Sure you can. If you have experience in negotiating business sales, finding the most qualified buyers, have the time to both run the business and negotiate with multiple buyers at the same time, and can keep your emotions in check as you negotiate the sale of your most significant financial asset, you don’t need an Merger and Acquisition Specialist.
However, if you are like most business owners, you are experienced at running a business, not selling a business. An experienced buyer can easily outmaneuver an inexperienced business owner. The best thing a business owner can do to maximize the cash realized from the sale of a business is to focus on running the operations of the business at peak performance.
You will put yourself at a severe disadvantage if you attempt to negotiate on your own against experienced acquirers and/or experienced M&A professionals representing acquirers. Without a capable M&A specialist, the deal making process can be strenuous and take much of your attention from the business. It is best to have an experienced professional help you negotiate the sale of your business.
One anther important factor that most business sellers do not recognize is the grueling nature and length of the business sale process even after the price and terms are established. Most sales of businesses take months to close even after a buyer is found and a LOI is agreed upon. If your business suffers due to the reduced attention during this lengthy business sale process, the acquirers will seize the opportunity to renegotiate the deal. Any drop in the business performance will adversely effect the valuation of your business and many times kill the deal.
Selling a business is not just signing a pile of papers and collecting a check. Selling a business is a process that requires experience, is full of pitfalls and takes a lot of energy and time. Those that try to sell their businesses on their own run a high risk of running full bore into one of those pitfalls and taking their eye of their most important financial asset - their business.
A M&A advisor can take the burden off of you so that you can continue to focus on the business and help you avoid the pitfalls inherent in the sale of any business. The result: You sell your business for the maximum sale price on terms acceptable to you.
What does a Merger & Acquisition Specialist do?
As experienced Merger and Acquisition Specialists, Turning Point Advisors will:
Expertly market your business in a highly confidential manner.
Attract the best possible price for your company because of our ability to locate more than one qualified buyer and because of our years of experience negotiating and structuring successful transactions.
Structure a deal that allows you to receive the maximum after-tax cash.
Coordinate your team of tax advisors including accountants and attorneys to ensure that the transaction is done in your best interest.
Negotiate and close a successful transaction while letting you stay focused on business operations.
How long will it take to sell my business?
The time needed to sell your business depends on a great many factors and can take anywhere from a few months to a year. The time it takes to sell depends on many factors including your goals, sales and margin trends, geographic location, market conditions and the conditions of your industry. We have seen well-run, profitable businesses in “hot” industries sell in as little as a few months. These are the exception. A more typical sale horizon is six to eight months.
When is it a good time to sell my business?
The right time to sell a business is when your business is performing well. Buyers like to buy businesses with increasing sales and margins or at least steady sales and margins. A big mistake many sellers make is waiting to begin the business sale process until they are absolutely ready to sell a business or until they are incapable of running it effectively. It takes time to sell a business at the best price and on the best terms. Unless you want a fire sale, the best time to start the process of selling your business is well before you think you are ready to sell.
What is value of a business?
You may have had a business valuation prepared by your CPA for buy-sell agreement or estate planning purposes. Is that the price you can expect when you sell the business? The answer is clearly “no.” The value of a business is only what the highest bidding buyer is willing to pay.
Early in our process, we will discuss a range of business valuations with you. But there is no formula. In the end, each prospective buyer will value your business based on its own circumstances. Prospective buyers will look at your cash flow, your trends, your prospects, how your business strategically fits with theirs, and how your distribution channels mesh, among other things.
The only way to really know the value of a business is to approach as many buyers as possible and determine what they are willing to pay.
What are the three most important factors that increase the value of my business?
Strategic fit, growth rates and recurring revenues are the three most important value drivers for most businesses. See "10 Proven Ways to Get Less When You Sell Your Business" for tips on how you can improve your business so that you will receive the maximum sale price.
What are the three most important factors that reduce the value of my business?
Customer concentration and risk that customers will abandon your buyer are the two most important factors that drive down the value of a business. Just as damaging are undisclosed issues that arise during the buyer’s due diligence. See "10 Proven Ways to Get Less When You Sell Your Business" for tips on steps to take to maximize the price you receive when you sell your business.
What can a Merger & Acquisition Specialist do to improve the value of a business?
An experienced Merger & Acquisition Specialist makes a huge difference when it comes to how prospective buyers view your business. We work with buyers every day and know how they think, how they view financial performance and what they are looking for.
We have yet to represent a client whose financial statements tell the whole story. More often than not, the financial picture is much better than presented by the financial statements. A better financial picture means a higher selling price.
For example, your CPA has undoubtedly used various business ownership structures and techniques to defer/reduce the revenues or accelerate/inflate the expenses to reduce your tax burden. Unfortunately, these techniques make the business look much less profitable than it really is. The unforeseen side effect of good tax planning it that your business may appear less profitable than it really is to a prospective buyer.
Our job as your representative is to carefully examine your financial statements. That examination, together with our knowledge of your business, will help you show your true financial picture and cast your business in the best light.
For example, we will recast your financials to reverse the adverse financial effects of non-arm’s length intercompany transactions, extraordinary expenses such as one-time legal fees and personal expenses that the buyer will not incur.
We also will look for the hidden value drivers that we know buyers seek. For example, one of our clients was talking with prospective customers that would significantly increase its sales. From our conversations with a prospective buyer, we knew these customers would be of value to that buyer’s existing business. We focused on these prospective new customers during our conversations with that buyer. In the end, that prospective buyer increased its offered purchase price to beat out a competing buyer.
Who are PEGs? Does it make sense to sell my business to a PEG?
PEG stands for Private Equity Group. PEGs are one of the important sources of liquidity for mid market business owners but not the only source. We target both PEGs and industry players to make sure your deal attracts the most qualified buyers and get a competitive bidding process going. See "Is Private Equity The Right Option For Your Company?" and "Beware Of The Private Equity Buyer" for an understanding of PEGs and the complexities involved in dealing with PEGs.
A company/individual has approached me and wants to buy my business? Do I still need a Merger & Acquisition Specialist?
Yes! Anybody that approaches you is looking for a bargain. It is our philosophy that where there is one party interested in buying your business there are also others. The more buyers interested in buying your business, the higher the sale price. A Merger & Acquisition Advisor will identify and contact other prospective buyers for you ensuring that you do not sell your business at a discount.
What types of offers to buy my business should I expect to receive?
Astute business buyers are going to structure their initial offer to leave sufficient negotiating room. Therefore, you should recognize that your initial offers will be lower than your final offers. This is where our negotiating experience pays you dividends.
All offers will contain some important contingencies, including review of the financial books and records of the business, obtaining a satisfactory lease, agreement on training, and transition periods. Other contingencies specific to your business may also be included. Contingencies are normal and provide the buyer with the opportunity to verify the information presented in the marketing materials.
Do I need to provide any financing for the buyer?
We know that you would like to completely cash out at closing. Whether you will be required to provide some financing depends on your business and the buyers.
Business buyers require financing for one of three reasons: Their banker requires it, they don’t have the financial wherewithal to pay you at closing or they want you to have a continuing stake in the success of the business. Banks and buyers see your willingness to finance a part of the sale as your vote of confidence in the continuing success of the business.
Of course, our goal is to find buyers that will not require you to finance any part of the sale of the business. We know that strategic buyers are less likely to require financing. Our proactive search of strategic buyers reduces the odds that you will be required to provide financing when you sell your business.
I want to keep the sale of my business confidential. I don't want my employees, customers and vendors to know that I want to sell my business. What steps do you take to ensure confidentiality?
Most business owners looking to sell a business share your concern. Our discrete process and procedures are designed to protect confidentiality. Some examples:
No information about your business is disclosed until a confidentiality agreement is signed.
No information about your business, including its name, is disclosed until we have screened the prospective buyer and determined the buyer is qualified and serious about acquiring your business.
A prospective buyer will not learn the identity of your business before passing extensive screening.
Executive Summaries are written so that the reader cannot identify your company.
We bypass your employees or mask our identities – they may think we are bankers.
We manage the sale process so that your customers and vendors do not know until the last possible moment.
We watermark each Confidential Memorandum so that the recipient cannot pass them on.
We limit the amount of information given to any screened prospective buyer leaving the detailed information exchange until you have selected one buyer.
All materials, descriptions, financial statements, and marketing materials are pre-approved by you.
When should I tell my employees that I am going to sell my business?
It is best to wait until the last possible moment. We have seen it too often – a business owner tells his employees he is thinking of selling a business. The next day employee morale is very low, productivity sinks and the key employees have put their resumes on the streets. The result: The business starts to decline which is the last thing you need when you are selling your business.
Generally, employees should be the last to know that you are considering selling a business. Of course, your key employees and management team are crucial to the business. Buyers will want to speak with them before the sale of the business is finalized. We use a variety of ways to manage the timing and nature of these conversations in a manner that protects your business.
Planning Your Exit
Selling Your Business
When To Sell
SellerReward™ Process
Seller Questions
Seller Insider™
We have yet to represent a client whose financial statements tell the whole story. More often than not, the financial picture is much better than presented by the financial statements. A better financial picture means a higher selling price.
