Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

May 13, 2018

Not A Penny More!

By Jeremy Albelda


“Not a penny more” or “this is the percentage commission I’m willing to pay out, and not a point more!”- familiar words every business owner has heard in the past from one of the business’ customers. What do you do?

Whereas this negotiation approach might be viable in an ongoing business that generates a consistent product or service flow for its revenue, with new customers coming through the door every day, it’s a devastating approach in the deal making world where the business transfer process consists of only one single deal.

“Business owners need to recognize that deal making is a negotiation, a give-and-take,” says Achim Neumann President, A Neumann & Associates, LLC, a New Jersey based Mergers & Acquisitions Advisory firm,, “an overly firm – or sometimes stubborn approach – or one-upmanship will ultimately kill what could be a good deal for both sides. A lack to engage, or strongarm, will not result in a closed deal.”

At times, some business owners set very negative, early telltale signs to an M&A advisor: the sell-side owner is completely insistent on a certain percentage for the M&A advisor’s success fee, not intending to bend under any means – even though various value propositions have been established.

However, if for example we were to assume that there is a delta of three percentage points in the success fee between what the business owner is willing to pay versus what the M&A advisor expects for a certain sized deal, then the immediate impact is only 50% – in light of Uncle Sam typically absorbing such; in other words, a three percentage point fee difference translates into a 1.5 percent after-tax net receipt difference.

Moreover, a 1.5 percent after-tax net differential is so minute versus the overall deal negotiations – often fluctuating 10% to 15% in deal size and structure – that insisting on preserving such reduction is simply not in any relevant relationship to the final deal negotiations.

This behavior becomes even more questionable if one wonders why a business owner would not hire the best M&A advisor obtainable for selling his business – a one-time (final) event to maximize income before retiring.

To take the example above, namely, to engage into a debate about a success fees being 1.5% apart versus ultimate deal negotiations fluctuating 10% to 15%, lacks any kind of economic reasoning. The qualifications of the M&A advisor should be the relevant determination, not a 1.5% fee differential.

Indeed, most often it’s the owner’s lack of true motivation to sell the business, generating numerous hurdles in the process early on. A non-agreement on fees provides an excellent excuse for the business owner not (having) to proceed with the sale.

However, history has shown that the very same business owners often find himself/herself still in the very same situation five years later, unfortunately, most often though the business or market environment has declined resulting in a lower Fair Market Value for the business.

Thus, a debate about success fees most often has some very different underlying reasons than the business owner’s focus on maximizing post transaction net earnings.

M&A advisors are well advised to recognize such situations well before expending a significant amount of time and resources in preparing a business for sale, as the lack of motivation and willingness to negotiate will ultimately render any deal impossible.

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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

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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

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Dennis Frazier

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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
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