Selling Your Company | Owner Exit Strategies | Lantern Capital Advisors

A Sale To A Third Party (selling your company to a strategic or financial buyer)

There are multiple options for owners to consider when investigating owner liquidity strategies or exit strategies for a business. Planning for the owner liquidity event, desirably 5 years of more in advance, affords an owner the ability to achieve the maximum value for their company. Lantern Capital Advisors helps entrepreneurs and businesses prepare for and execute various owner liquidity strategies according to our clients needs or desires. Because of our consulting model approach, we can investigate multiple concurrent strategies for our clients in order to achieve the best liquidity outcome for the entrepreneur. Our fees are not determined by the amount raised, or the value of the company. We work on behalf our our clients in order to maximize the liquidity strategy.

One popular strategy and alternative that Lantern Capital Advisors helps companies to evaluate and consider in regards to providing owner liquidity include is:

A Sale To A Third Party (selling your company to a strategic or financial buyer) - At any one time, approximately 20% of businesses are for sale. Out of that number, only 25% of those businesses sell. In clearer terms, only 5% of businesses are likely to be sold to a third party. Percentages of success increase when revenues exceed $10 million dollars a year. Often times the valuation is higher for these businesses because the company is purchased by a strategic buyer who realizes the “value” of the business, or the company is in a growth market. However, when an owner sells their company to a third party, typically children or employees aren’t protected, company culture changes, and control over decisions for the company are eliminated.

Sometimes these opportunities appear out of the blue, and a competitor or strategic buyer has inquired about the entrepreneur’s interest in selling the business. Lantern Capital Advisors can quickly put together an overview of the business and the financials in order to present to the inquiring entity.

In addition, as corporate financial advisors, Lantern Capital Advisors helps companies evaluate the offer, investigate alternatives, and determine the best solution for the business owner. Because we offer our services on an hourly, consulting model basis, our compensation is based on our time, and not a percentage of the value of the business.

How Lantern Capital Advisors is Compensated

Unlike most investment bankers and advisors, Lantern’s compensation is not based on the overall purchase price of the Company. While fees under the Lehman Formula or Double Lehman Formula are lucrative, Lantern Capital Advisors believes this compensation structure presents a conflict of interest for our firm and works against the best interests of the management team. Like all of our projects, Lantern Capital Advisors charges an hourly fee for our consulting time and our success rate for delivering financing alternatives for entrepreneurs and management teams surpasses those of investment bankers and brokers. Lantern’s process for selling a company can run as an exclusive process, or a concurrent engagement while evaluating whether a management buyout would be a feasible alternative for an owner.

Sample Calculation of Lehman Formula vs. Lantern Capital Advisors Consulting Model.

Investment Banking Fees Vs. Consulting Fees: Learn About How We Raise Capital For High Growth Companies

Management Buyout

Leveraged Buyout

Tunstall Consulting

Corporate Finance Consultant

Selling Your Company:

Owner Exit Strategies

A Representative Alternative

Lantern Capital Advisors represents owners and management teams to prepare for, distribute, and evaluate, and negotiate offers and successfully achieve Owner Exit Strategies.

Learn About: Company Exit Strategies

Learn More About Buying Out A Partner Or Business Owner

White Paper Library:

Management Buyout Strategy

“Creative Management Buyout Strategies”

Download from CFO.com

August, 2008

Chris Risey - Atlanta

Abstract:

Private equity firms particularly those that focus on buying smaller companies (less than $100 million in value), will often structure the financing of a buyout utilizing limited amounts of their own equity and aggressive debt structures. While such an approach can create spectacular returns for their investors, management and the sellers can often end up feeling shortchanged. Thankfully, owners and managers can use their own creative buyout strategies to create substantially more value for both buyer (management) and seller (owner).

Selling Your Company

“Selling Your Company: How Selling Your Company To Management Can Be An Alternative Exit Strategy”

Download from CFO.com

April 2010

Chris Risey - Atlanta

Abstract:

Business owners often overlook selling their company to management as a possible exit strategy. But for solid companies with good cash flows, selling your company to management may yield a higher financial value for the owner and a much brighter future for the business, management, and the seller. This white paper discusses the benefits of the strategy of selling to management, and illustrates it with an example of a company that successfully completed a leveraged management buyout after proactively pursuing other alternatives.

Helping Companies Explore “What if?”

Corporate Finance Consulting • Corporate Financial Planning

Financial Advisory Services • Raising Capital • Business Plans • Management Buyouts

LANTERN CAPITAL ADVISORS HAS EXPERIENCE SUCCESSFULLY HELPING GROWING ENTERPRISES AND ENTREPRENEURS WITH REVENUE THAT TYPICALLY RANGE FROM $5 MILLION TO $150 MILLION EXECUTE THEIR OWNER LIQUIDITY STRATEGY. WE DO THIS ON AN HOURLY CONSULTING MODEL BASIS.

What’s Your Company Exit Strategy?

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