Selling Your Business

AdvantEdge Advisors - Merger & Acquisition Advisors

AdvantEdge is in the results business. Bringing transactions to fruition is what we do.

Business assessment, consulting, and valuation are milestones on the way to a successful closing—rather than independent, fee-for-service activities.

Our Process - The Strategic Business Review and Valuation

  • Number 1

    Financial Analysis

    AE's blue-chip analysis takes your company's historic performance and its potential growth and designs a favorably adjusted financial blueprint.

  • Number 2

    Business Assessment

    AE assesses the non-financial factors that drive performance (the management team, for example).

  • Number 3

    Market Research​

    AE researches market conditions and recent similar transactions, identifying potential buyer types and the potential number of buyers in each group.

  • Number 4

    The Report

    AE recruits a highly qualified third-party affiliate to produce the final business valuation report. This independent valuation puts AE in an uncompromised position with respect to your value and pricing.

Our Process - The Tactical Marketing and Selling System

  • Marketing Materials Preparation​

    AE designs an engaging Investment Briefing (IB) and produces an extensive Confidential Information Memorandum (CIM) to position your business for maximum value.

  • Number 2

    Proactive Buyer Prospecting​

    AE creates multiple marketing tactics and deploys multiple channels of proven proactive buyer searches to leave no stone unturned.

  • Number 3

    Maximizing the Offer

    One buyer is no buyer. AE vets each inquiry to screen unqualified buyers and to generate multiple, high-quality, high-value offers, leading potential buyers to engage in a competitive process.

  • Number 4

    Closing the Deal

    AE's experience anticipates and resolves deal-threatening issues, ensuring the process stays on schedule and that the finish line is crossed.

Merger & Acquisition Case Studies

AdvantEdge Advisors - Invetment Bankers - Image Labs International acquired by Reflect Scientific, Inc.

Emerging Technology Licensing Sale

A small group of medical practitioners developed an innovative way to image the nerve systems of the human body. The prototype of the technology showed great promise in affording more accuracy with peripheral nerve anesthetic applications for local surgeries.

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Flexible Exit with Continued Opportunity

Flexible Exit with Continued Opportunity

The owner of a Montana based company, although relatively young (about 50), was beginning to realize changes were needed. The high demands of owning and operating a very successful crane company, were keeping him from many other compelling interests that he wanted to have more time for.

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Selling a Business Frequently Asked Questions

While our goal is to complete all transactions as quickly and efficiently as possible, it is the patient tactical process that brings the highest value. Generally, most businesses sell within a process window that takes from six to eighteen months.

The merger and acquisition world functions in a space that most people are not even aware exists. AdvantEdge deploys proven and proprietary methods to provide as much assurance as possible that your intentions to sell remain confidential.

Astute buyers understand that there is no such thing as a perfect business. You can take comfort in the fact that they routinely overcome concerns and complete acquisitions. In fact, they often regard weaknesses or “issues” as opportunities which they can fix thereby adding value the  to the company post-acquisition. Being upfront about weaknesses as well as strengths builds credibility in the eyes of the buyer, and transforms it into an issue “issues” from deal-killers into opportunities to discuss and to strategize about.

During your engagement, AE will contract with a nationally-recognized, independent valuation firm to calculate your company’s fair market value—using an array of standard professional methods.  However, the reality is that value is ultimately determined in the market—which is why AE’s tactical process for creating competition among a pool of buyers is so critical to your success.

“Representation pays for itself.” Research supports this adage and the published fact that professional representation can add 20% to a client’s sale price. Each business requires unique and specialized approaches, all of which are covered in a proposal for services provided upon request.

Business Broker, M&A Advisor, Investment Banker—Which One Fits Your Company?

Three general types of intermediaries work with business owners to buy and sell companies:  business brokers, merger and acquisition (M&A) advisors, and investment bankers.

The right intermediary will fit with your company in terms of the company’s size and management sophistication, and target buyer groups.  The right advisor must also have the experience, market methodology and resources to successfully represent your company, and to identify, attract and negotiate with the level and types of buyers you’ll be pursuing.

There is some overlap between company and advisor types.  A company that’s “main street” in revenues but has strong margins, consistent revenue growth and a solid management team might benefit from engaging an M&A advisor, rather than a business broker.  An M&A advisor with deep industry and regional experience might be more effective (and less costly) than an investment bank, for a company on the borderline between lower-middle and middle market size.

Here are some general guidelines:

Business Brokers

Company Type:Main Street and Small Business
Company Size:Revenues under $10 million
 SDE* under $1.0 million
 Employees under 50
Management:Usually owner-managed, may have some middle management
Target Buyers:Individuals, or similar-sized companies
Financing:Seller finance; SBA-guaranteed bank financing
Marketing Method:Broker website; “business for sale” websites
Market Scope:Typically local or same-state; sometimes nearby states
Negotiation:Often one buyer, may have limited competition

M&A Advisors

Company Type:Lower Middle Market
Company Size:Revenues $10 to $100 million
 Employees over 50 (sometimes less)
 EBITDA *  over $1.5 million; usually over $2 million
Management:Management team in place; may be some dependence on owner
Target Buyers:Financial (Private Equity Groups, or PEGs); Strategic (corporate)
Financing:Senior and subordinate debt; seller equity rollover
Marketing Method:Proactive, direct outreach to researched buyer pools
Market Scope:National; sometimes multi-state regional, or international
Negotiation:Managed competition process; typically several competing offers

Investment Banks

Company Type:Middle and Upper Market
Company Size:Revenues $100 million and up
 Employees 500 or more
 EBITDA* over $10 million
Management:Full upper and middle management team; no owner dependence
Target Buyers:Large PEGs; hedge funds; publicly traded companies
Financing:Senior and subordinate debt; IPOs and private equity offerings
Marketing Method:Proactive outreach to buyer pools; “pitch book” presentation tours
Market Scope:International
Negotiation:Formal auction process; typically numerous competing offers

* Earnings measures utilized:

SDE: Earnings before interest, taxes, depreciation & amortization, plus owner-manager’s salary. (used for positioning for an owner-operator type buyer)

EBITDA: SDE minus one market-level general manager or CEO salary. (used for positioning a company for a private equity or strategic buyer.)

Both SDE and EBITDA are “normalized”: adjusting rent and owner-managers’ salaries to market rate; also subtracting non-operating income, and adding back non-business (nonessential) and non-recurring (one-time) expenses.

Benefits to Sellers from Retaining an Advisor—Beyond Finding a Buyer

Perhaps you’ve already been contacted by a buyer who seems ready to make an offer. If a buyer’s already in the picture, why hire and pay an intermediary—such as an M&A advisor, business broker or investment banker?

The two primary reasons:

  1. Negotiating with a single buyer puts the buyer in the driver’s seat, and the seller in the back seat. The seller has no ready alternative.  Their offer is the only offer—and they know it.  The further a seller goes in negotiations with a single buyer, the harder it is to back out and start over again from square one—and the buyer’s knowledge of that often costs the seller dearly. That’s why we often say, “one buyer is no buyer.”
  2. Even if the buyer is acting in full good faith, transactions without experienced intermediaries often self-destruct in the course of negotiations. That’s because key issues are not negotiated at the proper time, or the seller cannot commit the proper amount of time to support the buyer’s due diligence because they are consumed with running their business. When these single-buyer deals die, it leaves owners starting over from scratch, after months of wasted time and costs.

AdvantEdge has the methods and the experience to assemble a pool of well-qualified buyers; to do this confidentially (without the fact that you’re for sale becoming common knowledge); and to manage a controlled competition among the buyers, to get you the best price and terms available. Once the best buyer is selected, the advisors run the transaction process through to closing, dramatically reducing the demands on the business owner.

Also keep in mind:

  • From studies of the M&A, business broker and investment banking field, hiring a professional advisor increases price by an average of 20%, improves seller’s terms, and increases the probability of successful closing. Bottom line: M&A advisory services almost always deliver gains that far exceed the costs.
  • In these complex transactions, time is not our friend. The more delay, the more opportunity for something—from a family problem to a business setback (on either buy-side or sell-side) —to derail the transaction or compromise the valuation.
  • Experienced advisors work with the sellers and their other professional advisors to conduct “pre-diligence.” We pre-screen the items that the buyer’s advisors are going to scrutinize later. We organize an electronic “data room” which buyers who have signed our confidentiality agreement can access.  Having everything reviewed, corrected and organized in advance saves precious time, sustains forward momentum, and builds credibility for the sellers and their business.
  • Experienced advisors also set and enforce “hurdle dates” to keep the buyers moving on a scheduled path to closing.  We also recognize and avoid accepting at early stages (such as the Letter of Intent) deal conditions or provisions that can lead to serious conflict at later stages (final purchase documents.)
  • When the purchase is negotiated directly between buyer and seller, the disagreements, struggles and emotional baggage of the negotiation attach directly to the parties. The seller must go directly from opposing and sometimes antagonizing a prospective buyer in negotiations, to working with or supporting that buyer as the new company owner, post-transaction.  Having a professional advisor take on the “slings and arrows” of negotiation makes the post-close transition far easier, and more likely to succeed.
  • It can be a fatal mistake for the owner to become distracted by the M&A process from keeping a clear focus on running the business, and maintaining the keys to success which make it attractive to buyers.  If the business begins to deteriorate during the due diligence and closing process, those facts will come to light.  That can be devastating to sale price and terms; and in many cases, can completely derail the transaction.

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5 Lessons from Home Depots Acquisition of Blinds.com

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