We Translate the Complex Technical and Transactional Aspects of Mergers and Acquisitions in Ways that Achieve Successful Outcomes

Why Choose Del Lingco International Mergers and Acquisitions?

Del Lingco International M&A specializes in the sale and valuation of mid-sized privately held companies. We have successfully completed thousands of business transfers for business buyers and sellers since our inception in 1958.

We know and understand your thoughts, fears, and desires. We, too, are entrepreneurs and will do everything in our power to ensure your success. Unquestionably, the most important aspect in everything we do is confidentiality. You can rest assured that every step along the way to your financial independence will be treated confidentially, professionally, and courteously. Welcome to the world of entrepreneurship.

Del Lingco International Mergers and Acquisitions

The difference between a Business Acquisition & Merger
People often use the terms business acquisition and merger interchangeably, yet they are two separate types of transactions. If two businesses are joining forces, it’s a merger; however, if one business is buying another, it’s an acquisition. The reason many companies talk of a merger as opposed to an acquisition is because acquisitions can sometimes be viewed with negative connotations. For years, media and movies have often used the acquisition term to portray a hostile takeover, which unfortunately can cause the public and business industry to have misconceptions. Mergers, in contrast, tend to be seen in a more positive light. What other things do consumers and entrepreneurs need to understand about business acquisitions and mergers?
Acquisitions
Occur when one company steps in and buys out another company. In this situation, the company being purchased will no longer exist, and any assets owned will be absorbed by the purchasing company. The company purchaser also assumes all aspects and traded stocks of the purchased company. There can be several reasons an acquisition takes place, and not all are bad. Most take place when a company or small business is in trouble or distress. Sometimes a parent company or related industry business will acquire a business that has a large division that is no longer relevant but will purchase it to form a new business. In other cases, a successful small business may be expanding and will acquire another business within the industry that may not be performing well. For many acquisitions, the purchasing company or investor is viewed as a “Savior” to the struggling business, and employees of that business may not have to lose their jobs in many cases.
Mergers

Take place when two businesses combine resources to form a new and better entity. In most cases, the two organizations being joined are of equivalent size and industry, thus often referred to as a merger of equals. The stock of each independent company must be surrendered during a merger, and stock in the newly formed company will then be issued. Often, companies choose to call a transaction a merger even when it is an acquisition, as the company purchasing a business doesn’t want the public to form negative connotations surrounding the transaction.

Established 1958

As M&A Advisors in Houston, Del Lingco International Mergers and Acquisitions has helped investors & entrepreneurs buy and sell their businesses for over 60 years. We are well-seasoned and have managed business sales across many different industries in a variety of different situations.

Confidentiality

Unquestionably, the most important aspect in everything we do is confidentiality. You can rest assured that every step along the way to your financial independence will be treated confidentially, professionally and courteously.

Business Appraisals
We translate the often complex technical and legal aspects of business valuation and economic analysis into documentation that is understandable and defensible.

Our Certifications

Protecting Confidentiality

Without a doubt, the most important aspect in selling your business is confidentiality. Premature disclosure to employees, customers, competitors, suppliers, lenders and the general public can only have detrimental effect on business and the resulting value of it. Del Lingco will employ strict procedures to control disclosure until you’re ready. There is no reason for anyone to know until after closing.

Mergers and Acquisitions

The sale of mid-sized and larger businesses is frequently purchased by other businesses or corporations. Depending on the size, complexity and nature of your business or industry, Del Lingco may market your business to the logical acquirers.

Product-Extension
Merger or Acquisition

This is when a functionally similar company buys a business with a product line which will complement the acquiring company. For example, a wholesale produce company buys a wholesale frozen food business. They functionally do the same thing and may sell to the same customer base. The resulting synergistic integration allows for premium pricing and value.

Recasting Your Financial Statements

The first step in the selling process is for your Del Lingco associate to recast your financials. This is done after an extensive meeting where we get to know you and your business. We know your income statement is prepared to reduce income and therefore taxes. For example, a business may show a non-cash expense such as depreciation in excess of what would be necessary for a reasonable replacement fund. Also, the owner may be receiving a salary that is either too high or too low for the work being performed. Both of these situations require adjusting the financials to show a buyer what he or she could make from the business. Another adjustment is required for interest expenses since the new owner will have a different debt and equity structure than the current owner. There will probably be other expense items requiring adjustment, which are not necessarily important to the business operations but are considered important to the owner as additional benefits or compensation.

Also, the balance sheet will typically require adjustment. The book value of furniture and equipment may be almost fully depreciated but has a much higher fair market value. The balance sheet may also show other assets such as franchise fees or real estate at cost, which may have actually appreciated in value. however, there may be other assets as well as liabilities, which should be eliminated because they are not essential elements of the business operations.

These and other adjustments are made to more accurately reflect the true fair market value of the assets, and the income statement is made to show the real profit potential to a new owner/operator. All of these steps enhance the worth of the business and are intended to maximize the proceeds for the seller. Del Lingco has the expertise and the experience to get you the most cash for your business.

Horizontal Merger or Acquisition

This is a buyer who is in the same or similar industry and may be a direct competitor. This avenue would only be pursued after discussions with the seller. Usually, this is not the best buyer for a profitable business but rather for liquidation purposes. Horizontal acquirers usually pay the least.  Sellers should understand that value is based on the anticipated profits the buyer hopes to realize. Only through careful analysis and understanding of all the hundreds of variables associated with business buying and selling can the maximum amount of seller proceeds be realized. For many years, Del Lingco has been an industry leader and knows well the intricacies involved in business transfers.

Call today for a confidential meeting to discuss your business needs and desires. We are here for you.

Conglomerate Merger or Acquisition

Some acquirers adhere to the philosophy that a wise investor diversifies his portfolio and thereby reduces his risk. This is the thinking of this type of investor. Certain management and overhead expenses can be reduced but to a lesser degree than our other examples. This is strictly a “buy by the numbers” type buyer and usually will not pay the premium or realize the value as the other examples mentioned above.

Finding the Right Buyer

The key to finding the “right buyer” and getting the most value for your business is maximum exposure to qualified buyers. Del Lingco maintains a large database of pre-qualified buyer/prospects, which is constantly updated through extensive advertising, participation in various networks, websites, and through a large referral source of bankers, attorneys, accountants and other business intermediaries.

Vertical Merger or Acquisition

This is when a company vertically integrates with a company usually “cutting out” the middleman and duplication expenses. For example, a manufacturing company buys a retail operation that sells the same product lane as the acquirer. This is the current trend in American business. It allows for premium pricing and value.

Market-Extension
Merger or Acquisition

This is when a similar company in a different market buys a company in a target market to gain market share or penetration. Premium prices and values are possible due to the economies of scale enjoyed by the resulting union.