We Use the M & A Process to Sell Businesses for More Money
When a business earns $500,000 or more and there are strategic buyers for it, we add the M & A process to reach the best buyers and get the best offers from them. This process is designed to sell the business for the best price.
When we use the M & A Process, we market the business without a price. There are two reasons for doing so. First, a price puts a cap on what a buyer will pay. Secondly, the buyers for larger businesses will do their own analysis and don't need an asking price to decide how much to offer.
The M & A Process consists of these steps:
Initial Analysis/ Value Discussion/Engagement
During this phase, we collect basic information about your business so that we can perform preliminary research. After we know more about your business and have an appraisal done by an independent appraiser, we can discuss the financial value of your business and your ultimate goals for the sale. Our finanial goal in marketing the business is to get you at least the financial value for the business and, hopefully, more from a strategic buyer.
At the end of this phase, we make a mutual decision whether to proceed with the engagement.
Data Collection and Buyer Identification
In order to plan effective marketing strategies, we collect relevant data about the industry, and we use this data to create a list of the potential buyers who may be interested in buying your company. This list may include private equity groups, buyers from similar industries, competitors, and others. It’s important to note that, although we attempt to identify all buyers likely to be interested in your company, we focus our efforts on those who will be willing to pay the best price. While some buyers will pay no more than the market value of your assets, the best buyers are willing to buy your business at a premium. These may be synergistic buyers, private equity groups, or any other interested parties capable of generating better returns than a financial buyer can. We work diligently not only to identify these buyers, but also to develop a marketing strategy that appeals to them directly.
Writing the Marketing Book
At the same time as we are identifying the best buyers for your business, we create the marketing book. Because the contents of this book often determine whether a potential buyer will bid on your business or walk away, we make every effort to develop a document that highlights your company’s value, and potential for growth. The typical marketing book will cover:
- The history of the business
- The company’s current structure
- Description of the company’s products and/or services
- Financial information
- Sales and marketing information
- Opportunities for growth and profitability
All potential buyers must sign non-disclosure agreements before they receive any confidential information about your company. After signing an NDA and being financially qualified, interested buyers will receive copies of the marketing book. Our marketing approach emphasizes your appeal to qualified buyers while maintaining confidentiality. During this phase of the M&A process, we narrow down the list of prospective candidates to determine the specific buyers who are likely to pay the most for your company.
Our ultimate goal during the auction phase is to generate the best price for you by facilitating competition between the parties who have shown interest in your company and are willing to pay more than other buyers to obtain it. This private auction is not a live auction. It is a deadline for buyers to submit offers. We help you evaluate the offers and negotiate with the buyer who makes the best offer.
Letters of Intent
When the best offer has been identified, we will help you and your attorney negotiate a formal Letter of Intent, which is a legal document describing the details of the transaction. This letter will define the primary terms of the sale, including the price, timing, employment agreements and any other factors affecting the deal. Once both parties have agreed to the terms, due diligence begins. This part of the M&A process can be time-consuming, but you can count on us to help you through this.
After due diligence is complete, all contingencies have been satisfied, and both parties accept the final terms of the transaction, the closing will be scheduled. The purchase agreement is usually signed at the closing, all included assets transfer to the buyer, the purchase price is paid, and the sale is completed.
The M&A process has been used many times, by many M&A advisors, to find the best buyers for a business, and maximize the selling price. We recommend using it in the sale of a larger business.