How Recapitalization Benefits Business Owners

It is important for business owners to consider all available opportunities when envisioning long term goals. This is important because they have a lot of wealth tied up in their companies. For instance, when in need of liquidity, many business owners prefer recapitalization. It is a powerful tools of corporate finance, allowing them to reduce the amount of wealth at stake by selling a portion of their company to a private equity firm or an outside investment firm. 

Through recapitalization, capital infusion happens, again allowing the business owners to diversify their holdings without having to lose control over the company. There are several ways in which outside capital can benefit a company; however, the benefits will majorly depend on the goals of the owners and the company’s development stage. 

If you are a business owner and you are opting for recapitalization, it will provide your business with the much needed capital for various plans such as, diversifying personal portfolio, growing the company, expanding business in new markets and so on. 

Here are top three reasons why recapitalization can prove beneficial for your business:

• Even if everyone has been pushing you to retire because you have been working at your business for decades, you don’t necessarily have to. You can take some stress off by choosing to recapitalize the business. You will reduce your involvement to a great extend but also stay in control.

• This is a great move if you don’t want the company culture to change which usually happens in a buyout. 

• Third benefit is that you can get the required liquidity to seize various opportunities available in the market. 

Whether it is recapitalization or business acquisition, it is recommended to hire experts who will give you the best advice.

3 Benefits of Investing in Business Valuation Services

Business valuation is one of the critical tools in a business owner’s arsenal. Business valuation is not just important when you are selling your business. It is an important task that needs to be implemented throughout the business cycle because it offers various benefits in running a business smoothly.
If you are a business owner and you are planning to invest in business valuation services, here are some of the benefits that you can enjoy:
1.    It will give you a better knowledge of your company’s assets. You cannot work with estimates because it will mean generalizing everything. You need to gain specific numbers through the valuation process so that proper insurance coverage can be obtained or reinvestment can be done in the company in the right manner. It will also give you a clear idea of how much you can sell your company for, if the need arises.
2.    You will get a better understanding of your company’s value. For instance, if you are contemplating selling your company, you need to know its true value in the market. This process needs to be completed even before the business has been put up for sale. This is because if you know the value of the business beforehand, you can achieve a higher selling price.
3.    Even during mergers and acquisitions, it helps to know the real value of your business. If a big company wants to purchase your business, you can show them the value of your business as a whole.
Whether you need business valuation services or you want the right management buyout strategy for your business, it is necessary to seek expert help. There are several companies that offer these services so make sure you choose the right one in order to get desired results.

What are the benefits of company divestiture for businesses?

Mergers and acquisitions are given a lot of importance for growth of business organizations. It plays a vital role in the corporate strategy and maintenance of the business portfolio. However, when a company diversifies into various businesses and its corporate portfolio becomes huge, it becomes difficult to maximize returns on capital. Also, it gets difficult to take advantage of new opportunities for growth.
Company divestiture plays a vital role in restructuring of the organization’s corporate portfolio and maximizing growth. Compared to M&A, companies don’t give much importance to divestitures. They fail to realize that if this activity is carried out perfectly, it can provide huge benefits in terms of future growth, shareholder value and cash flow.
Why divestiture is done?
There are various reasons why a business owner might want to divest a business. From restructuring the business portfolio to short-term cash generation, irrespective of the reason, the main aim of divestiture is to get the best return.
Organizations should do divestiture in an accelerated time frame in order to get optimum return from it. It is important to ensure that the to-be-divested units are configured in such a manner that it gives out maximum appeal to potential buyers.
In order to develop divestiture strategy, companies need to assess their corporate portfolio comprehensively. They need to identify opportunities for value creation. From aligning assets with the best opportunities for businesses to development of a sequencing strategy for divestiture transaction, this process entails various steps.
There are several companies that offers services related to mergers and acquisitions in India. It is recommended to do some research and find a reliable option. You can either ask for references or shortlist two three companies on your own. Compare their charges and portfolio to make a final choice.

Why are business valuation services required?

There are various purposes for which business valuation is required. From the sale or purchase of a business to settling legal issues related to a business, there are various reasons why you would need this service. But before we delve into the importance of business valuation, let us first understand what it means.
Business valuation is basically the process of determining the estimated value a business has in the market. It acts as a valuable tool for business owners, investors as well as stock owners. Used for buying/selling agreements, estate planning, mergers and acquisitions, pension plans and even bankruptcies, business valuation services hold a lot of important for businesses.
Why is it important?
It is the heart of a buy-sell agreement that is instituted between business owners. If you are a business owner preparing for a sale or in a legal situation that needs detailed valuation, this service will be of great importance.
It is also conducted when shares are bought or sold to employees, gifts are planned to heirs, adequate key man insurance coverage is provided or a base needs to be created for compensating key non-family management. Business owners also use this method for conducting valuation for tax purposes or transfer of ownership. It is also required for insurance and financing purposes. 
There are several factors that need to be considered when conducting business valuation. From earnings of the business and availability of assets to history of the enterprise from inception and other intangible values, various factors need to be taken into consideration.
If you are planning to seek services such as business valuation, M&A advisory or private equity advisory, make sure you are choosing professionals to work on the same. Only a team of valuation or advisory experts can deliver you desired results.

Tips to Consider in Business Acquisition

If you are planning to acquire a business, here are few tips that can help you in the process:
•    Make sure you are doing your research and due diligence before you go ahead with business acquisition. For instance, if you are buying a business, you need to research about the business and check all the details, including the letter of intent, confidentiality agreement, leases and contracts, tax returns, financial statements and other important documents.
•    Don’t hesitate in getting professional help. You should hire an attorney to look into the legal documents and legal matters and an accountant to look into the accounts of that business. You will also need an investment banker, valuation expert and representatives from sales, marketing and finance in the team for help.
•    Whether you are acquiring the talent or keeping the business intact, it is very important to respect what the team has built in terms of customer relationships and products. Don’t lose the respect or upset the customers.
•    Don’t forget to secure the digital rights of the business you are acquiring. From the email IDs and passwords to the web domains and social media accounts, everything needs to be with you. The email accounts from customers, stakeholders and vendors should also be with you so that you can inform them about the acquisition.
•    If you want to acquire a business but don’t have cash at the moment, you need to seek alternatives to cash. Try looking for funding in different places. You can use the seller’s assets, use an ESOP (Employee Stock Ownership Plan) or buy co-op.
Business acquisition has become a standard approach to business diversification. It needs to be done in the right manner and therefore, it becomes important to find professionals who can help you with it.