Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

July 8, 2012

Justifying a Sale Price

By Joseph Eneldas

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In a recent banking and finance article in NJ Biz, we underscored the changing attitudes of business owners toward more realistic values for their businesses. “I think everybody recognizes that the market is not going to go back to the crazy days of 2007,” said Achim Neumann, President, A Neumann & Associates. “This trend is also being experienced at our firm’s offices.”

A Neumann & Associates will have five field offices in place by this Fall, ranging from Eastern Pennsylvania/Lehigh Valley, to Long Island, to Northern New Jersey/Southern New York.  Southern New Jersey and the Metropolitan Philadelphia will be served by Steve Wrubleski, recently appointed Director Marketing at the company.

Accuracy has always been the hallmark of the firm when it comes to valuations. A consistent and rigorous standardized business preparation process is followed at each of the firm’s offices, and this is key to ensuring that Fair Market Valuations correctly reflect the true market value of a business. As Gary Herviou, Director Marketing, Central NJ, comments, “It’s important to capture all aspects of a business’ cash flow, even if this is not immediately apparent on the company’s tax returns. And this applies to both Strategic Valuations and Transaction Valuations.”

Essentially, the preparation process serves the purpose of discovering inconsistencies in a business’ financial reporting systems, thus, alerting a business owner early to a situation that needs improvement prior to presenting the business to potential buyers. “It’s very important to us that the presentation to a buyer shows a true picture of a business, and that is the reason we spend so much time during the preparation phase,” says Mike Gersten, Director Marketing, North New Jersey-Southern New York, “if we find inconsistencies or erroneous information later on, buyers rightfully abort the purchase of a business.”

So how does one justify the sale price? First, all information and federal tax returns for the past three years are captured during a confidential, one-to-one meeting with a business owner, with no employees in attendance. An initial recasting is prepared and reviewed with the business owner, and if correct, the information is provided to a national, accredited valuation firm for a full valuation report.

“Our firm only utilizes external, qualified valuation firms and would never position itself into a conflict-of–interest situation by internally developing valuations,” says Neumann, “a business broker’s internal valuation never serves a business owner properly. It is an inherently faulty practice that business owners should be very wary of.”

The subsequent valuation draft report that is presented to the business owner contains various charts, analyses and comparisons, including a price justification chart. “It’s this chart where the ‘rubber meets the road’”, says Herviou, “it clearly spells out the return on investment for a buyer and very quickly determines if the proposed value indeed will be attractive to an investor.”

Having performed hundreds of valuations for its clients followed by many deal closings over the past ten years, the firm has a keen sense for what buyers are willing to pay and how they prefer to see the valuation information presented. Justifying a sale price is of paramount importance to a seller if a successful sale is to be achieved.


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.”

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

“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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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.

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