Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

March 8, 2016

Save The Commissions – Forget the Advisor!

By Joseph Eneldas

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Not surprisingly, the value of an M&A Advisor or business broker is often questioned. The intuitive reaction of a business owner is to question the commissions involved in selling a business and to try to avoid such “cost items.”

“Rarely, though, does a business owner take into account the opportunity costs of not selling at all, or of improperly or underselling a business,” says Achim Neumann, President, A Neumann & Associates, LLC, a leading New Jersey-based mergers & acquisitions and business brokerage firm. “We have seen a lot of scenarios where an improper transfer has resulted in many years of litigation after the closing.” So, what exactly is the role of a good transaction advisor?

Generally speaking, the advisor should help the business owner in preparing the business for a sale. This includes assembling all accounting records, checking the proper financial presentation, and establishing a coherent narrative about the business, especially its competitive advantages and growth prospects. Once that is established, an accredited third-party valuation should be obtained, not merely a “back of the envelope” value assessment, a common shortcut. Upon agreement about the value of the business, a comprehensive set of marketing documents needs to be prepared. A good advisor will be able to provide the right package to entice investors to take the next step.

“We have seen many poorly prepared marketing documents,” says Frank Arcoleo, Managing Director, Central PA and NY region, “missing essential information such as ownership structure, market position, or a description of key personnel.” As a matter of fact, without a qualified advisor and a properly prepared marketing package, the seller cannot make a “good first impression” – leading to the investor to heavily discount the contemplated purchase or to not pursue the business acquisition at all.  After all, if the business owner has such low standards in selling a business, why would standards be higher for its management?

The next step in the business sale process involves properly reaching out to investors. First, reaching investors needs to be done in a non-divulging way, so that the confidentiality of the sale is not compromised. Only advisors who have been in the business for some time have the network and experience to do this properly. Secondly, investors need to be pre-qualified to sort out any “tire-kickers.” Pre-qualification verifies that the prospective buyer has sufficient funds for the execution of an acquisition, and that the right non-disclosure agreements have been put into place.  All of this needs to be done while generating a healthy flow of buy side inquiries – no small task!

Once a business investor has been identified, introductions need to be arranged, facility reviews established, and an offer needs to be negotiated – one that can ultimately be converted into a final transfer agreement by the legal counsel of each party.  It is here that the deep experience of a well-established advisor can mean a purchase price several hundred thousands of dollars – or more – larger than it otherwise would have been.

The negotiation phase is also the point where the advisor acts as a “relationship buffer,” exploring the concerns of both parties and finding common ground for the key issues in order to propel the deal forward. This allows the parties not to be on the “front line” when being confronted by demands by the opposing party – an invaluable advantage to maximize the deal outcome and the post-deal cooperation during the transfer process.

Finally, in the due diligence and closing process, the advisor acts as conduit to facilitate the document flow ensuring that the deal “stays alive.”  “Not long ago, we actually had a business seller who wanted to increase the transaction price by 100% only two months after having accepted an offer from a buyer, and then to proceed to the closing table to sell the whole company, including the shares of his co-shareholder who was not appraised to any of the negotiated terms!” says Achim Neumann. “These are the type of scenarios where only a good advisor will be able to save a deal.”

One common saying is “Good advice does not have to be expensive, but bad advice will cost a fortune.”  This is nowhere more applicable than in the world of mergers & acquisitions and business brokerage.

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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