Episode 95 - An Interview with Roland Frasier
Selling a Business
[2:27]
A business might experience a wide range of events. Thus, the first reason to sell a business is to protect against the unknown.
[5:16]
If you're holding on to your business for your kids, they don’t want it. According to research, just 2% of businesses effectively transition from one generation to the next because the children don't want it, aren't qualified for it, or don't know how.
Private Equity Company
[10:04]
The environment of acquisitions goes from the least appealing company, which has the most risk, is an owner-operated company.
[11:17]
When you work in private equity, businesses across all industries with revenues above $10 million and profits over $2 million are usually acquired for 15.4 times profits. Simply increasing the company's profitability and sales will enable it to attract customers of a different class.
[16:37]
They also frequently employ another tactic known as a roll-up. A roll-up means that we'll buy a ton of businesses, some of which may be competitors and others which may not. Seven different categories make up the acquisitions.
Importance Of Having A Mentor Or a Coach
[21:28]
People that attempt to accomplish this on their own will probably receive a reasonable offer. However, you can double the worth of the offer if you are familiar with the procedure. When you've never sold a company before, for instance, negotiating a deal with a private equity firm that has a staff that specializes in negotiations is like entering a gunfight with a knife.
[24:19]
People need to think about the process they could go through to fully optimize the value of their company.
[27:32]
Exiting without proper guidance, especially dealing with a tax liability, can cost you so much. For example, If you have a tax that costs 30 percent, and you exited with $100 million, you are going to pay a whopping $30 million.
[32:31]
Many people are unaware that most companies, particularly private equity firms, just desire one thing from a company. However, there may be valuable assets in the company that are valuable on an ongoing basis or have independent value over the income from this particular object that the company has to sell.
[40:17]
If you don't know what you're doing, get the expert. Don't let your ego get in the way of getting a full value.
Now Is The Time To Make an Acquisition
[42:06]
Because everything is on sale, now is the best time to consider acquiring. When people are uncertain, the multiples will be most advantageous to you. But don't feel predatory because you're supporting them in getting what they want.
[45:33]
There are two ways to approach a company or a competitor: direct and indirect. But the best approach will be direct.
[51:19]
To determine which company to acquire, remember that the market influences multiples in terms of what is popular. So you'll see that some items become popular and others fall out of favor.
Psychology of Human Beings
[1:01:36]
At the end of the day, a human being is a human being. There's always a human being behind the decisions. And the psychology of human beings is wild, whether it’s their ego or pride.
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