understanding of the reasons for the earnings variability. Some common reasons for earnings variability are:

v  Economic changes in the target market

v  Development phase of the company

v  Large non-recurring income/expenses

v  Loss/gain of large customers

v  Entry/exit of major competitors

v  Changes in management or key employees

v  Changes in physical environment and target market

v  Substantial changes in level or amount of operating equipment or people

v  Changes in COGs that are out of line with changes in final product/service prices

Acquirers may see some of these reasons as problems that reduce the future earnings. They may also see some other reasons as opportunities that increase the future earnings. It is imperative that both the reasons and the impact be well understood early in the valuation process. Once the reasons are identified and their impact assessed, appropriate adjustments can be made to recast the financials to get a more meaningful picture of the company’s revenue and earnings stream. Quite often, these recasted numbers indicate a stable or predictable earnings or revenue stream.

If the earnings stream is predictable, the acquirer can use industry price/earnings multiples to arrive at a reasonable valuation.

If the earnings stream is somewhat erratic but the revenue stream is predictable, the valuation may have to rely more heavily on industry price/sales multiples.

If neither the earnings nor the revenues are predictable after recasting, the valuation process becomes highly subjective. In such a situation, the transaction price should either show a substantial discount to a market multiple or be tied to future performance of the business.

Valuing Growth Companies

January 17th, 2008

The folly of industry multiples


I routinely see individual buyers coming up with low valuations for growth businesses based on simple multiple of the most recent year’s profitability and, worse yet, based on a multiple using a weighed average of the profits from the preceding 3 years. I usually offer them this simple way of looking at the problem.

Let’s take the example of 3 different businesses with identical last 12 month revenues and earnings:

v  Business1 has a history of cash flow growth of 10% over many years and the target market is continuing to grow.v  Business2 has a history of a steady cash flow for a long time with relatively minor variation from year to year and the target market is a stable.v  Business3 has a history of steadily declining cash flow for the last several years and the market outlook appears to be unfavorable.

Using industry standard multiple of most recent year’s earnings, all these business are valued the same. Would you value these businesses at the same level? Of course, not!

How about using multiple based on weighed average of last 3 years profits? A quick check would show that this would lead to the conclusion that Business3 has the highest valuation and Business1 the lowest valuation! In most scenarios, this answer would be preposterous!!

So, why did industry multiples and weighed averages give wrong results for these companies? How can you value these companies? I will cover the answer to the former question in a different blog entry. For now, let’s focus on how you can better value these companies.

Setting aside the strategic or synergistic value of these companies, there are a couple of good answers to this question:

v  Use Gordon Growth model to arrive at a growth adjusted value of the earning stream. 

V= E / (R-G)

Where: V= Value of a company

E = Annual earning stream

R = Required rate of return

G = Projected long term growth rate of the Earning Stream

v  Develop a forecast of long term earnings stream and conduct scenario analysis based on discounted cash flow. This method is more sophisticated and requires spreadsheet skills but can be useful in establishing a range of values under different scenarios.

The valuation arrived by these methods gives acquirers a reasonable starting point in many small to mid-market business acquisitions. The acquirer should aware that the real value of these companies has more to do with the strategic or synergistic value of these companies and can be much higher than what these simple methods suggest. We will cover this topic in a different article.

Business Broker, M&A Advisor Or Investment Banker?

January 17th, 2008

Picking The Right Intermediary For The Sale Of Your Business


You are ready to sell your business. You ask around and find that some businesses are sold by Business Brokers, some by Mid-market M&A Advisors, and some others by investment bankers. The difference in intermediaries can make difference of 20% to 40% or more in what you can take away in many situations. So, picking the right intermediary can have a major impact on your nest egg. Which one of these is right intermediary for selling your business? Who should you use?

The following table shows the applicability of these intermediaries based on various metrics.

  Business Broker Mid-market M&A Advisor Investment Banker
Size Of Business

Less than $2M

$1M – $100M

$50M and higher

Type of Business

Mostly Retail

Distributors, Manufacturers, Healthcare, Technology, Large retail, B2B companies

Public or large private companies

Typical Representation

Seller & Buyer (DUAL AGENT)

Either Buyer Or Seller

Either Buyer Or Seller

Typical # Of Employees

Less than 10

Tens or Hundreds

Any size

Typical Acquirers


Corporations, PEGs

Public Companies or Large PEGs

Typical Sale Type


Asset or Stock

Stock or Mixed

Business Valuation

Street Multiple / Rules of Thumb

Strategic Value, DCF

Strategic Value, DCF

Transaction  Complexity



Very Complex

Size of contracts

A few pages

Tens of pages

Hundreds of pages

Typical Fee Structure


Double Lehman / Negotiated


Upfront Fees




Typical Multiples

2-3x DCF



The deciding factor in selecting the right intermediary is type of business you have. For small companies with revenues under $1 million and for large companies with revenues over $100 million, the choices are obvious.

If your business is a small retail or service business and there is no strategic value in the business, any competent business broker may be able to get the job done. However, since there is a substantial  negotiating component in deals this size, your interests are likely to better served if you choose an intermediary to represent you exclusively (i.e. not a dual agent).

An M&A Advisor is the right choice if your business is larger, complex or has a high component of product or service specialization. A competent M&A Advisor can unlock the value in your business, represent you exclusively, and get your business the higher value it deserves. This is extremely important if your business has untapped strategic value or has intellectual property subject to a broad interpretation of value in the marketplace.

The Experience Factor

January 17th, 2008

The folly of going with a single buyer


“When a man with experience meets a man with money, the man with experience walks away with some money and man with the money walks away with some experience” – Anonymous 

Recently an insurance company executive approached us about selling her company. She had an offer from a national insurance company, let’s call it “XYZ Company”, and wanted to see if we could bring in a buyer to pay more for her company. We have seen many instances where a buyer, typically someone in the same industry, makes an offer on a local company and ends up paying a substantially lower value for the company than what a proper business sale would enable. The best advice we could give her was to retain our company to represent her and conduct a confidential M&A Process to maximize her take home.

This buyer, a sharp lady, is a great insurance executive but, as is the case with most business owners, has no experience selling companies. The national insurance company on the other hand, has done many acquisitions in the past and has a seasoned team working on this transaction. Without representation from a competent M&A specialist, here is what this business owner will likely go through:

v  XYZ starts the process off with a basic, generic, non-binding LOI with an offer well below or at the low end of the business’s value

v  Seller may ask for more money and the XYZ Company may accede depending on their acquisition strategy and how tough its negotiators are.

v  Once the seller thinks she has got fair value for her company, XYZ embarks on an exhaustive due diligence process. XYZ company’s attorneys, accountants, acquisition experts start their inquisition into the seller’s company affairs.

v  The owner gets busy with collecting tons of paperwork, preparing many diligence reports, answering questions and starts losing focus on the business

v  XYZ starts finding several small and big things that are wrong with the company’s financials, sales pipeline, future projections, leases, etc.

v  XYZ puts out an updated LOI which is lower than the initial offer because of all the things that they uncovered in the due diligence process.

v  The terms in the updated LOI are complex, payments delayed, tied to future performance, and generally structured in a way that is not advantageous to the seller

v  By this point in time, the seller has spent countless hours of precious personal time and has also spent several tens of thousands of dollars in attorney fees reviewing the contracts and other legal documents.

v  The process also takes its toll on the business. With the seller’s eye off the ball, the business starts to suffer. Employees get nervous and productivity drops. In some cases, key employees or key customers may leave. XYZ Company’s continued due diligence finds signs of deteriorating business and asks for further accommodations from the seller.

v  If the seller realizes she has been had or if she becomes emotional about the process, she will pull the plug, cut her losses, and go back to rebuilding the company for a sale later. But more often than not, the seller is tired, anxious, stressed out, under time pressure to make the transaction, and eager to move on. Faced with the compelling arguments from XYZ Company’s experts, the seller decides to take the lowball deal and moves on.

The seller could avoid this with one simple step – Start M&A process with a competent set of advisors and let them work with multiple buyers. The M&A process will enable all potential buyers, including the one that started off the process, to compete for the business. The buyer who sees the most value in the business will likely win and provide the seller with the best value as well as favorable terms. A win-win deal for all parties involved.

At our firm, we have routinely done deals where the final take away was 20% to 40% higher than what the seller would have netted had he/she gone with the first offer.

How To Maximize The Value Of Your Business

February 23rd, 2007

Looking At Your Business From An Acquirer’s Viewpoint

You are contemplating on selling your business and want to understand how best to maximize the value of your business. You might have heard from your industry contacts that some businesses similar to yours sold for 3 times EBITDA and some others sold for 6 times EBITDA. This variation could mean a difference of several million dollars in take-home! What makes this variation possible? How can you get the best value for your business?

The purpose of this article is to help you look at your business as an acquirer might in valuing your company. The more attractive you can make your business to the acquirer, the better chance that you will get a higher value for your business. Your M&A advisor will also play a big role in the valuation and we will cover this in a different article.

Here is a list of key vectors acquirers use in evaluating business:

1.      Strategic Fit: Strategic fit occurs when some aspects of your business (products, services, distribution channels, location, etc.) are worth a lot more to another player in the industry than it is to you. When a strategic fit is established, the acquirer sees what you offer on a post acquisition basis and may be willing to offer much more than the going market multiples for the business. Give careful consideration to who the strategic acquirers may be. This is one area where a knowledgeable M&A advisor can be of great help to you. 2.      Cash Flow: After strategic fit, cash flow is the single largest value driver for most businesses. Think of ways to improve your EBITDA on a sustainable basis. Acquirers are suspicious of short term jumps in cash flow. So, be careful not to delay hiring or equipment purchases beyond what you believe is reasonable. Once an acquirer starts doubting your credibility and sees risk in the deal, the due diligence increases and the acquirer will make changes to valuation to adjust for the risk.3.      Management Depth: Keep in mind that acquirers are buying the business that they hope will be functional and growing after the sale. It is tough for the acquirer to place high value on your business if you are the sole decision maker in the company and the business depends largely on your skill set. Developing your staff so that they can run the business when you are gone can pay big dividends when it is time to sell. If you are concerned about your employees leaving once you are gone, it may be good idea to consider employment contracts, stock grants and other incentives that give them a reason to stay long term. If possible, start work on staff related issues at least a year before you plan on starting the sales process.

4.      Customer Diversity: Acquirers are nervous about businesses where a high percentage of business comes from a handful of customers. Ideally, no single customer should contribute to more than 10% of your revenues or profits. The best solution for this problem is to diversify the customer base. If that is not feasible, be prepared to accept part of the transaction price paid as earn-outs or plan on supporting the acquirer in an advisory role to ensure customer continuity.

5.      Recurring Revenue Stream: Acquirers love predictable and low risk revenue streams. Any long term contracts, annual service/licensing fees, and other recurring revenue streams make business more desirable and fetch a higher price in the marketplace. In service oriented business, converting predictable customer support calls into recurring revenue stream can turn a business liability into an asset.

6.      Desirable Products & Services That Are Difficult To Copy: Acquirers place higher value on a business with unique products, services, or distribution systems than a business whose offerings are considered generic. Think of ways in which your product/service is unique and why it should be valuable to an acquirer.  Having an edge and having the ability to communicate the edge can do wonders to your business’s valuation.

7.      Barriers To Entry: With so much competition all around you, why is your business difficult to copy? Why will the acquirer be able to have as much success with the business as you had? Is it because of intellectual property (patents, copyrights), regulation (permits, zoning), difficult to get contracts (you are one of the two or three qualified vendors at each of your major accounts), or something else? What is unique about your business? Having good answers to these questions indicates that there are barriers to entering your business and these barriers make your businesses more valuable than your competitor with similar cash flow.

8.      Pending Upsides: You believe you are about to come up with a compelling new product or make major inroads into a premier customer. You also believe that these developments can double your business next year and do not want your company to be undervalued based on current financials. Delaying the sale has other consequences that make it unattractive for you to wait. So, what do you do? A good forecast backed up by management presentations with examples on why the company would achieve the forecasts is extremely powerful. However, keep in mind that any forecasts that do not materialize as planned during the sales process can have substantial negative impact on the sales price. Having a good understanding of your product/sales pipeline and having the ability to communicate it with your M&A advisor can help structure a deal where part of the sales price can be paid in earn-out to capture some of the upside.

9.      Industry Exposure: Perceived industry leadership is an intangible that can enhance your company valuation. Keep a record of newspaper stories, articles in trade magazines, mentions on local TV or any other mention of your company in print or any other media. Your business is more valuable, if your company is perceived as being a leader in the industry and sought after for its expertise. Asking your employees to write articles and keeping in touch with local and industry reporters not only enhances your valuation in the long term but also helps drive your business and image in the community.

10.  Strategic Plan: A written strategic growth plan that clearly documents the areas the company can grow can be an asset to acquirer. Length of the document is not as important as the content. A well written 2 or 3 page growth plan is sufficient. Acquirers will also find useful prior year plans that show the history of your ventures – along with their failures and successes.

11.  Record Keeping: To many acquirers, high quality book keeping reduces risk and also says a lot about how the business was run. Having a set of clean, easily auditable books inspires confidence and helps during the due diligence and negotiation process.

12.  Accentuate The Positive: Every business has its chinks and it is very important for the seller to identify these negatives and proactively offer solutions for turning the negatives into positives. It is important sellers take steps to put out any bad news on he table early and dealing with it than letting it come back and haunt them during the negotiating process.

The most important takeaway from this article should be that while EBITDA matters, EBITDA is not everything. Improvement along the key vectors mentioned above will give your M&A advisor a considerable upper hand during the negotiation process. If the EBITDA of your business is $1 million, a difference in a multiple of 3 and 6 would mean a difference of $3M in pre-tax earnings. Not bad for doing a little bit of homework!

Double Lehman Explained

February 23rd, 2007

How M&A intermediaries get compensated

Almost every seller wants to know what our fee structure is before deciding to put a business on sale. Some of our larger clients are immediately familiar with the Double Lehman structure we use but some others have never heard of this fee structure before. Some of the larger companies have heard of the “Lehman Formula” but not the “Double Lehman”. First a brief history of “Lehman Formula”: Lehman Formula is a compensation formula developed by Lehman Brothers many decades back for investment banking services and is structured is as follows:

–       5% of the first million dollars involved in the transaction

–       4% of the second million

–       3% of the third million

–       2% of the fourth million

–       1% of everything thereafter

This formula suggests that a seller would pay an intermediary a fee of $150 thousand on the first $5 million of transaction value. Thereafter, the formula calls for an additional 1% of any value in excess of $5 million. According to the Lehman Formula, a transaction value of $100 million would generate a transaction fee of $1.1 million, or 1.1% of value. Over the last few decades, as inflation changed the size of the deals and as the complexity of the deals grew, this fee structure has evolved. In modern investment banking transactions, this fee structure is somewhat modified and goes along with upfront fees, retainers, hourly fee and other fee to compensate for the expenses in the transaction.  

For large deals, especially the ones in hundreds of millions of dollars, the Lehman Formula provides large fees and there are several national M&A firms such as Goldman Sachs, Merrill Lynch who compete to win these deals. These deals are highly customized and compensation for the M&A specialists is tailored per the objective of the deal.

On the other end of the transaction sizes, business brokers typically charge 12% of the transaction proceeds for business under $500,000 and 10% of the transaction proceeds for businesses over $500,000. Mid market M&A specialists have a challenge in the sense that the work of finding qualified buyers and closing smaller deals can be as or more difficult than for larger deals. Working at the compensation level implied by Lehman is untenable given the complexity and work required of these small deals. However, charging clients at 10% level as business brokers charge can be detrimental to the interest of the client selling his/her multi-million dollar business. Double Lehman is the compensation structure designed by M&A specialists to solve this problem. Double Lehman is a variation on the Lehman Formula to bridge the gap between the very small (less than $1 million) and very large (greater than $100 million) deals.

Under Double Lehman, the M&A specialist fee is structured is as follows:

–       10% of the first million dollars involved in the transaction

–       8% of the second million

–       6% of the third million

–       4% of the fourth million

–       2% of everything thereafter

The Double Lehman provides for a transaction fee of $300,000 of the first $5 million of the transaction value. The fee on a $20 million deal would be $600,000 (3% of value).

Bottom Line: The Double Lehman is a convenient way to begin discussions regarding M&A specialist compensation for selling mid-market companies. The formula provides a structured means of discussing fees and facilitating agreement between sellers and intermediaries. For smaller deals, this fee structure is significantly superior to what business brokers charge. For larger deals (greater than $10 million), the fee structure is more likely to be a combination of upfront fee and success fee and every deal is negotiated. The seller and the M&A specialist can work together to create win-win deals.                        


January 22nd, 2007

Welcome to the blog of Chakradher (Chak) Reddy, Chief Dealmaker, Elite Mergers & Acquisitions.