The Transition Companies Self Improvement Articles

3 Fantastic Tips to the Road of Success

3 Fantastic The Transition Companies Tips By Shawn Lim.

Everyone wants to be successful. Unfortunately, only a small portion of them actually achieve the things that they really want in their life. Successful people held different belief and mindset in achieving success in their life, which is why they are successful. Therefore, if you want to be successful today, you have to model the belief and the mindset of the successful people, and you will be able to create the similar amazing results just like them.

1. Make success a ‘must’ achieve in your life instead of just dream. Every successful people know that if they want to be successful, they will have to put in 100% commitment and make success a ‘must’ for them. When you make something a ‘must’ achieve, you will do whatever it takes to achieve it. So ask yourself, are you willing to do whatever it takes to achieve success? Is achieving success in your life something a ‘must’ or just a dream?

2. Get out of your comfort zone if you want to be successful. Success will never come automatically, you will have to put in real effort to make it come true. Hence, you need to get out of your comfort zone. As long as you stay in your comfort zone, you will never improve and you will never take the necessary action. There is no free lunch in this world; you will have to sacrifice your time and energy to achieve the things that you want in your life.

3. Never give up no matter what happened. This is one of the most crucial factors that are going to determine your success. If you give up, you will never achieve the things that you want. Therefore, do not give up even if you fail to achieve success. Instead, change your strategies and treat failure as feedback. You fail because you are using the wrong strategies. Keep on trying with different strategies until you achieve what you want. This is the main recipe to success.

Tags: 3 Fantastic The Transition Companies Tips

The Secret Of Personal Success

The Transition Companies of Personal Success By Linos M David.

There are many secrets in life. Though scientists have been conducting researches on human mind and body, they have not yet succeeded in totally revealing the mystery regarding them. There are certain secrets lying behind personal success also.

Earnest desire is the most important quality needed for achieving success in life. The raw materials, opportunity, resources, wealth etc are more than enough in this world. Personal success does not depend on chance, destiny, luck or good fortune. Rather it depends on goal setting, hard work, discipline, vision, responsibility etc. Human mind has tremendous potential. Our sub conscious mind acts as the life guidance system in leading us towards our goals and dreams. The most important thing that we should possess in order to become successful is to have specific aims and dreams. Our sub conscious mind should be fed with our aims in short phrases. If such phrases are repeated constantly our mind will lead us to our destination.

Success does not come overnight. It needs perseverance. Personality development, knowledge accumulation etc are indispensable for achieving success.

Tags: The Transition Companies of Personal Success

The Transition Companies

Investors in a company that are aiming to take over another one must determine whether the purchase will be beneficial to them. In order to do so, they must ask themselves how much the company being acquired is really worth.

Naturally, both sides of an M&A deal will have different ideas about the worth of a target company: its seller will tend to value the company at as high of a price as possible, while the buyer will try to get the lowest price that he can.

Comparative Ratios - The following are two examples of the many comparative metrics on which acquiring companies may base their offers:

There are, however, many legitimate ways to value companies. The most common method is to look at comparable companies in an industry, but deal makers employ a variety of other methods and tools when assessing a target company Here are just a few of them:

·         Price-Earnings Ratio (P/E Ratio) - With the use of this ratio, an acquiring company makes an offer that is a multiple of the earnings of the target company. Looking at the P/E for all the stocks within the same industry group will give the acquiring company good guidance for what the target’s P/E multiple should be.

·         Enterprise value-to-sales ratio (EV/Sales) - With this ratio, the acquiring company makes an offer as a multiple of the revenues, again, while being aware of the price to sales ratio of other companies in the industry.

                        Replacement cost- In a few cases, acquisitions are based on the cost of replacing the target company. For simplicity’s sake, suppose the value of a company is simply the sum of all its equipment and staffing costs. The acquiring company can literally order the target to sell at that price, or it will create a competitor for the same cost. Naturally, it takes a long time to assemble good management, acquire property and get the right equipment. This method of establishing a price certainly wouldn’t make much sense in a service industry where the key assets – people and ideas – are hard to value and develop.

                        Discounted cash flow (DCF) - A key valuation tool in M&A, discounted cash flow analysis determines a company’s current value according to its estimated future cash flows. Forecasted free cash flows (net income + depreciation/amortization – capital expenditures – change in working capital) are discounted to a present value using the company’s weighted average cost of capital (WACC). Admittedly, DCF is tricky to get right, but few tools can rival this valuation method.

Synergy: The Premium for Potential Success
For the most part, acquiring companies nearly always pay a substantial premium on the stock market value of the companies they buy. The justification for doing so nearly always boils down to the notion of synergy; a merger benefits shareholders when a company’s post-merger share price increases by the value of potential synergy.It’s hard for investors to know when a deal is worthwhile. The burden of proof should fall on the acquiring company. To find mergers that have a chance of success, investors should start by looking for some of these simple criteria:

Let’s face it, it would be highly unlikely for rational owners to sell if they would benefit more by not selling. That means buyers will need to pay a premium if they hope to acquire the company, regardless of what pre-merger valuation tells them. For sellers, that premium represents their company’s future prospects. For buyers, the premium represents part of the post-merger synergy they expect can be achieved. The following equation offers a good way to think about synergy and how to determine whether a deal makes sense. The equation solves for the minimum required synergy:

In other words, the success of a merger is measured by whether the value of the buyer is enhanced by the action. However, the practical constraints of mergers, which we discuss in part five, often prevent the expected benefits from being fully achieved. Alas, the synergy promised by deal makers might just fall short.

What to Look For

• A reasonable purchase price – A premium of, say, 10% above the market price seems within the bounds of level-headedness. A premium of 50%, on the other hand, requires synergy of stellar proportions for the deal to make sense. Stay away from companies that participate in such contests.
• Cash transactions – Companies that pay in cash tend to be more careful when calculating bids and valuations come closer to target. When stock is used as the currency for acquisition, discipline can go by the wayside.
• Sensible appetite – An acquiring company should be targeting a company that is smaller and in businesses that the acquiring company knows intimately. Synergy is hard to create from companies in disparate business areas. Sadly, companies have a bad habit of biting off more than they can chew in mergers.

Mergers are awfully hard to get right, so investors should look for acquiring companies with a healthy grasp of reality.

The Transition Companies

© 2009 The Transition Companies . All rights reserved.

Tags: The Transition Companies

The Transition Companies Business Intermediary

Acquisitions
As you can see, an acquisition may be only slightly different from a merger. In fact, it may be different in name only. Like mergers, acquisitions are actions through which companies seek economies of scale, efficiencies and enhanced market visibility. Unlike all mergers, all acquisitions involve one firm purchasing another – there is no exchange of stock or consolidation as a new company. Acquisitions are often congenial, and all parties feel satisfied with the deal. Other times, acquisitions are more hostile.

In an acquisition, as in some of the merger deals we discuss above, a company can buy another company with cash, stock or a combination of the two. Another possibility, which is common in smaller deals, is for one company to acquire all the assets of another company. Company X buys all of Company Y’s assets for cash, which means that Company Y will have only cash (and debt, if they had debt before). Of course, Company Y becomes merely a shell and will eventually liquidate or enter another area of business.

Another type of acquisition is a reverse merger, a deal that enables a private company to get publicly-listed in a relatively short time period. A reverse merger occurs when a private company that has strong prospects and is eager to raise financing buys a publicly-listed shell company, usually one with no business and limited assets. The private company reverse merges into the public company, and together they become an entirely new public corporation with tradable shares.

Regardless of their category or structure, all mergers and acquisitions have one common goal: they are all meant to create synergy that makes the value of the combined companies greater than the sum of the two parts. The success of a merger or acquisition depends on whether this synergy is achieved.

Tags: The Transition Companies Business Intermediary

The Transition Companies Toughest Decision

A Business Owners Toughest Decision is deciding to sell. In many cases he ignores some market dynamics that fortell difficult times ahead. Those difficult times often result in a significant drop in the value of the business. This article will help you identify some of those signs.

For the past 20 years you have built your business. Your company has become part of your identity. Even when you are not at work, you are working, thinking, planning. You never stop. If you sell you are leaving behind much more than a job. In this article we will discuss some signs that might indicate that it is time to exit your business.

1. Late in your working life you are faced with a major capital requirement in order for your company to maintain its competitive position.2. A large competitor is taking market share away from you at an accelerating pace.3. Your legacy systems, production capabilities, or competitive advantage has been “leap frogged” by a smaller, nimble, entrepreneurial firm.4. A major company in a related industry just acquired a direct competitor.5. Your fire to compete at your top level is not burning as brightly as it once did.6. Your kids are not interested or are not capable of running the business.7. You have had a health scare and have decided to smell the flowers.8. You have lost a major client of a key employee.9. The market is hot and you decide to take some chips off the table for asset diversification.10. You exit in an orderly fashion and from a position of strength as you intended.

Lets look at these in a little more detail.

Major Capital Investment Required – You are supposed to be diversifying your assets, not concentrating them even further. Think about a simple payback analysis. Does that extend beyond your retirement date? You want to be able to defend that investment with the energy and intensity you devoted when you were originally growing your business. Maybe it is time to bring in an equity partner with smart money, an industry buyer with the management depth, infrastructure, or distribution network to protect that investment. You might consider selling not with a three year employment contract. Let the new owner defend the required capital investment.

A Large Competitor is Taking Market Share Away from You – Believe me, the news is not going to get better. As an investor you would probably sell the stock in a company you owned if Microsoft or GE decided to assume a presence in that market. Business owners often struggle with objectivity when a similar event takes place in their own company’s industry.

Your Legacy Systems have been “Leap Frogged” by a Nimble Entrepreneurial Firm – This happens all the time and can cause an erosion of your customer base. Your inertia will sustain you for a while, but eventually you will begin to experience customer defections. You can either rewrite, acquire or sell. If you decide to sell, do so before losing too many clients.

A giant company in a related industry just acquired one of your major competitors. Watch out, they did not make this acquisition to maintain status quo. They want to grow their market share. They will be coming after your clients. The good news is that as a defensive measure, one or more of their competitors will be compelled to make a similar acquisition. It is best to be aggressively ahead of the curve and get acquired while the market is hot and prices are being bid upwards.

Your interest and competitive fire is eroding. Let’s face it, if you are not growing, you most likely are contracting. Your competition was tough when you were on your game. Your family’s net worth is under attack if you are no longer fully committed.

Your original plan was to turn your business over to your children. They may not be interested or capable of competing at this level. Perhaps the greatest legacy you can leave to your kids is to convert your company into a diversified portfolio of financial assets that are far less risky than turning the company over to inexperienced managers.

You have a health scare and all of a sudden you start thinking of all the sacrifices you made and all the things you want to do before it is too late. Your list of goals is immediately changed from financial in nature to family, friends, travel, experiences, philanthropy, etc. You might want to listen to your heart this time.

You have lost a major client or a key employee. That can be a real blow to a business. The owner, by nature, is optimistic and believes that the lost business will soon be replaced and does not ratchet down the expense level to match this new sales level. If he does cut, inevitably, it is not fast enough and not deep enough. Maybe it is time to seek a buyer that could replace that business before your company’s value is severely impaired as your profits erode.

The market is hot and you decide to take some chips off the table for diversification. You may be thinking of retiring in four years, but a consolidation is occurring in your industry and valuations are up 20%. Sell at the top and sign a four year employment or consulting contract. The odds are that if you exit on your original schedule, valuations will have settled back down to the norm.

You ring the bell and exit on your own terms, from a position of strength, exactly like you planned. You are well aware of the competitive forces in the market and the relative strength or weakness in valuation multiples. You have prepared your business to be attractive to a strategic buyer. Everything is going your way. You hire a good M&A advisory firm to present you confidentially to the most likely buyers. Several recognize your value and show interest. You are able to get a little competitive bidding going. Your transaction value rises and your terms improve. You pull the trigger and complete the sale. Mission Accomplished.

The Transition Companies Toughest Decision

Tags: The Transition Companies Toughest Decision

The Transition Companies Selling Information

Sell my business

Sell my company

Partial sale of a company

As mergers capture the imagination of many investors and companies, the idea of getting smaller might seem counterintuitive. But corporate break-ups, or de-mergers, can be very attractive options for companies and their shareholders.

Advantages
The rationale behind a spinoff, tracking stock or carve-out is that “the parts are greater than the whole.” These corporate restructuring techniques, which involve the separation of a business unit or subsidiary from the parent, can help a company raise additional equity funds. A break-up can also boost a company’s valuation by providing powerful incentives to the people who work in the separating unit, and help the parent’s management to focus on core operations.

Most importantly, shareholders get better information about the business unit because it issues separate financial statements. This is particularly useful when a company’s traditional line of business differs from the separated business unit. With separate financial disclosure, investors are better equipped to gauge the value of the parent corporation. The parent company might attract more investors and, ultimately, more capital.

Also, separating a subsidiary from its parent can reduce internal competition for corporate funds. For investors, that’s great news: it curbs the kind of negative internal wrangling that can compromise the unity and productivity of a company.

For employees of the new separate entity, there is a publicly traded stock to motivate and reward them. Stock options in the parent often provide little incentive to subsidiary managers, especially because their efforts are buried in the firm’s overall performance.

Disadvantages
That said, de-merged firms are likely to be substantially smaller than their parents, possibly making it harder to tap credit markets and costlier finance that may be affordable only for larger companies. And the smaller size of the firm may mean it has less representation on major indexes, making it more difficult to attract interest from institutional investors.

Meanwhile, there are the extra costs that the parts of the business face if separated. When a firm divides itself into smaller units, it may be losing the synergy that it had as a larger entity. For instance, the division of expenses such as marketing, administration and research and development (R&D) into different business units may cause redundant costs without increasing overall revenues.

Restructuring Methods
There are several restructuring methods: doing an outright sell-off, doing an equity carve-out, spinning off a unit to existing shareholders or issuing tracking stock. Each has advantages and disadvantages for companies and investors. All of these deals are quite complex.

Sell-Offs
A sell-off, also known as divestiture, is the outright sale of a company subsidiary. Normally, sell-offs are done because the subsidiary doesn’t fit into the parent company’s core strategy. The market may be undervaluing the combined businesses due to a lack of synergy between the parent and subsidiary. As a result, management and the board decide that the subsidiary is better off under different ownership.

Besides getting rid of an unwanted subsidiary, sell-offs also raise cash, which can be used to pay off debt. In the late 1980s and early 1990s, corporate raiders would use debt to finance acquisitions. Then, after making a purchase they would sell-off its subsidiaries to raise cash to service the debt. The raiders’ method certainly makes sense if the sum of the parts is greater than the whole. When it isn’t, deals are unsuccessful.

Equity Carve-Outs
More and more companies are using equity carve-outs to boost shareholder value. A parent firm makes a subsidiary public through an initial public offering (IPO) of shares, amounting to a partial sell-off. A new publicly-listed company is created, but the parent keeps a controlling stake in the newly traded subsidiary.

A carve-out is a strategic avenue a parent firm may take when one of its subsidiaries is growing faster and carrying higher valuations than other businesses owned by the parent. A carve-out generates cash because shares in the subsidiary are sold to the public, but the issue also unlocks the value of the subsidiary unit and enhances the parent’s shareholder value.

The new legal entity of a carve-out has a separate board, but in most carve-outs, the parent retains some control. In these cases, some portion of the parent firm’s board of directors may be shared. Since the parent has a controlling stake, meaning both firms have common shareholders, the connection between the two will likely be strong.

That said, sometimes companies carve-out a subsidiary not because it’s doing well, but because it is a burden. Such an intention won’t lead to a successful result, especially if a carved-out subsidiary is too loaded with debt, or had trouble even when it was a part of the parent and is lacking an established track record for growing revenues and profits.

Carve-outs can also create unexpected friction between the parent and subsidiary. Problems can arise as managers of the carved-out company must be accountable to their public shareholders as well as the owners of the parent company. This can create divided loyalties.

Spinoffs
A spinoff occurs when a subsidiary becomes an independent entity. The parent firm distributes shares of the subsidiary to its shareholders through a stock dividend. Since this transaction is a dividend distribution, no cash is generated. Thus, spinoffs are unlikely to be used when a firm needs to finance growth or deals. Like the carve-out, the subsidiary becomes a separate legal entity with a distinct management and board.

Like carve-outs, spinoffs are usually about separating a healthy operation. In most cases, spinoffs unlock hidden shareholder value. For the parent company, it sharpens management focus. For the spinoff company, management doesn’t have to compete for the parent’s attention and capital. Once they are set free, managers can explore new opportunities.

Investors, however, should beware of throw-away subsidiaries the parent created to separate legal liability or to off-load debt. Once spinoff shares are issued to parent company shareholders, some shareholders may be tempted to quickly dump these shares on the market, depressing the share valuation.

Tracking Stock
A tracking stock is a special type of stock issued by a publicly held company to track the value of one segment of that company. The stock allows the different segments of the company to be valued differently by investors.

Let’s say a slow-growth company trading at a low price-earnings ratio (P/E ratio) happens to have a fast growing business unit. The company might issue a tracking stock so the market can value the new business separately from the old one and at a significantly higher P/E rating.

Why would a firm issue a tracking stock rather than spinning-off or carving-out its fast growth business for shareholders? The company retains control over the subsidiary; the two businesses can continue to enjoy synergies and share marketing, administrative support functions, a headquarters and so on. Finally, and most importantly, if the tracking stock climbs in value, the parent company can use the tracking stock it owns to make acquisitions.

Still, shareholders need to remember that tracking stocks are class B, meaning they don’t grant shareholders the same voting rights as those of the main stock. Each share of tracking stock may have only a half or a quarter of a vote. In rare cases, holders of tracking stock have no vote at all.

The Transition Companies Business Selling

Tags: The Transition Companies Business Selling

Realizing Shareholder Value: Private Company Exit Strategies

The perpetuation of ownership and the succession of management are among the most difficult challenges that a privately held business will ever encounter. The decisions surrounding these issues will determine what will become of the organization to which business owners have devoted their lives, and what will be the return on what is likely their most valuable financial asset.

Yet, ironically, these critical, and complex decisions are among those for which the owner is least prepared, since they may be confronted only once in a lifetime. Owners may have many decades of experience at managing a business, but little or no experience with the monumental task surrounding his or her exit.

The Transition Companies (“TTC”) of Dallas, Texas is expert in selling privately held businesses for the most amount of money and the best terms and conditions.  Realizing maximum value is the challenge, and in order to do so, proper planning and quality optimization is critical.  TTC sells privately held business, and improves profit and profit opportunities on those client companies in need of such, allowing its clients to maximize their return when they do exit, which all business owners will do eventually. The Transition Companies can help business owners to financially plan for “the life they want” after transitioning out of their company.

_______________________

The Transition Companies is the pre-eminent professional services firm providing complete exit and transition strategies for owners of privately- held companies seeking to maximize the proceeds from the sale of their companies or increase earnings or business enterprise value, prior to going to market.

Originally founded in 1988, The Transition Companies has over 100 Associates nationwide.

Tags: The Transition Companies Exit Strategies

Business Sellers – What are Qualified Buyers?

by Gene Sartin

CEO of The Transition Companies

If you are a business owner considering selling your business most likely you will interview several business brokers or merger and acquisition advisors. In the process you might hear, “We have lists of qualified buyers.” Some potential business sellers find this phrase almost hypnotic. It congers visions of this group of well funded, anxious buyers who can’t wait to pay a generous price the moment they are made aware of this great opportunity.

Let’s lift up the covers and look a little closer. If this is a business broker who handles main street type businesses like convenience stores, dry cleaners, salons, and restaurants, he is typically selling to an individual who is buying a job. If the broker is one that does not charge an up-front or a monthly engagement fee, he is agreeing to work for a success fee only. To improve their odds of getting some success fees these contingent fee brokers take on dozens of clients.

With dozens of clients, the broker can’t really afford to engage in the labor intensive M&A process. Instead he can only list the business. Listing would include posting it on several “business for sale” web sites, placing an ad in the business opportunities section of the paper and putting the word out to his network of professional contacts and lists of “qualified buyers”. These lists are the result of capturing the contact information from individual buyers that resulted from years of this passive listing process.

They have lists because these people almost never buy. Here is why. The business has to be priced low enough and generate enough cash so that it will provide debt coverage (assuming the business has enough hard assets to collateralize a loan), provide a generous return for the buyer’s equity, and finally exceed their career high salary when they worked for the fortune 500 employer. On top of that, the business should have a healthy growth rate and not be in a commodity type of business.

The business brokers do qualify these buyers by requiring them to complete a financial disclosure form and a confidentiality agreement. They make sure they have some money, but they have no way of qualifying whether they will actually part with that money. Individual buyers typically pay the lowest valuation multiples when they do buy a business.

For the larger business owners that are interviewing M&A firms, this “qualified buyers” claim takes on a different meaning. These M&A firms have lists of hundreds of private equity firms with their buying criteria, business size requirements, minimum revenue and EBITDA levels and industry preferences. All M&A firms have pretty much the same list. There are subscription databases available to anyone. The better M&A firms have refined these lists and entered them into a good contact management system so they are more easily searchable.

The approach these M&A firms with these Private Equity lists employ is to blast an email profile to their list and if they get an immediate and robust response, they will focus on the deal and work the deal. What happens to the 90% of sale transactions that clearly do not fit either the minimum EBITDA and revenue requirements or the conservative valuations of this group of buyers? Those deals requiring contact with strategic industry buyers usually go into dormant status. They will not be actively worked, but will occasionally be presented in another email campaign, mail campaign or at a private equity deal mart (industry meeting where many M&A firms present their clients to several PEG’s).

For the business owner that has paid a substantial up front engagement fee or healthy monthly fees, this is not what you had in mind. The way to get a business sold is to reach the strategic industry buyers. That is not easy. Presidents of companies (the buyer decision maker) do not open mail from an unknown party. So, mailings do not work. Let me repeat that. In a merger and acquisition transaction, mailings do not work.

Presidents of companies do everything possible to keep their email addresses confidential, so email blasts on a broad scale are not possible. Telemarketers are not skilled enough to pass through the voice mail and assistant screening gauntlet. If you have ever tried to present an acquisition opportunity to IBM, Microsoft, Google, Hewlett-Packard or Apple, let’s just say it would be easier to get into a castle with a moat full of alligators.

The investment bankers from Morgan Stanley or Goldman Sachs can generally get an audience with any major CEO. However, the fees they charge limit their clientele to businesses with north of $1 billion in revenues. So how do $15 million in revenue businesses get sold? You need to locate a boutique M&A firm that will provide a Wall Street style active selling process at a size appropriate fee structure.

What does this mean? The approach that consistently produces a high percentage of completed transactions is the most labor intensive and costs the most to deliver. It is an old fashioned, IBM, dialing for dollars effort, starting at the presidential level of the targeted strategic buyers. It usually takes ten phone dials and a great deal of finesse to penetrate the gauntlet and get a forty five second credibility opportunity with the right contact.

If you are able to pass that test and establish their interest, you ask them for their email address so you can send them the blind profile (two page business summary without the company identity) and confidentiality agreement. This is a qualifying test. The president will not give you their email address unless they have real interest and you have established your professional credibility.

If the president is not the appropriate contact, his assistant will generally direct you to the correct party. When that happens, we update our contact management database with this information so on the next M&A engagement we go directly to the proper contact.

So there are lists of qualified buyers and there are lists of qualified buyers. When selling your business, make sure that you contact The Transition Companies.

Tags: The Transition Companies Qualified Buyers