Business Insights

Michael Jacobs, the Founder and CEO of Jacobs Capital, has over 25 years of experience in corporate M&A and governance fields. Mr. Jacobs is the author of Short-Term America (Harvard Business School Press) which was named one of the ten best business books in 1991. He later published Break the Wall Street Rule: Outperform the Stock Market by Investing as an Owner (Addison Wesley) which was the main selection of the Fortune Book Club in spring 1993.

Below you will find a collection of Mr. Jacobs’ articles and essays written for various publications. We have shared these to help business owners make informed decisions.

Mergers & Acquisitions

Who Wants to Go Public Anymore?

Not long ago it was the dream of many a private company CEO to take their company public someday. During most of our lifetime, an initial public offering (IPO) was the preferred exit strategy for the successful entrepreneur. It not only provided liquidity for their shares but also demonstrated to customers, employees and suppliers that […]

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Buyer Beware

Studies consistently show that in about two-thirds of corporate acquisitions shareholder value is destroyed, which means that companies either paid too much or what they bought did not perform as planned. This is not because the concept of putting two businesses together is flawed; it is a result of user error. In other words, most […]

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The Art of Negotiation

Negotiating styles are a lot like snowflakes; no two are alike. There are, however, certain principals of negotiating that can increase the likelihood of success when structuring a business deal. Over the years I have witnessed deals that should have been made that blew up because of poor negotiating and others that could easily have […]

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Using Advisors Wisely

Most business owners and executives rely on professional advisors for outside counsel. It is crucial to not just select the right individuals to be your advisors, but to seek their advice on the appropriate matters and to manage your advisors properly. Human nature teaches us to surround ourselves with people we trust. Listening to your […]

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The Small Print in Selling a Company

It is common, almost predictable, that a business owner will experience serious indigestion, if not outright fury, when he or she reads the “small print” in a purchase agreement to sell their business. This can be avoided by knowing what to expect. After what is often a lengthy, drawn out negotiation with a purchaser of […]

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Two Bites of the Apple

Sometimes in business, like in poker, it’s wise to take some chips off the table, even when you’re not ready to get out of the game. There is a very effective, and often prudent way to do this that I call “double dipping.” In effect, you have the opportunity to sell your company more than […]

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Is Now the Right Time to Sell My Business?

The most common question I am asked by business owners is: “When is the right time to sell my business?” The answer depends on three factors, which I will explain below, but that question may not be the right question. The correct question should be: “When is a good time to take some money off […]

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Valuations

What is Your Financial Signature?

Have you ever seen a talented employee flounder because their strengths were not properly matched to the job requirements? It happens all the time — a great salesperson is promoted to sales manager and turns out to be a lousy manager of people, for example. When it comes to the CEO, the risks of a […]

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What is Your Financial Model?

In the July issue of CATALYST, I discussed the notion of a financial signature, which is essentially the way that an individual is wired from a financial standpoint and why it is important to match the individual’s nature with the company’s leadership needs. This month I am going to discuss a very different concept with […]

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All Share Are Not Created Equal

On January 18th, Catalyst magazine will host a seminar on two questions that are near and dear to every business owner’s heart: “What is my company worth?” and “What am I going to do with it?” As a backdrop to this seminar, I thought it would be helpful to clarify an aspect of business valuation […]

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Does Size Really Matter – Valuation Multiples

There is finally an answer to the age old question pondered by business men and women for centuries: Does size really matter? For those of you with your minds in the gutter, the issue pertains to whether larger companies are worth more, i.e., valued at higher multiples, simply because they are larger. The answer to […]

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What is Your Company Worth?

The primary goal of most executives and shareholders is to increase the value of their company. Since less than 1 percent of companies have publicly-traded stock, how do 99percent of business owners and their key employees know if they are accomplishing this goal? For a shareholder in a public company, it is a breeze to […]

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Governance

Podcast: Can Business Serve a Higher Purpose than Profits?

Can business have a higher purpose than profits and revenues? Should business have a higher purpose than profits and revenues? Michael Jacobs spoke with AFP Conversations host Ira Apfel about corporate governance, business with a higher purpose, and how treasury and finance fits into this equation. Learn more about Jacobs Capital.

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Why Business Owners Need Boards

The old adage ”it’s lonely at the top” applies nowhere better than to running a private company, where CEOs make daily decisions about disciplines in which they have no background. ​ Having worked with over 200 private-company owners over the past 25 years, it is my observation that the most underutilized resource for private companies […]

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Private Company Governance: Is it an Oxymoron?

With all the noise about ENRON, WorldCom, Tyco and the myriad other corporate governance disasters that motivated Senators Sarbanes and Oxley to rewrite many of the laws affecting corporate accountability, private company owners have been asking what, if anything, this means for them. The answer is nothing, and a lot. From a legal and regulatory […]

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What They Don’t Teach You at Harvard Business School

During the summer months, I work out of my home on the coast in Wilmington, N. C. Sitting here watching the dolphins swim by, it is easier to be philosophical than when I am perched in my high-rise Atlanta office. So rather than pen another educational article about how things are supposed to work, this […]

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Business Planning

Uncertain Death in Business

If you are an owner or partner in a closely held business, have you given serious thought to what would happen to your company if you were to die unexpectedly? Chances are, you probably haven’t. “Most small business owners haven’t given succession planning any real thought beyond, ‘I ought to do something,’ ” says David […]

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Getting Your Affairs in Order

Every once in a while, as busy executives focused on the day to day, we need to be reminded of our mortality. Recently, for me, the story of the two Darlington students who drowned on a spring break kayaking trip in Florida hit close to home. The two boys were friends and classmates of my […]

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Uncle Sam’s Going Away Present to Business Owners

Uncle Sam has provided a generous tax subsidy (that is not utilized nearly as often as it should be) to business owners who are exiting their businesses. It is a complex program that is not well understood and frequently used inappropriately. About a year ago I wrote a high-level article on the subject, but I […]

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ESOPs: The Good, the Bad and the Ugly

Most business people have heard of Employee Stock Ownership Plans, commonly referred to as ESOPs, but not too many of us fully understand them. This is not surprising; they are very complicated. The typical reaction from a business owner when the subject comes up is that they have heard that ESOPs are not a good […]

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Cashing in the Chips – Transitioning Ownership

There is a popular saying that the two happiest days in the life of a boat owner are the day they buy their boat and the day they sell their boat. In between are countless unanticipated frustrations. The same could be said for business owners. Yet rarely do entrepreneurs, like boat owners, think about their […]

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Financing Decisions

Reprint from the Harvard Business Review: Do You Know Your Cost of Capital?

Written by Michael Jacobs and Anil Shivdasani. Click here to see the original publication in the Harvard Business Review. With trillions of dollars in cash sitting on their balance sheets, corporations have never had so much money. How executives choose to invest that massive amount of capital will drive corporate strategies and determine their companies’ […]

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How Much Should I Borrow?

What is the proper amount of debt for your company to borrow? None as much as the banks will lend you neither of the above The correct answer is c. In fact, for every company, there is an optimal amount of leverage that results in the highest return on the shareholders’ investment. The trick is […]

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Mezzanine Financing

I recently discussed with my client Keith, the CEO and 50 percent owner of a recycling company, the options for buying out his partner, Bob, who owns the other half of the company. Bob, who put up the initial capital to start the company about 15 years ago, has never been actively involved in the […]

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Dealing with a Venture Capital Firm

Now that the venture capital market is coming back to life, entrepreneurs have a shot once again at raising some early-stage and growth capital from professional investors. If you are contemplating traveling down this road, however, a little planning can save a lot of time. I will share some tips on who to approach, how […]

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