Business owners going through the process of selling their business can often be one of the largest financial, emotional, and impactful transactions of their life. Bray Business Brokerage firmly believes that selling a business is a transaction that requires adequate experience, attention to detail, and relative knowledge about the process in order to maximize an owners post-sale return and legal protection. There are many material steps in the process along with important details to address to ensure that you and your company engage in the most successful transition possible. Bray Business Brokerage is here to help guide you through this journey and ensure you have the highest level of expertise on how to effectively close on your business with a high rate of success, while structuring a deal that helps encourage future success for the Seller as well as his company and employees.
This is the initial introduction meeting that may be done via phone, video, or in person, and is important for the Seller to build rapport with the Broker, to learn about the firm, and for insight on the listing and selling process. This is also important for the Broker to gain an understanding of the business and the owners’ goals and expectations.
This stage involves gathering preliminary business financials and other applicable information needed in order to provide a full business evaluation. The broker will take appx 1-2 weeks to review information and prepare an analysis regarding the valuation and liquidity of the business.
This is the second meeting that is preferred to be had in person, and primarily consists of the Broker presenting his analysis on the business. Here the Broker will discuss any questions about financials or operations, present a range of value for the business, any will deliver any concerns or optimisms regarding a potential sale. The Seller(s) are encouraged to ask any and all questions regarding the evaluation, listing process, etc.
If expectations match for each party, and the Seller would like to move forward towards a successful sale, the Broker would then prepare a listing agreement to present to the Seller. This will be delivered and needs to be signed by both parties prior to the beginning of any work.
Once the business is officially listed, the Broker will begin the process of collecting due diligence documentation that is regularly requested by purchasers and lenders. This info is also needed to complete the “Offering Memorandum” and other sales packages and marketing materials needed to present to potential purchasers. During this period the Broker will approve all forms including Non-Disclosure Agreements and other applicable documentation needed during the sales process. If not approved, the Seller will deliver his personal or attorney drafted documents.
Once all marketing materials and memorandums are completed, then the Brokers begin their confidential marketing campaign. The buyer for every business is out there, they just may be hard to find. Every business will have a different kind of ideal buyer, which is why Bray Business Brokerage will prepare a custom and individualized marketing plan for each client. While providing full and exclusive confidentiality through Non-Disclosure Agreements and buyer underwriting, the Brokers will focus on getting the opportunity in front of local and national investors, private equity groups, potential like-industry competitors (if desired), and their own in-house group of verified buyers which totals over 300+ individuals/groups. Bray Business Brokerage takes extreme initiative in actively marketing and selling your business and committing a substantial amount of time for direct sales, calls, emails, meetings, etc.
Once the perfect buyer is found, then begins the negotiation phase of the sale. The buyer may ask for a certain amount of due diligence prior to an offer, but once they are in the right position to make an educated presentation, the buyer will present an IOI (Indication of Interest) or an LOI (Letter of Intent). In these forms, they will present the major deal points of the purchase without going into too much depth. While this often won’t fully cover all negotiations in transaction, it gets expectations on the table to make sure that the buyer and seller are in general agreeance on terms before spending more time on the deal. Bray Business Brokerage can help consult and advise as to what terms are critical to negotiate in this stage upfront to ensure the most respect for the owners time and efforts.
The process of arriving at a negotiated and agreed upon Purchase Agreement is a very critical stage of the business sale. The SPA or APA will spell out all the terms of the sale, including representations and 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, but it is imperative to select an attorney that is familiar with these types of contracts, transactions, and negotiations. We can help refer local business attorneys who are experienced in drafting and reviewing PA’s. Once the agreement starts to form and negotiations begin on the terms and implications of the contract, there can be many “deal killers” in this stage, based on the high volume of items that are contained in these documents. Bray Business Brokerage can help keep the deal progressing forward, while focusing our clients on material matters to consider for their benefit, while still being able to close a deal.
This stage can come at different times during the process of a sale, depending on the purchase agreement and the buyer/seller preference. It almost always comes in different shapes and sizes, with the amount of due diligence requested by a buyer depending largely on the type and size of business, and the buyers personal requirements. Typical items to expect could be tax returns and P&L’s/Balance Sheet, equipment list, facility tours, specialized financials and reports, Q&A with the Seller, etc. Your broker will help ensure all requests are valid and appropriate, while coordinating all data presented so there is no duplicated efforts for the Seller.
The closing is where Buyers and Sellers see the light at the end of the tunnel, but the deal is not completed until all paperwork is executed and funds have been delivered. Typical closings can occur at an attorney’s office, title company, or other mutually agreed upon location. In this stage, all parties will execute all applicable paperwork including Purchase Agreements, Bill 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. There can be very large impacts from the execution (or non-execution) of some of the paperwork needed to successfully close the business and ensure that you are protected and maximizing your return on sale. Bray Business Brokerage can help ensure that all of the material items and documents have been considered, and that there are no last minute surprises or hiccups at the closing table.
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.