A crucial red flag when evaluating a new acquisition target is a lack of customer diversification. Companies that have customer concentration greater than 20% may pose a significant problem for a buyer. The nature of the relationship between the company and…
As we have noted in prior perspectives, there are many things to consider when buying a business. One item that does not always get the attention it deserves is the real estate of the business. First, you must know if…
Valuing and financing a company is more complex than using a discounted cash flow model or market comparable EBITDA multiples. Unlike certain outliers (looking at you Tesla), debt compliance plays a major role in valuing a company. Fixed charge coverage…
Adjusted or normalized EBITDA is one of the components in determining a company’s valuation, as well as establishing debt financing and its various loan covenants. Once Adjusted EBITDA is established through a quality of earnings analysis, it becomes the baseline for…
The sale (or purchase) price of a company, in most instances, implies that a business is being sold as a “going-concern” to a buyer. Therefore, as part of any sale, a seller needs to deliver to a buyer all the assets…
The world has become obsessed with EBITDA. Public companies, private companies, business owners, investment bankers, lenders, valuation firms, and the mainstream business media constantly reference EBITDA and use it as a business term to negotiate value, define agreements, and reference…
Over the past 25 years, Westshore’s principals have purchased many companies, but the transactions that are the most challenging tend to involve companies where the inventory was either under managed or reflected aggressive inventory tax strategies. Many variables affect the…
