• Brokers are trained to sell business assets -RMS and Company understands the market and knows the quickest and most effective path to closing transactions

• You remain focused on running your business - A brokerage service enables you to keep operating smoothly during the transaction process without added stress

• Marketing and advertising activities -Professional brokers have the skills to develop a marketing plan to target the right buyers interested in your business and have access to databases to provide optimal visibility to prospective buyers.

• Qualifying potential buyers - The business broker performs financial analysis of potential buyers, ensuring that interested parties have the financial means to complete the transaction.

• Presenting the business - Brokers have the skills to show off your business, represent the business in negotiations, and provide you the convenience of managing only your business during the transaction process.

• Maintaining privacy and confidentiality - A professional broker is skilled at protecting their clients’ confidentiality from employees, suppliers, creditors, and customers of the business during the process.

• Negotiating the business sale transaction -The business broker is a vital advisor during the sale transaction. Experienced at negotiating price, terms, and other key aspects of the sale, the broker guides the seller at each step. The proper deal structure greatly affects the net proceeds that the seller keeps at the close of the transaction.

The value of a business depends upon many factors, and the right analysis of your business and comparable sales of business entities in your industry is crucial. A business broker will create a projected business value based upon answering the following questions:

• What is the cashflow position of the company?
• What are the current asset values?
• What is the financial history of the company?
• What are the conditions of the equipment and physical plant?
• Are there favorable lease terms on properties?
• What does the competitive landscape and state of the industry look like? 

The right broker can advise you on the proper pricing strategy, based on the answers to these questions. RMS and Company has the experience to ensure that sellers have properly valued their business, and that prospective buyers have the confidence needed to determine an accurate fair market value.

One other important factor to consider, most financial institutions will insist on having a business valuation before they will consider financing. In addition, businesses that enlist third party valuations sell more frequently at the asking price that those that don’t have one. The valuation offers the buyers the confidence that the business has been objectively and properly analyzed and priced.

To put it simply, most owners fail to understand how much time, expense, and effort is involved in marketing and selling a business. Even in a perfect situation, it is a time consuming, difficult process that presents many possible pitfalls, including:

• Spending long hours working with unqualified potential buyers
• Lack of network that can provide qualified buyers
• Difficulty in maintaining confidentiality
• Lack of skill sets in legal entanglements, negotiation strategy, and separating the emotional from rational thinking
• SETTLING FOR LOWER NET PROCEEDS from poorly negotiated terms

Enlisting the help of a business broker can ensure the highest dollar capture as well as having experience in navigating the potential unknowns that the owner themselves would be facing.

The best time to sell a business is at the peak of the business’ lifecycle. Buyers put most of their focus on future prospects, so if your business has been steady performing entity, and buyers can see high growth or strategic potential, you can ask for and get a higher purchase price.

You will need to gather the following for evaluation:

• Three years of income statements and/or tax returns
• Current financial balance sheet
• Current list of assets with replacement value
• Copy of lease agreements for facilities and equipment
• Company organizational chart

You are the expert in your business or the industry. The broker is the marketing expert. Preparing a marketing package for your business requires that the owner and broker worth together to determine the company’s strengths, weaknesses, opportunities, and threats. This SWOT analysis will influence how the marketing package is constructed.

The ideal time to develop an exit strategy for a business is at or soon after you start or purchase a business. Industry statistics show that 85% of all business owners lack a defined exit strategy. This, despite on average 75% of the business owner’s net worth is tied to their business.

Your company’s financial records and operations must be evaluated and analyzed to determine its strengths and weaknesses. Proper planning can help you address and hopefully minimize any operational or financial weaknesses before launching the marketing phase of the disposition.

Your company’s market price range is determined after consulting with all of your team members (accountant, valuation expert, M&A specialist) and evaluating your goals and objectives. Timing considerations, proposed transaction structure, industry conditions and lending market conditions are all key elements to consider in estimating the best market price range.

The industry average for selling a business is 6-12 months. The pricing structure and specific marketing strategy all directly affect how long the process takes.

Confidentiality in dealing with internal personnel and external sources is critical to achieving a successful transaction. For the seller’s protection, RMS and Company requires a Buyer’s Confidentiality Agreement to be signed by the potential buyer before the release of the Business Memorandum.

Before the acquisition search begins, it is important to narrowly define and target a specific industry and business size, develop an integration plan (if applicable) and understand your financial purchasing parameters before exploring your financing options.

Yes. We assist buyers in obtaining transaction financing through our extensive financial institution network. We counsel you on a variety of transaction financing options and assist in evaluating these options as they relate to your specific potential business acquisition.

Yes. We will formulate with you a definitive acquisition plan that targets both single and multiple acquisition candidates. You can remain anonymous and maintain confidentiality until the appropriate time in the transaction.

A business valuation is an estimate of the value of a business or of an interest in the business.

A business valuation includes the market value that a buyer is reasonably expected to pay, and that a seller is reasonably expected to accept.

A valuation may be necessary to sell a company, buy a company, sell shares of a company to key employees, or settle estates. Valuations are also performed for divorce property settlements, insurance purposes or so the owner can stay informed of the company’s value as growth takes place.

RMS and Company uses proprietary information such as tax returns and accountant-prepared financial statements for up to five fiscal years. We also incorporate interviews with the principal and employees, tours of the business facility, reviews of customer lists, tangible business assets, general operating and management information, and other information concerning business operations. We also analyze and compare the company’s financial performance to others in the same industry.

The basis of any valuation should be the analysis and reconstruction of business earnings, an assessment and reconstruction of business earnings, an assessment of current business assets, and an opinion of the future of the business. The valuation considers the continuity of business income, market competitiveness, industry growth, company longevity and reputation, financial trends, management depth, customer mix, the quality of the products and services offered, and the general desirability of the business.

While it’s true that earnings must support the purchase of business assets, it’s also true that assets must be available to serve as financial or even “psychological” collateral. The mix of assets and earnings varies considerably among businesses. This mix must be judged accordingly for any specific business.

In most valuations it is necessary to reconstruct the tax oriented income statement and balance sheet to display the information as it would appear to a new owner.

An example given would be:

The income statement may need to be adjusted to better show the pre-tax earnings that a business can generate. This is necessary since an income statement is prepared for tax purposes and in general will attempt to lower taxable earnings. A business may show a non-cash expense such as depreciation, in excess of what would be necessary for a reasonable replacement fund. Also, an owner may receive a salary that is either too high or low for the work being performed. Both of these cases will require adjustment. 

Another adjustment is usually required for interest expenses since a new owner’s debt and equity structure may be different than the current owner’s. Other adjustments may be needed on expense items which are not necessarily important for business operations but considered important to the owner as additional benefits or compensation.  In addition, a company’s balance sheet may display equipment that is fully or almost fully depreciated, but that has a higher fair market value. The balance sheet may also display certain assets such as franchise fees or real property at cost, but they may actually have appreciated in value. Conversely, there may also be unrelated business assets that should be eliminated. These and other adjustments to a company’s book value of assets need to be made in order to show the current fair market value

1. Business priced too high
2. No justification for the price
3. Business cannot be financed
4. Poor record keeping (tax returns)
5. Not packaged correctly, need to explain full value of the company in writing
6. Buyers want to leverage their money
7. Desirability (owner’s responsibility and hours required to operated successfully)
8. Management and employee(s) not staying on after the sale (family owned)
9. Outdated service and/or product (i.e. payphone business)
10. Too much working capital required

• Asking Price - Must be reasonable and fair to both seller and buyer.

• Deal Structure and Financing- Is owner financing a consideration? Does this company have the potential for SBA approved financing?

• Sales and Earnings- Are revenues going up, down, or flat? What are the trends in expenses and margins?

• Company History- Is this business a start-up company or is there a long, steady history?

• Deal Structure and Financing - Is owner financing a consideration? Does this company have the potential for SBA approved financing?

• Industry Trends - How are revenues trending in the industry as a whole? Is there a consolidation movement within this industry?

• Employees - Is there a stable workforce? Do the employees know the business is for sale? Is the owner willing to stay on as an employee?

• Facilities - Is there a long-term lease? Is real estate included in the deal?

• Assets and Liabilities - Exactly what assets and liabilities will be transferred with the sale of the company? Should accounts receivable and accounts payable be included? Are there any assets or liabilities that should be excluded?