Premier's 8-steps to A Successful Sale
Step 1: Learn about the business and recommend a price and deal structure at no cost or obligation to the business owner who is considering selling his or her business.
The most important factor in determining the price for a lower middle market business is cash flow. Depending on the size of the business, cash flow is determined in three different ways:
1. EBIT ~ Earnings + Interest + Taxes2. EBITDA ~ Earnings + Interest + Taxes + Depreciation + Amortization3. EBITDAS ~ Earnings + Interest + Taxes + Depreciation + Amortization + Owner Salary (Including All Perks)
1. EBIT ~ Earnings + Interest + Taxes2. EBITDA ~ Earnings + Interest + Taxes + Depreciation + Amortization3. EBITDAS ~ Earnings + Interest + Taxes + Depreciation + Amortization + Owner Salary (Including All Perks)
Other factors we consider include:
- Industry Trends
- Balance Sheet and Profit & Loss Statement Trends
- How Other Companies of Similar Size in the Industry Perform
- Gross Margins
- “Barriers to Entry” (The Difficulty of Someone Getting Into The Business)
- Types of Products/Services Offered
- Competition
- Customer Base
- Type and Condition of Equipment and Facility Appearance
- Quality of the Staff
- The State of the Economy and the Lower Middle Business Market
- Growth Opportunities for the Company
- Owner’s Role
- Owner’s Financial Needs and Goals
Upon receiving the recommendation based on this information, a business owner may decide not to proceed with Premier Business Group, LTD. There is no obligation or cost to the owner.
Step 2: Implement comprehensive procedures for maintaining the confidentiality of the process.
Step 3: Research the industry.
Step 4: Prepare non-confidential “teaser” material and a non-confidential executive profile.
Step 5: Prepare a highly confidential full profile for qualified buyer prospects. This bound document provides a comprehensive look at most aspects of the business. A business owner may choose to require his/her prior personal approval on each prospect receiving this document.
Step 6: Contact four types of buyer prospects, including:
Step 3: Research the industry.
Step 4: Prepare non-confidential “teaser” material and a non-confidential executive profile.
Step 5: Prepare a highly confidential full profile for qualified buyer prospects. This bound document provides a comprehensive look at most aspects of the business. A business owner may choose to require his/her prior personal approval on each prospect receiving this document.
Step 6: Contact four types of buyer prospects, including:
- Strategic Buyers (When Appropriate) - These are companies in the industry or a related industry that would benefit from the purchase.
- Private investors/individual buyers: Premier Business Group, LTD has thousands of these prospects in our active database.
- Financial Groups (Investment Groups That Own Multiple Companies) - Premier Business Group, LTD has numerous financial groups in our active database—some of whom operate in other countries.
- Other Prospects - Those persons who read our ads, visit our website, receive our mailings, attend our seminars, and read our articles.
Step 7: Qualify interested prospects; “evidence of financial capability is required.”
Step 8: Visit the facilities with the prospective buyer. These eight steps normally take an average of six months. The owner’s time commitment is usually quite limited during this process.
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Step 8: Visit the facilities with the prospective buyer. These eight steps normally take an average of six months. The owner’s time commitment is usually quite limited during this process.
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5 STEPS TO CLOSE A DEAL
Step 1: The buyer gives the seller an offer in the form of a non-binding letter of intent that covers only the major points of the deal.
Step 2: The seller probably makes a counteroffer to this letter of intent.
Step 3: The buyer accepts counter, and business is taken off the market.
Step 4: The due diligence process begins. This is the point in the process where the buyer investigates the seller and vice versa. Using a highly experienced broker who actively quarterbacks the due diligence process can greatly reduce the risk of a deal falling apart.
Step 5: A closing takes place. This process typically takes 60 days. The owner’s time commitment during this process is quite heavy.
Step 2: The seller probably makes a counteroffer to this letter of intent.
Step 3: The buyer accepts counter, and business is taken off the market.
Step 4: The due diligence process begins. This is the point in the process where the buyer investigates the seller and vice versa. Using a highly experienced broker who actively quarterbacks the due diligence process can greatly reduce the risk of a deal falling apart.
Step 5: A closing takes place. This process typically takes 60 days. The owner’s time commitment during this process is quite heavy.