Competitive Market, Liquidating Event, & Maximum After-Tax Value

Mission Statement

Using Honesty, Character, Integrity, and Expertise, Create a Competitive Market that Produces a Liquidating Event, allowing Our Clients to Receive Maximum After-Tax Value for the Sale of Their Business.

Competitive Market 

Competition drives value. Our goal is to create a sales process that produces multiple qualified & motivated buyers for every listing we accept.  The more qualified buyers, the more leverage and negotiating power our seller clients have in the process.  A few of the marketing methods we use are as follows:

·       Distribution to Buyer Database

·       Online Marketing to over 100 sites

·       Soliciting other M&A and professional services (accounting/legal/financial planners) offices

·       Social Media, Website, and Pay-Per-Click Campaigns

·       Targeted Direct Mailing

·       Targeted Telemarketing

Liquidating Event

While the owner’s goal during a business exit is often to maximize the amount of cash he or she receives at closing, it’s often not possible or not financially viable to receive all of the consideration at closing, creating the need to manage other consideration as part of the business sale.  This other consideration can take the following forms:

• Seller Note/Seller Financing (either on full standby subject to SBA loan repayment or not)

• Installment Sale

• Earn-Out (Consideration contingent upon the occurrence of a future event)

• Employment/Consulting Agreements

• Lease Payments

• Non-Compete Provisions

Managing these different provisions and structuring the various elements of a business sale transaction in a way that maximizes value to our clients are a couple of the many ways Adena Business Advisors puts cash in our client’s pockets during a business sale.

Maximum After-Tax Value

While the liquidating event is certainly important, proper tax planning during the negotiation and construction of any Letters of Intent and Purchase Agreements is necessary to ensure that our clients maximize the amount they “take home” from any sale.

As there is often an inherent conflict between business buyers and sellers as to how the deal is to be structured (asset sale vs stock sale) and how the tax allocation should occur (tangible assets vs. intangible assets/goodwill), our process attempts to proactively control these negotiations, ensuring the best after-tax treatment for our clients.

Adena's Process For Managing the Sale of Your Business

Unlike most intermediaries, Adena has a team of professionals with a wide range of experiences.

Adena's principals have owned and managed their own businesses and understand the challenges that face business owners. When Adena represents you, you benefit from the experience of our entire team. Here is the process we will utilize to sell your business.

1. DETERMING YOUR OBJECTIVES: There will be an introductory meeting to gain an understanding of your business and your personal objectives. We will provide you with a signed Confidentiality Agreement for your protection. Your needs, objectives, business history and basic financials will be discussed. We will discuss possible options for the transaction. Selling options may include: sell and retire, sell and remain with the Company, take on a partner, etc. Thinking this through in advance will help expedite the process of finding a suitable alternative.

2. RECAST & VALUATION: Many people will recite the "rules of thumb" for valuing businesses. Adena is familiar with these guidelines but utilizes a broader and more analytical approach when valuing a business. Determining the fair market value of your business is an involved and complex procedure that involves recasting the business financials to establish the true financial return being generated. Proper consideration must also be given to your Company's strengths, assets, historical financial performance, and projections, along with the money and intangibles inherent in your company. Market conditions, industry trends, and public perception will impact value. Capital availability as well as your flexibility with terms will also impact value.

Adena utilizes several different valuation methodologies to determine the appropriate price for your business. In addition to financial and Industry Analysis comparisons will be made with similar companies that have sold recently within your industry. By determining the highest price a fully informed buyer is willing to pay for your company, you will avoid the risk of losing a timely sale by over pricing the company, or "leaving money on the table” by undervaluing your business.

3. LETTER OF ENGAGEMENT: We will work together to identify and be prepared to address issues such as leases, regulations, licensing, key employees, minority shareholders or other concerns that might apply to your specific situation. Failure to address these early in the process can potentially lead to the loss of qualified Buyers, along with months of wasted activity. Once we have agreed on the objectives and have gained an understanding of your business, Adena will recommend a preliminary action plan. A Letter of Engagement will be signed, which will outline the terms of the assignment, the fee structure, and any special provisions or stipulations for the engagement.

4. INFORMATION COLLECTION: You will be provided with a list of required information. It will involve gathering financial, as well as general information, on all aspects of your business. Proper preparation is crucial for the best presentation of your business and is also the first step in establishing the confidence of a Buyer. Adequate information will enable a Buyer to gauge their level of interest.

5. BUSINESS PROFILE & CONFIDENTIAL BUSINESS REVIEW (CBR): The business must be properly packaged with all applicable records and facts organized and documented. The CBR ensures a presentation in a favorable and factual light, while providing the acquirer with a document to follow and review. The CBR also educates Buyers on the many intangibles inherent in your Company and the opportunities for growth, hence raising the perceived value to the acquirer. These intangibles include name recognition, market niche, vendor relationships, operation and production systems, distribution channels, customer loyalty, trained and skilled employees, and many more.

6. LISTING / MARKETING THE BUSINESS: Your business will be confidentially marketed in several ways, depending on the type of Buyer(s) that is being targeted. We will share the business profile with prospective buyers through the use of websites, buyer databases, professional referral sources, and many more.

7. BUYER PRE-QUALIFICATION: Adena will acquire an NDA from the Buyer, and also determine the Buyer's interest level, management skills, fit and ability to meet the financial requirements of the transaction, prior to releasing the Confidential Business Review (CBR).

8. BUYER/SELLER INITIAL MEETING: The purpose of the initial meeting is to allow the Seller and Buyer an opportunity to gain a better understanding of background, motivation, and other high level items, including determining if there is good chemistry between the Seller and Buyer.

9. INITIAL SITE VISIT: Working together to maintain confidentiality, the potential Buyer will be provided with the opportunity to visit your facility. Generally there are multiple site visits. This is a good forum for the Buyer and Seller to develop a favorable rapport. More detailed information can then be exchanged. An Adena representative will coordinate the visit and be present.

10. BUYER FEEDBACK / DEAL STRUCTURING: Adena will collect feedback from the Buyer at this point to determine if serious interest exists in proceeding to the offer stage. If that interest does exist, deal structuring will begin.

11. OFFER TO PURCHASE / LETTER OF INTENT (LOI): Upon a "meeting of the minds" regarding the key transactional issues, a written offer to purchase, generally in the form of a Letter of Intent, will be prepared. It should outline the purchase price, terms, conditions, and any contingencies. Proper compliance with this step can save thousands of dollars in legal expenses.

12. DUE DILIGENCE: The offer is normally contingent upon the Buyer or their representatives verifying the accuracy of the Seller's financial and operations representations. This detailed review is typically completed within 30 to 60 days of the signing of the Letter of Intent, but may take longer, depending on the Buyer, the size of the transaction, and how quickly the Seller provides information to the Buyer and his/her diligence team.

13. PURCHASE AGREEMENT / CONTRACTS: After all major issues are resolved, and the Buyer is satisfied with the Seller's representations, contracts can be drafted and negotiated. Financing can be arranged. This can be the most trying time in the entire process. Adena has established a solid network of transaction-oriented attorneys, appraisers, bankers, and accountants to assist. Many times, an independent attorney or accountant can expedite the process of closing the transaction and save significant expenses for both Seller and Buyer.

14. PRE-CLOSING REVIEW: All final contracts and documents, as well as estimated closing costs will be provided prior to closing for review.

15. CLOSING: Adena will assist in the coordination of the closing. It is at this point that legalized transfer of assets will take place, and you will have realized your goal.

16. TRANSITION PERIOD: This typically involves a period of cooperation in which you will assist the Buyer in achieving a "seamless" transition. This includes transferring of key relationships and proprietary information needed to successfully operate the business.

IN CONCLUSION: The entire process can take several months, or longer, depending upon the circumstances. In any case, Adena will assist in every step of the process. We look forward to working with you on this very important assignment.

Selling a Business Yourself? Not a A Good Idea

The independent business owner who decides to sell, is at the threshold of a major process involving emotions, as well as the marketplace.

In many cases, the business for sale represents the seller’s life work. Being the independent type to begin with, as well as someone who knows about deals and sales, the tempting notion sometimes arises: “Why don’t I handle the sale of my business myself?” Those sellers with similar temptations should first take a look at the steps necessary for the successful business sale, and at the advantages of taking those steps in tandem with the best possible professional guide.

Preparing the business for sale

That looks good or just fine to the seller could make quite the opposite impression on prospective buyers. The weathered sign out front that the seller thinks is “rustic” might strike a buyer as in need of a fresh coat of paint. On the other hand, improvements planned by the seller may be either unnecessary or wrongly-conceived. In either case, sellers would be wise to rely on the advice of a professional Advisor, with experience in dealing regularly with buyers and with the objectivity required to set the business scene to its best advantage. Of course, preparing a business for sale goes way beyond outward appearances. Ultimately, a business will sell according to the numbers. A Business Advisor can be invaluable in helping the seller provide financial records that are clear and up to date.

Pricing and Valuation

All sellers naturally want to get the best possible price for their business. However, they also need to be realistic about the true value of the company for sale and to understand that price is, in fact, dictated by the marketplace. To determine the best price, a professional business advisor will use industry-tested valuation techniques.

Marketing & Advertising

The Professional Business Advisor is key to the marketing of a business. He or she will prepare a marketing strategy and offer advice about essential marketing tools. Advisors, through their data bases of buyer prospects, professional associations and other networks, can get the word out about the business far more effectively than any owner could manage on an individual basis.

Presenting the business

The Professional Business Advisor is experienced in handling the typical objections and negative “readings” many typical buyers will raise. Does the business lack parking space? Is its location less than ideal? The Advisor has the skills to balance negatives with positives, or to point out that what appears to be a disadvantage is not always the case. In addition to skill, an Advisor also offers the seller convenience. Sellers often fail to visualize the number of buyer calls they would have to field if handling the sale on their own. The business owner working with an Advisor can continue managing his or her business at the same time the selling process is taking place.

Negotiating the business sale transaction

The Business Advisor will be the most vital Advisor to sellers during any stage of the sales transaction. Steeped in knowledge about negotiating price, terms, and other key aspects of the sale, the broker will guide the seller each step of the way. During the early stages, while the buyer is still considering an offer, the Advisor is the ideal person to follow up and keep the deal running smoothly. Sellers working alone could lose bargaining effectiveness by doing the follow up themselves.

Mastering the paperwork. Even though business owners handle mountains of paperwork as a part of doing business, few of them have had training in the specialized contracts and forms required for the sale of a business. The Business Advisor is an expert at sales transaction details, will help guard against delays, problems, and the worst of all possible worlds – the “wrecked” deal.

Qualifying buyers

The Business Advisor will determine the right buyer for the right business, focusing on those prospects who are financially qualified and who are genuinely interested in the business for sale. For locating and qualifying prospective buyers, a business advisor uses computerized databases to access comprehensive lists of local, national and international buyers – all to increase the chances of selling a business at peak value. And most important, to avoid wasting the sellers’ valuable time.

Maintaining privacy and confidentiality

When an Advisor is involved in the sale, bringing to the business only those prospective buyers who qualify, it is also easier to maintain confidentiality during the selling process.