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companies typically have enough critical mass to be of interest to both strategic acquirers and PE funds. Also, because these deals are larger than small business and sole proprietorship deals, M&A transaction fees are large enough to justify the involvement of an investment banking firm.
    Large company (and beyond)
    Companies with revenues north of $500 million are considered large, huge, gigantic, and, if revenues are well into the billions, Fortune 500. Although transactions are typically very large, the fact is very few companies are large. The middle and lower middle markets are far larger.
    Firms in this category typically use bulge bracket investment banks. These entities are the largest of most sophisticated of investment banks. They also charge enormous fees.
    The term bulge bracket originates from the placement of a firm’s name on a public offering statement. Public offerings of securities typically involve multiple firms, and the largest firms, or managers of the offering, want their names to the left, away from the names of the smaller firms. The placement of the names looks as if they were bulging, hence the moniker.

Chapter 2
    Get ting Ready to Buy or Sell a Company
    In This Chapter
    Knowing why companies often sell or buy other companies
    Preparing your company to engage in M&A
    O n Seller’s side, the conversation begins with any one of numerous comments: “I think it’s time to retire,” or “I’ve taken this company as far as I can take it,” or maybe even, “This company is about to crater; I want to get out.”
    On Buyer’s side, the conversation also begins with any one of numerous comments, but comments of a slightly different variety: “Organic growth isn’t enough. We need to consider growth through acquisitions,” or “I think buying that product line might be easier and less expensive than building one from scratch,” or maybe even, “Those guys are killing us; let’s see if we can buy them out.”
    These conversations are often held with advisors — lawyers, accountants, wealth managers — or other executives. Most often, a set of questions follows: “How do we do this?”, “What’s the first step?”, and finally, “Do you know anyone who can help us?”
    The decision to sell a business or to make an acquisition is often confusing, frustrating, time consuming, and expensive. But never fear; in this chapter, I break down the early considerations for selling or buying a company so that they feel less intimidating.
    Considering Common Reasons to Sell
    Many people, including many business owners, think the cash flow from a business is the only source of wealth creation. They overlook the (quite often stunning) wealth that company ownership can create. This section explores the reasons an owner may want to sell his business.
    Trying to time the market — that is to say, trying to set your transaction to close when the economy is roaring — rarely works. Instead of trying to guess when Buyers are going to pay high prices, Sellers should focus on running the business, increasing sales, controlling costs, and improving profits. The best time to sell a company is at the intersection of salability and the need/want to sell the business and not necessarily when the market is booming.
    Retirement
    Retirement is one of the top reasons business owners decide to sell their businesses. The older some people get, the more they hear the siren call of Florida or Arizona. Or the Carolinas. Or . . . well, any place that doesn’t involve work sounds enticing. When an owner is considering moving on to the next phase of life, that phase of life often is fueled by the proceeds from selling his business.
    So the question then becomes, “How do I know when it’s time to retire?” Here are some typical issues business owners consider when deciding whether to head off into the sunset:
    Family: