Transitioning after Selling your Business
Our team at Lakes Business Group has helped hundreds of business owners through the process of selling their business. It’s a big change for most of the business owners we work with, many have been contemplating it for a while and have future plans and others have just decided it’s time to move on.
Regardless of the reason, when a business owner decides to exit the business, the process can be an emotional time. Part of the transition is communicating with your employees and the emotions and stress that they may feel during the transition period. Also, you and the new owner assessing how to tell the customers, suppliers and any other key people associated with the business.
From feelings of relief and excitement to disturbed, anger and concern about the future of the business as well as your future without the business as part of your life. It is okay to take the time to mourn this loss. You now have the time to slow down and consider the next step.
The article in Inc.com tells of an owner who sold her company to pursue a dream of living abroad which gave her new perspectives.
“When I sold my company to Caliber Corporate Advisors, I spent two months pursuing my dream of raising my children overseas by living in Nicaragua and Costa Rica,” says Joy Schoffler, Founder of a FinTech focused PR firm, Leverage PR. “It was really amazing getting the time to read, paddle board, and just be.”
“Now that I am home and back in the swing of things, I am looking at everything in a new light. In addition to continuing to serve as a senior advisor at Leverage PR and on AARP’s and SXSW’s Accelerator advisory boards, I have gotten a chance to serve as an advisor to companies I’ve had a passion for over the years: Wealth Migrate and The Experience Firm. Having the time and energy to dedicate to companies I believe in is a really cool part of this phase,” adds Schoffler.
Need for an Exit Strategy
Of course there is always a percentage of business owners who regret their decision after it is sold. If you are contemplating and exit strategy in the next 5 or so years, begin your plan now rather than waiting. Planning now reduces the risk of regretting the sale. If you need help in a future exit plan, reach out to our team of business advisors who can help with information that can help.
Selling your Business – Starting the Process
One of the hand-outs our sales reps may provide before meeting or at the first meeting with a business owner is a 20 step sales process outline. Below are these steps condensed into 15 steps process to sell your business.
1- Initial Meeting: In the first meeting you’ll be introduced to our company and how we can help with the value of your business. During this meeting, the sales rep may ask to review your business tax returns, company financials, any sales or marketing materials and any other relevant information that may help explain your business in more detail. After this initial meeting, a decision will be made whether to move forward at this time.
2- Recast Financial Statements & Market Value Analysis: Our Lakes Business Group (LBG)
sales rep recasts or normalizes your financial statement to reflect non-reoccurring expenses and prepares a market value analysis. If the decision has been made to obtain a third-party business valuation, the sales rep will prepare the business outline and coordinate with the Valuation Analyst. Our goal is to get the most value for the business.
3-Proposal: LBG sales rep will present and explain the recast financial statements and the market value analysis. Once a comfort level has been established and both sides feel that LBG is a great fit to work in the seller’s best interest, the sale rep will provide a proposal regarding the cost of services.
4-Documentation: You, the seller, will provide the LBG sales rep with the necessary documents and data required to sell you business. LBG prepares a business profile based on the information you have provided. Details are not released to any prospective buyers without the execution of a non-disclosure agreement to protect the confidentiality of your business.
5-Advertising and Marketing: Lakes Business Group team takes control of the advertising and marketing for the sale of your business, which results in the highest possible response and the greatest number of prospects. Your business will be advertised on our website, as well as numerous other websites featuring ‘businesses for sale’. Our office is associated with VR, an international professional business broker organization, so the business is also featured on the VR website. Besides online advertising, we send letters to other businesses who may be looking for an acquisition, as well as marketing to our database of over 20,000 vetted buyers looking for a business to purchase.
6-Buyer Qualification: As mentioned in #4, all prospective buyers must sign a non-disclosure agreement before reviewing your business profile. We also vet the financial capability prior to introducing prospective buyer to you, the seller. In our business, we’ve seen it may take 39 interested buyers to find one qualified buyer for your business.
7-Business Presentation: After the buyer is financially qualified and the LBG sales rep has talked with them and feel there is a good fit for your business, a conference call or meeting is scheduled with you, the seller, and prospective buyer. A showing of the business may be scheduled at the same time.
8-Offer to Purchase and Presenting the Offer: We encourage the buyer to write a fair and equitable offer with an amount of earnest money to be paid up front. Presenting the offer to purchase includes an explanation of the terms and conditions, any contingencies and background information on the buyer.
9-Offer Acceptance or Counter Offer: You may accept the offer as it is written, or with the help of your LBG sales rep create a counter offer or reject the offer entirely.
10-Mutual Acceptance: When all parties agree to the terms and conditions of the sale, and sign all counter offers and amendments, the offer becomes a Purchase Agreement.
11- Assist with Financing: LBG has numerous financial resources including lenders who specialize in business loans. With our assistance you and the buyer can determine which financing will work best for both parties which will end in a successful transaction.
12- Due Diligence: Almost all offers are contingent upon the buyer’s inspections and approval of all facets of the business operation including financial records. The coordination due diligence process is a crucial step in a successful sale. LBG will keep a spreadsheet of the items needed and completion dates to keep both the seller and buyer on task.
13-Note and Lien, Search, Clearance or Assumption: If there are existing loans, liens or equipment leases that the buyer is to assume, LBG can help with transferring those obligations. All liens must either be cleared or transferred to the new buyer, if part of the contract.
14-Inventory: Arrangements are made for the seller and buyer to count and price the inventory if it applies to the business that is being sold. If the inventory is large or complex, it may be necessary to outsource to an inventory service.
15-Closing: After signing the final closing documents the business is transferred and the funds are distributed. Congratulations! you have sold your business!
Tim Bullard & Team Awarded Quadruple Diamond Centurion Award
Every quarter VR sends out awards to top producers. Our team has been the #1 VR Office in 5 of the past 6 years. This quarter our office is the first to be awarded a Quadruple Diamond Centurion Award. Here’s the article from their newsletter:
To be excited about the future you have to know your history. So here is a little known fact…in 2000 there were only 3 quarterly VR Centurion Award categories; those being bronze, silver, and gold. To our knowledge the gold award had only been handed out a few times for a quarter in the previous 20 years. As the strength of our people increased, so did the award categories. First we added Platinum (fees above $400,000 for a quarter), but the bar continued to raise, so we added Diamond, then Double Diamond, Triple Diamond, Quadruple Diamond (fees above $1,000,000 for a quarter), and Quintuple Diamond (fees above $1,500,000 for a quarter).
For the second quarter of 2018, Tim Bullard, and the outstanding team in Waukesha, WI are being awarded a VR Quadruple Diamond Centurion Award. Off the record…one more closed transaction and we would have added another diamond. Congratulations to Tim, and everyone who worked so hard for this honor.
The bar has officially been raised. Congratulations to the Wisconsin team for this award.
Eight Reasons to Hire a Business Broker when Selling Your Business
Below are some of the benefits of using a business broker.
- Maintain Confidentiality: At Lakes Business Group, we protect the identity of our clients. All our prospective buyers sign a confidentiality agreement before seeing a business profile. Some of our clients ask us to run the buyer’s names by them so they can approve before disclosing the business profile.
- Determine the best selling price: Every business is different, with many variables that have an impact on the value. Our team has access to databases that can be used as reference points as well as the experience of ten years plus in business valuation and selling businesses. Being a ‘third party’, we can see the business from a buyers’ perspective.
- Marketing: Because all we do is business acquisitions, we know where and how to market for your company’s business. A business broker will know what to highlight in your business to find the right buyer. Our team will create the business profile for your business. Usually a full business profile is only for those who have signed a confidentiality agreement. We also prepare a ‘teaser’ sheet that is more generic for marketing your business without giving confidential information.
- The business owner can continue to run the business. An owner’s lack of attention to running the business can cause business performance to suffer.
- Qualify and Screen Buyers: Lakes Business Group has been doing this for over 10 years and have a database of over 20,000 vetted buyers. We’ll introduce the buyer candidates to the sellers after they have been vetted.
- Mediate and negotiate with buyers and help the buyer to obtain financing.
- Receive purchase offers to present and help evaluate them to the sellers.
- Manage the Due Diligence Process: When the business is under agreement, the buyer will want a thorough due diligence of the financial and legal aspects of the business.
Reputable Recycling Center Business Sold
Congratulations to Michael Szmanda for assisting in the sale of a highly reputable recycling center located in Northern Illinois. Michael has been working with the seller since last March to find the find the right buyer and close the deal.
The seller was looking to retire and has kept the business well organized with a strong team in place.
Congratulations to the new buyer of this profitable turn-key business and to the seller as he looks to enjoy his retirement!
Acquisition of Manufacturing Company
This plastic molder manufacturer has been in business for over 40 years producing an array of products for businesses and consumers. with contracts in place for the larger accounts and a great customer distribution, this business was very well diversified and stable. There is plenty of additional room for growth in each of the two divisions. Growing by adding new customers or products or by way of marketing and selling directly to end users.
Included in the sale of the business was over nine acres of land with facilities totaling over 74,000 square feet.
Congratulations to the new owner and to all involved in the sale!
Tim Bullard and His Number 1 M&A Team
Over 10 years ago, Tim Bullard started Lakes Business Group, and became part of the VR network. VR (Valued Representation), established in 1979, is the leading international transactional advisory firm serving the privately held middle market. In the past 10 years, Lakes Business Group has been the number 1 VR Office internationally in 5 of those years with 2017 marking the fourth consecutive year of being #1. Tim was awarded the VR Most Valuable Intermediary Award in 2013 and again this past year, 2017.
JoAnn Lombardi, President of VR Business Brokers / M&A stated, “VR recognizes the achievements of its owners on an annual basis. To be a two time winner of the VR Most Valuable Intermediary awards allows us to acknowledge Mr. Bullard’s continued contribution to the entire VR organization. I personally thank him for setting standards that everyone in VR can aspire to with hard work and dedication.”
Tim thanked everyone on his team in Waukesha and everyone in VR. “I get to work alongside great people and assist others in their quest for the American Dream.”
Northern Illinois Wholesale Food Distributor Successful Transaction
An Illinois food distributor has been successfully transferred to a new owner. The seller was ready to retire after operating the business for several years. The new owner has an incredible brand that is known for customer service and reliability.
This company has a niche in providing a wide variety of ingredients throughout the bakery industry.
This wholesale food distributor was on the market for 5 months and had over 90 inquiries. So congratulations to our sales rep, Joe Braier and to the new owner. Also, best of luck to the seller in his retirement!
Successful Transfer of Business
Congratulations to Andy Schmelzer for assisting with a successful business transaction of a community based residential facility (CBRF). We also want to congratulate the new owner of this profitable, well run CBRF/Assisted Living operation in southeastern Wisconsin. And, finally to wish the sellers best of luck in their retirement!
This business opportunity was sold within six months of being signed with our office. In those six months, there have been over 50 inquiries. This business sale included the property.
Begin with an Exit Plan
As a business owner, it’s never too early to think about an exit plan. Reading the summary from the book Seven Habits of Highly Effective People, the author, Steve Covey says “begin with the end in mind.”
One reason to have an exit strategy is it keeps you on task to grow your business, so when it’s time to exit, you’ll have an attractive business for buyers. Another quote from Stephen Covey’s book is “Changing our habits to improve what we are can be a painful process. It must be motivated by a higher purpose, and by the willingness to subordinate what you think you want now for what you know you want later”.
Below are some questions to ask to help you prepare for an exit strategy:
- What will make your company attractive to a buyer?
- Is your company growing?
- Is your business dependent on you?
- Do you have a strong management/leadership team?
- Is your team able to handle the day to day operations of the company?
- Are there systems and structures in place for running the business?
- Are your financial records in order and up to date?
As you answer these questions you’ll see how you need to start preparing your exit plan so you can maximize the value of your business when it’s time to sell. This can be overwhelming, so start small by changing one thing. A question to start with is, is there one thing you can do that you aren’t doing that would make a difference in your business?
Our experienced team can help with getting an exit strategy in place for your business. Getting the a business valuation may be the first step to see where you are at and how to improve.