Mergers & Acquisitions
Asset Transfer Consultants
Business Plan Review
FAQ FREQUENTLY ASKED QUESTIONS
Mergers & Acquisitions (M&A)... Frequently Asked Questions about Financial Exchange and FEC Services
Does FEC represent sellers?
Yes. FEC will either represent the buyer or the seller, generally the seller. We are effective in either fiduciary capacity.
Is it possible to keep in confidence preparation, negotiations and business transactions?
Yes. We at FEC feel Confidentiality Agreements are a necessary part of most business and property transfers. Our non-disclosure agreements have worked well.
What are the advantages of Growth by Acquisition?
Generally acquiring is less time consuming, more economical, less risky, and easier to finance than are traditional growth strategies. In a well executed acquisition, the acquiring company can take advantage of synergies as the two companies together will be stronger and more profitable than either previous company. Acquisition may be an overlooked shortcut to expansion.
How is FEC compensated for services?
FEC clients generally have several methods to choose to compensate FEC for services. FEC may choose to offer an all or none fee based on a success performance fee (private treaty sale). The all or none success fee varies depending on the size of the acquisition, typically between 2% and 7%, which is due at closing or possession of an asset sale, or upon transfer of stock or promise to transfer. Alternative compensation may include expenses with a lower success fee with recapture of expenses included. Other compensation may be by a pre-agreed compensation dollar amount or barter amount. Projects could have an hourly fee plus expenses.
How does FEC find qualified acquisition candidates?
We use a variety of methods depending on the industry and the situation. Over the past 21 years we have developed an extensive database of buyers, sellers and gray area sellers (those that aren't listed for sale but might consider selling). We rely on referrals, some general advertisement, confidential personal contact and telephone calls to business owners with high integrity that has served us well over the years.
Can FEC help in other acquisition areas?
FEC can assist you in setting your acquisition criteria, assisting to establish a fair value for an acquisition (business valuation), negotiating with sellers, and assisting to complete a deal.
Does FEC assist with tax deferred property exchanges inside corporations?
Yes. For real property asset transfers we have a premium replacement income property service, 1031FEC (www.1031fec.com). This service is for business and income property owners, sellers, investors and their advisors to promote success of property transfer and ownership. Premium tenants-in-common premium income property, farm, development and recreational land for appreciation are located for each client's portfolio requirements. This service is for corporate and individual clients.
How much information is necessary to inform a buyer or seller to allow a timely decision?
We feel that most deals are not completed because of incomplete or inadequate historical details and other information about a business or property. We feel that more information equals time and positive money for all parties. A timely decision should be made with complete detail to assure an accurate decision.
Can business and property esthetics and appearance effect a merger or acquisition?
Generally the most important business function is its ability to produce revenue, cash flow and profit for owners. We have viewed and experienced excellent businesses and properties that failed at a merger or acquisition deal or received a hefty discount because of poor appearance and esthetics. We feel that any expense to repair, paint or clean property can have a 10 to 20 times return of the expenditure expense.
Can an owner save the tax expense when transferring a business or property?
With a FEC property transfer plan with alternatives, one can have multiple choices allowed by IRS rules to transfer property minimizing tax consequences. Many business owners who are aware of the capital gain tax are not aware of the much higher recapture of depreciation tax than can result in alarming tax expense obligations. FEC advises many alternatives to the client, tax advisors and legal advisors. These alternatives may vary as the needs vary of different parties involved in a deal. Asset and stock strategies are many and must be negotiated by experienced business deal negotiators as FEC consultants and Intermediaries before any involved party signatures documents.
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One's property of value inevitably transfers ownership, with or without one's wishes.
Prepare now to save your family wealth. Ken Wheeler
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