OUR PROCESS FOR SELLING YOUR BUSINESS

Initial Consultation

This is for both parties to learn more about one another. What type of business do you own? What is the reason behind wanting to sell and within what period? Is the business growing or declining? Is it profitable? What are your goals and expectations?

We will explain our process and fees. We can sign a confidentiality agreement with you to ensure that our discussions are confidential. If there is mutual interest to work together, we will request additional documents to help us understand your business. We will set a second meeting.

 

Valuation

After receiving documents from you and reviewing your on-line presence and visiting your business we will have a better understanding of your operation. Are your facilities and operations in good working order? What is your competitive position in the market? What is your competitive advantage? What is your customer profile? What kind of systems/procedures/contracts does your company have in place? Do you have good financial records that are accurate and up to date?

Based upon an analysis of the above we will provide you with a Most Probable Selling Price using several valuation approaches. Price will be impacted by variables that include: your growth rate, profitability, company size, market share, industry and business model, capital requirements and workforce – management team. As part of our valuation assessment, we will look at income, market based and asset-based models.

If there is an agreement to move forward, we will sign a listing agreement with you.

Engagement

We will engage in further consultations, and we will need to know who from your company will be involved in the process. You will likely have outside team members that include your accountant and lawyer with whom we will need access. We need to fill in information gaps and refine the value proposition for the sale of your company.

 

Marketing The Business

Based upon the documentation we received from you, our discussion and an understanding of your sector, a marketing plan and marketing materials will be developed. These will include a Confidential Information Memorandum that contains financial, operational and management information which will only be released to qualified buyers after they sign a Non-Disclosure Agreement. We will use multiple channels including on-line promotion, and targeted mailings and phone calls. We can provide information without disclosing the name of your business. Our job is to generate qualified leads to enable you to maximize your sale price.

 

Qualifying Buyers

 Once marketing starts inquires quickly follow and depending on the business and sector there can be a large number of inquiries. We will follow-up on every inquiry. Most inquiries (90%) will not meet our qualifying criteria. We immediately screen people for their financial capability to purchase and other criteria including buyer experience, industry experience, buyer timeline and what they plan to do with the business after they purchase it. Anyone to whom we send or disclose confidential information must sign a Non-Disclosure Agreement before any disclosure is made. There are usually multiple conversations with these people to understand fit, concerns, potential and their interpretation of your documents and systems.

In managing this process we save the seller a lot of time enabling them to spend it working in and on their business.

 

Negotiation

The most interested qualified buyers will want to see your facility which we will arrange in concert with you. Interested buyers may send a Letter of Intent (LOI) which outlines a proposed price and terms which is generally a non-binding letter which is often used to negotiate terms for an agreement of purchase and sale. We will work with you through this process. Prospective buyers will due heavy due diligence through this looking at all aspects of your business. They will critically review your financials and all other documents. Do they feel confident with your business as it is being presented? What needs to change? Based upon their plans for the business, how much will they have to invest beyond the purchase price for additional capex, marketing, R&D, and human resources to achieve their desired growth? How long will it take to receive a return of their capital? Can they secure their required rate of return? Our job is to honestly present your business in the best possible manner to secure a deal.

This step of the process is the most complex and where most deals fall apart. Being able to turn around information requests in a timely manner and having knowledgeable legal and accounting professionals proficient in selling business is important.

Some buyers may skip the letter of intent and move straight to a purchase and sale agreement. The agreement of purchase and sale sets out the final terms for the purchase of your business. Other documents may include stock/asset purchase agreement, bill of sale, financial closing statements, non-compete agreement, employment agreements, licences and permits, escrow agreements, leasing equipment transfers, disclosure, representations and warranties, indemnifications clauses and schedules.

 

Finalize Contracts and Close the Deal

In alignment with a selected closing date, all agreements are agreed to and signed. It is critical that everything is in place for a smooth closing. Adjustments are made for inventory, receivables, working capital and other items. Seller will have dealt with debt, and cancelled any lines of credit, services, leases, accounts, licences, permits not being assumed by the buyer. The Seller may have agreed to a training period with the buyer following the closing.

Ideally, the owner has developed a personal exit plan for themselves following the sale. This should include financial and personal goals for life after the business. For most owners, the business was the driving force in their lives. Stepping away is a big step change in their life.

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