Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

September 7, 2015

Asking Price Premiums with a Business Broker

By Joseph Eneldas


Two months ago, I talked about how our biggest competitor in business transitions turns out to be the owner’s kids.  Last month, I let everybody know that our second-biggest competitor is “nobody.”  Many small business owners are determined to sell a businesses on their own in order to avoid paying a commission.  We looked at what could go wrong when a business owner tries to sell their own business, things like setting a bad price, inability to find buyers without breaching confidentiality (leading to an exodus of their best customers and employees), neglecting ongoing operations while they try to manage the sale, and wasting time with buyers who don’t even have enough money for the down payment.

To sum up, as I said last month: without a business broker or M&A Advisor, many things could go wrong that will lead to a much worse outcome – including no deal at all or compromising the business value in the process – than paying an intermediary to do things correctly.  “In other words,” says Michael Feite, Managing Director of the Eastern Pennsylvania region for A Neumann & Associates, LLC, a professional Mergers and Acquisitions firm based in New Jersey, “we’re sometimes viewed as an insurance policy the owner buys to protect against something going wrong.”

But what if having an intermediary actually increases the sale price MORE THAN the cost of paying a broker commission?

“Intuitively, we’ve always believed that we add a substantial amount of value to a transaction,” says Achim Neumann, A Neumann & Associates’ CEO, “but believing it and having evidence to substantiate such a claim are two different things.”

It’s hard to find any study to prove our worth.  You can’t look at the same business with and without an intermediary – it only sells once!  To compare different businesses might not be statistically valid.  We did find one study, however, conducted by Mercer Capital in 2007.  Although it’s 8 years old, we’ve seen nothing about it to indicate it wouldn’t still be valid.

The Mercer Capital study was done on banks, particularly small private banks, because it’s one of the few industries that has both enough available financial information about the banks themselves as well as about the transaction prices – the prices for which the banks were sold.  One might think that an analysis of bank transactions would not apply to them.  Instead, it might apply even more so.  According to a description of the study by Jay D. Wilson, Jr., published in their Mercer’s “Value Matters” newsletter, “The transaction data analyzed clearly indicates that transaction advisors play a very significant role in helping owners maximize the value received for their banks, despite the increased level of information available.”

How significant?  Controlling for bank size and other factors, says Wilson, “It was found that those sellers who utilized an M&A advisor received substantially higher pricing multiples and were more likely to maximize the value received from their investment.”  Furthermore, “Those banks sold with the assistance of a transaction advisor received a 20% higher price to earnings multiple and a 15% higher price to tangible book multiple.”

For most non-banks, price to tangible book multiples are not very relevant.  But price to earnings multiples are critical.  “What this study says,” comments Gary Herviou, Vice President, “is that transaction advisors like us add substantially more value – in the form of increased sale prices – than we absorb in success fees.”

As Frank Arcoleo, Managing Director, Central Pennsylvania, noted, “there is indeed a very simple measurement we always outline to our clients: opportunity costs and reduced legal expenses. For example, reducing the time to close a deal by a single month for an average transaction value of $3m, substantially increases the receipts to a seller. Another example: using our time tested Offer-To-Purchase format provides a clear deal outline and time/action calendar without the need of attorneys having to define many details – saving both parties on the average $10,000 in legal costs for said transaction size.”

So why use an M&A advisor like us?  Well, we preserve confidentiality while getting the word out to the maximum number of potential buyers.  We qualify buyers to make sure they have the money to do the deal, preventing a business owner away from wasting time on “window shoppers.”  We get all the details done, like orchestrate the business valuation and prepare all the marketing documents.  And last but not least: we get actual sale price premiums that significantly exceed our commissions.

What could be better?



About A Neumann & Associates, LLC

A. Neumann and Associates, LLC is a professional M&A and business brokerage firm with over 30 years of experience in NJ, PA, NY, MD and DE that assists business owners and buyers with the business transfer process in a completely confidential manner. Neumann and Associates is affiliated with BBN, offering over 450 offices and access to a national network of qualified buyers and sellers. For more information, please contact A. Neumann & Associates at 732-872-6777.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or

Comments are closed.

Any questions? Please contact us at 732-872-6777
Call Now

Client Testimonials

“I had been in touch with Karin and Gary from A Neumann & Associates regarding some opportunities and was looking forward to meeting with them. Hence, when they organized a seminar in Princeton, NJ, I was quick to sign up. The seminar was very informative as the team walked the attendees through various scenarios and referenced real life buying/selling situations they had been through. The sessions by Gary, Karin and Achim were crisp and focused and brought clarity to potential seller and buyers. I strongly recommend the team and look forward to continue working with them.”

Gaurav Tyagi

“Thank you for your Event on "How to value, Sell, and Buy A Business for Maximum Profit" and the insight into ANA’s approach on what is involved in the Business Exit for sellers. Garys Hervieiou's "Business Valuation", Achim's "Deal structure" presentation and Karin’s "Preparing the Package" are real street knowledge shared. They answered attendees questions which makes it more interesting for learning from others. Great for small businesses like us. The presentations were totally worth our time and travel for the event to Princeton, NJ from Rockville MD. Ravi Bhutani, President, CIPS”

Ravi Bhutani

“Gary, this is to thank you for an excellent job done in selling our business. We could never have done it without your professional expertise, dedication and time put in without reservation to make it happen. We will gladly and highly recommend you to anybody in our position.  It was a pleasure to work with you.”

Pat Iammatteo, Owner

“Your vetting is simply outstanding, among the best I've seen from a broker.”

Eric H., Investor

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

Double Diamond

“Used A Neumann & Associates to sale my business. could not imagine having done it with out the patience and experience Gary provided. Thanks Gary,”

Dennis Frazier

“Working with Marc and his company was a pleasure. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio

“I recently completed an acquisition using A Neumann & Associates. Tony Valentino was very helpful and accessible during the entire process. They do a thorough job vetting both parties and got us to the finish line.”

Srini Mudambi

“Claus out of Florida helped us with the sale of our business. We had never done anything like this and him and his team walked us through the process from start to finish. We had some challenges through the process and Claus continued to show up even in the difficult conversations.”

Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs
view all testimonials

Contact A Neumann & Associates, LLC

If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

call us now
Contact Us for a Free, Confidential Consultation

Experienced M&A Advisors available

Full Name
Email Address
Phone Number