Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

September 8, 2014

What Could Possibly Go Wrong? The Seller with No Time

By Joseph Eneldas


Last month, I addressed one of the two worst things we’ve seen happen in the M&A world.  In that article, I talked about the worst one: the buyer with no money.  In this installment, I’ll discuss the other awful situation we run quite often – the seller with no time.

The “seller with no time” story begins like this:

The owner has had his business for many years and has built up both a loyal customer base and a loyal cadre of employees.  In many ways, the business is his pride and joy.  Except for his nice home, the kids’ educations, and a few toys, just about every spare nickel has been reinvested in the business to make it better – to build a new facility, to take on a new product line, to invest in a new computer system.  He has a life insurance policy, but he hasn’t really created a separate IRA or 401(k) or any other retirement vehicle.  His business IS his retirement.

Not that retirement is a big deal.  He thinks about retirement from time to time, but it always feels to him that retirement is something to be done “later,” at some undefined point in the future.  Inevitably, though, something happens.  He could have a medical issue, or one of his friends could get seriously ill.  His family and friends may start bugging him to retire to Key West.  Or one day he may wake up to realize he’s pushing 70, or simply decide that the business just isn’t as fulfilling as it once was.  He decides to explore selling the business.  He meets with a financial advisor, who both helps him determine a target nest egg ($3 million, let’s say) and suggests that he enlist a business broker to help him sell the firm.

“On the face of it, we’re very happy to meet such a guy,” says Achim Neumann, President of A Neumann & Associates, a New Jersey-based M&A Advisory and Business Brokerage firm.  “He’s got a successful business, a good track record, and is motivated to sell fairly soon.”  So we begin to work with him to establish a value, obtaining a lot of information about the business and its financials, then “re-casting” the financial statements to determine the amount of “seller’s discretionary cash flow” the business is generating.  We provide the recasting to an independent valuation firm, and they come back with a fair market value.  Unfortunately, the fair market value is only $1.5 million.  Now what?

There are two variants to the “seller with no time” scenario.  In one, the seller decides to go through with the sale.  However, instead of retiring to Key West, they may have to retire near to their current home.  Instead of living a soft retirement after years of being responsible, they’re left with pinching pennies harder than ever.

In the other variant, the seller decides that he has no other choice than to continue working.  What caused him to want to retire – medical issues, family pressure, or a desire to just step back from the stress of owning a business – hasn’t gone away.  But now, he’s forced to go on, even though he doesn’t want to and it may not be good for him.  In some instances, we’ve seen people in physically demanding professions like construction be forced to continue with back-breaking tasks into their seventies.

So what could that business owner do?  “We tell all of our clients – and our prospective clients –  that it’s critical to obtain an independent business valuation at least 3 – 5 years before they would even contemplate retirement,” says Michael Gersten, Managing Director of A Neumann & Associates’ North Jersey Region.  “If you find out early enough that your business isn’t worth what you need to retire, you can take steps to fix it.  If you wait too long, you’re stuck between a rock and a hard place.”

“Many business owners balk when we tell them to get a valuation early – because it costs a little money,” says Gary Herviou, ANA’s Managing Director for Central New Jersey.  “But put in perspective, a professional valuation can cost only about one-quarter-of-one-percent of annual revenues – an insignificant drop in the bucket compared to the risk of being blindsided later.”

Steve Wrubleski, Managing Director for Southern New Jersey, puts it a little differently: “Not knowing what your business is worth is like not opening the envelope with your 401(k) report until the day you retire.  You may be in for a surprise – and not necessarily a pleasant one!”

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

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“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

“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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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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