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Tag: Selling a Business

Business Brokerage Consultant, Uncategorized

What makes The Montana Group the best option for selling a business?

Aug 4, 2016 by The Montana Group 0 Comments , ,

There are many various options when selling a business. Of course, one option is selling the business without representation. While this does indeed “save” the transaction fee the money saved is costly, as an accomplished intermediary will increase the sales price significantly over the fee saved. Another option would be to use a business owner’s attorney or accountant to act as the intermediary. This too can also prove costly as it is unlikely that these advisors have extensive experience is selling operating businesses and are unlikely to have the database and relationship with those additional buyers needed to create a competition necessary to increase the price for the seller.

The Montana Group has for 25 years sold profitable operating businesses with at least $2 million of pre-tax profits that are in the manufacturing, distribution, or service sectors. As our website (www.montanagroup.com) will illustrate we have sold businesses throughout the United States. We have a thorough database of 100’s of buyers with an understanding of their acquisition criteria, thus enabling us to contact well funded potential business acquirers. The Montana Group offers its services on a success based fee structure (no retainer) that aligns its interest with the owner’s, the transaction structure and price. This fee structure is highly unusual in the business brokerage world. These services include an accountant review to allow for the financial presentation in the format that best promotes the company and this includes the recasting of the historical income statements which increases the value of the business. As consultants The Montana Group has recommendations of those needed throughout all aspects of the sale process in order to increase the likelihood that the transaction indeed closes to the satisfaction of all.

It should also be reinforced that because The Montana Group does NOT charge a retainer then it is apparent that they feel confident in their ability to initiate and complete the sale of a company as only this results in a fee paid. It should also be noted that The Montana Group’s listing consulting agreement allows either party to cancel the agreement with a 30-day notice. This termination is also very unusual.

“Selling a business is a once-in-a-lifetime and lifestyle change that often affects multiple generations. So, use a specialist with years of experience. While this can be done by the business owner in an attempt to be frugal, our 25 years with this specific focus tells us that often the owner is reducing the sale price in multiples over the money saved from not paying a success-based consulting fee.”, says Emmett Barnes, President and Founder of The Montana Group.

 

Estimated Time in Selling a Company
Business Broker Newsletter, Business Brokerage Consultant, Uncategorized

Estimated Time in Selling a Company

Jul 10, 2016 by The Montana Group 0 Comments , ,
  After executing an agreement to work with the representative firm here is the ballpark timing estimate for Selling a Company:
  • The consultant will supply a list of financial data necessary to properly present the company’s historical, current, and future expectations. While this sounds very basic it really is an opportunity increase the ultimate price of the business, so merger and acquisition experience is ultra important. There will also be a list and conversations that will allow the presentation to provide an understanding of the company’s focus, method of operation, and makeup. This information is often time consuming to assemble however, it is critical to the ability to attract the proper acquirers who should make very competitive offers. The process really does not begin until this information is provided and the time required to assemble varies from days to weeks.
  • The consultant uses the information from the prior paragraph and assembles a memorandum presenting in a clear and encouraging format, which is based on their experience in selling similar businesses. This should be completed within a week to ten days.
  • The consultant approaches potential buyers based on the authorization of the seller. This starts with an initial thumbnail summary that is intended to remain anonymous and an initial conversation to understand the reason for the interest is followed by a Confidentiality Agreement (also known as a Non-Disclosure Agreement). After answering questions and supplying additional insight to the investment opportunity the non-binding valuations are presented. This phase should take 30-45 days.
  • The consultant and stockholders decide which valuations are attractive and appear to be a likely candidate. Conference calls between these suitors, the stockholders, and the consultant are made to present the company in more detail and to learn more of the suitors. This should be completed within 2 weeks.
  • Of those suitors who remain in the process are invited to tour the facilities. The interview goes both ways. Depending on schedules and the number of dates required this could take several weeks.
  • The consultant then discusses with the potential buyers their interest in proceeding, which is a Letter of Intent. Once the stockholders review these offers and the consultant negotiates to enhance the preferred proposals then one is selected. This could take from one to several weeks.
  • The due diligence process begins which is an extremely detail assemblage of information, visits from the buyer’s representatives and lenders, and the legal document negotiation and assemblage.  This could take two+ months.

Of course, every transaction is unique so this is only an educated guess. We at The Montana Group advise that six months is a good target and we strive for as expeditious as possible.

“Selling a business is a once-in-a-lifetime and lifestyle change that often affects multiple generations. So, use a specialist with years of experience. While this can be done by the business owner in an attempt to be frugal, our 25 years of this specific focus tells us that often the owner is reducing the sale price in multiples over the money saved from not paying a consulting fee.”, says Emmett Barnes, President and Founder of The Montana Group.

Business Brokerage Consultant, Uncategorized

Selling a Business: Issues to Consider

Jun 1, 2016 by The Montana Group 0 Comments

Issues to Consider When Structuring a Business Sale

Of course, the cash received at closing is the single most important consideration however there are many other issues, which we encourage our clients to consider:

  • Any unusual business agreements, issues, or relationships that need to be addressed with the buyer before the closing?
  • Is there an interest in retaining any ownership?
  • Is there an interest in continuing to run the business post-sale? If so, what is the preferred amount of time?
  • Is there an interest in receiving a seller note as part of the overall sale proceeds?
  • Would you object to selling to a competitor, as they will know of your customers, your margins, your employees, and your method of operation BEFORE the sale is completed?
  • Is there a preference to sell to a buyer who will need your staff? If so, a competitor may not need them as your operation could be folded into their existing operation.
  • Any asset on the company balance sheet that is not essential to the operation of the business that you would like distributed to you?
  • Is there a Profit Sharing Plan distribution or rollover that needs addressing?
  • Are there any tax considerations from the sale that would be prudent to discuss with an advisor before the sale?

 

Sell a Business yourself
Business Brokerage Consultant, Uncategorized

Sell a Business Yourself?

May 6, 2016 by The Montana Group 0 Comments ,

Sell a Business yourself?

Often a business is owned and/or run by a very good negotiator so; why not just sell it without a broker, especially when the competitor is knocking? After all, the fee can be saved and how difficult can it be? Don’t you really just photocopy the financial statements and wait for an offer? Can’t the company lawyer or CPA just take care of it as he/she has taken care of about any and everything up to this point?

The answer is yes the business owner can and often does complete the sale of the business without a broker. But, the goal is not just completing the sale. Isn’t the goal completing the sale with the best possible overall transaction? This means not only maximizing the after tax cash but also maximizing the “extras” such as deferred compensation, non-compete agreement, carried interest in the company going forward, and post-sale employment agreements. As a company’s balance sheet changes daily, these fluctuations during the time of negotiations need to be included. It’s a moving target! Plus, most (if not all) private businesses expense certain items that in effect reduce the company’s tax liabilities yet are not really necessary in the operation of the business. These obvious expenses plus more innovative ones that can be justified and added back in recast financial statements could have a substantial positive effect on the overall transaction. A good business broker is aware of these enhancements and a large percentage of the time the overall transaction increase from these “add-backs” is much greater than the fee paid the business broker. Also, a good business broker will know what information is normal to provide and in what format (e.g. Customer Lists). Would it be helpful to know if the buyer Is simply over the line in its requests?

Now let’s also be realistic. Even if this buyer is indeed the buyer of choice for the business (and ultimately buys it) does it make sense to sell the company under the market value to them? Will a competitor who thinks they are allowed to buy the company without other buyers to compete with really offer a full price? Would you? Then buyer will also get the financial benefits of the easy elimination of unnecessary expenses, not the seller.

There are many former owners who wish they had not been “penny wise and pound foolish”. As the owner will only be selling their business once isn’t it simply prudent to have someone driving the transaction that has many years of successfully negotiating transactions … not learning as they go along, as the business owner who has never sold a business would be.

“Selling a business is a once-in-a-lifetime and lifestyle change that often affects multiple generations. So, use a specialist with years of experience. While this can be done by the business owner in an attempt to be frugal, our 25 years of this specific focus tells us that often the owner is reducing the sale price in multiples over the money saved from not paying a consulting fee.”, says Emmett Barnes, President and Founder of The Montana Group.