Selling a Business

Clear Snap Shot Of Business

The first step is establishing a clear understanding of what your business is all about. We identify the industry you are in, get an understanding of your business overview, company history, financial history along with the facilities and equipment that are owned, leased or rented. With this information we can then have clarity about the investment opportunity that needs to be presented to prospective buyers.

During this phase,our advisors interpret the Sellability Score and PREScore. Both are tools from the Value Builder System which help our clients evaluate their readiness for a sale and what they might expect in their life after the sale. As Certified Value Builders, our team is trained in interpreting the outcomes of these surveys.

DBG Advisors also performs a business valuation which includes a Broker Opinion of Value. Ultimately, our goal is to create a Most Probable Sales Price for business owners. This snapshot provides a clear picture of what the company could sell for, depending on timing.

Huddle With Trusted Advisor

Once a decision has been made to sell a business, a Listing Agreement with DBG Advisors is needed to move forward. We encourage clients at this time to coordinate and collaborate with other experts, including: accountants, financial advisors and/or estate planning attorneys and transaction attorneys. We also encourage our clients to involve any family members who are decision makers in the company. Obviously, these advisors need to hold this information in strictest confidence.

There are many moving parts to selling a company. Important stakeholders need to be on the same page with a complete understanding of the exit plan.

Confidential Promotion Package

After establishing a game plan, the next step is to promote the sale of the company. DBG Advisors works closely with our clients in creating a “Teaser” and a “Confidentiality Information Memorandum” (“CIM”).
The Teaser is a one-page document that presents the opportunity without revealing the company identity. The Teaser is sent to a wide network of accountants, attorneys, financial advisors, known buyers and private equity groups who in turn are encouraged to send it on to others who may have an interest in this opportunity.

The Confidential Information Memorandum (“CIM”) is forwarded only to those who indicate interest and sign Confidentiality Agreements. The CIM provides much more detailed information because confidentiality is required, and these individuals and groups have been vetted to assure their ability to move forward with a purchase. CIMs include an executive summary, industrial overview, business overview, financial information, and a description of the investment opportunity. A CIM is everything a buyer would need to decide on buying a business.

Once these documents are approved, DBG Advisors can launch the promotion of your business for sale. The time frame can vary, but we are committed to promoting your business as soon as possible.

Engage Qualified Buyers

DBG Advisors makes it a priority to meet with clients to determine who would express interest. We also want to establish who should not be allowed to buy the company at any price. We make sure no stone goes unturned in locating a qualified buyer. All buyers will be vetted, even before an NDA is signed to protect our clients time.

After a non-disclosure agreement is signed, confidential questions and seller disclosures can be revealed. DBG is a gatekeeper in this process, handling a qualified buyer’s questions and concerns.

Eventually, DBG Advisors receives the qualified buyer’s Letter of Intent (“LOI”). We then work with the business owner and transaction attorney, to wisely respond to the buyer’s intentions. This may go back and forth between the attorneys before an acceptable LOI can be executed. With the execution of an LOI the buyer is usually required to place 1% of the purchase price in escrow to take the company off the market.

Manage Due Diligence

DBG Advisors serves as the funnel through which the buyer and seller exchange information during the due diligence period. The reason for this is to protect the seller from sharing too much or the wrong information. In many cases this is a period of negotiation where specifics of the deal are discussed point by point. The old saying, “Time kills deals,” is true. Moving quickly and deliberately through negotiations will aid in a successful closing.

Effective management of the due diligence period also provides considerable assurance to the buyer. Timely production of information reduces buyer suspicion and assures a successful transaction.

Negotiate Definitive Agreement

Attorneys for the buyer and seller will draft the Definitive Agreement as negotiations advance. This process is a back and forth exchange of documents that outline the structure, consulting agreements, non-compete clauses, representations and warranties. During this time, all trusted advisors meet to confirm the game plan is implemented properly.

  • Business CPA: Evaluates the Net Working Capital Calculation and provides other important information.
  • Financial Advisor: Categorizes the proceeds of the transaction to limit the tax liability of the seller.
  • Transaction Attorneys: Focus on documentation and “fine print” that defines liabilities in order to protect the sellers.
  • Business Broker: Make sure that buyers, sellers and advisors are communicating effectively and moving forward with the transaction.

Ultimately, DBG Advisors confirms the Definitive Agreement is in alignment with a client’s original intent: To Get the Full Value of your life’s work

Receive The Funds!

The closing table is the “finish line” that everyone is looking to cross. When we sit down to sign the Definitive Agreements and all the other documents required to close the sale of your company, we should have the full confidence that everything that could be done has been done to your full satisfaction.

When the wire transfers have been received it is time to celebrate and to begin the process of moving on to your next adventure. That could be a month-long vacation on the beach, or it could be stepping into another business that you planned to start once you sold your company. No matter what your plans are, DBG Advisors will be celebrating with you and making sure that your best interest is served even after the transaction has closed.

The DBG Proven Sales Process

Most business owners know everything about their business. They know the good, the bad and the ugly. They understand the ins and outs of the industry. They live with the ups and downs, day in and day out.

However, few business owners have ever sold a company. Selling a business follows a unique process for a sale to be successful. However, business owners don’t know what they don’t know.

Business owners need to work with a professional M&A Advisor who understands the sales process. Owners, not only do you need to know what to do and when to do it along with what not to do. Every decision has consequences and experience will help provide positive results.

An M&A intermediary can provide guidance throughout the process, from business valuation to promotion, negotiation to coordination with transaction attorneys and CPAs.

Owners need to plan for how they want to walk away from their business, not only in a perfect scenario but also in a worst-case scenario. It is critical to consider the following situations that force owners to exit their business hurriedly, that could leave value on the table. These situations are often called the 5 D’s:

  • Death – of business owners/partner
  • Disability – of the owner(s),
  • Divorce – of the owner(s),
  • Disagreement – between owners
  • Distress – outstanding debt and liabilities

DBG Advisors specializes in the sale of manufacturing, distribution, and service companies. We follow a Business Sales Roadmap that has led to many successful M&A transactions.