What is extremely exciting about selling businesses is that everything is negotiable. Purchase price, transition agreement, consulting agreement, non-compete agreement, perhaps an earn-out or royalty over time, or even seller financing. All of these negotiations have financial impacts on taxes, etc. which affect your net proceeds. Lake Country Advisors has extensive experience helping you package your business in such a way to net as much proceeds as possible.
We always recommend to have an open mind when selling your business. You never know what type of sale, type of buyer, or type of package the market will bring. Some of our FAQs are answered below:
Depends – An asset sale is not like a liquidation, but rather the sale of the assets of a business. Essentially a new owner starts fresh from the day of close, and a Seller shuts everything down – paying off all liabilities, etc. The benefit of an asset sale is that there are no contingent liabilities for both the buyer and the seller in the transaction. A stock sale is the sale of the stock/shares of the company of which the company owns the assets. In this case, liabilities will transfer to the new owner. There are many positives to each type of sale in regards to liabilities, tax implications, etc.
We suggest to have an open mind – depending on your business and the type of buyer that comes to the table, there may be benefits that will determine the type of sale.
Yes – often we sell businesses where the new owner/buyer is the majority owner, but the seller still has an equity position. At some point, when the business is for sale again, you can get a second bite of the apple – which is typically very profitable as the new owner worked with you over a period of time to take the business to the next level.
In short, we will market and advertise your business in a confidential, discreet manner. LCA will implement extensive Electronic & Traditional Marketing Strategies as well as leverage our proprietary CRM system that has over 20,000 vetted/qualified buyers who are waiting to be notified of the right opportunity. In addition, we work with Sellers to create an Offering Memorandum that will include details of what your business is currently doing, what it could/should be doing as well as market research/analysis to help buyers understand and get excited about your opportunity.
Financial vetting is dependent on the type of business for sale and on the type of buyer. Depending on the type of buyer, we may ask PEG funds to provide us with proof of funds available. If a wealthy individual is interested, we may ask for proof of funds direct from the banking establishment. Financial statements are also important in helping us understand how much total money is available, from where, and how long it will take to gain access to those funds.
Lake Country Advisors highly recommends that a Seller does not waste any money on attorneys and/or accountants until you have an agreement of price and terms with a buyer. We would like to be introduced to your attorney and accountant at the beginning of engaging your business, but we do not suggest that we include them in negotiations. We typically include a contingency for Attorney and Accountant review/approval within days of accepting price and terms. There is no need to get a bill from an attorney or accountant if you can not agree on a price of selling your business. Once we can get an agreed upon price established, we will want your attorney and accountant heavily involved working in your best interest.
After an accepted offer, there will be a virtual data room created to help manage the due diligence materials that all parties in the transaction will have access to: Seller, Buyer, Attorneys, Accountants, Etc. We have found this to be very effective in providing the materials quickly and in an organized manner to all parties.
After an accepted offer, there will be a virtual data room created to help manage the due diligence materials that all parties in the transaction will have access to: Seller, Buyer, Attorneys, Accountants, Etc. We have found this to be very effective in providing the materials quickly and in an organized manner to all parties.
Audited financials aren’t necessary in the sale of your business, however, it is beneficial if they are available as it could potentially ease any anxiety a buyer might have. In reality, it is more common that businesses are sold without audited financials in the Lower Middle Market M&A environment.
Since we help you sell your business in a confidential and discreet manner, there are a few ways to handle buyers: conference calls, meeting off site/Lake Country Advisors’s office, or we can meet at your business’ location before/after hours so employees are not informed of the sale.
Contrary to many beliefs, we can help sell a business that is “losing money.” There are many strategic buyers/companies that have the resources to turn distressed businesses into thriving/profitable businesses and would like to roll them up into their current operation. We are very well connected with buyers who are looking for these types of opportunities.
We require an advanced fee to help cover upfront administrative and marketing expenses. We are fee based with commission percentage due upon the sale of a business. We emulate a Lehman type fee structure, where the larger the business, the smaller the percentage commission. When you decide to engage your business for sale, Lake Country Advisors. will provide you with a proposal that includes the fee structure. Our fees are non-negotiable.