There are many elements that dictate the value of a business – such as cash flow, equipment values, historic financial performance, lease terms, location, recurring revenue/repeat customers, competitors and the economy.  Potential “strategic fit” and efficiencies of scale or eliminating redundancies also will come into play for strategic buyers.  Each potential buyer will have a different view in balancing the opportunities and risks your business might represent to them.  

A Western M&A intermediary is capable of analyzing your business and comparing it with your competitors, as well as recent comparable transactions (“comps”) to arrive at a value range that you can reasonably expect as an offer from a buyer. The documented evidence that we use to determine the value of your business will also assist in securing qualified buyers who are willing to pay the maximum price.

The time to sell can vary based on a number of factors, but on the quick side we’ve had several businesses get offers within the first 30 days, and close within 4 months.  On the long side, we have had transitions take more than a year.  So based on industry data and confirmed by our experience, on average the process takes 8 months from start to closing.

It’s also important to realize the different elements in selling a business.  Once the business is officially listed, the marketing, on a very confidential basis, begins and we will review your business with qualified prospective buyers (with your approval).  When a buyer wants to buy your business, they will typically submit one or more letters with the price they are willing to pay and outlining the applicable terms.  Once an LOI (Letter Of Intent), at that point, you have a tentative deal, pending “due diligence”.  Due diligence is a period where the buyer will check facts, review financials, and make sure that the information they had based their offer on is indeed accurate and representative.  This period can vary in length from 21 to 45 days.  We do not want the business off the market for a prolonged period of time. With financing and legal documents to prepare and finalize, the entire process from offer to closing/funding typically takes 60 to 90 days.

At Western M&A, we take great pride in our ability to keep all your information confidential. At no time will the name of the company, owner or even specific geographical region be revealed. Any serious buyer is required to sign a confidentiality agreement to protect the seller’s interests, before they will see the name or any other confidential information about your business.

Selling a business, especially for the first time, can be stressful and difficult to navigate. Western M&A has tremendous experience in shepherding the sale process to completion; we take care of the marketing, paperwork, and buyer screening for you and we do so confidentially. By using an intermediary to sell your business, you are also giving yourself leverage; we make a market for selling your private business.  We will be working with a pool of buyers versus you working with only one to try and make ends meet.  WE handle the process while you continue to run your business.

Another benefit to using an M&A Advisory like Western is that we have a very, very large existing pool of qualified buyers who are actively looking to buy businesses in various industries.  For this reason, it is not uncommon for us to receive significant interest and in some cases offers within a few weeks of offering a business to our buyer pool.

And last is this analogy: You hire a CPA to do your tax return and you hire an attorney to help you with legal issues, you also need to hire a professional when it comes to selling one of your largest - if not THR largest asset -your business. Selling your business is one of the top 5 things you will do in your lifetime!

The best time to sell your business is when it is doing well. You want to sell your business when the profits are rising to ensure you get the best price for your business. The fact that your business is doing well will also assist in securing a buyer sooner rather than later.

That said, even if your business is not performing at its peak, we encourage you to contact us.  We can discuss what we are currently seeing in the marketplace, and there are buyers that are willing to explore acquiring businesses that are having some struggles.  We can also discuss actions you can take now to best position your business for a sale in the future – whether that is six months out or five years out.

The purchase price of your business and the allocation of that price towards FFE vs. goodwill dictates how much you will pay in taxes, and also affects the buyer’s taxes as well. Most business owners are also able to treat the sale of their business as capital gains, and thus typically pay a lower percentage on that income than they would “normal” income from the operations of their business.  This said, we must encourage you to contact a CPA before and after the sale of your business for details, exceptions and expert advice specific to your situation.