Planning a Business Sale with a Broker
Historically, a business owner does not engage a business broker until immediately prior to selling the company. In certain situations, as with the case of illness or divorce, this is unavoidable and a competent business broker can assist with both a timely valuation and business sale. The sale of a privately held company can be very complex involving a multitude of variables and it is important for the business owner to seek expert advice. By creating a strategic exit plan and itemizing a specific timetable of actions to be completed, an owner will have a concise action plan detailing exactly when and how they will be leaving the business. Ascertaining the worth of the company and how that value is calculated is critical. In many cases, there are a few minor changes that an owner can make that would increase the transaction value of the business. Strategic planning coupled with a proven merger and acquisition process can produce tens of thousands of incremental dollars upon sale.
A credentialed and experienced business broker will be an invaluable resource to both buyers and sellers. Traditionally, business intermediaries have almost always represented the seller but buyer representation is happening more often. Business brokers offer a wide variety of services ranging from developing complex exit plans to performing roll-up’s involving the acquisition of multiple businesses within a specific geography or industry. Most often, a business broker is retained to provide services related to the sale of a privately owned business. Within this context, the services provided include preparing a business valuation, creation of a comprehensive marketing package, development of a targeted marketing plan, qualification of buyers, negotiation of the LOI (letter of intent) and DPA (definitive purchase agreement), assistance with the buyer’s due diligence, securing financing and funding for the transaction, and collaboration with the attorney’s and CPA’s that are typical part of the transaction team. Confidentiality throughout the entire process is critical and most experienced intermediaries have a process in place to market the business for sale without alerting competitors, employees, and the business customers.
Over the last two decades, I have met some incredibly intelligent, successful and talented business owners and have enormous admiration and respect for the amount of work, time and sweat equity that was devoted to building their business. Most of these company owners were able to maximize the market value of their business upon sale through the proactive implementation of a strategic exit plan. Historically, a business owner sells only one business in their lifetime and it is the two or three years prior to selling the company that are the most critical. Ensuring that the financials are well organized in a format which complements the business enterprise and maximizes the value of the company, is a process that, when adopted early, will pay significant dividends upon sale.
Michael Fekkes is a Senior Broker at Enlign Business Brokers in Nashville, TN. Michael is a Certified Business Intermediary CBI®, a member of the International Business Brokers Association IBBA®, as well as a former business owner. He can be reached at 910.691.2202 or mfekkes@enlign.com. Enlign Business Brokers (www.enlign.com) is a Professional Services Firm serving the Southeast that is headquartered in Raleigh, NC with regional offices in Nashville, TN and Atlanta, GA. providing business intermediary services ranging from valuation and sale to exit & succession planning strategies.
Kim on Small Business Broker on 16 Nov 2010 at 2:59 pm #
Having a reliable small business broker when selling or buying a business will be a great.