Business owners experiencing the process of selling their business often find it to be one of the greatest financial, emotional, and impactful transactions of their lives. Bray Business Advisors Group believes that selling a business is a transaction that requires significant experience, attention to detail, and expertise in order to maximize an owner’s financial return and legal protection. We are here to help guide you through this journey.
This is an initial in-person meeting and is important for the Seller to build rapport with the Advisor, to learn about our firm, and for insight into the listing and selling process. It is equally important for the Advisor to gain an understanding of the business and the owners’ goals and expectations. The Seller and Advisor will discuss the need for confidentiality in the sales process.
This stage involves gathering preliminary business financials and other applicable information needed in order to provide a full business evaluation. The Advisor will take approximately 1-2 weeks to review the information and prepare an analysis regarding the estimated value of the business.
This meeting primarily consists of the Advisor presenting his analysis of the business. The Advisor will discuss any questions about financials or operations, present a range of values for the business. The Seller is encouraged to ask all questions regarding the evaluation, the Listing Agreement, and the sales process.
If expectations match for each party, and the Seller would like to move forward towards a successful sale, the Advisor will prepare a Listing Agreement to present to the Seller. The Listing Agreement must be signed by both parties prior to the beginning of any work.
Once the business is officially listed, the Advisor will begin the process of collecting all data necessary to complete the “Offering Memorandum” and sales package needed to present the business to potential purchasers. During this period the Seller will approve all forms, including Non-Disclosure Agreements and other applicable documentation. If they prefer, the Seller may deliver his own attorney drafted documentation.
Once all marketing materials are completed, Bray Business Advisors Group will begin it’s confidential marketing campaign. Every business will have a different profile for the ideal buyer. We will prepare a custom and individualized marketing plan for each client. While providing full and exclusive confidentiality through Non-Disclosure Agreements, the Broker will focus on presenting the opportunity to local and national investors, private equity groups, potential like-industry players (if desired), and our own in-house list of qualified buyers. Bray Business Advisor Group will aggressively market your business and commit the necessary assets and time.
Once an interested and qualified potential buyer is found, the negotiation phase of the sale begins. A buyer will typically present a non-binding LOI (Letter of Intent). The LOI will define the major deal points of the purchase. The purpose of the LOI is to present certain terms, including price and a framework for the deal structure. Bray Business Advisors Group will consult and advise as to what terms are critical to negotiating in this stage to ensure respect of the owner’s time and effort.
The process of arriving at a negotiated and agreed-upon Purchase and Sale Agreement (PSA) is a critical stage of the sales transaction. The PSA will detail the terms of the sale, including representations, warranties, legal ramifications, deal terms, price allocations, purchase structure, inclusions/exclusions, and more. An attorney is most often engaged by the Buyer/Seller to prepare this document. It is imperative to select an attorney familiar with these types of contracts, transactions, and negotiations. Bray Business Advisors Group can refer local business attorneys who are experienced in drafting and reviewing PSA’s. Our role is to keep the transaction progressing while focusing on our client’s needs and desires.
The amount of due diligence requested by a buyer depends largely on the type and size of the transaction. Typical items to expect would be tax returns and P&L’s/Balance Sheet, equipment lists, facility tours, specialized financials and reports, Q&A with the Seller, etc. The Advisor will help ensure all requests are valid and appropriate, while coordinating all data presented, so there is no duplicated effort by the Seller.
At the closing, all paperwork is executed and funds are delivered. Typical closings will occur at an attorney’s office, title company, or other mutually agreed upon location. In this stage, the parties will execute all applicable documents including Bills of Sale, UCC Filings, Loan Documents, Real Estate Contracts or Leases, Promissory Notes, POA’s, Stock Agreements, Operating Agreements, and more. Funds are typically delivered via certified checks, or wires, and are often coordinated by an intermediary. Bray Business Advisors will ensure that all the material items and documents have been considered and complied with.
Depending on the type of business and negotiations, the Seller may be required to assist at some level in the transition of ownership. This can range from being available for a short period of time to answer the new owners’ questions, to working under an employment contract for a number of years.
Sellers that are nearing their retirement should most often start the conversation of selling 3-5 years prior to their desired exit from the business. When looking at a sale, most buyers, equity groups, banks, and appraisers look at business performance over the past 3 or more years, and the current YTD performance. The selling process once engaged can also take time, with a start to finish timeline of appx 12-18 months on average. This makes it important to meet with a professional to evaluate your current marketability and value, and what potential changes and implementations may be able to be made to make for a more profitable and expedient sale when the time comes.
Business owners considering selling should most often begin the process at least 3 years prior to their desired exit. Most sophisticated buyers evaluate business performance on the past 3-year financial history, and the current YTD performance. Therefore, presenting clean and attractive financials for those periods is important. The selling process (as described above) may take 6 to 18 months on average. This makes it imperative to meet with a Bray Advisor and begin the process with adequate lead time in order to evaluate the current marketability and value of the business and make any potential changes that may yield a more profitable and expedient transaction.
