A few weeks ago the M&A Source hosted a webinar entitled “Value Drivers and Business Models” lead by James Darnell, a partner with KLH Capital. KLH Capital is a “fully capitalized SBIC-licensed private equity firm, which currently manages $165 million in capital across two funds. During their nearly 30-year business tenure, they have successfully completed more than 130 transactions, including recapitalizations, management buy-outs and buy-ins, family successions and retirement transitions, and corporate divestitures.”
Based on their track record, KLH’s perspective on the acquisition process can be quite enlightening. Their information was delivered from the viewpoint of a private equity firm actively acquiring privately held companies. Since many of our loyal readers are business owners who eventually will be looking for investors, I thought I would share with you KLH’s insight regarding how they view their targets, items that add value to an opportunity for them, and generally what they look for when they examine potential investments.
According to James Darnell, KLH looks for five key “value drivers” when they examine a potential target company:
Some key questions they ask for these five value drivers include:
KLH is not unique with the questions it asks about value drivers. Most equity firms and strategic buyers will ask you some variation of these same queries. The question only you can answer is this: Are you prepared to answer them?
This is one of the most important services that Generational Equity brings to its clients. We help to prepare you in advance for these questions and many more from business buyers during our initial evaluation stage.
Another point that Mr. Darnell made is how vital it is for the Offering Memorandum that you prepare for potential buyers to be designed to answer these questions in a format that clearly highlights the value proposition your opportunity provides. This is really essential and is usually not a focus of business owners who look for buyers without professional representation. Simply put, most business owners are experts in successfully running their businesses; however, more often than not, they are not experts in financial analysis, industry research, competitive analysis, and creative deal presentation.
Leading M&A advisors like Generational Equity are, and it is for this reason we have sold more lower middle-market companies in North America than anyone else the last several years.
A special thanks to the M&A Source and James Darnell from KLH Capital for presenting this incredibly vital information and giving us an inside view of how professional business buyers operate.
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
Generational Wealth Advisors’ affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables Generational Wealth Advisors to serve you more efficiently and makes it more convenient for you to do business with Generational Group. Generational Wealth Advisors is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.