Take Five #098: How to use Return on Assets (ROA) during the SMB acquisition assessment process, and more
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Codely v2.0 public release is here
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What has changed in our latest release?
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All new features available for all public channel users
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Coding collaboration with over 200 users at once
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Real-time code save every 0.1 seconds
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Take Five #098: How to use Return on Assets (ROA) during the SMB acquisition assessment process, and more
1. Financial Strategy Interview: Pushing through the $3M revenue milestone aka The Messy Middle
Entrepreneur and financial expert Greg Crabtree talks about navigating the growing pains associated with the $3M revenue mark, plus common founder mistakes like cutting corners on accounting and labor management, and more.
2. TED Talk: EtA owner focuses on people, then profits
Thanks for sharing, Karen Spencer!
3. 5 ways buyers get played during a business purchase
The small and medium-sized business (SMB) acquisition market is still the wild wild west in many ways. Sellers and buyers have a lot of competing intentions when walking into a deal making trust difficult to develop. While plenty of upstanding sellers just want to offload their company (and life’s work) to a reliable buyer, deciphering which players in the industry you can trust is difficult, especially for new acquisition entrepreneurs with little experience.
As a deal guy who has spent years buying businesses and advising on deals, I’ve seen the many ways buyers can get played in their SMB deals. If you don’t stay on your toes, you could get pulled into a deal that isn’t what it seems. Keep your eye on these five situations to make sure you don’t get played in your deal.
Read Guardian Due Diligence’s list here.
4. How to use Return on Assets (ROA) during the SMB acquisition assessment process
Both ROA and ROIC are intended to evaluate the efficiency and profitability of a company, but they differ in what they measure and how they're calculated.
ROA measures how effectively a company is using its assets to generate profit, and is calculated by dividing the company's net income by its total assets. The result indicates how much profit a company generates for each dollar of assets it owns.
On the other hand, ROIC measures how effectively a company is using its debt and equity capital to generate profits, taking into account the capital invested by debt holders and shareholders. You calculate ROIC by dividing the company’s after-tax operating profit by invested capital (debt plus equity).
Find Silverwave’s post here.
5. Cap table construction, search parameters, first-week post-close to-do’s, and other search fund FAQs addressed
In my opinion, the short answer to this question is a resounding “no”: Though there has indeed been explosive growth within the search fund ecosystem over the past few years (as measured by search fund formation activity, the number of active investors, the number of transactions being consummated, the amount of capital being deployed, and so on), the number of searchers in the market relative to the number of suitably sized businesses in North America represents a proverbial “drop in the bucket”. In any given year, the number of search funds actively pursuing an acquisition is likely measured in the dozens, whereas the number of small businesses that meet the size criteria of most search funds is likely measured in the hundreds of thousands.
Read the rest of Mineola Search Partners’ article here.
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