Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

July 13, 2015

Helping Out Our Biggest Competitors – the Kids!

By Joseph Eneldas

selling-the-family-business1

By Frank Arcoleo, one of Neumann and Associates premier M&A Advisors

I’m often asked who our competition is.  There are other M&A advisors out there, some smaller and some larger.  And although I’ve met a few of them, I’ve rarely, if ever, run across any of them in dealings with prospects and clients.  So when I’m asked, I tell people I have two main competitors.  In this month’s newsletter, I’ll deal with one of them.

The biggest competitor, I tell them, is “the kids.”  Many small business owners are owned by single individuals, and generally, these owners don’t have large 401(k)s or other significant retirement savings.  In most ways, there business IS their retirement.  However, there are family members – often one or more sons and daughters – who are also active in the business, and some of these family members have historically been instrumental in the growth and success of the enterprise.

“When an owner begins to contemplate such an exit strategy,” says Achim Neumann, CEO of A Neumann & Associates, LLC, the full-service M&A advisor based in Atlantic Highlands, New Jersey, “he or she needs to balance two major factors: the need for retirement income, coupled with the desire to give part of the business to his/her heirs, both as an inheritance and as a reward for past contributions to the business.”

Balancing these factors is not necessarily easy, but it’s critical.  “I can’t tell you how many families I’ve seen split apart, broken into factions, based on perceived inequities in dealing with business transitions,” says Vincent Eades, Managing Director of the Southern Maryland Region.  “Such a situation turns a hard-earned family asset into a wedge that causes lasting bitterness.”

As business brokers, we could recommend one solution – just sell the business and deal with the allocation of proceeds in the same way as any other estate would be distributed.  And in fact we’ve seen some of these situations, most often when the next generation is only minimally interested in continuing to own and operate the business.  Such a situation is the exception, not the rule, and for most of these owners, selling is not an option.  So how can we help, even absent a sale?

“For an owner who intends to keep the business in the family,” says Gary Herviou, Managing Director of the Central New Jersey region, “we highly recommend that he get an independent business valuation, performed by a 3rd party who is not connected in any way to the family.”  Armed with a true market value of the firm at a given point in time, the owner can decide how much of that value he or she needs to fund retirement (either in a lump sum payment from the successors or paid out in installments over time) or other legacy items, such as charitable contributions, and how much can be given to the kids.  That allocation of business value may not be easy, but without knowing the fair market value of the business, it can be disastrous, both financially and for family relationships.

So how do we deal with our biggest competitor – the kids?  We don’t even try.  But we can participate in helping even intra-family business transitions to be smoother and more successful by assisting the owner to establish a true market value of the business.  And who knows?  If the kids want to sell the business someday, we’ll be there for them!

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

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Client Testimonials

“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.”

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“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

“A Neumann & Associates is the only business broker I would use or consult with. They have assisted with 3 business sales over the past 15 years with me. They are honest and sincere and have always performed better than my expectations. They are the only one i would use for the sales of my businesses.”

James Belanger, Business Owner

“I wanted to take a second to commend the exemplary customer service from both you [Karin Neumann] and Mr. Valentino. It’s both a rarity in the industry, and very much appreciated.”

Andrew G., Investor

“We worked with Neumann & Associates to investigate the purchase of a research company in 2010 and found Achim to be capable, forthright and realistic. His depth of experience enabled us to fully understand our options, offering creative options that might enable the acquisition. While we didn’t acquire that particular company at that time, we know exactly who to call whenever we’re looking to buy or sell a business.”

Daniel Coates, Buyer

“Purchasing a business through this firm was a pleasure. Gary was very professional and transparent throughout the entire process. I look forward to working with A Neumann & Associates in the future.”

William Klemens, Buyer
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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.

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