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 appreciate your diligent approach to screening buyers and sellers as well as the high quality CIM that you produce.”

Andrey O, Investor

“Finally enjoying retirement after recently selling my business using the services of A Neumann & Associates. Joe Oddo provided the conduit to a successful transaction. Joe knew when to inject input and when to simply listen and allow the buyers to vent, step back and regroup. The outcome met our expectations and got us to the finish line, which included my staying with the company six months in order for the buyers to get their footing and keep our workforce in the loop. He helped at every step by providing his expert guidance & resources. Thank you!”

Emily Parker Myers, Co-Owner - Myers McRae

“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
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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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