Selling Your Business - What Would Sam Zell Do?
Keywords: business broker, merger and acquisition, sell a business, succession planning, investment banker, M&A
If you were thinking of making an investment it might be a good idea to watch how Warren Buffet does it. If you are going to sell your business, maybe you should emulate Sam Zell, multibillionaire founder of Equity Residential (EQR). He is selling his company in one of the largest private equity deals ever.
Sam agreed to take an initial offer from Blackrock Private Equity at $48 per share with a break-up fee of $500 million. EQR has 292.13 million shares outstanding, resulting in a total bid of $14.02 billion. This is where most privately held business owners stop. They put the word out through their professional network, get an introduction to an owner of another related business, and begin the process. If they get an offer, it is low and is driven down during the due diligence process because there is nothing to stop this behavior from a single buyer.
Back to Sam Zell. Sam tells his investment bankers to continue to solicit more buyers. Surprise, enter Vornado with the backing of a couple of very large private equity competitors of Blackrock. Their first counter offer is $52 per share. It goes back and forth with these heavyweights slugging it out. When I last checked, Blackrock had increased their bid to $56.35 per share, making the total bid $16.46 billion. That is an increase of $2.44 billion over the initial bid.
We tell our clients that a competitive bid will produce a 20% premium or more over a single bid. In the case of a single non-solicited bid, the differences can be much greater. This one sits at a 17% premium over the initial offer. The process will net the shareholders about an additional $2.5 billion.
What can we learn here? Blackrock is a very smart buyer. They were trying to buy at a bargain. When they made their first offer they knew exactly what EQR was worth. Sam Zell is a very smart businessman. He knew that getting multiple buyers involved is the only way to maximize the sale proceeds for himself and his shareholders.
If you are a business owner and are approached by a buyer, do not think that your lawyer or accountant is going to do for you what the investment bankers did for Sam Zell. They will not contact hundreds of potential buyers and create the soft auction required to drive up your selling price.
Don’t get me wrong. Your attorney and your CPA will play critical roles in your business sale with their contract work and accounting work. However, the role of your investment banker or merger and acquisition advisor is to bring the right buyers to the table and then assist them is seeing the full value for your company.
Dave Kauppi is president of Mid Market Capital, Inc. MMC is an M&A advisory firm focused on middle market strategic business sellers. Dave a licensed business broker and a member of IBBA and the MBBI. Contact (630)325-0123 davekauppi@midmarkcap.com or www.midmarkcap.com
Previous Articles Highlighter:
Getting A Perfect Skin Bronze (1)
Keywords: skin bronze When making a trip to the beach, you usually go equipped with several things. A towel, a hat and sunglasses, a big bottle of sun block, comfortable clothes and slippers, lots of water and, if you're planning to spend most of the day there, maybe a chair and a large umbrella.
Keeping Your Shoes Looking Good As New (2)
Again, this does not need a colored polish. Simply buy some clear polishing liquid for leather shoes, both fake and real. For those hard-to-clean suede shoes, medium textured sandpaper can clean up the material and make it look almost as good as new.
Shopping For Radio Controlled Helicopter - Tips To Help You Choose (3)
Gas helicopter is for advanced rc pilot. Electric helicopter - Early electric helicopters released are expensive but later models are more affordable. This makes electric helicopters more popular than any type of helicopters in the market.
Hair Pulling Is A Creative Way To Cope (4)
How difficult is it for you to think about letting it go? Once you've come to terms with your feelings, its time to stay with and live with your own truth.
Make Prescription Lenses Fashionable With Sun Clips (5)
And since they barely take up any space, you can even carry them with you all at once. Sunglassology.com provides you with information on all kinds of Sun glasses.
Dreams Of A Million Dollar Wardrobe (6)
. 1. Make sure your day-to-day clothes are cared for by keeping the following items close-at-hand: Spot remover for small stains A good clothes brush to remove dust and lint A sewing kit for minor rips and repairs A good quality stream iron to remove wrinkles Plastic garment bags for storing out-of-season clothing.
Wishing For Practical, Affordable Solar Power (7)
Keywords: solar power Solar power has been available for decades. Safe, relatively clean energy, but the cost of the panels has long been too high for the average consumer. They're also the one problem with solar energy, for those wondering about the relatively clean energy part.
Choosing An Obedience Training Class For Your Puppy Or Dog (8)
If a trainer cannot provide references or fails to answer your questions satisfactorily, consider the possibility that you may be able to train your own pet just as effectively in the comfort of your own backyard.
Common Meanings Of Cat Behavior (9)
A common behavior that almost all cats do is push their heads into any type of object that will allow them to do it. You've probably seen your cat do this before, probably against table legs, TV stands, or another object.
Top Types Of Investment Properties (10)
.. Golf Course Land: Golf is a great sport, enjoyed by multitudes of people nowadays. Lately, there has been a growing trend of buying property on or near a popular golf course.
Newer Articles Highlighter:
The Most Useful Golf Cart Accessory (1)
Installing such accessories as lift kits, alloy wheels or racing-style steering wheel can transform an ordinary golf cart into a very interesting and useful thing. The Golf Cart Concept Basically it's a small vehicle with three or four wheels.
Starting A Business Over 50 (2)
Fred: It seems that with all the medical advances and a stronger focus on healthy living; older people are motivated by the prospect of living longer. Lyna: Boy, times are changing!
What Best Execution In Equity Trading Really Means - Part 1 (3)
In any case, the quality of execution must always be viewed from the customer's perspective, not the firm's. This paper discusses the concept of best execution in that light, the regulatory environment in which it is defined, and examines a number of approaches for the investor to obtain the best execution possible.
Sandyport Beaches Resort: A Little Worn But Comfy (4)
The staff were friendly and the front desk did everything they could to make our experience hassle free. The people who work at the front desk are very helpful and nice.
How The ATV Snow Plow Can Help (5)
For example, it can be used for such things as moving leaves and dirt on projects you might be doing during the other warmer seasons. The strong yet compact body of the this snow plow makes it the idealistic choice for you.
Seven Tips For An Active Network Marketing Downline (6)
An autoresponsder is a great tool to use for this. You can send your downline motivational quotes, techniques that you use that are successful, inform them of new resources they can use for their business, etc.
Getting To Old Or Too Tired To Play Sports? Start Collecting Instead! (7)
If you are into NASCAR check into this area of sports memorabilia, you will find an item for whatever racer you like. Some other sports collectors keep items that relate to their individual recreational sport such as fishing or golf.
What Are The Implications Of Smoking While Breastfeeding? (8)
Smoking as few cigarettes as possible is obviously more preferable and it has been shown that using nicotine replacement products is better than smoking. Under no circumstances should you smoke while using nicotine replacement products as the levels of nicotine would possibly become dangerously high.
What's The Big Deal With Copywriting Training? (9)
Sales will not be soaring for that product as consumers were not aware of its benefits and how it would dramatically improve their lives. Only through a great sales letter can optimum sales be achieved.
In The Bay Area, Virtual Office Space Is Your First Step To Success (10)
What is it? The idea is to offer full office services to small businesses and entrepreneurs, on either a short-term or long-term basis; this lifts the burden of agonizing over space requirements and overhead, and frees business owners to concentrate on refining, adjusting and marketing their ideas to the consumers of the world.
Permalink to Selling Your Business - What Would Sam Zell Do?