Inital Valuation

Once an owner has decided time is right to sell the company, the first question is generally how much? The first step in the process should be to analyze and to calculate a full, fair market and justifiable business valuation. 

There are several generally acceptable valuation techniques, all which, by and large, can be categorized as one of, or as some combination and/or variation of three general methods.

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Confidential Presentation

Buyers want to learn what they need to know about the business as quickly as possible, and then either proceed with it or move on to another. Business owners, on the other hand, will be concerned about disclosing confidential information.

Blind Business Profiles are an effective and confidential way to present the business-for-sale to prospective buyers. In fact, we recommend a series of profiles in order for both parties to be able to gauge what if any impact each disclosure might have on continuing interest, in order to stop and limit disclosure should the level of interest become insufficient to continue.

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The Right Buyer

Finding the Right Buyer should not be a long or difficult process, provided you have a profitable business that can be transitioned to and profitably continued under new ownership.

Of course, the Right Buyer is first one who will recognize the right fit between himself/herself and the business. A buyer looking for a heavy steel manufacturing business is not apt to purchase a retail candy store.  It's just the wrong fit.  But, whether you have a viable manufacturing business to sell or have a viable candy store to sell, our experience tells us that today, there is a serious and qualified buyer ‘somewhere close by, who is actively searching for you.’

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Offer to Purchase

When the fit is good, when price and terms are seen reasonable, justified and acceptable, when owner and seller have met once or twice, typically, maybe toured the facilities and asked and answered questions of each other, and when the parties are ready to take the next step, that next step should be a written Offer to Purchase with subjects.

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Due Diligence

The Offer to Purchase should contain a 'subject to diligence' clause written to the benefit of the buyer, and a 'subject to diligence' clause written to the benefit of the seller, whereby both parties will be granted access to books, records, materials, contacts and/or other information in order to satisfy both parties that they are indeed in possession of the relevant facts on which the Offer to Purchase has been made and accepted. If either should find otherwise, the buyer must be able to withdraw the offer, and/or the seller must be able to withdraw acceptance of the offer, without penalty.

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Final Valuation

The Offer to Purchase should provide that the Sale Price will be subjected to final valuation as at ‘Adjustment Date’ and provide that final valuation be calculated on the same formula that calculated the Sale Price as at the Offer to Purchase, particularly as it pertains to Balance Sheet Value.

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Close of Sale

It has been our experience that when the pre-diligence and preparation has been thorough, when the right business and its owner and the right buyer have discovered each other, when they have spent the time and effort to understand the opportunity each represents to the other, the Offer to Purchase is a detailed but easy next step.

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