Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

October 9, 2017

The Three Most Important Aspects Business Buyers Seek

By Jeremy Albelda

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Assuming a particular industry has been pre-selected, there are several criteria that an investor is seeking when evaluating various businesses to purchase within that industry.
“It is important for a business seller to know these criteria” says Achim Neumann, President, A Neumann & Associates, LLC, a leading New Jersey-based mergers & acquisitions and business brokerage firm, “as a business seller fully addressing these investor concerns and requirements, will be more successful in selling a business”

So, what are the three most important components that facilitate a ‘go ahead’ on the investor’s end?

Seller Motivation

The investor wants to see motivation on the seller’s part that they are truly wanting to transition the business. A lack of seller motivation can express itself in a poorly written prospectus, no preparation, lack of business valuation, long response times in due diligence, or dirty and unorganized facilities. A long delay in answering to a full-price offer is typically a dead giveaway of an unmotivated seller.

Investors pick-up on such lack of motivation very quickly and immediately shy away. Simply speaking, it just costs too much money and time for an investor to explore a business purchase, and the potential early warning signs that a seller will back out last minute is just a risk no investor wants to assume.

Professional Investment Package

Every investor wants to see a professionally prepared investment package, often called Confidential Memorandum, prospectus or CIM – long before actually meeting with a business owner. The aforementioned package needs to outline the specifics of the business, including marketing, sales structures, product description, research & development, as well as past and projected financials. Most importantly, the package needs to describe the competitive advantage of the business and growth aspects for the enterprise, as no investor buys a business for its status quo.

On a few occasions, sellers say to ‘just bring in the buyer’, but rest assured, not a single business buyer will travel or even consider such invitation without a prior detailed presentation of the business. Such a statement underlines already a significant lack of motivation on the seller’s part.

Accredited Valuation

Most investors require an accredited business valuation, not only for their own sake assuring themselves that an independent third party has reviewed the business, but said valuation is also needed for the investor to obtain a preliminary lending commitment from the investor’s bank to finance the acquisition.

Without the valuation on-hand, the investor cannot proceed with an offer, but will then require a valuation first and will in essence delay the acquisition process for several weeks or months. This delay will result in the deal losing steam.

In conclusion, business sellers are well advised to the above-mentioned factors, as failing to do so – even for just one criteria – will most likely not result in the transfer of a business.

[The blog contains excerpts out of the recently published book “ The Road Beyond – What Nobody Tells You About Selling a Midsized Business by Achim Neumann]

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage 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, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or info@neumannassociates.com

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“I've always had great respect for those who are excellent in their fields of endeavor. Gary certainly lived up to that standard. He was knowledgeable, persuasive, determined and ultimately the main driving force that culminated in the very successful sale of my business. Well done Gary!”

Stuart Zeiff, Seller

“ I appreciate your diligent approach to screening buyers and sellers as well as the high quality CIM that you produce.”

Andrey O, Investor

“Finally enjoying retirement after recently selling my business using the services of A Neumann & Associates. Joe Oddo provided the conduit to a successful transaction. Joe knew when to inject input and when to simply listen and allow the buyers to vent, step back and regroup. The outcome met our expectations and got us to the finish line, which included my staying with the company six months in order for the buyers to get their footing and keep our workforce in the loop. He helped at every step by providing his expert guidance & resources. Thank you!”

Emily Parker Myers, Co-Owner - Myers McRae

“I had been in touch with Karin and Gary from A Neumann & Associates regarding some opportunities and was looking forward to meeting with them. Hence, when they organized a seminar in Princeton, NJ, I was quick to sign up. The seminar was very informative as the team walked the attendees through various scenarios and referenced real life buying/selling situations they had been through. The sessions by Gary, Karin and Achim were crisp and focused and brought clarity to potential seller and buyers. I strongly recommend the team and look forward to continue working with them.”

Gaurav Tyagi

“Thank you for your Event on "How to value, Sell, and Buy A Business for Maximum Profit" and the insight into ANA’s approach on what is involved in the Business Exit for sellers. Garys Hervieiou's "Business Valuation", Achim's "Deal structure" presentation and Karin’s "Preparing the Package" are real street knowledge shared. They answered attendees questions which makes it more interesting for learning from others. Great for small businesses like us. The presentations were totally worth our time and travel for the event to Princeton, NJ from Rockville MD. Ravi Bhutani, President, CIPS”

Ravi Bhutani

“Gary, this is to thank you for an excellent job done in selling our business. We could never have done it without your professional expertise, dedication and time put in without reservation to make it happen. We will gladly and highly recommend you to anybody in our position.  It was a pleasure to work with you.”

Pat Iammatteo, Owner

“Your vetting is simply outstanding, among the best I've seen from a broker.”

Eric H., Investor

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

Double Diamond

“Used A Neumann & Associates to sale my business. could not imagine having done it with out the patience and experience Gary provided. Thanks Gary,”

Dennis Frazier

“Working with Marc and his company was a pleasure. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio
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