The selling process includes…

Determine Objectives: What are your needs and objectives? Options include: sell and retire, sell and remain with the Company, take on a partner, capital infusion, etc. Thinking this through in advance will help focus your efforts.

Collect Information: You must gather financial, as well as general information, on all aspects of your business. Proper preparation is crucial for the best presentation of your business and is also the first step in establishing the confidence of a buyer. Adequate information will enable a buyer to gauge their level of interest.

Maximize Financial Presentation: Financial statements are prepared for tax purposes. A buyer must be educated to accurately interpret the “recast” financial statements in order to recognize your Company’s true worth. The recasting of financial statements requires identifying and adjusting for normalized owner’s salary and fringe benefits, as well as one-time, non-recurring and non-applicable expenses.

Valuation: Determining the fair market value of your business is an involved procedure, which takes many variables into account. Proper consideration must be given to your Company’s strengths, assets, historical financial performance and projections, along with the many intangibles inherent in your Company. Purchase price comparisons should be made with like companies that have sold within your industry. By determining the highest price a fully informed buyer is willing to pay for your Company, you will avoid the risk of losing a timely sale by overpricing your Company, or “leaving money on the table” by undervaluing your business.

Preparation of a Corporate Presentation: The business must be properly packaged with all applicable records and facts organized and documented. This ensures presentation in its most favorable light, while providing the acquirer with a concrete document to follow and review. This package educates buyers on the many intangibles inherent in your Company, hence raising the perceived value to the acquirer. These intangibles include name recognition, market niche, vendor relationships, operation and production systems, distribution channels, customer loyalty, trained and skilled employees, and many more.

Buyer Identification Strategy: Determine your strategy for bringing the Company to market. What type of buyer will perceive the greatest value and synergies in your business? Identifying the “right” acquirer for your business can significantly impact its valuation.

Contingent Issues: Identify and be prepared to address issues such as leases, regulations, licensing, key employees or other concerns that might apply to your specific situation. Failure to address these issues early on in the process can potentially lead to the loss of qualified buyers along with months of wasted activity.

Marketing Strategy / Confidentiality: Determine the most likely type of buyer and how to best market the business, while maintaining complete confidentiality. There are a number of different marketing strategies available, which will provide the necessary exposure while maintaining strict confidentiality. There are steps you should take to guard against your competitors, employees, vendors and customers ever finding out about the pending sale of your business.

Pre-Qualification: Qualify potential buyers as to their interest level, management skills, cultural fit and ability to meet the financial requirements of the transaction. Maintain confidentiality with any interested acquirers, until all of these aspects are addressed to your complete satisfaction.

Site-Visit: Provide the potential buyer with the opportunity to visit your facility. Generally there are multiple site visits. This is a good forum for the buyer and seller to develop a favorable rapport.

Purchase Offer / Negotiations: Upon a “meeting of the minds” as to the key transactional issues, a written offer to purchase, generally in form of a letter of intent, should outline the purchase price, terms, conditions and any contingencies. Proper compliance with this step can save thousands of dollars in legal expenses.

Due Diligence: The offer is usually contingent on the buyer’s professionals verifying the accuracy of the seller’s financial and operational representations.

Contracts: After all issues are resolved and the buyer’s accountants and attorneys are satisfied with your representations, contracts can be drafted and negotiated.

Closing: This is the point at which you can be assured that you have realized your goal.

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