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Selling Your Company: Will You Choose a Financial or Strategic Buyer?

If you decide to sell your business, you’ll likely encounter two main types of buyers: financial and strategic.

Each type has its own intentions for wanting to buy your business. When you understand what drives and motivates each type, you can potentially maximise your ability to get the best deal terms based on your objectives – including the price you get for your company.

  • Financial buyers will likely resell your company in a few years.
  • Strategic buyers seek synergies by running your business along with their existing businesses.
  • Factors such as sale price, debt and role in the company post-sale should drive your decision-making.

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Strategic Buyer

Other notes and risk warnings

This article is distributed for educational purposes only and must not be considered to be investment advice or an offer of any security for sale. The reference to any products is made only to make educational points and must, in no circumstances, be deemed to be any form of product recommendation.

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. 

It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Do You Know – Really Know – What Your Business Is Worth?

This article explores the importance of having a formal business valuation.  Really knowing what your business is worth can strengthen your position, should you ever consider selling.

If you think you know the true financial worth of your company, a formal business valuation might change your mind.

If you’re planning to sell your business, or even if you’re just thinking about possibly doing so down the road, you’re going to want to have a formal valuation conducted. Formal valuations are often very useful in helping all parties by providing, at the very least, a solid starting point for negotiations.

  • Formal business valuations often come in lower than entrepreneurs expect.
  • There are at least six commonly used valuation methods, each with pros and cons.
  • Choosing the right method for your situation is both an art and a science.

Click the image below to read the full article:

Other notes and risk warnings

This article is distributed for educational purposes only and must not be considered to be investment advice or an offer of any security for sale. The reference to any products is made only to make educational points and must, in no circumstances, be deemed to be any form of product recommendation.

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. 

It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Rebalancing – Do I Really Have to?

Humans have a hard time being investors.  Normally, we like to purchase things when they are cheap and avoid them when they are expensive, but that is often not the case for equities.  We tend to get overly optimistic and enthusiastic when equity markets rise dramatically, as they have done since the Global Financial Crisis a decade ago.  Yet when markets fall materially, we feel bruised and cautious, seeking to hang onto our stable bonds and even selling equities to avoid further falls in portfolio value.  That’s rarely a good idea, especially if you do not need the bulk of your capital in the foreseeable future.

As a client you will know that we have always sought to rebalance your portfolio on a regular basis, by which we mean returning it to the original target allocation that we initially established with you.  Most often, over the past few years, rebalancing has meant selling growth assets (equity-like) and buying defensive assets (bonds) in a contrarian manner.  This has helped to avoid the portfolio becoming dominated, over time, by the riskier growth assets component of the portfolio and to keep you within your emotional tolerance for falls, your financial capacity to weather them and your need to take risk in the first place.

Logically, the reverse also applies; at times like these the proportion of equities in your portfolio will have fallen below their long-term target.  This matters because your portfolio now has too little risk and it will be harder for the growth assets remaining to recoup the falls in value when markets eventually recover.

We can work that idea through with a simple example.  Imagine you own a £10,000 portfolio split 50% (£5,000) into growth assets and 50% into defensive assets.  In the growth assets portion, you own 50 units of a global equity fund priced at £100 per unit.  Growth assets fall by 40%.  Let’s assume your defensive assets are unchanged in value.  You still own 50 global equity fund units, but they are now priced at £60.  Your growth-defensive split has moved from 50/50 to 37.5/62.5.  Time to rebalance.

Figure 1: Market falls leave you underweight growth assets

Rebalancing

Source: Albion Strategic Consulting

Rebalancing i.e. buying equities to realign the portfolio with its allocation target, helps to ensure a quicker recovery back to where you started.  This is because the breakeven price of your equity holdings is now lower.

So, let’s now assume that you rebalance by taking £1,000 from your defensive assets and buying growth assets to get you back to a 50/50 split (left hand grid below).  You can buy 16.7 units at £60 with the £1,000 raised.  To get your portfolio back to its starting value of £10,000 your now 66.7 global equity units need to rise 50% to £90 per unit (middle grid).  However, an un-rebalanced portfolio (right hand grid) only rises to £9,500 with this 50% rise.  In fact, to get back to a portfolio value of £10,000 and un-rebalanced portfolio requires a rise of 67% in the global equity units to £100.

Figure 2: Rebalancing helps the portfolio to recover faster

Rebalancing

Source: Albion Strategic Consulting

Even if the markets fall again after rebalancing, the opportunity exists to rebalance again, likewise further reducing the rate of return required to get back to where you were compared to un-rebalanced portfolios.  That takes courage and discipline, when your emotions are telling you to do the opposite.

The issue of a potential rebalance on the back of large market falls is certainly being considered and don’t be surprised if we raise this with you.  You now know why.  Remember, if you are drawing an income from your portfolio, withdrawing from bonds can get you closer to your target.  Likewise, if you have incoming cashflows, this too can be used to buy growth assets.

As David Swensen, CIO of Yale University’s Endowment and one of the world’s most highly respected institutional investors states[1]:

‘The fundamental purpose of rebalancing lies in controlling risk, not enhancing returns.  Rebalancing trades keep portfolios at long-term policy targets by reversing deviations resulting from asset class performance differentials.  Disciplined rebalancing activity requires a strong stomach and serious staying power.’

Do you really need to rebalance?  The answer for most investors is likely to be ‘yes’ when the time comes.  If we feel a rebalance is necessary, we will be in touch to discuss this with you.

As ever, please feel free to give us a call if you have any questions.

Risk warnings

This article is distributed for educational purposes only and must not be considered to be investment advice or an offer of any security for sale. The reference to any products is made only to make educational points and must, in no circumstances, be deemed to be any form of product recommendation.
This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed.

It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

[1]    Swensen, D., (2000) Pioneering Portfolio Management.  New York: The Free Press

Want to Win in Negotiations? You’ll Need These Three Tools

Laid out in this article are the three key tools you need to master in order to win in negotiations.

Over the years we’ve observed that success – in business and in life – often results largely from knowing what skills work extremely well and then practising those skills, a lot.

That seems to be especially true when it comes to negotiating. You can almost always get what you ask for – if, that is you are able to ask the “right” way. And we find that highly successful self-made multimillionaires, high-caliber professionals and other high achievers are typically extremely skilled negotiators.

  • It’s important to understand the full range of issues at play during a negotiation.
  • A mindset that seeks a win-win outcome is ideal.
  • Know your need and how to “read” the other side.

Click the image below to read the full article:

How to Win in Negotiations

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

 

Free Up Your Life: Work Smarter, Not Harder

This article delves into how you can free up your life by working smarter, and unlock the possibilities that come with the extra time available.

168 hours. That’s how much time any of us has to accomplish our tasks and goals each week – at work, at home and out in the world.

Sleep seven hours per night and that window closes to just 119 hours.

  • Streamline how you perform tasks – especially the routine ones.
  • Automate as many steps as you can by removing the human element.
  • Outsource tasks and duties to a virtual assistant.

Click the image below to read the full article:

Free Up Your Life

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Don’t Leap Before You Look! The Benefits of Thoughtful Action

This article explores the benefits that come with the use of thoughtful action along with how quick-thinking is perceived and rewarded.

When people are confronted with adversity, opportunity or both, they often react quickly – with the intention of dealing with the situation rapidly and moving forward. These reflexively gut-driven responses are often rewarded by our culture, which praises the “fast-acting-do-er” who “gets the job done” or “puts out fires.”

Trouble is, rapid action can often result in adverse outcomes.

  • Quick responses to problems and opportunities don’t always lead to good results.
  • Thoughtful action rooted in your goals and in deep insights into a situation can create much better outcomes.
  • Accept your emotional reactions to big-moment situations – but don’t let them drive your decisions.

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Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

The Need for Wealth Management Before and After You Sell Your Business

This article puts a real emphasis on the importance of carefully considered wealth management and in particular, the benefits of such planning when you choose to sell your business.

Effective wealth management should be an important aspect of all stages of your career. That’s because wealth management is designed to coordinate a broad range of components of your financial life over time – from investments to estate planning, asset protection planning and charitable giving – around your needs and wants. It’s also designed to coordinate a team of experts to help deliver the financial outcomes you seek.

  • A windfall from the sale of a business can present investment management problems that must be addressed.
  • Estate planning can become a big issue if you sell your business for a lot of money.
  • Assets also should be protected post-sale.

Click the image below to read the full article:

The Need for Wealth Management Before and After You Sell Your Business

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

When Selling a Business, Failing to Plan Is Planning to Fail

This article takes a good look into why planning when selling your business can help you to be all the more successful. Let this article help to shape your actions and ensure your personal wealth is also protected when you consider selling a business.

The goal of many successful entrepreneurs is to sell their companies for top dollar – maybe in the near future, maybe decades from now. Successful sales not only validate owners’ skills and hard work, but also tend to make entrepreneurs a whole lot wealthier than ever before.

Unfortunately, many of those entrepreneurs may be in for a rude awakening. The fact is, far too many entrepreneurs these days – even some who are trying to be proactive and get set up for success down the road – are not prepared to get the most out of selling their companies. The reason: They haven’t taken a few key steps that can position them for the outcomes they most want.

  • Most entrepreneurs who want to sell their companies don’t have formal plans in place to ensure they get top dollar, based on our experience.
  • Even business owners who have transition plans usually don’t focus on maximising their post sale personal wealth.
  • Don’t leave money on the table – make sure your planning is comprehensive.

Click the image below to read the full article:

Click here to read about how to successfully plan to sell your business

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

 

 

The Art of Dealing with Successful Toxic Narcissists

Have you ever felt like the world revolves around you? Congratulations – you may be a narcissist!
Don’t fret – you’re in good company. Everyone of us can be a narcissist sometimes. In business, narcissism can be a good thing that can help fuel success – in the right dose, that is.
Narcissism runs along a spectrum, from healthy to toxic. Dealing with healthy narcissists can be relatively easy. On the other hand, toxic narcissists can be very complicated and problematic to deal with.
What’s more, we find from experience that some very wealthy and powerful people are toxic narcissists. That means you may encounter such people on your own path to success.

  • Some wealthy and powerful people are toxic narcissists – which means you may have to learn how to deal with them to get what you want.
  • Confronting them and trying to change their minds is a strategy that is likely to fail.
  • Outthinking them and using their need to be flattered to your advantage can be key to meeting your own agenda.

Click the image below to read the full article:

Click here to read The Art of Dealing With Successful Narcissists

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Stress Testing for Successful Business Owners

As a successful entrepreneur, you’ve probably engaged in business planning to some extent to help you get your company moving in the right direction. But how confident are you that your planning is set up to deliver the results you expect, want and need?

  • A stress test looks for any big gaps between what you aim to achieve as an entrepreneur and the actual results your current strategies are likely to produce.
  • The human element – your unique situations – is a key focal point of effective stress testing.
  • Exit planning, asset protection planning and retirement planning are three major areas that entrepreneurs tend to stress test.

Click the image below to read the full article:

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.