Morgan & Westfield Brochure


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Morgan & Westfield Brochure

  1. 1. | 1-888-mwestfield © 2009 Morgan & Westfield
  2. 2. 1-888-mwestfield Dear Business Owner, Congratulations on the decision to sell your business. Though it can be one of life’s most stressful events, it can also be one of the most rewarding. You’ve invested far too much money, time and energy in this special endeavor to leave a profitable sale to chance. It should be carefully planned and managed by an experienced professional broker--someone who understands every phase and nuance of the process and will work diligently to ensure that you are properly rewarded. There’s an old saying in the brokerage business: “one buyer is no buyer”. Meaning that to maximize your selling price it’s necessary to generate many buyers and let the “market” determine the price. At Morgan & Westfield, we pledge not only maximize buyer exposure but also the return on your sale, and to make your entire experience as smooth and stress free as possible. To that end, we handle all 200 multi-disciplinary tasks necessary to successfully complete the deal--from helping prepare legal and financial documents to working with lenders and escrow officers. Unlike others, our company is solely focused on brokering businesses. We take what’s called a “boutique” approach, which means that we’re very selective about the sellers we partner with. This allows us to give each one our full attention, support and guidance, from the beginning of the sale to the end. Morgan & Westfield uses a proven, systematic process that’s based on a unique combination of knowledge, confidentiality, marketing, objectivity and negotiation. Nothing is left to chance so there are no costly or unwanted surprises. Only positive, profitable results that satisfy your every expectation. Because we represent you on contingency, we don’t accept upfront listing or marketing fees. In fact, our “success” fee isn’t paid until your sale is successfully completed. Thanks again for considering Morgan & Westfield. Let us know if you have any questions. Best regards, Morgan & Westfield © 2009 Morgan & Westfield
  3. 3. 1-888-mwestfield seller concerns At Morgan &Westfield, our mission is to serve you with utmost attention and professionalism. Following each sale, our brokers conduct a “post-mortem” or post-sale analysis to see how we can improve our effectiveness and methods of selling businesses.Your concerns are very important to us, so please take a moment or two to share them with us, rating the importance of each using the checklist below. On a scale of 1 to 5, a 1 is of little importance to you, and a 5 is of vital importance. Please rate each item independently so that we may clearly understand your concerns in each individual area. concern: 1(low) 2 3 4 5(high) • Buyer Qualifications [ ] [ ] [ ] [ ] [ ] • Full Price [ ] [ ] [ ] [ ] [ ] • Amount of Cash Down Pmt. [ ] [ ] [ ] [ ] [ ] • Confidentiality [ ] [ ] [ ] [ ] [ ] • Closing Costs [ ] [ ] [ ] [ ] [ ] • How the Business is Shown [ ] [ ] [ ] [ ] [ ] • Advertising [ ] [ ] [ ] [ ] [ ] • How new owner continues [ ] [ ] [ ] [ ] [ ] • Speed of Sale [ ] [ ] [ ] [ ] [ ] • Ease of Sale [ ] [ ] [ ] [ ] [ ] • Other Concerns: Comments: © 2009 Morgan & Westfield
  4. 4. Standard Representation Services valuation • preparation • presentation • negotiation • and more As a business owner, you’ve devoted an incredible amount of time, resources and energy to building and nurturing an enterprise that may well represent your life’s work. If you’re considering selling, now is the time to consult the professional business intermediaries at Morgan & Westfield. Through experience, integrity, objectivity and multi-disciplinary expertise we can prepare you and your business for a smooth, timely, litigation-free transaction that minimizes risk and maximizes your return. No-cost, Exploratory The first two items below are free services designed to help you decide whether to sell your business now or to postpone it until later. If you wait, we can still help you maximize your company’s value and prepare it for a future sale, when conditions may be more favorable. Ask your broker for complete details. © 2009 Morgan & Westfield
  5. 5. 1-888-mwestfield FrEE sErvicE #1: rEcastiNG FiNaNcial statEMENts Step one in determining your company’s true value. The first step in accurate valuation is getting a clear picture of your current financial position (including tax liability) and determining your business’s actual income. We can help you achieve this by converting the company’s net profit to something called “Seller’s Discretionary Earnings.” Seller’s Discretionary Earnings is defined as pre-tax business net profit, PLUS: • Total compensation of a single owner/operator • Adjusting excessive owners wages to market value • Annual depreciation and amortization (non-cash) expenses • Interest and non-recurring expenses • Expenses and perks unrelated to business operations, such as owner health and life insurance, travel, entertainment and personal auto expenses Armed with these figures, you can make a more well-informed selling decision. If you decide that now is the time, we will prepare a FREE, no-obligation business valuation (see below) to aid in the process. FrEE sErvicE #2: valUiNG tHE BUsiNEss Setting and getting the price you want. Today’s buyers are better educated about pricing than ever before. If you’re serious about selling, your price must be realistic and in line with the company’s true value. At Morgan & Westfield, we believe in setting a proper, defensible price right from the start—one that results in the most expeditious and profitable sale possible. To present your business’s value in a way that’s meaningful to buyers, this free, comprehensive service covers: • Computer prepared pricing, based on over 50 key factors • Identification of primary value drivers • Professionally bound, 30-35-page report, featuring 8-12 different valuation methods • A suggested range of prices – low, medium, and high • Comps from highly regarded industry databases — BizComps and Pratts Stats • Analysis of operations, competitors, cash flow, ROI and debt-service © 2009 Morgan & Westfield
  6. 6. cErtiFiED BUsiNEss appraisal sErvicEs Available for a fee through Morgan &Westfield’s trusted resource network Because independent, third-party valuations have sometimes resulted in a higher asking price and a quicker sale, some buyers consider them more attractive than broker-initiated valuations. If you prefer this type of service, two companies we regularly recommend are: • Business Evaluation Systems • Gulf Coast Financial • Strategic Value Analysis • Formal Valuation • M&A Valuation • IRS Revenue Ruling 59-60 • May be deducted from commission at closing FrEE prEparatory cHEcklist If you decide to temporarily delay the sale of your business, we will provide, at no cost, a customized pre-sale checklist for you to help prepare for a future sale, including recommendations for assuring the highest possible selling price. arraNGiNG BaNk FiNaNciNG To attract more and better-paying buyers Financing the sale is critical to getting your deal done. If we can pre-approve the business for bank financing you may be able to cash out 100% at closing. Part of the added value offered by Morgan & Westfield is access to a nationwide network of progressive, business-friendly institutions solely dedicated to business brokers and their sellers. If you decide to obtain loan pre-approval, we can recommend several different lenders to help assure the most favorable rates, terms and buyer qualifications. © 2009 Morgan & Westfield
  7. 7. 1-888-mwestfield DraFtiNG rEprEsENtatioN DocUMENts Establishing and explaining the seller/intermediary relationship Once you select Morgan & Westfield as your business broker, your representative will prepare documents that clearly define our working relationship, including disclosures, responsibilities and expectations. These include: • A Representation agreement • Agency disclosure • Seller’s disclosure statement prEpariNG prE-salE DocUMENtatioN Expediting due diligence to facilitate a quick sale To sell your business quickly, you must anticipate the buyer’s (as well as lender’s) informational requests and have all the necessary documents readily available. Doing so makes you appear to buyers and bankers like a committed seller who’s serious about closing the sale. To ensure timely, efficient replies to all qualified prospects, your Morgan & Westfield broker will work closely with you to assemble and organize copies of the most commonly requested pre- and post-offer documentation. A partial list of examples includes: • Your business/marketing plans and most recent business appraisal • An interim financial statement with prior year comparison (or gross revenues) • Three years of Federal tax returns and P/L statements • Your business license, lease summary and franchise agreements • F, F & E List © 2009 Morgan & Westfield
  8. 8. packaGiNG tHE BUsiNEss Expediting due diligence. Satisfying buyer demands. Buyers are a rightfully cautious group that require honest answers and full disclosure before moving forward with a purchase. Why are you selling the business? Which accounting method do you use? Who are your primary competitors and where do they advertise? How much do you owe suppliers? What are your licensing requirements? The secret to expediting your sale is anticipating buyers’ questions and concerns, and compiling into one document, answers they need to make a confident, fully informed decision. As our partner, you’re entitled to receive the Morgan & Westfield Business Summary and Valuation, a comprehensive, professionally bound report that saves time and limits post-sale litigation by succinctly answering buyers’ most frequent pre-purchase questions. Typically 25-50 pages in length, your fully customized summary will: • Increase the likelihood of a swift, problem-free sale • Clearly spell out buyer qualifications and licensing requirements to discourage unqualified buyers • Detail lease terms and other information to eliminate misunderstandings and post-offer deal killers • Highlight your business’ primary value drivers MarkEtiNG tHE BUsiNEss Confidentially promoting your firm to the largest possible audience Intelligent, targeted, full-scale marketing is vital to receiving top dollar for your business. To maximize the selling price, you must expose your business to a large universe of highly qualified prospects. Morgan & Westfield takes a proven, global approach designed to attract buyers from around the world. We package your business to appeal to both first-time buyers and industry pros who may be willing to pay more if synergistic value is perceived. As always, we exercise the utmost care and consideration in maintaining confidentiality and will never publicly publish your company’s name. Our marketing services include: • Preparation of Marketing Plan • Ad composition and placement • Listing your company on 30+ international Web sites • Special search engine optimization techniques • Direct mail and (if appropriate) fax campaigns © 2009 Morgan & Westfield
  9. 9. 1-888-mwestfield prEscrEENiNG prospEctivE BUyErs Separating serious prospects from curious tire kickers A large percentage of prospective buyers are casual lookie-loos who never make a purchase. Many lack the financial resources to get the deal done. That’s why Morgan & Westfield places so much emphasis on prospect pre-screening. Weeding out unqualified buyers not only saves you time and headaches, it allows you to focus on running your company and preparing it for sale — an effort which, our experience shows, ultimately helps maximize your selling price. Our brokers respond to all buyer requests within one business day with both an email and at least three phone calls. Many brokers simply email the buyer, with messages often never reaching the buyer. To protect your interests and streamline the evaluation process, we carefully prepare the following documents for the qualified prospect: • Non-Disclosure Agreement • Buyer Interview & Profile • Buyer Financial Summary • Credit Report and Score — obtained if requested by seller EDUcatiNG prospEcts Educating buyers and setting realistic expectations Though some buyers know what they want in a business purchase, the vast majority don’t. Many lack entrepreneurial experience and are unschooled in even basic business principles, further compounding the seller’s challenge. To facilitate a smooth, trouble-free transaction, your Morgan & Westfield broker will help educate these buyers about key aspects of the purchase process, including pricing, valuation, due diligence requirements and more. DiD yoU kNow tHat BUyErs: • Are often told by their accountants to pay 20-30% of what a business is actually worth? • Frequently expect to see sellers’ bank statements and tax returns, and talk to employees before making an offer? • Expect to submit a non-binding letter of intent instead of an offer with an earnest money deposit? • Often focus exclusively on the financials and little else when evaluating a business? © 2009 Morgan & Westfield
  10. 10. Morgan & Westfield’s Buyer Assistance Services In addition to education, we offer several ways to help serious buyers purchase a business, including: • Credit clean-up: we have sources that can permanently remove negative items from a buyer’s credit report • Financing: we can help prepare buyer to apply for favorable bank financing • Alternate cash sources: we can show buyers how to unlock the purchasing power of other capital sources, including retirement and 401 (k) funds • Discretionary reminders: where needed, we will remind buyers about the necessity of confidentiality sHowiNG & NEGotiatiNG Representing your interests every step of the way Personal chemistry, unchecked emotions and simple misunderstandings have derailed countless transactions, leaving buyers and sellers equally frustrated and unsatisfied. As your intermediary, we assume a neutral, unemotional position that maximizes our influence and objectivity and allows us to act as a buffer between you and the buyer. In addition to negotiating critical pre-offer considerations, we’ll also: • Prepare you for the all-important Buyer/Seller meeting, including a detailed discussion of the buyer’s purchasing profile and hot buttons • Interpret and assess buyer’s true purchasing interest and intent • Obtain objective buyer feedback about your business’s purchase appeal • Deal only with prospects who understand and are willing to pay fair-market value © 2009 Morgan & Westfield
  11. 11. 1-888-mwestfield prEpariNG tHE pUrcHasE aGrEEMENt You manage your business, we’ll handle the details For seller convenience and security, an Asset Purchase Agreement (with refundable earnest money deposit) trumps a non-binding Letter of Intent every time. On your behalf, your Morgan & Westfield broker will handle this and other critical details vital to a successful purchase, including: • Drafting a Basic Agreement and addenda • Creating a Transaction Timeline and Due Diligence Checklist—a precise listing of documentation and other requirements needed to close • Suggesting a guarantee—explaining to the buyer the necessity of personally guaranteeing the seller’s promissory note • Exploring creative terms—to increase the price of your business • Developing a counter offer, if needed coNDUctiNG DUE DiliGENcE Avoid costly mistakes and deal breakers Morgan & Westfield has brokered many successful and mutually beneficial transactions. We know that most mistakes and deal breakers occur during due diligence. As your intermediary, we serve as a catalyst, helping you avoid setbacks and ensuring that your sale maintains momentum and closes quickly. We’ll help you anticipate buyer requests, avoid problems and eliminate surprises. Ways we accomplish this include the creation and compilation of: • A Due Diligence Checklist and Contingency Sign-Off • A strict timetable to ensure confidentiality • Due Diligence Materials and Book DiD yoU kNow? A purchase offer is often followed by a request for documents such as these: • Financial and bank statements • Equipment leases • Tax returns • Outside contracts • Sales tax reports • Premise lease • Seller’s disclosure statement • Operational policies • Customer contracts • Environmental reports • Payroll records • Supplier contracts • Insurance Policies • Franchise agreements • Condition of equipment • Employment agreements © 2009 Morgan & Westfield
  12. 12. assistiNG witH BUyEr FiNaNciNG Helping serious prospects become satisfied buyers With your permission, we will help qualified, high-quality buyers arrange financing, including accessing equity they have in their home or retirement plans. • Preparing for preliminary lender interview and application • Explaining pre-qualification requirements • Business Plan & Projection (often required by lenders) • Dealing with preferred lender representative • Consideration of a seller’s promissory note • Drafting escrow Instructions • Aid with other third-party sources closiNG tHE salE Expediting a smooth, litigation-free transaction Successfully closing the sale of a business requires a coordinated commitment by all parties to the use of tried and true legal documentation. Participants are rewarded with lower legal fees, fewer unwanted surprises and a mutually satisfactory and profitable purchase experience. As your chosen intermediary, your Morgan & Westfield broker provides expert services and support that includes: • Drafting escrow instructions • Clearing outstanding contingencies • Preparing escrow company document package • If applicable: obtaining Franchisor Approval and lease assignment • Developing an orderly turnover plan • Drafting allocation of purchase price • Negotiating equitable closing costs and escrow fees • Coordinating activities between attorney, landlord, CPA, insurance agents and escrow officers © 2009 Morgan & Westfield
  14. 14. Exclusive Quick Close Program If you qualify, Morgan & Westfield can help you close the sale of your business in as little as one week, once a legitimate offer is received. Though there are always numerous factors at play in any sale and no deal is ever guaranteed, the Quick Close Program can help you be ready to move when the right opportunity knocks. Eligibility REquiREmEnts To qualify, you must meet the following requirements before your company goes on the market: 1) The businesses must be listed within 15% of the Most Probable Selling Price. 2) The seller must be willing to accept a reasonable enough down payment with an amortization of the balance that will still provide a potential buyer with a living wage and return on his investment. 3) The seller must be willing to pay for a U.C.C. search prior to putting the business on the market. 4) The seller’s landlord must be contacted to verify the lease information and get a pre-approved assignment of the lease. 5) The seller’s attorney must be contacted and must be willing to cooperate with the program. 6) A complete list of furniture, fixtures, and equipment and inventory must be prepared. 7) A seller’s disclosure statement must be completed. 8) A credit report must be obtained from Dun and Bradstreet on the seller and his business prior. 9) All other required documents must be in the broker’s file (including but not limited to): • Financial Statements (3 years) • Interim financial statements and • Tax Returns (3 years) current balance sheet • Copy of property and equipment leases • Copy of any encumbrances, liens, or • Employment agreements other indebtedness on the business • Documents supporting add-backs © 2009 Morgan & Westfield
  15. 15. 1-888-mwestfield quick closE pRogRam — sample buyer letter The following is sample letter template we often use to inform buyers of the Quick Close Program: Dear Buyer, When a business qualifies for our Quick Close Program, it falls within our very strict pricing range. It also means that have done a lot of preliminary work to ensure that no unwanted or unpleasant surprises surface during your purchase. If the company you want is part of this program, you can rest assured that a Morgan &Westfield Professional Broker has: • Spoken with the seller’s landlord and attorney (or escrow company) • Verified lease status • Conducted a preliminary UCC search (title search) • Completed a seller’s disclosure statement • Confirmed the owner’s commitment to sell Of course, you must carefully review this or any other opportunity to be satisfied it fits your needs. But if you choose a business from our Quick Close Program, we can assure with reasonable confidence that you’ll enjoy a speedy, rewarding, trouble-free transaction. Sincerely, Morgan & Westfield © 2009 Morgan & Westfield
  16. 16. Advantages Of Using a Broker: The only thing more misunderstood than a business broker’s role is the full extent of the value they bring to the selling process. The most effective brokers possess broad-ranging, multi-disciplinary knowledge, from real estate, escrow and tax law to marketing, finance and psychology. In the course of a sale, the broker is equal parts business expert, diplomat and trusted confidant—someone you can rely on to act in your best interest from the first buyer inquiry to the day your deal closes. If you have the time and patience—and enough experience to weather the rigors of a potentially protracted sell— including valuation, due diligence and one-on-one negotiations—it is possible to sell your business without a broker. The advantage, of course, is that at the end, there’s no fee to pay. For the vast majority of owners, however, retaining an experienced, professional intermediary is a wise and prudent decision that can easily repay the fee they earn many times over. © 2009 Morgan & Westfield
  17. 17. 1-888-mwestfield Time SavingS • IntervIews and showIng: A broker handles all buyer inquiries, conducts the preliminary interview, arranges showing times, answers questions and gives you the opportunity to focus on operations, cash flow and profitability. • screenIng and QualIfyIng: By doing a preliminary interview and asking the sensitive questions, a broker can identify and reject curious “tire kickers” and others who lack the intent or resources to successfully conclude the sale. ObjecTiviTy • showIng and negotIatIng: Competent, committed intermediaries know that (for their client’s benefit), they must maintain an objective, unemotional position that creates a buffer between seller and the buyer. This objectivity enables the broker to more accurately interpret buyer’s motivations and behaviors and adjust tactics to maximize the seller’s benefit. cOST SavingS and ROi • PrIcIng: Studies show that using a business broker results in a higher price than when owners sell on their own. Most buyers are reluctant to purchase directly from a seller. Most, however, believe that a professional broker is more likely to structure a safe, mutually beneficial transaction. RiSk avOidance • lItIgatIon: Though you alone are liable for the accuracy and veracity of all information you provide, the broker’s knowledge of how your business was “packaged” for sale may help you and your attorney avoid or settle unexpected disputes. © 2009 Morgan & Westfield
  18. 18. Specialized knOwledge and expeRTiSe • MarketIng, advertIsIng, ProMotIon: An experienced broker will have the marketing skills and knowledge necessary to advertise and promote your business, including managing media planning, search engine optimization and ad writing. • escrow suPPort: The closing is handled through an escrow procedure. Documents are provided to both parties for review by their prospective attorneys before the closing occurs. The business broker can provide tried- and-true legal documentation that reduces the need for attorney fees. • Buyer fInancIal assIstance: A seasoned broker with an established resource network can often direct prospective buyers to financing sources beyond the SBA and second-mortgage money. In certain circumstances, intermediaries can identify financing alternatives that facilitate a sale that otherwise might not take place. • sellIng MeMoranduM: Your broker should prepare a detailed selling memorandum for each company they put on the market. They know exactly what buyers expect to see and how to organize information in a clear, compelling format that attracts interest and inspires action. • valuatIon knowledge: Brokers have the valuation knowledge and experience necessary to maximize the value of your business, including recasting financials. They will prepare a detailed report that includes several valuation methods, and provide a range of legitimately defensible values that often results in a higher selling price. expeRience and pROfeSSiOnaliSm • MultI-sPecIalty coordInatIon: An experienced broker knows how to coordinate and control sell-side and buy-side activities with various specialists and advisors, which can save time, reduces risk and facilitate a quicker close. • confIdentIalIty: For obvious reasons, customers, employees, suppliers and competitors need not know that a company is for sale. Competent, professional brokers know this and exercise the utmost care in maintaining confidentiality when marketing your business. To assure the integrity of your operation, a professional intermediary will never openly publish your company’s name. • follow uP: Buyers expect to deal with intermediaries. Since your broker handles all follow up, you, the seller, maintain position of greater strength, control and leverage. • access to More Buyers: Professional brokers typically have access to large international buy/sell databases. The owner wishing to sell a business does not. This is a distinct disadvantage. If a prospect loses interest, the seller loses the sale, and must start the process anew. Because brokers have a steady flow of inquiries, they’re able to quickly replace unengaged buyers with others who may have an immediate interest. © 2009 Morgan & Westfield
  19. 19. Preparing Your Business for the Sale ask the right questions. get the right price. While the discovery questions below may not apply in all situations, they can help you create a customized plan to optimize the value of your business and the price you get for it. Ask your Morgan & Westfield broker which apply to your unique selling strategy. © 2009 Morgan & Westfield
  20. 20. 1-888-mwestfield Is the busIness scalable? Scalability refers to your ability to rapidly grow your customer base without significantly increasing your fixed costs. It can create high leverages in terms of value. Does the busIness have a DIversIfIeD customer base? If one customer accounts for more than 10% of the total base, a buyer often gets nervous. In almost every deal, this question appears. are you anD your customers “too close?” A close personal relationship with your customers can spell trouble to a buyer.What happens when you exit the business and the buyer does not have this relationship? Does your revenue moDel revolve arounD a repeatable Income stream? Repeatable income streams create value. But not all businesses have repeatable income sources. Still, it’s a question worth considering. They’re more applicable in a relatively small market. Examples include your dentist (every six months) or the insurance business. Do you have multIple proDucts that you can sell or Develop? or are DepenDent on a sIngle proDuct lIne? Businesses that have a more diverse line or products or services often sell for more. are your gross margIns IncreasIng or DecreasIng? A decreasing gross margin may indicate competitive pressure on pricing. If gross margins are decreasing, perhaps you can shift revenue to a more profitable product line. © 2009 Morgan & Westfield
  21. 21. Do you have stanDarDIzeD processes anD proceDures whIch can easIly be followeD? Buyers are looking for an established system to reduce their management time. Is your busIness a turnkey operatIon? Businesses that can be purchased “turnkey” often bring in strategic buyers who may pay more than a financial buyer. If a business “runs itself ” without you, this can translate into a higher price. Stay away from the business and see what tasks could be assumed so that you can work on the business rather than in the business. are your fInancIal recorDs presentable? Sloppiness or the lack of clear financial information and records can be a value deflator when selling a business. Is your internal staff or CPA preparing records that are clear, presentable, and consistent? If so, your chances of a successful sale will improve considerably. Do you have a management successIon plan? The lack of a management succession plan with formal cross-training can be a major negative for the buyer. Do you have a roaDmap for growth? You don’t necessarily need a formal business plan but you do need a roadmap for growth. Your intermediary should address this in your Offering Memorandum. Is there any lItIgatIon agaInst the company? If you have pending litigation, especially in small to middle market companies, buyers often are extremely nervous and may demand holdbacks to address settlement amounts. © 2009 Morgan & Westfield
  22. 22. 1-888-mwestfield what type of growth has your company been experIencIng? Many buyers study financial ratios of an entire industry and will criticize your business using these ratios. Check to see how you compare with others in your industry. how often Do you “clean house” In your busIness? It may sound trivial, but poor housekeeping shows possible deferred maintenance, safety considerations and other concerns. A little paint and organization goes a long way. Remember, sloppiness brings down value. You could leave a lot of cash on the table by ignoring cleanliness. what Does your offerIng memoranDum look lIke? When you make the decision to sell your company a poor Offering Memorandum doesn’t place you in a position of strength. You have spent years building your business and doing a poor job of presenting it is a disservice to you and to your stakeholders. Do you have a DIversIfIeD supplIer base? You do not want a key supplier to hold you hostage. This is a very common question from buyers. are your employee salarIes over market level? This can be a major turnoff to a potential buyer. Profit sharing programs are fine but when the base is out of line with market salaries many buyers will look elsewhere. Do you have job DescrIptIons for all employees? Clearly defined roles and responsibilities are essential in an effectively run organization. Loosely defined positions can create ambiguity in the mind of a buyer. © 2009 Morgan & Westfield
  23. 23. how are your customer satIsfactIon ratIngs? Companies that can show quantifiable data from surveys from customers have a chance to receive a much higher value. Do you run your busIness from a percentage basIs? Showing percentage of costs devoted to labor and other items shows you have a handle on the business for comparisons from year to year. how have you Done wIth your Intellectual property? This can be a real bonus especially if it adds significant barriers to competition. Do you have a solid patentable position that may lock out competitors? are there barrIers to entry In your InDustry? A great location, proprietary products or stable customer base all pose significant barriers to entry. When presenting your business for sale, all these items help to create value in the eyes of the buyer. have you lookeD at your famIly compensatIon? Buyers often look at several items in this category. An owner may have a very low salary to suggest that the company is profitable. He may also be using business assets for personal use. These issues are quickly picked up by sophisticated buyers and are sometimes are grounds for an early exit. There are also cases where family members are on the payroll but not active in the business. Non-operating assets are common, but do nothing to motivate a buyer. Do you have many new proDucts? A constant flow of new product offerings brings excitement and opportunity to the business. Leaders in specific niches usually are active in new product launches, new ways of adding services and many other positive additions. how Do your fInancIal ratIos look? Sophisticated buyers often look at financial ratios and compare them to leaders in your segment. A strength/weakness/opportunities/threats (SWOT) assessment is often performed. Typically, current ratio, inventory turns, total asset turnover, sales/fixed assets are all carefully scrutinized. © 2009 Morgan & Westfield
  24. 24. 1-888-mwestfield Do you have geographIc DIversIfIcatIon? Buyers look both at regional and nation trends. Employment rates and other factors differ from region to region. If your business is located across several geographic areas, you may have a value enhancement factor. how are you DoIng wIth your aDvertIsIng anD marketIng buDgets? Buyers like to see advertising budgets maintained prior to the sale of a business. Maintain all of your advertising and marketing, especially Yellow Pages. Do you have a passIon for qualIty? Fast food chains know all about the need for quality. Strict, repeatable built in quality controls bring confidence and value to a buyer. have you recently IncreaseD prIces? A price increase often falls right to the bottom line and rarely results in the loss of customers. Strong pricing and margins and very attractive to buyers. Buyers do not like to be in the discount business. how vIsIble are you In the InDustry? Buyers like to purchase companies that have a good reputation and industry visibility. What can you do to increase your reputation and profile? how current Is your accounts receIvable leDger? Aging accounts make buyers very weary. Write off old accounts and stay on top of current paying customers. Do you have agreements wIth your key personnel? Buyers typically like to be assured that key employees will stay after the sale. Employment agreements with top people can increase the value of your company in the eyes of the buyer. how olD are your projectIons? Buyers like to see reasonable projections outlining strategies for growth. Have your CPA or intermediary prepare credible projections with variable growth rates for your company. © 2009 Morgan & Westfield
  25. 25. checklIst of Important pre-sale tasks The first step in selling a business is preparing it for sale. Following is a brief checklist of some of the most common areas to consider in preparing a business for sale. In certain circumstances, we may work with the Service Corps of Retired Executives to assist in preparing the business for sale and to maximize the value of the company. If you have key employees that are essential to the continued operation of your business, it may make sense to incentivize those employees to stay through the sale of the business. attributes that motivate buyers does this apply action plan: to your business? • Consistent profit for two or more years [ ] yes [ ] no • No unresolved legal problems [ ] yes [ ] no • Proof that accounts receivable can be collected [ ] yes [ ] no • Clear and consistent accounting protocols [ ] yes [ ] no • Convincing business plan for the next few years [ ] yes [ ] no • Solid relationships with suppliers and customers [ ] yes [ ] no • Commitment of experienced employees to stay with the business [ ] yes [ ] no • Long-term lease at a favorable rent [ ] yes [ ] no • Complete disclosure of all relevant information [ ] yes [ ] no • Honest business practices [ ] yes [ ] no • Attractive and organized business premises [ ] yes [ ] no • Current inventory that’s in good condition [ ] yes [ ] no • Business and office equipment that is in good condition [ ] yes [ ] no • Clear list of noncash perks, such as business-related travel [ ] yes [ ] no • Sensible or convincing reason for sale [ ] yes [ ] no • Organized paperwork, including cash flow records, tax returns, leases and important contracts, and documents such as entity records [ ] yes [ ] no • Other: _______________ [ ] yes [ ] no © 2009 Morgan & Westfield
  26. 26. Valuation: Getting the Right Price For Your Business Value is related to risk and to the ability of the business to generate an income stream that is comfortable for the buyer. The value of a business depends on the needs and perspectives of each individual buyer. to accurately assess the value of your business, you and your Broker will start with these basic steps: • Review and evaluate hard assets • Recast, normalize, confirm and review financial statements • Identify factors that can impact future earnings • Select the appropriate valuation method • Calculate and apply external factor discounts © 2009 Morgan & Westfield
  27. 27. 1-888-mwestfield VALUATION METHODS While there are many different valuation methods, most fall into one of the following categories. Your Morgan & Westfield Business Broker can help you determine which method is most beneficial for you: • Cost of Assets: this method bases the value according to the value of its assets: all equipment, furniture, fixtures, inventory, supplies, etc. • InCoMe/eArnIngs: this method is predicated on the amount of income the business can produce for the potential buyer • MArket/CoMpArABle sAles: this method looks at sales of comparable businesses bases on gross revenue and net profit and other rules of thumb In many cases we see some common averages of what businesses sell for, for example: • two to three times annual discretionary cash flow/earnings* • fair market value of equipment and inventory, plus 18 months of discretionary cash flow • A percentage of annual gross sales (25%-100%) TUrNArOUND OppOrTUNITIES THE VALUATION “SANITy TEST” The figure you set must answer these questions: Businesses with a negative cash flow may • Does it adequately cover debt service? not pass the sanity test but may be a good • Does it provide a reasonable income for the buyer? acquisition for the right buyer. these types • Does it allow for working capital fluctuations? of opportunities make the most sense for an industry buyer or someone who has experience in your industry. novice buyers will be too intimidated and lack the experience to buy a turnaround opportunity. expect the acquirer to offer you an “earn out,” or a percentage of future sales. (*Discretionary earnings is defined as the owner’s total compensation. this includes owner salary, net profit, deducted interest, depreciation plus other benefits, such as luxury automobiles, excessive insurance, exotic travel and family bonuses that have been charged off as business expenses.) © 2009 Morgan & Westfield
  28. 28. HOw bUSINESS ASSETS INfLUENcE bUSINESS VALUE (excerpted from Business Broker press, 2008) However, buyers have to consider what is really behind those well-maintained tangible assets. there are many businesses, especially today, in which physical assets play a very small part in the success of the business. these intangible factors include: the business’ reputation with its customer or client base, and within its industry; mailing lists and customer/client lists; quality of product or Many courts and the Internal revenue service service; reputation with its vendors and suppliers; strength have defined fair market value as: “the amount at which of the business’ technology and other systems; plus many property would exchange between a willing buyer and other factors that can add a lot more value to the price of a willing seller, neither being under any compulsion to the business than can shiny equipment. buy or sell and both having a reasonable knowledge of Although the intangible assets listed above cannot be relevant facts.” You may have to read this several times seen, they are certainly an important part of the business to get the gist and depth of this definition. - and purchase price. Businesses that don’t need expensive the problem with this definition is that the conditions fixtures and equipment can, in many cases, be expanded cited rarely exist in the real world of selling or buying a more quickly and inexpensively because they do not business. for example, the definition states that the sale require cash-intensive equipment purchases. Buyers, to of the business cannot be conducted under any duress, their own detriment, do not want to pay the same price and neither the buyer nor the seller can be pushed into for equivalent cash flow for businesses that do not have lots the transaction. such factors as emotion and sentimental of equipment. they want to buy tangible assets. value cannot be a part of the sale. surprisingly, under this Business brokers and intermediaries know how definition, no actual sale or purchase has to take place to to point out to prospective buyers the advantages of establish fair market value. that’s probably because one businesses that may not require lots of equipment but have could never take place using the definition. those all-important intangible assets that create steady cash so what does make up the value of a privately-held flow. Business owners who have a service or other type of business? A business consists of tangible and intangible business that does not rely on the heavy use of tangible assets. the tangible assets are the most visible and the assets and are considering selling, should talk to their ones on which buyers too often base a judgment on the professional business broker/intermediary who can point value of a business. As factors of value, fixtures, equipment out the pluses and the hidden assets of the business. and leasehold improvements are often valued first by the buyer. Well maintained equipment and attractive interior (Copyright 2008 Business Brokerage press) surroundings are the first things a buyer sees when visiting a business for sale. Make no mistake, regardless of what prospective buyers may say, the emotional impact of a physically well-maintained business can be a very positive factor. In addition, it is much easier to finance tangible assets than intangible ones. © 2009 Morgan & Westfield
  29. 29. 1-888-mwestfield VALUE DrIVErS factors that can affect value and selling price It is critical to consider all of the value drivers. In valuing a business it is important to take all of the factors below into account. • Quality and sustainability of earnings • Years in business • Controls and internal systems in place • Ability to finance the sale • Industry trends — cyclicality, seasonality • requirements of franchisor or dealer • Customer concentration • the general economy • growth rate • license requirements and regulatory issues • Market — stability, potential • financial results (sale, margins, net, supportable • Capital expenditures earnings, trends, working capital requirements) • Barriers to entry • key performance indicators — • supplier concentration and dependability # inventory turns, A/r to sales • employment contracts • scalability/Upside potential and • profit margins related additional investment required • product differentiation • facility lease (rate vs. market, renewal • Market share options, landlord reasonableness) • Cost advantages • Marketability, demand, availability of • Business type — commodities, technical, competitive buyers with the necessary skill set • repeat customers • seller after sale issues (training/ • Quality of management mentoring, consulting, non-compete) • terms of sale • Competitive threats (internet, • size franchises, industry leaders) © 2009 Morgan & Westfield
  30. 30. rEcASTINg fINANcIAL STATEMENTS presenting an accurate picture of your company’s actual earnings If you’re like most owners, you’ve operated your business in a way that’s calculated to minimize taxes.You may have given yourself and family members as many perks and benefits as possible, kept offspring on the payroll, plowed profits back into capital improvements, etc. these and other common practices are designed to keep your profits (and your taxes) low, perhaps artificially so. But the need to “recast” or recalculate earnings arises when you decide to sell. removing owner-specific perks, benefits and expenses will make your company look as profitable as possible. If time does not permit (or in addition to) this step, you can have your broker adjust (recast) your past income statements to reflect your financial condition if you removed from them: • Your salary and perks, and those of family members you don’t expect to remain with the company • expenses or income that would not be expected to recur or continue after the sale (for example, income or expenses associated with discontinued products, or gains or losses from the sale of any business assets) • Investment or other non-operating expenses or income • Interest payments on any business loans, since you’ll be removing such liabilities from the balance sheet. • owner health insurance, life insurance, auto expenses, etc. © 2009 Morgan & Westfield
  31. 31. SAMpLE ADJUSTED INcOME STATEMENT for the year Ended December 2007 Statement adjuStment ReviSed income $ $ $ gross sales 5,090,578 0 5,090,578 other Income 0 0 0 total income 5,090,578 0 5,090,578 Cost of Goods Sold 3,840,899 250,4701 3,590,429 Gross Profit 1,249,679 250,470 1,500,149 expenses Advertising 22,045 2,5102 19,545 Auto 36,787 35,4303 1,357 Bad Debt 128 0 128 Computer service 6,907 0 6,907 Contributions 1,697 1,6974 0 Dues & subscriptions 3,845 3,8455 0 fuel 4,992 4,9926 0 Insurance 35,104 6,3217 28,783 licenses & permits 2,680 0 2,680 Misc. 4,593 4,5938 0 office supplies 48,993 6,1129 42,881 office Wages - 1099 10,237 0 10,237 payroll expenses 163,550 0 163,550 payroll taxes 96,890 13,60010 83,290 payroll Wages - office 258,802 136,00011 122,802 postage & Delivery 1,102 0 1,102 printing & reproduction 4,637 0 4,637 professional fees 9,540 0 9,540 rent 130,674 2,51012 97,146 repairs & Maintenance 9,970 0 9,970 Depreciation 4,060 0 4,060 taxes 7,069 0 7,069 telephone 1,888 1,88813 0 Uniforms 6,244 6,24414 0 Utilities 4,208 0 4,208 Workers Compensation 3,042 0 3,042 total expenses 879,694 622,934 net Profit/Sde (Before taxes) 169,985 476,212 646,197 © 2009 Morgan & Westfield
  32. 32. NOTES TO fINANcIAL STATEMENTS 1 $3800 – Installers no longer paid to measure, job now performed by salespeople. Cogs from another unrelated business. 2 non–Business expense. 3 owner’s personal vehicle. 4 non–business expense. 5 non–business expense. 6 owner’s personal vehicle expenses. 7 Dental insurance no longer provided for employees $2705. owner’s health insurance $3616. 8 non–business expense. 9 office supplies paid by salesmen $6,112. 10 sales Manager’s payroll taxes $4,800. friend’s payroll taxes $2,800. owner’s payroll taxes $6,000. 11 sales Manager duties assumed by owner $48,000. excess wages paid to friend $28,000. owner’s salary $60,000. 12 rent reduction in new facilities by $2,790 per month. 13 owner’s personal cell phone. 14 Uniforms no longer paid for employees. © 2009 Morgan & Westfield
  33. 33. Advantages Of Financing the Sale: In the U.S., people rarely buy a business for all cash. In fact, studies show that the most successful and profitable transactions are financed by the seller. Your Morgan & Westfield broker is intimately familiar with the numerous advantages and benefits of seller-backed financing, including those listed below. © 2009 Morgan & Westfield
  34. 34. 1-888-mwestfield • Lower taxes: You only pay taxes on money that you receive. When financing the sale, you do not pay taxes until you receive the money. If you receive all cash, you may be pushed into the highest tax bracket for the year. • HigHer seLLing price: Financing the sale often results in a higher price, often 10-20% more for the same business. If you sell for all cash, you must reduce the price 10-20%. In a study done by BizComps, all-cash sellers received 69.9% of asking price, while seller-financed businesses received 85.7% of asking price. • greater cHance of seLLing: Few people pay all cash for a business. If you finance the sale of your business, you dramatically increase the chance of it selling and expand the universe of buyers able to consider purchasing your business. • ongoing casH fLow: With seller financing, it’s not unusual to receive regular payments for up to eight years, including interest. • More favorabLe rate: Your rate of return is often 8-10%, higher than you could receive investing your money elsewhere. • greater buyer confidence: The buyer will have more confidence in your business knowing that you are willing to finance the transaction. This expedites the sale and results in a higher selling price. • increased borrowing power: Brokers get bombarded by people willing to buy seller notes. After seasoning the note for six months, you can often sell it if you need the cash for a small discount. • faster cLosing: At minimum, bank financing takes six weeks to close. With seller financing, you can wrap up the sale in as little as a few days, decreasing the change that the deal will fall apart. • guaranteed protection: Sometimes the buyer is willing to personally guarantee the note, allowing you to sue if you he defaults. You also get the business back and can quickly resell it at a discount to recover the remainder of your money. © 2009 Morgan & Westfield
  35. 35. reduce risk by thinking like the bank Historically, only a very small percentage of seller notes default, making the arrangement safer and more secure than most sellers realize. However, when carrying the note you still need to be prudent and think like a bank. Here are some simple, proven guidelines to help ensure a smooth transition and regular, timely payments: • find tHe rigHt buyer: Easier said than done, especially without a Professional Business Broker. A conscientious broker will provide you with the prospective purchaser’s credit report, resume, personal references, and a list of banking relationships. • offer paLatabLe terMs: Give the buyer reasonable enough terms so that he can make a living and still afford to pay you. • provide adequate training: The new buyer deserves a genuine opportunity to succeed. This can begin with proper training and a clear understanding of how your business runs. • incLude an “evergreen” cLause: Require the buyer to maintain a minimum level of inventory. • receive reguLar stateMents: Require the buyer to provide CPA–prepared financial statements as often as you like. This allows you to keep your finger on the pulse of the business and if necessary, come in to rescue an irresponsible buyer. © 2009 Morgan & Westfield
  36. 36. 1-888-mwestfield a million dollar illustration The following example compares annual and total funds received between a seller-financed sale and one that’s all cash. Based on a BizComps study, it shows that sellers who offer terms can receive as much as 85.7% of the asking price, while businesses selling for all cash receive considerably less— typically 69.9% of the asking price). The example is based on a price of $1 million. Please note that this data is presented as an example and not a promise or guarantee of returns. selling price w/terms $ 857,000 selling price — all cash $ 699,000 Amortization assuming a 50% down payment ($428,500) at 10% interest amortized over 60 months (5 years): Cumulative Payments Total Money Received (interest and principal) (including down payment) Year 1 $ 109,251 $ 537,751 Year 2 $ 218,503 $ 647,003 30 months $ 273,130 $ 701,630 After just 30 months, you would have received $701,630 in total payments including interest and principal. This exceed/equals the amount you would have received had you sold for all cash .It takes just 30 months to equal the price had you sold for all cash! The rest, as they say, is gravy. Year 3 $ 327,756 $ 756,256 Year 4 $ 437,008 $ 865,508 Year 5 $ 546,261 $ 947,761 $947,761 - $699,000 = $248,761 excess if you carry the note ! the bottom line: nearly a quarter million dollars more After five years, you would have received $947,761 in total payments or $248,761 greater than had you sold for all cash, resulting in a 35.59% increase in price! [NOTE: The above illustration is an estimate only, and does not include estimates for taxes, broker’s commission, liabilities paid at closing, and other closing costs. A seller should perform his/her own calculation along with their CPA in determining the most suitable financing structure.] © 2009 Morgan & Westfield
  37. 37. Frequently Asked Questions: There’s no question that selling your business is a major decision! You’ve devoted your time, money, and energy to building and running an operation that may well represent your life’s work. Now, you’ve decided to sell and want the very best professional guidance possible. Now is when working with a professional business broker can make the difference between just getting rid of a business and selling it for the very best price and terms. The following are some of the most common questions asked by sellers. The responses are based on years of experience and knowledge. If you have a question that’s not listed here, please let us know. © 2009 Morgan & Westfield
  38. 38. 1-888-mwestfield Question: What can Business Brokers do — and What can’t they do? Answer: As your business broker, we can help you decide how to price your business and how to structure the sale so it makes sense for both you and the buyer. We can find the right person to buy your business and work with each of you, every step of the way, until the transaction is successfully closed. We can also help the buyer in all the details of the business buying process. What we can’t do is sell an overpriced business. Most businesses are salable if priced and structured properly. You should understand that only the marketplace can determine what a business will sell for. The amount of the down payment you are willing to accept, along with the terms of the seller financing can greatly influence the ultimate selling price, as well as the success of the sale. Question: hoW long does it take to sell my Business? Answer: It generally takes on average, six to twelve months to sell most businesses. Some will take longer, while others sell in a short period of time. The sooner we have all the information needed to begin the marketing process, the quicker the sale will be completed. It is also important that the business be priced properly right from the start. Some sellers, operating under the premise that they can always come down in price, overprice their businesses. This theory often “backfires”, because buyers often will refuse to look at an overpriced business. It has been shown that the amount of the down payment may be the key ingredient to a quick sale. The lower the down payment, generally 40% of the asking price, or less, the shorter the time to a successful sale. A reasonable down payment also tells a potential buyer that the seller has confidence in the business’s ability to make the payments. Question: Why is seller financing so important? Answer: Surveys have shown that sellers who ask all cash receive on average only 70% of their asking price, while sellers who accept terms receive on average 86% of their asking price.That’s a 16% difference! In many cases, businesses that are listed for all cash simply don’t sell. With reasonable terms, however, the time period from listing to sale greatly decreases. Most sellers are unaware of how much interest they can receive by financing the sale of their business. In some cases, it’s quite significant. © 2009 Morgan & Westfield
  39. 39. Question: What happens When there is a Buyer for my Business? Answer: When a buyer is sufficiently interested, we will help prepare an offer or proposal, which may contain one or more contingencies. Usually, this includes a detailed review of your financial records, review of your lease and franchise agreement, and other pertinent details of your business. When the buyer’s proposal is presented for consideration, you may accept the terms or make a counter-proposal. If you do not accept, the buyer can withdraw any time. We will submit all offers for your consideration. At first, you may not be pleased with a particular offer but it may contain some plusses to seriously consider. There is an old adage that says, “The first offer is generally the best one the seller will receive.” This does not mean that you should always accept the first offer, or any offer for that matter, just simply that every offer should be carefully reviewed. When you and the buyer agree, we will work with both of you to satisfy and remove any contingencies. It is important that you cooperate fully in this process.You don’t want the buyer to think that you are hiding anything. The buyer may, at this time, bring in outside advisors. When all conditions have been met, final papers will be drawn and signed. Once the closing has been completed, money will be distributed and the new owner will take possession. As your business broker professional, we will work with you throughout the process. Question: What can i do to help sell my Business? Answer: You can cooperate fully with us and any other professionals you are using. A buyer will want up-to-date financial information. If you retain an accountant or bookkeeping firm, you can work with them. If you are using one, make sure your attorney is familiar with the business closing process and the laws of your particular state. You might also ask if their schedule will allow them to participate in the closing on short notice. If you and the buyer want to close the sale quickly, you don’t want to wait until the attorney can make the time to prepare the documents or attend the closing. Time is of the essence in any business sale. The failure to close on schedule permits the buyer to reconsider or make changes in the original proposal. And finally, your team of advisors must all be working towards the common goal of selling your business for the best price and terms available in the marketplace, and closing the sale as quickly as possible. Remember that, as your professional business broker, we are on your side. Only through your full cooperation can we best handle your business interests. © 2009 Morgan & Westfield
  40. 40. 1-888-mwestfield Question: What do Buyers look for? Answer: • Provable books and records • Training • Reasonable price • Appearance • Leverage and terms • Covenant not to compete • Living wage • A good reason for sale • Furniture, fixtures, and equipment • Time is of the essence • Lease • No last minute surprises Question: When is the Best time to sell my Business? Answer: The best time to sell is when the business is doing well. Selling during difficult economic times is much more challenging. Question: hoW much is my Business Worth? Answer: A company’s value depends on many factors: cash flow, assets value, and financial history, condition of equipment and premises, lease attractiveness, competition, potential for improvement, location, industry, and economy. Most importantly, value is determined by its ability to provide the buyer an adequate wage to live on and cash to retire the debt. Question: can a real estate agent sell my Business? Answer: It may be difficult. Business brokers are licensed to sell real estate but most real estate agents do not know how to sell businesses.The techniques of pricing, selling and putting together the business transaction are altogether different from selling houses or commercial property. It is virtually impossible for a real estate agent to get the confidential exposure to qualified buyers that a business brokerage firm can get. © 2009 Morgan & Westfield
  41. 41. Question: What aBout the accomplishment fee? Answer: We only collect our fee when the business is sold. We pay all costs involved with advertising, qualifying buyers and bringing the right buyer to closing. Most sellers have found that the cost of using our services are more than offset by the value to be gained from taking advantage of our expertise and access to qualified buyers. Sellers have found that because our buyers historically offer more for businesses, the net proceeds to the seller (after fees are paid) are usually more than what a seller could have negotiated independently. Question: Wouldn’t i Be Better off listing my Business With several intermediaries? Answer: The key to getting top dollar is the ability to negotiate with two or more buyers to get them to enhance their bids, thus taking full advantage of any synergistic situation. An intermediary cannot effectively negotiate with buyers without full knowledge of all bids and the status of each. Therefore, one person must control the negotiations. Experienced, professional intermediaries will not usually work on a project where they have no control. other disAdvAntAges: 1) Loss of control of confidentiality – in exponential ratio to the number of intermediaries. 2) Buyers may receive offering notices from more than one intermediary – with the result that the offering gets shopworn and the buyers quickly lose interest. 3) A non-exclusive intermediary will be competing to have his/her buyer be successful. The result is that the intermediary, in effect, represents the buyer and the seller ends up with no representation even though the seller is paying. 4) A non exclusive intermediary has little incentive to qualify buyers. The more buyers presented, the more likely to earn a fee. This results in many unqualified tire kickers taking up your time. 5) The seller with non-exclusive intermediaries will spend countless hours, qualifying, talking, showing, and negotiating, with both numerous buyers and numerous intermediaries. The seller can ill afford to spend unnecessary time when all the sellers’ time should be dedicated to making the business run at peak efficiency in order to achieve top sales dollar. AdvAntAges: 1) More buyers contacted. That may be true… but not always. Remember that a professional intermediary will do a comprehensive search of all prospective buyers with no duplications. These pros have access to all prospects, so none are exclusively represented. This may not be an advantage, especially if potential buyers are inundated with duplicate offerings from different intermediaries. © 2009 Morgan & Westfield
  42. 42. 1-888-mwestfield Question: i have Been approached By an american stock exchange con- glomerate that has purchased 60+ companies in the last ten years and does not negotiate With intermediaries. should i go solo to ensure a sale? Answer: If the giant has bought 60 companies, you can be sure they have looked at over 600 and probably nearer to 6,000.The question is how many have you sold? Unless it’s several, you are at a tremendous disadvantage and need someone to offset this liability. The reason why they don’t want to deal with intermediaries is that they feel they can control the transaction and procure a much better deal by negotiating directly with unsophisticated sellers. Read the Wall Street Journal.What is the first thing that a company does when it is approached with an unexpected offer. The company hires an intermediary! You should too. As far never working with an intermediary: the suitor has no choice if they want to deal with you. The implied threat is tantamount to saying you can’t have a lawyer assist you. They won’t go away if you hire an intermediary. Besides, how do you know if you got the best price if you only have one unsolicited offer? Bottom line? Hiring an intermediary is a prudent investment that returns the fee you pay many times over. Question: should i try first to sell my Business on my oWn? Answer: Consider the facts below on owner-sold businesses and decide for yourself. • 70% close • 25% give up • 5% sell disAdvAntAges: • You will also exclude first time buyer’s as they are too intimidated to buy directly from a business owner • Experienced buyers typically low-ball an owner if dealing with them directly, attempting to steal the business at a very low price • You will lose a lot of time that you should have spent running the business • It will cost you thousands of dollars to advertise the business and on attorney’s fees AdvAntAges: • You will save money on the commission © 2009 Morgan & Westfield