Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

September 9, 2009

What Is An Investor To Do Now?

By Joseph Eneldas

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What is the investor to do now? With record amounts of cash on the sidelines, debt yields at history lows and gold hitting new highs, many potential investors/business buyers are questioning where the economy will be heading from here and what is the best time to acquire a business.

Whereas we would never claim to have that crystal ball, we can however, contribute a few recent observations out of our trade.

In terms of the economy’s direction, several factors point either way: on the “good side”, durable goods orders are way up for goods such as appliances, existing home sales were up by 7%, the stock market is way up, and cash for investments is plentiful available. On the “bad side” however, consumers are continuing to reduce their record debt levels, thus, inducing somewhat weak spending, surveys point to weakening business profit margins, and stocks are certainly no longer cheap. With no clear trend in sight, our firm believe is that the economy will eventually experience a slow recovery.

More importantly, though, is the question of personal life change and timing for a potential business buyer. The management of many mid sized businesses can certainly not exclude themselves from general macro economic trends, but the individual management talent and motivation more often overrules such broad based trends. Some of our (sell side) clients have convincingly demonstrated how to significantly outperform their peers in this environment, not only in terms of gaining market share but also in their financial performance. Significant adaptation in business methods to these challenging times have made them better companies.

Thus, the real question for the business buyer then becomes, does she/he see opportunity in a particular market and does she/he have the motivation, time and talent to turn/expand this opportunity into a successful investment by way of purchasing a business.

Taking that point of view, timing becomes somewhat of a secondary issue. As we had reiterated a few months back, many businesses generate good cash flow for the seller even during “bad” times, thus, the need to immediately sell taking a second rank. Yes, there are businesses with poor cash flow wanting to sell immediately which could represent an opportunity for a buyer, but if the low cash flow is a structural based issue will the cash flow improve then during an economic upswing, or is it merely a matter of the weak being sorted out during a down turn? Consequently, many “opportunities” during poor economic times are not really opportunities but merely represent a rude awakening during a better economic environment.

We have consistently worked with sellers who have proven that they can weather a storm and have been in business for many years and thus, can only encourage any investor – or business seller for that matter – to give us the opportunity to discuss their plans in detail with us. We have the experts on staff to provide a comprehensive review of your plans.

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 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

“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
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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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