This document discusses the process of selling or acquiring a professional services firm. It addresses deciding when to transition ownership, valuing the business, the selling process which involves engaging advisors, conducting valuation and creating marketing materials, and targeting potential buyers. The acquisition process is also summarized, including responding to marketing materials, due diligence, financing options, and closing. Key considerations around using advisors versus going it alone are provided.

1. Selling or Buying
a Professional
Services Firm

2. Learning Objectives
1. Deciding to transition, how to, and to whom?
2. Valuing your business
3. Making the Sale –
the process
4. Making the Acquisition–
the process

3. Question 1
“I’m 60 years old and I need to start thinking
about transition. I want to keep working but I
want to cut back my hours and get rid of
ownership duties while leaving a legacy for my
employees and team.”

4. Deciding to Transition –
Selling Your Business
 You are thinking about retirement, other
business opportunities, and/or suffering
burnout.
 You are tired of the responsibilities of
business ownership like payroll, taxes,
insurance, HR but would like do what
you do best and continue in business.
 Or, you need to get out of the gap by
expanding people and resources, and
wish you were bigger to play in bigger
markets.

5. Question 2
“I’ve been thinking about selling or merging or
partnering with another organization to help
with that. What do you think of that?”

6. Ways to Transition (sell) your
Business
1. Sell to family members
2. Sell to employees
3. Sell to fellow partners if any
4. Sell to Venture Capitalist/Private
Equity companies
5. Sell to larger firm in your industry,
i.e., strategic acquisition

7. Question 3
“What is your process of representing me and
my firm if I decide to approach the open market
to be acquired/sell my business?”

8. The Selling Process
 Engagement Agreement
 Exclusivity
 Fees
 Valuation Cost
 Valuation Process
 Marketing Package
 Target Marketing Discussion

9. Question 4
“What is the timing of all that?”

10. Timing
 Preparation – Valuation and Marketing Package
 First Wave of Marketing
 Subsequent Waves of Marketing
 Initial Conference Call
 Visit and More Review
 LOI
 Due Diligence
 Closing

11. Question 5
“How do I protect the confidentiality of the
situation?”

12. Confidentiality
 General Approach to the Market
 Non – Disclosure Agreement
 Continual Reinforcement

13. Question 6
“How is Value Determined?”

14. Question 7
“What kind of information will you want for the
valuation”

15. Question 8
“How long is a typical transition and
what goes in to it”

16. Employment Agreements – Staying On
With New Company
 Are there premiums for being a past owner
 Will the seller be paid the same even though there are
less ownership duties
 Will the seller become billable
 What is the length of time –
specified or ongoing
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17. Employment Agreements – Staying On
With New Company
 How are benefits like insurance handled?
 Is this part of the purchase agreement?
 Are there any considerations for employment
agreements as it relates to SBA financing?
Photo Supplied by FreeDigitalPhotos.net

18. Question 9
“What is the market like now?”

19. Question 10
“Can we get references?”

20. References
Email us for references:
Al Lautenslager - al@stonemillpartners.com
Patrick Neal - patrick@stonemillpartners.com

21. Question 11
“How do we get started?”

22. Buy Side Considerations
 Question 1 – “Why should I consider an
acquisition?”

23. Considering an
Acquisition
 In the Gap
 A need to diversify projects and services
 New geography
 The need of people
 Capacity

24. Question 2
“What is the process to acquire a firm?”

25. Acquisition Process
 Respond to Business Opportunity Summary after
signing NDA.
 Schedule a conference call and/or personal visit
 Submit a non-binding letter of intent
 Due Diligence
 Determining how to fund the acquisition
 Prepare closing documents and agreements
 Closing

26. Question 3
“How Do I Fund an Acquisition?”

27. Acquisition Funding
 Cash
 Local Bank
 SBA backed funding
 Promissory Note with Seller
 Earn-out – How is this defined and when is it used?
 Incentives

28. Question 4
“What does the structure of a deal typically look
like?”

29. Question 5
“What should I expect to pay for a firm that I am
acquiring?”

30. Doing Things On Your Own VS.
Using an M & A Advisor

31. Things To Watch Out
For 1. Beware of the M&A firm that is charging a large retainer
fee up front, does not deduct it from the final fee and does not
perform.
 2. Beware of the M&A firm that does not have a focus in the
Architectural / Engineering / Construction / Interior Design
markets.
 3. Beware of the M&A firm that lists businesses for sale,
online and then adapt a “hope” strategy, especially in the
A/E/C industry, with no targeted selling.
 4. Beware of firms with a lack of experience in your markets.
 5. Make sure you work with a firm that understands value, the
valuation process and pricing of the business to be sold.

32. Things to Consider –
Internal Transition vs. External Sale
 Do you have an effective leader to replace you?
 Can a new leader(s) work together as a team like you
did
 Do they have money to pay you upon a sale
 Are they willing to take on debt for a sale and can they
make debt payments
 Will new cash flow allow for growth?
 Do they have an entrepreneurial mindset - steady
paycheck vs. ebb and flow of ownership
 Is a larger, acquiring firm more appealing

33. Wrap-Up/Summary
 Selling Your Business
 Transition Planning
 Contact Stonemill Partners – Engagement
 Valuation
 Marketing Package
 Approaching Targeted Prospective Buyers
 Entering the buying process once a prospective
buyer is interested

34. Wrap-Up/Summary
 Acquiring a Business
 Review a Business Opportunity Summary (BOS)
 Initial Conference Call/Visit with Seller
 Review of Information
 Letter of Intent
 Due Diligence
 Financing
 Agreement Preparation
 Closing

35. Wrap-Up/Summary
 Using an M & A Advisor - Advantages
 Things to Watch Out for
 Internal vs. External Transition – Things to Consider
& External Advantages

36. Thank You
 Its your business
 Your future depends on your decision
 Sell to capture value
 Buy to increase value and grow
 Rely on Experts
 Capitalize on your dreams, vision and passions!

37. Contact Us:
Al Lautenslager - al@stonemillpartners.com
Patrick Neal - patrick@stonemillpartners.com