Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

October 9, 2017

The Three Most Important Aspects Business Buyers Seek

By Jeremy Albelda

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Assuming a particular industry has been pre-selected, there are several criteria that an investor is seeking when evaluating various businesses to purchase within that industry.
“It is important for a business seller to know these criteria” says Achim Neumann, President, A Neumann & Associates, LLC, a leading New Jersey-based mergers & acquisitions and business brokerage firm, “as a business seller fully addressing these investor concerns and requirements, will be more successful in selling a business”

So, what are the three most important components that facilitate a ‘go ahead’ on the investor’s end?

Seller Motivation

The investor wants to see motivation on the seller’s part that they are truly wanting to transition the business. A lack of seller motivation can express itself in a poorly written prospectus, no preparation, lack of business valuation, long response times in due diligence, or dirty and unorganized facilities. A long delay in answering to a full-price offer is typically a dead giveaway of an unmotivated seller.

Investors pick-up on such lack of motivation very quickly and immediately shy away. Simply speaking, it just costs too much money and time for an investor to explore a business purchase, and the potential early warning signs that a seller will back out last minute is just a risk no investor wants to assume.

Professional Investment Package

Every investor wants to see a professionally prepared investment package, often called Confidential Memorandum, prospectus or CIM – long before actually meeting with a business owner. The aforementioned package needs to outline the specifics of the business, including marketing, sales structures, product description, research & development, as well as past and projected financials. Most importantly, the package needs to describe the competitive advantage of the business and growth aspects for the enterprise, as no investor buys a business for its status quo.

On a few occasions, sellers say to ‘just bring in the buyer’, but rest assured, not a single business buyer will travel or even consider such invitation without a prior detailed presentation of the business. Such a statement underlines already a significant lack of motivation on the seller’s part.

Accredited Valuation

Most investors require an accredited business valuation, not only for their own sake assuring themselves that an independent third party has reviewed the business, but said valuation is also needed for the investor to obtain a preliminary lending commitment from the investor’s bank to finance the acquisition.

Without the valuation on-hand, the investor cannot proceed with an offer, but will then require a valuation first and will in essence delay the acquisition process for several weeks or months. This delay will result in the deal losing steam.

In conclusion, business sellers are well advised to the above-mentioned factors, as failing to do so – even for just one criteria – will most likely not result in the transfer of a business.

[The blog contains excerpts out of the recently published book “ The Road Beyond – What Nobody Tells You About Selling a Midsized Business by Achim Neumann]

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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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.”

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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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