Lionel Etrillard

Acquisitions are an exciting, often nerve-wracking step in a business's journey. They signal growth, success, and the promise of something greater but also demand preparation. Signs You Might Be Ready: 1️⃣🟢 Strong Financial Records: One of the most telling signs that you're ready for acquisition is having organized, reliable financial records. A potential buyer will want to see a clear picture of your company's financial health, including revenue, expenses, liabilities, and profitability. If discrepancies exist between your accounting records and operational contracts, you may need assistance to get your books in order. Missing stock option entries, unrecorded leases, or misplaced contracts can be significant red flags during the acquisition process. 2️⃣🟢 Sufficient Data Room: Another indicator of readiness is having a well-constructed data room. A data room contains all relevant documents that a prospective buyer might want to review, such as contracts, financial statements, tax returns, and corporate records. Ensuring all contracts are appropriately manifested and all liabilities are accounted for is crucial. Buyers may use any lack of documentation against you during negotiations. 3️⃣🟢 Aligned Departments: Often, when businesses are running at full speed, internal miscommunication can occur, especially between sales, executives, and accounting. If your sales team has closed deals or executives have made compensation promises that aren't communicated to accounting, your financial records could be incomplete. Aligning these departments is critical to presenting a united and accurate financial story to potential buyers. Steps to Prepare for Acquisition: 1️⃣🛠️ Identify Gaps: Start by identifying gaps in your financial records or processes that might impact your valuation. This can include everything from discrepancies in revenue recognition to improperly amortized loans. Addressing these gaps is essential for ensuring your financials are rock solid and won't cause issues during negotiations. 2️⃣🛠️ Clean Up Liabilities: Make sure any accruals, such as lease liabilities or employee benefits, are fully recognized in your financials. Buyers often scrutinize liabilities, and anything that isn't properly documented could become a point of contention. The goal is to leave no surprises for potential buyers. 3️⃣🛠️ Document Everything: Proper documentation is critical. Make sure every contract, lease, guarantee, and compensation promise is accurately recorded and included in the data room. Buyers are thorough in their due diligence, and missing information can make them question the integrity of your business. Acquisition preparation is about more than having strong sales or a promising product. It requires airtight financial records, complete documentation, and a thorough understanding of your business's agreements and implied risks. Address these areas before acquisition discussions to ensure the best outcome.

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Want to make your business more attractive to buyers? Focus on one thing: Recurring Revenue. Recurring revenue isn’t just another income stream—it’s the backbone of long-term success. According to a Forbes study, businesses with strong recurring revenue, especially SaaS companies, are seeing 3x higher valuations compared to those dependent on one-off sales. As discussed in the Forbes Tech Council, despite the SaaS development challenges in 2024, companies focusing on subscription models and long-term contracts are leading the way. Here’s why: Stable Cash Flow: Recurring revenue gives you consistent income, which translates to peace of mind. Enhanced Valuation: Buyers love businesses with predictable revenue—they see lower risk. Customer Retention: Strong recurring revenue often reflects deeper customer loyalty and long-term relationships. Curious about how recurring revenue can boost your business’s value? Let’s chat. 👉 https://lnkd.in/gDct67gU #BusinessGrowth #RecurringRevenue #SaaS #Valuation #FinancialSuccess #Forbes #PGAdvisors #ForbesTechCouncil #ProfitandGrowth

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Grappling with the complexities of equity compensation and stock options? Understanding the nuances is critical. Here are some key insights from a recent client discussion: 1️⃣ Be cautious with equity instead of cash: If you're offered equity instead of cash, be aware of potential mismatched expectations. The founder might view it as significant value, but if the equity doesn’t translate into liquid assets soon, you might not see the immediate benefit. 2️⃣ Restricted Stock: For early-stage companies, restricted stock can be advantageous. If the common stock is valued at pennies, securing a restricted stock grant lets you lock in capital gains early. The 83(b) election is crucial here—it allows you to pay taxes on the stock at its current value rather than when it vests at a higher value. Filing within 30 days can save you significantly on taxes. 3️⃣ Stock Options: When a company's valuation is already high, restricted stock may come with a substantial tax burden upfront. Stock options offer a way to delay taxes, which can be helpful if you can't afford to pay taxes on a high valuation immediately. While gains are often taxed as ordinary income, the flexibility to manage when you exercise can make options an attractive choice. 4️⃣ Tax Mistakes Can Be Costly: Missing the 83(b) election can lead to serious consequences. One individual ignored the 83(b) election, thinking it unnecessary, only to face a massive tax bill when the company's value soared. They ultimately had to forfeit their shares to avoid the tax burden. This underscores the importance of working closely with a tax advisor and ensuring all paperwork is filed correctly and on time. Key Considerations When Accepting Equity: 💡 Can you afford the tax burden? If not, stock options might be the safer choice. 🔮 Do you believe in the company’s future? If you’re confident in the company’s potential, restricted stock with an 83(b) election could maximize your gains. 🤝 Are you ready for a long-term relationship with the founder? Equity compensation often ties you to the company for several years. Make sure you’re comfortable with the team and their direction. Equity compensation is a powerful tool for aligning interests, but it requires careful planning. If you need additional guidance, we're here to help you navigate these decisions with confidence.

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May is when many private companies finalize mid-year comp plans 💵 Need a reliable 409A valuation? Or has it been over a year since your last? We've got you covered! Scalar's 409A valuations keep you compliant, protect employees from tax penalties, and come with a team that supports you all the way through an audit. https://lnkd.in/gs_CtPNS

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As we approach year-end, here's a helpful guide for General Partners and Limited Partners explaining: - What gets taxed? - What isn't taxed? - Scheduling K-1s - How venture fund earnings are taxed - VC fund write-offs - How Carta can help Check it out below (it's a quick read)!

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Q3 is out and Q4 is in!  This is a great read about Base10's strategic switch showcasing how Carta is simplifying fund administration for emerging managers, which is especially important now rolling into the year-end busy season. 

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Rate cuts will be disastrous; we're seeing a replay of 2007 right now! We constantly hear different reports about the state of the economy, so I decided to break it down into 11 different indicators from various sources and rate them according to how strong, normal, weak, or relatively weak they are. This chart breaks down various economic indicators and shows you where we are with these indicators so you can understand firmly how the economy is trending. I put this chart together almost as much for myself as you guys. Overall, there was a mixed image of the economy, which I interpreted to mean that things aren't going well and would probably get worse.

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VC Market Update: Riding Out the Post-Boom Bumps. 2021's high-flying valuations and growth have given way to a more complex reality. With longer private timelines, tough exit markets, and capital tightness, startups face unique challenges—but also fresh opportunities. For those navigating today’s VC landscape, strategic planning is key. Whether it's balancing growth with capital efficiency or exploring secondaries smartly, there’s a path forward. And with boosts from AI and future rate cuts, brighter days could be ahead!

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Executive Edge | Issue Two: Suite Success. Should a case study approach be used to successfully hire C-level talent? ------- If you're a #cfo currently working in private equity, venture capital (or other investor types), or, you're a business seeking to hire transformational finance talent Camino Search specialises in head-hunting & consulting for investor-backed tech businesses. Globally. #fd #saas #pe #privateequity

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🌱 For founders taking on venture debt, covenants are the fine print you cannot afford to ignore. 📃 They set the boundaries for how you can operate and manage your company’s finances. If you don’t play by these rules, the consequences can be pretty dire. It’s all about negotiating terms that align with your startup’s financial health. Be sure to read the original post by Kruze Consulting to get the full breakdown. Link in the 1st comment. 👇 #StartupFinance

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I've been a bit surprised recently with the number of decent-sized software businesses (i.e. $15M+) that don't have a legitimate VP of Finance or CFO on their leadership team. I think some product and/or industry-expert founders and CEOs view finance as simply "accounting" vs. a strategic partner to help them properly scale the business. This seems to particularly be the case with first-time CEOs. They likely haven't seen "what good looks like" when it comes to a finance leader and the positive impact they can have, so they hire an outside firm or individual to manage their finances...treating it like a "necessary evil." The role is far more critical than that. I've found that the right CFO is a fact-based, unemotional partner and sounding-board for the CEO, and an invaluable resource to other members of the leadership team as they determine strategy, budgets, etc. Plus, referring back to another recent post of mine (https://lnkd.in/eTjvqdnv), having the right CFO allows your company to better represent itself and speak the language of your investor / buyer. P.S. I was fortunate to have two strong partners as CFO at Daxko. Jonathan Sides and Winston Gillum both made a world of difference!

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Monday Momentum: Strategy #16 for a Successful Exit – Maintaining Financial Controls. Strong financial control is the backbone of a scalable, high-value business. Buyers and investors want to see robust systems, clear profitability, and data-driven decision-making. Here’s how to ensure your financial foundation is solid: Tip 33: Appoint a Finance Director (FD) or CFO Bring on a Finance Director or CFO to oversee your financial operations. This leader ensures profitability, manages financial planning, and provides critical insights as your business grows. A strong financial leader signals stability and readiness to scale. Tip 34: Monitor Key Financial Metrics Regularly track indicators like utilization rates, fee rates, and overhead costs. Keeping a close eye on these metrics helps you make informed decisions to maintain profitability and optimize operations. Example: A professional services firm hired a CFO to manage its financial operations and implemented monthly reviews of key metrics. The CFO identified inefficiencies in overhead spending and adjusted fee rates to improve margins. These changes resulted in stronger profitability, which became a key factor in the firm’s valuation during acquisition talks. The takeaway: With financial control and oversight, you not only scale effectively but also demonstrate operational excellence to potential buyers. When it is time to produce a Quality of Earnings report to a buyer pool you will have everything at your fingertips. Ready to strengthen your financial foundation for a successful exit? #MondayMomentum #ExitStrategy #FinancialControl #Profitability #Leadership #CFO #Entrepreneurship #Club33

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💼 Tailored Financial Solutions for Business Owners and Solopreneurs 💼 Running a business requires the right financial strategy—and that strategy isn’t one-size-fits-all. At P&G Advisors, we provide tailored solutions depending on your unique needs: 📊 For small business owners: We keep your books, help you plan for taxes, and implement proven strategies like Profit First and Value Builder to grow your business sustainably. 💡 For solopreneurs: We offer flexible packages. Whether you need tax preparation, tax planning, or quarterly meetings to fine-tune your strategy, we’ve got you covered. The goal? To ensure you're not paying a penny more in taxes than necessary and setting your business up for long-term success. 👉 Ready to get started? Watch the reel and learn more in our latest blog on tax readiness: [https://lnkd.in/gZmJmVNH] #SmallBusinessSuccess #Solopreneurs #TaxPlanning #BusinessGrowth #ProfitFirst #ValueBuilder

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Businesses can be focused on cash flow, backed by private equity, growth (VC), or aimed at long-term holding. But they will all have a different "feel" Cash Flow Focused: These businesses prioritize low overhead and quick returns on investment (ROI), showing little patience for building capacity. Scaling is difficult when cash isn't reinvested. Growth-Oriented: Companies driven by growth capital invest heavily to create the future company today, with less concern for immediate profitability. All about top-line revenue. Private Equity Backed: In PE-backed firms, the emphasis is on achieving a lucrative exit. The business is managed aggressively on a quarterly basis to maximize strategic value and EBITDA for the eventual exit. The quicker the sale, the higher the IRR. Long-Term Hold: These organizations prioritize minimizing risks over pursuing high returns, favoring a conservative approach. They view business as a marathon rather than a sprint. There is no single correct approach but the capital backing a business ultimately shapes the business.

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KNOW YOUR REAL BUSINESS ECONOMICS • GAAP Revenue • Cash Flow • Cash • Contribution Margin • CAC • CAC Payback FUNDRAISING: PRESENT & SUBSTANTIATE FINANCIALS • Investor needs to know what your forecasts are • They need to believe them David Weiden, Khosla Ventures

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BluWave has a deep bench of 800+ interim CFOs that allow us to quickly and expertly connect private equity firms and their portfolio companies to the exact-fit interim CFOs they need.    In one case study example, a PE firm came to us in need of a stopgap interim CFO for their automotive operations portfolio company. Here's the details of how we helped:   The Situation - Needing to make a leadership change in their portfolio company, a PE firm came to us in urgent need of an interim CFO who could focus on the portco's cash flow and working capital optimization while the search for a permanent CFO was underway. Given the protfolio company's industry, the PE firm not only needed an interim CFO with financial acumen, but one with the ability to handle a complex operational landscape and turnaround skills.   How BluWave Helped - Thanks to BluWave's deep network of exact-fit interim CFOs, we quickly connected them with a select few interim CFOs with the exact experience they were looking for.    The Outcome - The client selected their preferred interim CFO from our presented options. Their leadership marked a significant turning point for the automotive manufacturer, helping them tighten cash flow, meet reporting requirements and guide them through a crucial transition period.   When you need an exact-fit, PE-grade interim CFO, contact BluWave and we'll be ready to support.   #interimCFO #interimchieffinancialofficer

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In PE, when you buy a company you're in business with the founders & the management team even though the PE firm owns the company. Success is a function of collaborative partnership & teamwork. PE firms that have this partnership philosophy are well positioned on the path to achieve top decile IRR. #pe #privateequity

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The Information broke news that Insight Partners has just secured $10B in funding for their latest flagship fund. This is perfectly timed given their multiple $1B+ companies sold over the past week. This is a clear sight that #limitedpartners still have in their #privateallocations even during the current slow markets for #IPOs and #M&A. This would also appear to be good news for #AIfinancing and #SaaSFinancing. What do you think? #Management #VentureCapital #PrivateEquity #CapitalMarkets https://lnkd.in/gXu_s8Qj

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🚀New CFO Insights episode alert! Our topic of the day: “Sales tax in California state”. Jon Naseath, CFO/Founder at Cantu Capital Inc. in conversation with Kamalika (Kate), Financial Technology Advisor at Hyperbots Inc. Key takeaways: - Sales tax rates vary across California, with local jurisdictions adding additional taxes to the base rate, resulting in significant regional differences. - Sales tax rates can change frequently, often triggered by new laws or local government projects, making it challenging for businesses to stay updated. - Keeping track of these changes manually is nearly impossible for businesses with high transaction volumes, and mistakes can lead to costly audits or penalties. - Reliable resources like the California Department of Tax and Fee Administration (CDTFA) and tax compliance platforms like Hyperbots or Avalara can help businesses automate tax rate updates and ensure compliance. - AI-powered tools can reduce manual work, minimize errors, and keep businesses compliant by automatically adjusting tax rates in real-time. Platforms like Hyperbots and Avalara are invaluable for businesses operating in multiple jurisdictions in simplifying tax compliance and reducing the risk of over or under-collecting taxes. 🔗Watch the full interview: https://lnkd.in/gFvfsTnE #hyperbots #CFOinsights

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