The business buyer-seller value gap is a very natural phenomenon. Bridging said gap can be difficult, even for the most seasoned entrepreneur or transaction advisor. Having outside assistance is obviously necessary and that’s the pitch of even the least pushy investment banker, but there are other tactics and tools that—if implemented— work to help move the business valuation needle.
The phrase “creative financial engineering” is often used to describe tactics that benefit a business owner or seller in a transaction. I’m not talking about fishy overseas havens in the Caymans or even the more legit ESOP, trust or tax-haven structures. I’m speaking about structures built into the deal itself that can aid in bridging valuation expectations between buyer and seller. Here are just a few ideas:
While the best value enhancement is performed long before the sale, direct engagement with advisors in the middle of the deal can greatly assist in mitigation of tax and other foreseen issues that will eat-away at the seller’s post-deal capital. Here are some pointers:
Overseas Transaction Nuances
Certain benefits exist for certain overseas and cross-boarder transactions. For instance:
The value gap is a palpable, tangible thing, particularly on the sell-side where the exit can mean the assets required for retirement for the owner. Some of these items should prove helpful in moving the dial in the right direction.