The Alliant Process
Determine Market Value
Possibly the most important first step is determining the market value of your business. Most business owners know the value of their home or their automobile but have no idea of the value of their most important asset— their business. Or, they rely on simple formulas or multipliers that do not take into consideration many variables like industry trends, location, financial and other critical factors.
The disciplined process carefully developed by Alliant Capital Advisors LLC will provide a detailed opinion of value, through market research and comparable sales in the industry. Our experience and industry knowledge will ensure that no money “is left on the table.”
Confidential Marketing Package
We will prepare a Confidential Marketing Package to market the business, positioning your company as the unique opportunity it is. The marketing package (commonly known as the CIM: Confidential Business Memorando) will detail the positive attributes of your business and explain any weaknesses in a manner that helps the buyer fully appreciate the business’s performance and its potential. Critical Elements of the Marketing Package:
- Website, address, photos, real estate details
- Detailed description of business products and services
- Current position in the market
- Opportunities for growth
- Detailed description of assets (i.e., equipment, computers, machinery, etc.)
- Re-cast earnings analysis to illustrate the true earnings of the business
- Real estate details (if part of the acquisition or there will be an option to purchase)
- Concluding with the asking price
Confidentiality:
Most business owners choose to market their business confidentially. We require that each potential buyer sign a Confidentiality Agreement prior to our releasing any information about your business.
In addition, all prospects must submit personal or corporate financial statements before we reveal any specifics. We will only bring you “qualified buyers”.
Marketing:
Our business marketing professionals have decades of experience marketing businesses confidentially. ALLIANT implements a very effective combination of internet marketing, print media, trade publications, and direct mail.
Our advertising communicates only specifics enough about the business for buyers to understand industry, sales and profit and general geographic location. Buyers are attracted primarily by industry and profit details.
Buyer Management
Confidentiality Agreements
Potential buyers are required to sign a Confidentiality Agreement before we disclose the identity of your business.
Buyer Screening
Buyers are required to complete our Confidential Buyer Profile and financial statement prior to receiving details about your business. This profile provides the buyer’s background, employment history and financial situation.
Controlling Flow of Information
Different buyers request different levels of detail at different times. We provide only enough information for the buyer to get into the position of a possible offer. Full due diligence will only be allowed after the buyer has made an offer and the seller has agreed to the terms of the offer.
Buyer-Seller Meetings
As soon as the buyer has determined he has a serious interest in your business, we will arrange a buyerseller meeting to discuss the general operations of the business. The price of the business is never discussed face-to-face and all offers must be in writing.
Financing Options
Owner Financing:
– Higher Price
– Lower Interest Rate
– Faster Closing
– Continued Owner Involvement
Third-Party Financing:
– Formal Business Valuation Required
– Various Options and Longer Terms
– Application, Processing and Loan Closing
– Greater Independence
Negotiating Offers
Critical Elements
• Price
• Terms:
– Asset sale vs. stock sale
– Allocation of purchase price
– Buyer’s financing the transaction
• Tax issues:
–Real property taxes
–Deferred taxes
–Corporate taxes
–Personal Taxes
• Transition Issues – training periods
• Non-Competition Agreements
• Closing Schedule
• Contingencies
• Earnest Money
Managing Due Diligence
Buyer Due Diligence
At this point in the process, the buyer has usually retained an accountant to help them evaluate the business. If the seller provided the information we requested when we began to market the business, we will have most of the information we need to start the due diligence process. During due diligence, our objective is to prove those earnings to the buyer and his advisors.
“The Only Surprises Allowed Are The Ones We Plan”
Seller Due Diligence
Seller due diligence activity will vary depending on the structure and terms of the deal. The seller should request a full financial statement and credit report on the buyer. Other due diligence information may be required depending on the terms of the financing, lease assumptions (if any), non-compete agreements, etc.
Negotiating Closing Documents
The closing documents define the terms of the transaction. Important elements that often require difficult negotiations are:
- Allocation of Purchase Price
- Representations and Warranties
- Indemnifications
- Promissory Notes
- Security Agreements
- Personal Guarantees
- Lease Assignments
- Assumption of Specific Liabilities ence
Closing The Transaction
“This Is Where The Money Changes Hands” Typically, the closing will take place at an Escrow Company that specializes in the transfer of businesses. The Escrow Agent is responsible for making sure all documents are executed before the release of funds to the appropriate party. Closings are typically smooth and quick. A closing should not include any additional negotiations although from time-to-time a last minute issue will need to be resolved at the closing table.