Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

December 7, 2019

Unsolicited Offer – What to Do Now

By Jeremy Albelda

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It is not unusual for a business owner to receive an unsolicited offer for their business – as a matter of fact, it happens quite frequently. But what should the owner do next?

“You probably have said something like, ‘for the right price, I might consider selling’,” says Achim Neumann, President of A Neumann & Associates, a New Jersey based mergers & acquisitions and business brokerage firm. “But in reality, you are most likely not ready to move forward.”

Various questions should be considered:

  • What is my business worth or what are similar businesses selling for?
  • Is there more than one interested buyer?
  • How is confidentiality preserved?
  • How does one negotiate the best deal?
  • What will I do after a sale?

Quite frequently, business owners will be initiating the process on their own. Certainly, one can take the Do-It-Yourself approach. However, the reality is that the transfer of a business is a specialized business in and of itself, and without a deep understanding of all the nuances in transferring a business, an owner can end up with a lot of risk, and little to show for it in the end.

Most importantly, selling a business is a very involved undertaking and is considerably distracting from running a business. A business owner’s priority needs to be ensuring that growth and profitability are maintained during the transfer process. For 80% of privately held businesses, the ownership of the business constitutes the majority portion of the owner’s net worth, and this is not the time to jeopardize what was created over many years – in a first-time effort to sell a business by oneself. It’s quite unlikely that a business owner would venture into a new market or process without detailed research as to which qualified experts can be hired. Nor should a business sale be treated as such.

Worse yet, often the buyer or investor/acquirer is pushing for a fast deal (“I need a decision by next week”) and has gone through many acquisitions before. Perhaps, they are professional experts in deal making, referring to matters in different terms and strategies.

Thus, the smart business owner assembles a team of experienced advisors to assist throughout the process. As we have so often stated in our seminars, such a team primarily consists of an M&A advisor, a transaction lawyer and a CPA, addressing various questions and concerns.

  1. Is the offer truly a full price offer?

Firstly, an accredited, third party business valuation by a reputable, national valuation firm should be put into place – not by an in-house operation of the advisor. The M&A Advisor should be able to facilitate external valuation, addressing the particular advantages and disadvantages of the business. Even if the initial offer were to appear as reasonable, your M&A Advisor should be able to increase such offer simply by way of presenting a comprehensive marketing package to the buyer, including all add-backs within the valuation.

  1. Offer Negotiation

Professional investors are generally well-experienced negotiators. How can the business owner ensure not to leave money on the table? In this situation, the M&A Advisor can be most useful as an intermediary, being the “bad cop” to shield the seller from difficult negotiation points, however, in the interim, preserving the principal-to-principal relationship between both parties. This is very important, if the seller/owner plans on continued involvement.

  1. Running the Business at Top Performance

Selling a business is time consuming even with a good deal team in place – without it, it will be all consuming and most likely disastrous. A business owner has to focus on running the business at peak performance during the transfer process because an under-performing business during the due diligence period will most likely not result in a closed deal.

Within this context, an owner’s M&A team will advise what information to share and which information to hold back. Specifically, questions like which information to release to underline the business’ strengths, or at what point to release sensitive competitive information about customers, vendors and employees are questions to be addressed by experienced professionals. The right approach to these questions will have positive implications into how a buyer values a business.

There’s no question, the business transfer process — from negotiating an offer, to due diligence completion to closing — brings a lot of ups and downs. Experienced professional advisors act as a sounding board and provide the much-needed coaching along the way.

The best strategy for any business owner is to always be prepared for that investor phone call – understanding the value of a business in today’s market. For that matter, many business owners have our firm prepare strategic business valuations every one to two years – simply to be armed and ready.

After years of investing into the business in terms of work and capital, to be properly prepared should be a no brainer for any savvy business owner.

# # #

This blog contains excerpts out of the recently published book

The Road Beyond – What Nobody Tells You About Selling a Midsized Business?

/the-road-beyond
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 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

“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
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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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