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Latest News
What Value Would You Put On Your Business For Sale?
Tuesday, May 31, 2011
Terry Welsh
There are many valua tion methods that can be applied to businesses for sale and sometimes we make the mistake of thinking that they are critical to the analysis of the business we are buying or selling. Relevant, yes. Critical, maybe not. The reason that I write this is that the sale of your business is unique. Your business has an unexplored upside and a history of financial stability. It is not the same as other businesses in your industry. It is not the...
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Key Steps in the Purchase Process
Buyer signs and submits a Non-Disclosure Agreement and summary personal financial statement to Broker.
Buyer receives company Business Profile from Broker (key operational and financial data). Broker provides initial input on transaction structuring alternatives
Questions and answers with Broker; receive additional data as appropriate
Meeting(s) with Seller and Broker
Additional questions and answers with Seller (via Broker)
Buyer go/no go for making an offer to purchase company
If making an offer, decide if a Letter of Intent (“LOI”) (non-binding) will precede a Purchase and Sale Agreement (“PSA”) (binding, but subject to contingencies)
Broker prepares Purchase and Sale Agreement outline to be reviewed with Seller’s and Buyer’s respective attorneys. This may occur before and/or after Buyer/Seller negotiations based on Buyer preferences
Negotiate price, terms and conditions, subject to each party’s legal , financial and other business advisor review and input. Purchase offer normally contains four contingencies (due diligence, financing, non-compete agreement, lease assignment) and possibly additional contingencies. Non-Compete may be part of PSA
Sign PSA
Buyer pays Earnest Money deposit into Escrow Account
Buyer develops Due Diligence plan and resources required; Broker provides suggestions along with input from Buyer’s legal and financial advisors
Provide Due Diligence plan and Document Request to Broker
Broker develops and coordinates a working acquisition calendar (acts as Project Manager)
Buyer commences financing request with support from broker
Buyer completes Due Diligence
Buyer and Seller complete a Non-Compete Agreement, if separate
Buyer gains permission for assignment of leases (or new) from Lessor
Lender approves financing
Buyer modifies price and terms, if appropriate, based on Due Diligence results and changes in company financial performance
Buyer releases contingencies, if ready to proceed to closing
Buyer and Seller finalize Purchase Price Allocation (required by IRS)
Buyer and bank fund purchase via escrow
Close transaction
Transition business
