Starting the Journey

GET READY!

Most often when we first meet with clients who are ready to sell the business they have done a lot of thinking about this – and for some time before seeking us out. Most have poked around on the internet to begin educating themselves about the process. Some have discussed their plans with their financial advisor. Some have considered selling the business to one or more key employees. Some have thoughts about value of the business. And so on. Most have kept this noodling primarily to themselves.

All of our clients have been owners of privately held businesses. Many of our clients have advanced degrees in their field of expertise and in business or finance. Most of our clients come to us more than ready to retire. Almost all have not sold a business in the past, and while they may understand the process intellectually, they have not experienced it personally.

And so our first step with them in their path to retirement, before getting into deep discussions about the business, its value, or the process of selling the business, is to learn about them, their hopes, plans, and desires for the next phase of their lives. For many business owners, having birthed and survived the start-up phase, economic downturns, employee, vendor, and client challenges, and also having enjoyed the fruits of business ownership, financially, emotionally, and spiritually, the reality of what lies ahead in a dramatic lifestyle change tends to unfold over the next few months as the prospect of selling the business becomes more tangible.

GET SET!

Whether thinking about selling the business immediately or sometime in the future, the first step in the process is to determine the fair market value of the business. This is key to setting a price range for selling the business. It can also provide a baseline for business owners who are looking to sell the business in the future and who wish to increase the business value before putting it on the market.

Fair market value is commonly defined as the price at which a business would change hands between a willing buyer and willing seller when neither are under compulsion to act and both parties have reasonable knowledge of relevant facts about the business.

The expertise required to determine a fair market business valuation goes well beyond the financial analysis of the past five to ten years’s financial statements. Relevant information also includes a deep dive into key aspects of the business, from sales and marketing practices to the competitive landscape including barriers to entry, to the quality of the management team, the customer base, the operations, to the value of tangible assets, and more! A skilled valuation expert brings a wealth of knowledge and understanding of the marketplace into assessing qualitative aspects of the business. Having provided business valuations for clients over 40 years we have a unique lens and significant expertise in determining the right value range at which to sell our clients’ businesses.

GO!!

The journey of selling a business can be quite a hike! We have learned that we can control much of the process – completing a fair market valuation, prospecting for buyers, maintaining confidentiality, negotiating the deal – but the one thing we have no control over is timing. Historically we have found business transactions from completion of the valuation to closing typically take between one and two years. And selling a business has an added complexity in that it is a fully confidential process. Unlike a realtor who can put a sign on a piece of property, selling a business requires a high level of confidentiality for obvious reasons: to maintain market integrity, preserve the workforce…basically to maintain business-as-usual until it changes hands. While we work diligently to identify, contact, and qualify potential buyers, our clients continue running the business without being distracted by our prospecting process.

As mergers and acquisitions specialists, our services go beyond what one would expect of a business brokerage firm. Unlike most business brokers, who typically outsource the business valuation, identify potential buyers, and leave the negotiations to the attorneys, with a consequential historic 20% close rate, our expertise enables us to manage the entire process of selling a business with over 90% of our engagements resulting in a successful business sale.

We mange the entire process, from conducting the fair market business valuation to identifying, qualifying, and securing the buyer, to negotiating the deal to the Letter of Intent, usually also bringing in the right transactional attorney as a strategic partner who completes the Purchase and Sale Agreement and all other pertinent agreements relevant to the business transaction within a reasonable timeframe and budget.

For our clients, here is where the next phase of their life journey begins! They’ve monetized equity in the business to help fund a secure retirement. And for most of our clients, they have also provided a legacy to their community – in employment, in revenues, and in community service – in passing the business baton to a new owner.