Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

July 8, 2022

Reevaluating Your Business

By Michael McEntee

By now we all know how the pandemic that necessitated employees working from home sparked the great resignation. A huge portion of the workforce became aware of the lifestyle benefits that accompanied a reduced or eliminated commute to the office. Who would have previously imagined being able to spend so much more time with our families while still successfully doing our jobs and earning a good living? The popular mantra is now: “If my employer wants our relationship to return to what it was, then maybe I need to find a different employer.”

The pandemic triggered a nationwide reevaluation of most every individual’s work-life balance. It has impacted employees and employers alike and is not only about one’s ability to work from home.
Small business owners, who have invested a lifetime developing their products, could also be motivated to rethink their work-life balance, questioning themselves as to whether all of their goals have been met and whether they still have the energy and desire to continue that activity.

Ultimately, whenever a business owner decides a fundamental change is desired, the first question will always be: Is now the right time to sell my business? If an owner has done everything to keep the business current, but no longer has that energy or desire; If they want to spend more quality time with their family; If they have accomplished everything, they set out to do, then the answer, on a personal level, clearly can be ‘yes’.

Unlike an employee, a business owner does not realistically have the luxury of deciding to just leave and find another job. Of course, it can be done, but at what cost. Making the final decision to sell a business is much more involved. A business owner may first want to embrace a two- or three-year plan to get the business humming again and polish up its financial picture. But, if the business is robust and its market value is substantial, then the answer to the “right time” question will again be ‘yes’.

Interest rates and financing costs have been rising. It is impossible to know what the future will bring, but there are always buyers in the market for a well-run business with good cash flow and solid prospects for growth. It is just a matter of agreeing on a fair price. At A. Neumann & Associates we currently have each month over 300 specific inquiries from buyers for businesses that possess those characteristics. Our buyers are national and international. They include Individuals looking for a business to personally manage, existing companies wishing to add to current operations, and assorted private equity funds searching for attractive additions to their portfolios.

Prior to beginning the marketing process, a fair market valuation of the business must be established, and an offering price agreed upon. Over the years business owners will have worked to minimize reported annual income, thereby limiting taxes due. As part of the valuation process, we recast the company’s financials, making sure that any depreciated assets such as vehicles and machinery are included at current market value. Also, expenses that current owners have incurred, but a new buyer may not, must be added back so that maximum cash flow is exhibited. Based on such true cash flow of the business, we will then engage an independent valuation firm that will establish a weighted, eight-point fair market valuation for the company.

Any transaction valued at over $1 million will most likely involve some form of secondary financing. The buyer’s lender will need to be comfortable with the agreed upon price of the business since it will be the ultimate collateral for the loan. This is where the independent third-party accredited valuation takes on additional importance. Without it, every potential buyer would have to go through the valuation process on his or her own, likely causing substantial delays. In contrast, small business lenders readily accept independent valuations, often accelerating the closing process.

Thereafter, the marketing documents, consisting of a blind profile and confidential memorandum, will be developed by our firm. All such marketing documents have to be approved by the business seller, with confidentiality being a key component.

Owners should never want anyone to know that their business is for sale. If employees become concerned for their jobs, they could leave, potentially jeopardizing the ability to sell an ongoing enterprise. If customers, suppliers, and even competitors believe the business will not be there for the long term, they can each react differently, with potentially negative consequences for the business during the marketing process.

At Neumann & Associates, LLC. we require all interested buyers to sign strict non-disclosure documents. We also financially pre-qualify those buyers before any of our seller’s specific information is released.

The time required for a business transfer, covering the introduction, valuation, marketing and closing phases usually ranges from 7 to 12 months. We have successfully managed more than 200 business transfers over the last 20 years and handle the entire process, including providing referrals for bank lenders, transaction attorneys and CPAs, so that owners can focus on what they do best: running their businesses.

Investors far outnumber sellers by a large margin and no one can predict how fast the increase in interest rates, higher taxes, and less equity will negatively impact Mergers and Acquisition markets. There is no better time than now to begin the selling process, and no better team to engage than the one found at A. Neumann & Associates, LLC.

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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