Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

November 2, 2023

BEYOND FINANCIALS: THE REAL KEYS TO SELLING YOUR BUSINESS

By Gary Herviou

business success

When it comes time to selling your business, there will be tremendous emphasis on the financials.  There is no doubt that the performance of the company leading up to and during the sale process is a prominent factor – both for proper valuation and structuring the ultimate transaction.  However, strong financial performance alone does not guarantee a successful experience or even an executed deal.  Beyond the numbers and margins, there are some key ingredients that need to be in place to provide peace of mind, efficiency, and a completed sale for the business owner. Without these components in place, a challenging task will result and one that might be impossible to surmount.

As Achim Neumann, President of A Neumann & Associates, LLC. and one of the foremost respected M&A advisors on the East coast, says in his 2017 book entitled The Road Beyond – What Nobody Tells You About Selling a Midsized Business, “The goal for any caring and experienced M&A Advisory Firm is to provide proper valuation, marketability information, and brokerage services to private business owners so they can prepare for and execute an efficient sale of their company when the time is right for them – a transaction that delivers peace of mind and quickly maximizes financial return with the correct buyer in a confidential and professional manner”.

Let’s go beyond the tax returns and valuation multiples to address some equally important parts of a sale that every business owner needs to keep in mind to achieve that “efficient sale” that Mr. Neumann mentions.  These 4 ingredients are essential for ultimate success:

A Prepared and Motivated Seller – A fully motivated seller is the #1 most important ingredient needed for a successful sale of the business.  Without the business owner being mentally prepared and “at peace” with the decision to sell, it is practically impossible to complete a transaction. The owner’s goals (both monetary and lifestyle) must be clearly defined and obtainable.  Moreover, they must be willing to go through the process and endure the stress involved in order to meet those objectives.  Bottom line is that the seller must be “all in” or it is a doomed scenario.  To be comfortable with a sale, it is imperative that a clear deal structure be defined and supported before going into the market.  As a first step, a proper independent accredited fair-market valuation should be performed and delivered to the business owner. A qualified M&A advisor should be able to lay everything out for the owner (positives and negatives) and have all of their questions answered. In addition to the value and deal structure, the seller needs to know exactly what to expect from a proposed sale before going into the market – process steps, confidentiality, timeline, tax implications, seller notes, real estate, transition period and life post-closing.  If the owner’s expectations are not in sync with reality, then a difficult process to begin with becomes extremely frustrating for all involved.

A Cohesive and Efficient Team –  In order to complete a transaction, a qualified team of professionals with clearly defined roles needs to be in place to support the owner – CPA, financial advisor, business attorney and an experienced M&A advisor.  Each professional should understand their specific role in assisting the business owner and defer to the expertise of their colleagues.  Good communication and dialogue throughout the various steps is critical to success.  In addition to this team, it is crucial that all stakeholders be supportive and share the motivation to sell – this is usually spouses, family members and key advisors.  The professional team needs to prioritize the transaction and act efficiently on behalf of the owner while the family needs to be on board 100%.  Anything less will cast doubt in the eyes of the seller and certainly put the deal closing successfully into jeopardy.

The Correct Buyer – Often, a buyer will approach a business owner with a proposition to purchase, as well multiple other potential buyers vying for the company too.  That is all very flattering but can also be problematic.  Before quickly getting into a deal with a potential buyer, it is critical to know who this buyer is, their management qualifications and their financial capability to complete the proposed transaction.  Any proposed buyer must be “a good fit” with the seller and there must be good chemistry, communication, and professionalism between the two.  The buyer should be decisive and have a well-prepared vision for success.  If the seller is not convinced that the buyer will be successful in growing the company, servicing its clients, and taking care of its employees, then it will certainly be an uphill battle to close the transaction.  Moreover, if it turns out that the buyer cannot financially qualify for bank financing or properly secure a seller note, then the deal is most certainly doomed.

    Choosing the wrong buyer can jeopardize confidentiality, waste months of valuable time and exhaust professional resources while at the same time reducing the negotiating leverage with other buyers as you must return to the market after a failed attempt.  Everything can be positive with the business and the offering, but accepting the wrong offer from the wrong buyer can lead to disaster.

    A Problem-Solving Quarterback – Once a deal is in place, the buyer will conduct their due diligence, bank financing must be obtained, and the closing process must be completed.  During this time, there are numerous problems and tasks that will need to be deftly navigated – items such as coordinating the myriad of financial documents needed by buyer/bank, handling landlord/lease issues, filing any EPA/ISRA documents if needed, obtaining debt/UCC terminations, addressing any buyer concerns that appear, and finally working with the financing bank to close the transaction.  It is imperative that the business owner have an experienced quarterback (usually the broker or M&A advisor) dedicated to managing these tasks and bringing the deal to fruition.  Such an individual has seen all the potholes before and is best positioned to address any challenges along the way – an invaluable resource for the business owner.

    Selling a business is never an easy task, but if you can combine these 4 elements with a business that is properly priced and professionally marketed with attractive financial performance then the pieces are in place for the best chances at success in meeting the goals of ownership.

    As Mr. Neumann adds, “Preparing for and deciding to sell a family or privately held business is a weighty exercise that calls for a thoughtful and proactive approach.  The execution of an efficient sale as described above is a complicated process that calls for experience, discretion, patience, and professionalism. The legitimate concerns of a seller must be addressed.  Determining the ultimate deal structure with cash at closing defined, preserving confidentiality throughout the process, and maintaining the continuity of the organization are paramount priorities.  Proper preparation and an experienced M&A team will go a long way to alleviating any fears involved with the sale of a business and avoiding a failed process.” 

    While there is so much emphasis and discussion about valuation, multiples, and financial performance – it is important not to forget some of the additional components needed to complete a transaction discussed here.  A motivated and prepared seller combined with the proper buyer and a process expertly managed by an experienced team of professionals are just as important as the last 6 months’ income statement.  The process of selling a privately held company is a unique experience and if handled properly, can result in an extremely rewarding transaction that fully meets the goals of the owner and the firm.  Thoughtful planning and a proactive approach with the right team will certainly result in an efficient sale of the business and a fulfilling experience for the business owner that fully realizes the goals identified going into the process.

    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 info@neumannassociates.com

    Leave a Reply

    Your email address will not be published. Required fields are marked *


    CAPTCHA Image
    Reload Image

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

    Client Testimonials

    “I'm an attorney. I have represented the buyers and sellers of businesses for 20+ years. Recently I had the pleasure of handling a transaction where Richard Wilder of A. Neumann & Associates was the broker for the seller. Mr. Wilder was of great service to his client. He is very knowledgeable and organized. Thanks to his guidance the transaction proceeded smoothly and closed on time. He is highly recommended.”

    Nick Ferrante

    “Richard, you came to my office a few years ago and were wonderful in explaining your process and procedures. Our company is probably an anomaly in that we sold the majority to two long time employees and I financed them both. Our company is entering its 45th year and is still thriving. The purpose of the note is to thank you very much for the service that you provide. Thank you again.”

    John Foug, Seller

    “We had a great experience working with Richard Wilder from Neumann and Associates as the sell-side broker for Blade Runners. He was knowledgeable, professional, and clearly had his client’s best interests at heart. Richard helped keep the process smooth for everyone, and thanks in part to his efforts, we found a fantastic owner to partner with. We'd gladly work with Richard and the Neumann and Associates team again.”

    Justin Martin

    “Very happy with Richard and the entire process. I was on the buyer side of the transaction.”

    Isaac Palmer, Jr.

    “If you are looking for a professional and informative company that meets your needs, A Neumann & Associates is the company to go with. Ted Kantor went above and beyond to make our experience as easy as possible. Ted was helpful from the start of our process to the end. He was there every step of the way to guide us and answer all of our questions. He handled all of the in-depth communication and followed up on every detail. We strongly recommend Ted Kantor to help you whether you're buying or selling. It was a great experience. We never imagined it would go as smooth as it did. The Laluna's (Andy, Maria & Tony Jr)”

    Maria Laluna

    “A Pleasure to work with - I highly recommend them! Working with Richard Wilder was a pleasure, and he found us the perfect match.”

    Laura Keith-Macario

    “This spring we acquired a business that was represented by Richard Wilder at A Neumann & Associates. Small business acquisitions can be very emotional for the sellers and life-changing for the buyers, and Richard was keenly aware of this throughout the process. Although he was working for the sellers and not for us, he knew that most business owners see their business as their baby so the only way to have a happy outcome for his clients was to also have a happy outcome for the buyers. Knowing how nerve-wracking this process can be (think home buying x 10), he never dropped the ball on keeping everyone updated, anticipating potential snags, and guiding us along in the process. We highly recommend Richard.”

    Shannon, Buyer

    “My business was my baby for over 40 years. It is a tough and cruel world out there when it comes to selling your business. Neuman and Associates provided the professional guidance/protection to get the job done with care and no pressure. In my view a tremendous value. I would recommend them to anyone seeking to sell their business. Eric Storck, president of Blade Runners Inc.”

    Eric Storck, President - Blade Runners Inc.

    “I’m really impressed with how your firm operates. The focus on confidentiality, the thorough vetting process, and the use of third-party accredited valuations really stand out. It’s easy to see why you’ve built such a strong reputation over the years.”

    Ann M., Investor

    “Thanks for sending over such a detailed CIM.  While I have only reviewed a have dozen CIMs at this point, your company has put together the most comprehensive data and detailed presentation I have seen so far.”

    Ben N., Investor
    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
    Message