Business Sale Process
Management of the Business Sale Process
We manage the business sale process from the point of engagement to closing. Key areas in which Stonemill Partners adds significant value are described throughout the steps of the process, described below.
- Provide financial information / Other information for Valuation
- Review and approve valuation / selling – listing price
- Provide website and/or marketing information
- Development of Business Opportunity Summary
- Receive, Review and approve Business Opportunity Summary
- Have target marketing discussion with Stonemill Partners
- Conference Call or Personal Visit with prospective buyers – coordinated by Stonemill Partners
- Review and accept submitted Letter of Intent to Purchase
- Provide Due Diligence information on time
- Review and approve Purchase Agreement and Employment Agreement
- Announce, internally, the transition once purchase agreement draft has been reviewed and approved in concept/principle.
- Signing of Purchase Agreement, Transfer of Funds, Closing
Valuing Your Company
Our goal is to offer a suggested selling price (listing price) at a fair market value. We gather financial documents, tax returns and other firm information at the beginning of the process. We then use three different proprietary valuation models to arrive at an optimum value. With our experience and everyday involvement in the market we have a unique and complete understanding of transaction values and deal structures that are typical for our niche clients. All of this provides clients with an overview and full understanding of a likely selling scenario, in advance of the selling process.
Proper interpretation and presentation of financial information is a crucial step in the selling process. Acquirers must be able to appreciate the total discretionary earnings that would be available to them. The process of adding back the adjustments is known as recasting. Re-cast earnings are a true representation of the value of a company. By adding back all applicable adjustments the financial presentation is maximized.
The Business Opportunity Summary
When acquirers evaluate a business opportunity, they appreciate information and facts that are properly organized, documented and presented. A professionally packaged and presented business increases a buyer’s confidence and comfort level, thereby increasing the likelihood of a successful sale.
Website information and information from other marketing materials is obtained. Stonemill Partners has the ability to present a professional representation of the strengths, weaknesses and opportunities of a firm.
Stonemill Partners prepares a full description of your business including historical financial information. You approve the Business Opportunity Summary before it is used in the marketing of your firm.
This information validates value as well as the future earnings potential of a business, thus maximizing its value and eventual selling price.
The Targeted Marketing Approach
Stonemill Partners utilizes many proprietary and confidential marketing strategies. We have current contacts, firms that have asked us to search, a wide network of industry contacts, databases and other sources all supported by relationships and research. This enables us to target the most appropriate buyer for the companies available for sale.
It is at this point we contact prospective buyers without disclosing your company’s identity. When we have received a signed non-disclosure agreement from a prospective buyer, we then send the Business Opportunity Summary describing your business (see below).
Facilitation of An Communication & Conversation
Once an interested prospective buyer expresses interest in our general marketing of a firm for sale, a conference call is scheduled with the seller. If the prospective buying firm is local enough, a local visit on or offsite can be arranged. The purpose of this initial communication is for the prospective buyer to investigate the fit, the focus and the culture of the firm for sale before moving on to more review. Stonemill Partners coordinates and facilitates this communication in an effort to move to next steps.
Letters of Intent
Upon completion of the initial communication and subsequent reviews a prospective buyer has the information necessary to prepare and offer a letter of intent to purchase the selling firm. Stonemill Partners assists in the drafting of this non-binding letter/document and the negotiation of its components. Within this letter are the key terms, conditions, price and closing date of a transaction. This document, once accepted by the seller removes the practice from the open market and opens up the due diligence process. Furthermore, a letter of intent serves as a guide in the drafting of purchase and employment agreements leading up to closing.
Due Diligence Facilitation
Certain representations are made during the selling process. Many of these are related to financials, operations, backlogs, employees and more. Prospective buyers rely upon these representations when developing the letter of intent terms and conditions. These representation are then verified and further reviewed by the prospective buyer with the seller during the due diligence period. Because of our extensive involvement in many deals we can anticipate what information the prospective buyer and their advisors will be looking for. Our counseling, facilitation and preparation maximizes the flow of due diligence information leading up to a successful closing with no surprises to either party.
Agreements must be drafted and efforts of the buyer, seller and advisors must be coordinated. Stonemill Partners plays a key role in ensuring that this process is managed within a timeline with all pertinent components to successfully complete transactions. Our involvement keeps all parties focused with complete communication while potentially saving our clients both time and money on their way to accomplishing their business goals.
Closing is the point in time when all documents are signed, money changes hand and ownership is transferred. We are by your side all the way to the successful completion of the sale of your business. The acquired business is then set for transition by the acquiring firm. Stonemill Partners can share experiences of others’ transition as well as offer communication best practices.