Selling Your business Series

Why use an intermediary?

We have seen just about everything you can imagine in our 20 years of  transacting middle-market enterprises across the country. Perhaps one of our favorite stories is a client in East Texas:  we represented his company with our sell-side process and, due to our relationships with certain public  companies, he successfully sold and closed with them. Prior to closing, we put him in touch with a Section 1031 Exchange expert, as the retail network segment of his business included real property.

After realizing the exciting world of like-kind asset trades, he exchanged the proceeds from one of his 30 retail sites for a new Cessna Citation. He’s now a real estate investor across the Southeast and within hours from most of his properties.

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    That’s the most exciting part of most every transaction.

    But it glosses over the emotional, financial, familial, and operational considerations and challenges to get to the finish line. Our client was a third-generation business in a changing economy, and our involvement in his thought process spanned nearly 3 years. He initially asked for detailed fair market valuation in addition to strategic scenario analysis for staying in business for another generation. During this time, not only did we provide our deliverables for him, but as in most cases we answer questions like: What is the optimal structure for a sale? What am I going to do with the proceeds? How are my employees going to be treated? How do I tell my kids (grandkids) our family business is being sold?

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    In most cases, our clients’ first questions are: What do you do? How do you do it? What is the process?

    We answer those questions as we did when we ran our own companies. We underwrite the financial performance, explain the operations in detail, identify opportunities for growth, create a sale structure that provides for our clients’ future (in most cases creating generational wealth) in a timely & confidential manner, and most importantly, we execute on the game plan. In all cases, our game plan is to identify a number of key suitors to present and negotiate all aspects of the transaction while allowing our clients to select their preferred buyer. Our business is to sell your business, allowing you to continue forward as if such a sale were not taking place at all while you run things as normal.

    As practitioners in the middle-market investment banking sector, our job is to handle the often-difficult interpersonal conversations in negotiations while separating the emotional intensity that often comes from each counter-party. We have the assuring experience that 95% of our transactions will successfully close. We understand the market for indemnification thresholds in a purchase agreement. We know the tax benefits of purchase price allocation across multiple IRS categories. We communicate extensively with our customers during the transaction  life-cycle to manage emotions and expectations.

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    Successful outcomes for every size transaction.

    Another interesting story comes from a client in the Tri-Cities area in northeast Tennessee. Our client had purchased the business, and the prior owner (seller) retained over 60 retail sites in a master lease. Our client retained our firm to assist in the restructuring of their business, including the master lease. Amazingly, the master lease included the following properties unrelated to the business, and for which our client was unknowingly paying rent: a dog grooming facility, an abandoned tavern, an outhouse, a junkyard, and the prior owner’s garage. Our role as an intermediary allowed us to successfully assist in the business restructuring without our client having to engage in potentially  incendiary negotiations regarding dog grooming assets and other  “kitchen sinks” thrown into that lease.

P.A. (Andy) Weber III
(805) 965-5510

Sean Stewart, CFA

Thinking about Selling Your Business?

Contact us to discuss the process.
(805) 965-5510