‘I know the value of my business and I have three buyers knocking on my door each week, I will sell my business on my own (and save the commissions)’ – statements often expressed by business sellers.
“As the old adage goes, ‘you don’t know, what you don’t know’ – this is exactly the reason many business transfers never close, or ultimately end up in court” says Achim Neumann, President, A Neumann & Associates, LLC, a New Jersey based Mergers & Acquisitions Advisory firm, “unfortunately, all too often, business sellers are not familiar at all with all the nuances and challenges of a business sale (while still being excellent and successful business operators).”
Here is a list of the top fifteen reasons why a business owner should hire a professional M&A Advisor:
- Professional cash flow recasting with a reconciliation of tax returns vs. financial statements and a compilation of all operational business information in an organized fashion;
- Establishing a Fair Market Value by way of an accredited third-party business valuation firm – defining the best price and terms before going to market;
- To maximize net receipts, M&A advisors can recommend additional external professional advisors – transaction attorneys, tax lawyers, CPAs, estate planers, etc.;
- Advisors prepare a professional investor package with a winning marketing strategy;
- Most business buyers start with an M&A Advisor / business brokers in their searches;
- A deep advisor’s database of buyers and investors will attract more than one offer;
- Confidentiality preservation – pre-qualification of potential buyers without divulging the name/location of the business for sale;
- Advisors can initiate contact with likely purchasers without releasing the name of the business – with the knowledge of what/when to show buyers. Sellers do not have to fear adverse effects of a premature sale disclosure to key employees and lenders;
- Minimize interference with owner’s ‘running of the business’ as most owners do not have time to sell the business (or the business’ performance will dramatically decline);
- To avoid owner’s adversarial positioning in the negotiation process with buyer;
- Advisor will coach sellers to answer buyers’ questions and concerns not setting red flags;
- Broker depersonalizes negotiations and takes seller out of ‘negotiation front lines’;
- Advisors help to evaluate purchase offers and reduce frustration during offering and sales process – most deals die numerous times, good advisors know how to revive them;
- Advisors help buyers to obtain bank financing – for cash to be at the closing table!
- Compensation is commission based upon a sale – what does a seller have to lose?
In sum, professional M&A advisors and Business Brokers know how to sell businesses. Most often, their objectives – by way of a back-end fee – are completely aligned with the objectives of a business owner in maximizing the value and terms of a transaction.
For that reason, it is very sensible to bring a professional M&A advisor in to develop a transaction as much as a business owner would hire a CPA to perform the tax planning or an attorney to handle legal matters – not doing so will simply translate into a performance decline of the business (aka a lower price) with a sub-par deal at the end.
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About A Neumann & Associates, LLC
A Neumann & Associates, LLC is a professional mergers & acquisitions and business broker firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating and over 5,000 business valuations performed through its affiliation, the company has senior trusted professionals with a deep knowledge base in multiple field offices in Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, DC, Virginia, North Carolina and Florida. The firm’s competitive fees are based on successfully completing transactions.