When Takeover Targets Become Takeover Artists

Equity Values are Falling. Instead of Panicking, Why not Buy Out a Competitor?

by François M. de Visscher

When it comes to mergers and acquisitions, family businesses usually think of themselves as potential targets, not acquirers. But now may be the perfect time to start thinking more like a potential buyer.

Several economic factors are converging to create a buyer’s market in the acquisitions arena:

  1. Valuations of private companies have dropped along with public valuations. When family companies see their own valuations diminishing, they often assume a defeatist attitude. It’s harder to create liquidity for shareholders. But the value of your competitors has likely fallen as well. That’s good if you’re a potential buyer. Instead of retrenching into a defensive posture, consider going on the offensive, by expanding or developing new lines and getting into new markets. Think of an acquisition as a different way to create value for future generations of shareholders.  More…

Creating Instant Equity for the Next Generation

Creating Instant Equity for the Next Generation

by Jim Percy

Does the predicament of Coleridge’s ancient mariner, “Water, water, everywhere, nor any drop to drink,” apply to your business? It may apply if the asset at issue is not water, but money. If it does, the use of a private annuity may be the tool that allows your business to quench your thirst.

A common problem in many family businesses is that parents want to retire, but put it off because of their worries about maintaining a sufficient retirement income. These parents often have children who are poised to take over, but lack the funds to buy the business from their parents. This albatross can hang over many businesses, even those that are well-established and profitable, largely because a lion’s share of the family’s assets are in their business. More…