Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

March 13, 2017

What Makes Business Buyers Walk – Out?

By Jeremy Albelda

what-business-owners-and-buyers-need-to-know-about-seller-financing

(Excerpt of the forthcoming book ‘The Road Beyond’)

Recently, many buyers with strong résumés in the corporate environment have come into the business-buying market. These buyers often have significant IRA or 401k accounts that can be dissolved tax free under current IRS rules, with the funds being used for buying a business. This has greatly expanded the market for business buyers in recent years despite the change in demographics for business owners.

However, Business buyers typically view any marketing presentation by a seller and his or her advisor with a healthy amount of skepticism when approaching the advisor firm that is representing the business for sale. A buyer’s perceptions often lead him or her to assume:

  • The business is an under-par investment with an overstated market position
  • The seller has misrepresented the financials
  • There will be little consideration for the buyer’s confidentiality
  • The seller is unmotivated or doesn’t truly want to sell
  • The entire process is a waste of time

Ultimately, any actions or presentations by a seller reinforcing any of the perceptions above spell trouble for a deal.

In particular, the fear that the seller is not truly motivated to sell is of great concern to every buyer. No buyer wants to waste time, and more importantly money for accounting and legal advice, for a seller not serious in selling the business.  

This lack of seller motivation can express itself in many different forms: no preparation on the seller’s part, lack of valuation, a poorly written prospectus, slow response times in providing due diligence information, a lack of interest in meeting, or dirty and unorganized facilities. The most significant issue is a long delay in answering to a full price offer. This is typically a dead give away!

However, ultimately, there are several motivating factors that propel buyers to move forward with a transaction, with the foremost one being cash flow and growth perspectives. There is no other factor as important as cash flow—or at the very minimum the prospect of being able to turn an operation around to generate a significant cash flow in the future.

Thus, in order for a transaction to successfully proceed, a seller has to show motivation, needs to demonstrate that the business generates positive cash flow, and the business needs to have good growth perspectives. With all three factors in place, a transaction will see ‘smooth sailing’.

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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“ I appreciate your diligent approach to screening buyers and sellers as well as the high quality CIM that you produce.”

Andrey O, Investor

“Finally enjoying retirement after recently selling my business using the services of A Neumann & Associates. Joe Oddo provided the conduit to a successful transaction. Joe knew when to inject input and when to simply listen and allow the buyers to vent, step back and regroup. The outcome met our expectations and got us to the finish line, which included my staying with the company six months in order for the buyers to get their footing and keep our workforce in the loop. He helped at every step by providing his expert guidance & resources. Thank you!”

Emily Parker Myers, Co-Owner - Myers McRae

“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

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