Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

May 12, 2019

Smart Transition Management

By Jeremy Albelda


Most entrepreneurs start a business because they know something about a particular industry, its practices, its products and services, and its customers.  Generally, they believe they can do whatever it takes to match or beat competitors profitably and successfully.  Many new businesses don’t survive, but for those that do, the belief that he or she knows how to deliver value to customers holds true.

Initially, the business owner may do everything.  He or she finds customers, prices the products or services, performs the work, handles the billing and collections, and performs all the administrative functions.  Over time, as the business grows, the owner typically hires others to help, generally hiring others to assist in making the products or performing the services.  Perhaps an administrative person is found to do some of the more mundane functions like billing, purchasing, and record keeping/accounting.  But the owner still maintains the primary customer relationships, continues to be the expert at production or service delivery, directly manages the employees, and has involvement in all but the most basic business operations.

“This arrangement can continue for decades, and it can provide the owner with a pretty comfortable lifestyle,” says Frank Arcoleo, Managing Director, A Neumann & Associates LLC, a New Jersey based Mergers & Acquisitions advisory and Business Brokerage firm, ”excess cash is typically reinvested in the business to grow, adding new products, new services, and additional employees to do the work.  Instead of a 401(k) or IRA, the business is their chosen investment option.”

Historically, the children of business owners typically grow up in the business, starting with after-school jobs and progressing to more significant roles.  Eventually one or more of the kids may wind up taking over the business after the parent retires.  However, we’re often seeing that the kids have other interests and don’t actually want to be in the business long term.  But the owner still needs to fund retirement, and the business is normally seen as their most valuable asset.  He or she can always sell the business and retire in comfort, right?  Maybe not.

In the world of mergers and acquisitions, there are two kinds of business buyers – strategic and financial.  A strategic buyer is one that is in the same or related industry as the target company and seeks to buy the firm as an extension to its existing business.  A strategic buyer could be a competitor.  In this case, the buyer is typically looking to acquire both the customers of the target firm as well as its production or delivery capability.  For example, one HVAC firm could seek to acquire another in order to eliminate a competitor, expand its client base, broaden its product line, and obtain qualified service technicians.  In the case of a strategic buyer, most of the functions the original owner performed can generally be transitioned to the acquiring firm.

A financial buyer, on the other hand, is an entity which is primarily interested in making an investment (i.e., purchasing the target company) and obtaining a cash return from that stand-alone business.  A financial buyer has no particular expertise in the industry of the acquired firm and looks for the firm to be able to function independently, after the former owner retires.

In today’s market, there are a lot more financial buyers than strategic buyers, and a business owner seeking to retire should understand what it takes to be attractive to them.  What seemed to work for decades – an owner who is intimately involved in all aspects of the firm’s customers and daily operations – is a big negative when trying to sell to a financial buyer.  So what’s the answer?

In a word, preparation.  In order to obtain the highest value from a financial buyer, the business should be capable of operating, at least on a daily basis, without direct involvement of the owner.  Ultimately, the owner needs to replace their own hands-on involvement with some combination of processes, systems, and other people.  For many owners, this is the hardest transition to make.

Much of an owner’s expertise can be embodied in a process.  For example, customer acquisition is a process that could consist of some combination of relationship-building, marketing, advertising, and/or bidding.  This process may come naturally to an owner but employees need to be trained to be able to perform it independently of the owner.  The same logic applies to product design, project planning, or service delivery.

Systems are important.  Systems support processes allow the coordination of functions among sales, production, delivery, and administrative people.  Accounting systems come to mind first, but many processes can be made more efficient and effective through systems.  For example, the sales process could be tracked in a Customer Relationship Management (CRM) system.

Finally, an owner needs to hire and train the people to execute the processes and run the systems.  This sounds expensive, but most often it’s not.  In many cases, the people are already in place, but they need to be enabled to “step up” to assume greater responsibility.  Having the right processes and systems in place can show them how.

Putting the right processes, systems, and people in place can take time and effort.  That is why we encourage our clients to start early, at least three to five years before they contemplate retirement and sale.   In fact, we recommend that owners do two things.  First, they should obtain an independent business valuation to establish a baseline value of their business to a (typically financial) buyer.  Second, as a by-product of the business valuation, an owner should obtain a “marketability assessment” of the business to determine what steps he or she should take to ensure that the business is indeed able to be sold as an entity independent of the owner.

Ultimately, all owners exit their businesses.  Done poorly, the only value may be in liquidation.  Done properly, and with foresight and preparation, the exit can provide a financially sound and rewarding retirement.

# # #

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business broker 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 base 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.

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

Leave a Reply

Your email address will not be published.

fourteen + ten =

Any questions? Please contact us at 732-872-6777
Call Now

Client Testimonials

“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

“I utilized A. Neumann & Associates to assist in an M&A process. They are VERY thorough in using their time-tested process to calculate the value of investment opportunities, a process which provided a very detailed explanation for the value of the potential opportunity. Additionally, they also went above and beyond to extend other services including connecting with others who specialize in your industry and can assist with necessary steps including legal and accounting. Highly recommended!”

Edward Lane , Business Owner

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Achim, who explained the process in detail. He had his colleague Gary come to my office 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 when the time comes for me to sell my business for max value. They gave me great insight into the steps I need to take now to get the best deal in the future. I highly recommend this firm to anybody who wants to sell now or down the road. They not only know their stuff, their actually just real nice guys.”

Robert Kardane, Business Owner
view all testimonials

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.

call us now
Contact Us for a Free, Confidential Consultation

Experienced M&A Advisors available

Full Name
Email Address
Phone Number