Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

September 9, 2022

Motivated Investors – How To Find Them

By Karin Neumann

Closing the deal is a significant challenge business owners face once they’ve made the decision to sell their business. Some business owners still hope somebody will walk through their door and make an offer they cannot refuse. While in some instances, inflated purchase prices might exist amongst public companies or with strategic acquisitions, but rarely will a buyer overpay for a business. In order to get a deal done, it will take a seller who is committed to sell and a buyer who is truly motivated to make a purchase.

So how do you find a truly motivated investor?

For a business owner, it is advisable to rely on a professional M&A advisor to identify buyers to support the owner in the transfer of the business as business owners have usually little experience and time to devote to find the right buyer. Prior to identifying and qualifying buyers, the asking price for the business has to be established through an independent, 3rd party business valuation, after which the advisor will prepare the business for sale.

Once the business has been posted on major business-for-sale websites in a confidential fashion, never releasing the company name or location, the M&A advisor will receive email or phone inquiries from potential buyers.

Another way to find potential investors is by extracting buyers who had shown interest in a similar business in the past out of a proprietary database or by identifying competitors and then creating USPS and email campaigns and reach out to see if there is interest in an acquisition.

How do you find out if any of these buyers who respond to the advertisements are truly interested?

The first step to differentiate between buyers on a fishing expedition or competitors trying to gain knowledge about their peers and a truly interested party, is to rigorously pre-qualify any potential buyer. Buyer pre-qualification documents should include:

  • A Non-Disclosure Agreement (protecting the seller’s confidential information)
  • An Investor Profile & Management Experience (important to get bank financing in place)
  • A Financial/Bank Statement (confirmation that sufficient funds are available for the acquisition)

Buyers who refuse to complete the pre-qualification documents are usually not serious buyers or don’t have the funds in place. There is no reason to give them access to confidential information about the business. Any investor who is seriously looking to buy a business should expect to be pre-qualified and shouldn’t have an issue to provide the requested information.

“Over the years we have seen a steady increase of buy-side inquiries, “says Karin Neumann, Managing Director in the Buy-side Department of A Neumann & Associates, a leading Mergers & Acquisitions and business brokerage advisory firm, headquartered in New Jersey, “however, less than 50% of inquirers respond after sending the initial inquiry and of the remaining 50% only half are willing to provide sufficient documentation to get pre-qualified. The fastest way to find highly motivated buyers is to reach out to our pool of more than 1,000 pre-qualified buyers in our proprietary database.”

Only after a successful pre-qualification should the Confidential Memorandum – disclosing company name and location – and 3rd party independent valuation be sent to the buyer. Once the buyer has reviewed the Confidential Memorandum and decided that there is further interest in the business, he will ask for a buyer/seller introduction.

The M&A advisor should first schedule an initial call to find out if the buyer seems to be a good fit to avoid time spent with unnecessary buyer/seller introductions. If there is continued interest, the advisor will schedule a call/meeting with the business owner to discuss the operation; if requested, the advisor will provide additional financial information and set up a site visit for the investor. Subsequently, if the buyer is ready to move forward with the acquisition, he will issue an offer to purchase or letter of intent. True motivation is shown on the buyer’s side by sending an escrow check together with the offer to purchase.

In sum, identifying truly motivated buyers will help to avoid wasting time for the seller, risking a breach of confidentiality and to get to a successful closing!

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'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
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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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