Q: What does a business broker do? Can't I sell my business on my own?
A: The best thing a business owner can do to optimize results is to focus on running the operations of the business. You will put yourself at a severe disadvantage if you attempt to negotiate on your own against experienced buyers and/or experienced business brokers representing buyers. We help you:
•Expertly market your business in a highly confidential manner
•Attract the best possible price for your company because of our ability to locate more than one qualified buyer and because of our years of experience negotiating and structuring successful transactions.
•Structure a deal that allows you to receive the maximum after-tax benefit.
•Coordinate your team of tax advisors, accountants, attorneys, etc., to ensure that the transaction is done in your best interest
•Negotiate and close a successful transaction. It is best to have an experienced professional help you negotiate.
Q: How do I find out what my company is worth?
A: We provide you with a valuation of your company. Our years of experience, valuation methods, and review of comparable sales of privately held companies will provide you with a valuation range indicating what your company could sell for in today's market. However, keep in mind that initial valuation is only an estimate and the final value of your transaction will depend on the marketing methods, negotiating skills, business environment, and numerous other factors.
Q: How does Reddy Brokerage find buyers?
A: Our buyer search is tailored to each company. First, we develop a customized marketing strategy and campaign for your business. Next, we utilize several databases including buyers who have approached us in the past and are now part of our qualified buyers database as well as external databases of nationally and internationally based companies. We also network with other intermediaries and buyers through various organizations. Strategic buyers are typically targeted and approached by direct mail or telephone. Discreet marketing may also include newspaper advertising, trade publication advertising, and ads placed on high traffic M&A websites.
Q: I want to keep the sale of my business confidential. I don't want my employees, customers and vendors to know that my business is for sale. What steps do you take to ensure confidentiality?
A: Most sellers share your concern. Our discrete process and procedures are designed to protect confidentiality. Some examples:
-All interested buyers must sign confidentiality agreements and must be financially qualified before any detailed information is disclosed about your company, including its identity.
-All external advertisements for your business are written in a discreet format and do not contain enough information to allow someone to determine that it is your company that is for sale.
-All materials, descriptions, financial statements, and marketing materials are pre-approved by you.
Q: Do I need a lawyer and/or an accountant?
A: Merger and acquisition specialists from Reddy Brokerage do not take the place of a lawyer or accountant. You are encouraged to seek legal and tax advisory services prior to closing any business transaction. We highly recommend that the attorneys and CPAs you use for the sale or purchase of a business be well experienced in M&A transactions. Over the years, we have worked with many qualified professionals in this area; we can refer you to them as needed.
Q: How long will it take to sell my business?
A: The time needed to sell your business depends on a great many factors, including your expectation of value for your business, the type of business, your willingness to finance all or part of the purchase price, and market conditions. On average, it takes about 7 months to consummate a sales contract. Your Reddy Brokerage specialist can explain how your business fits into these general guidelines.
Q: What types of offers should I expect to receive?
A: Astute buyers are going to structure the initial offer to leave sufficient room for negotiations. Therefore, you should expect to receive low initial offers. All offers will contain some important contingencies, including review of the financial books and records of the business, obtaining a satisfactory lease, agreement on training, and transition periods. Other contingencies specific to your business may also be included. Contingencies are normal and provide the buyer with the opportunity to verify the information presented in the marketing materials.
Q: How will I be protected on any personal financing I provide to the buyer?
A: The closing escrow agent can prepare a promissory note, a security agreement and will file a UCC-1 financing statement with the appropriate state and local agencies. It is much like financing a car - the lien can be recorded in the public records and the assets listed on the UCC-1 can not be legally sold or refinanced without your permission.
Q: How long is the training period for the buyer?
A: Generally, you will be expected to provide two weeks to two months of training in the business with equal time of telephone consultation. If you are financing any portion of the purchase price, as is common in a lot of deals, you still have an investment in the business, so properly training the buyer is in your best interest.
Q: Will I have to sign a non-compete agreement?
A: Typically, yes. The type of non-compete agreement depends on the type of business you are in.
Q: When should I tell my employees about the sale?
A: Although it sounds harsh, our considerable experience has proven that it is best to tell your employees about the sale immediately before or immediately after the sale is complete. Of course, if there is an employee whose expertise will be needed after the sale, you should introduce the buyer to this employee shortly before closing. Your Reddy Brokerage specialist can assist you in determining the timing for notifying employees.
Q: What is expected from a seller in order for Reddy Brokerage to conduct a valuation and to start marketing a business?
A: The information disclosure requirements for companies vary depend on the type of business. However, most businesses are expected to provide:
•3-5 years income tax returns, income statements, and balance sheets.
•Current list of equipment, fixtures, and inventory.
•A copy of real estate leases with details such as square footage, space availability, rent expense, terms, options, etc.
•Information about property or real estate owned or used by the business.
•Breakdown of employees with titles, salaries and a short biography for each member of the management team.
•Photographs of facility, equipment, and location, etc.
•Legal documentation for any patents, intellectual property, etc.
•Marketing materials such as copies of advertisements, magazines, articles, Yellow Pages ads, newspaper articles, etc.
•Other documentation specific to your business.
We will provide you with a list of required documents and materials. Reddy Brokerage may also require that you participate in a thorough interview allowing us to learn about your business to effectively represent you and your company.
Q: How does Reddy Brokerage get paid?
A: We are paid for success and therefore receive a transaction fee at the close of the transaction. If you have been considering the sale of your business or looking for buying a company that meets your investment criteria, please contact us to arrange a confidential consultation.
Q: What can I do to help sell my business?
A: As Reddy Brokerage begins the process of selling your business, there are certain things you can do to help us. Some examples are:
•Provide us with required information in a timely manner.
•Be as accommodating as possible in setting appointments to meet with buyers.
•Conduct business as usual - Keep normal working hours and continue with business as you normally would
•Make sure your financial records are an accurate reflection of revenues, business expenses and assets/liability levels.
•Do not let inventory levels dip below normal or delay asset purchases beyond what is reasonable.
•Keep all aspects of the business clean and in good repair.
•Remove equipment or furniture that is not part of the sale.
If you have are planning on selling a business with more than $2 milion in revenues, please contact: Elite M&A - Mergers & Acquisitions Specialists