How long will it take to sell my company?
Much longer than most people expect. From the day you begin the process until the deal closes generally takes from 6 to 9 months. We have closed deals in as little as two months and seen others take over a year.

What do I tell my employees while I am selling my company?
There is no standard answer to this question; it depends on a lot of factors, so consult with your advisor. In general, business owners significantly overestimate the problems that arise among employees while a transition in ownership occurs. If the matter is handled properly, disruption can be minimized. Some key questions to consider include the following:

• Which employees are crucial to the future success of the business, which ones will need to be involved in the sale process, and which ones do not fall into either of those categories? Your strategy for each group may be different.
• Will retaining key employees impact the value of the company to the eventual buyer? Some owners provide incentives to key employees to stay through a transition period, particularly for employees who are not shareholders.
• Is the probable type of buyer in a similar business where there are likely to be redundancies after a merger? Or, is the likely buyer going to need most of the present staff to operate the business?
• What has been your historical relationship with your employees in sharing information on the company?
• Are there other endeavors that could serve as plausible explanations for the activities associated with selling a company? Some owners, for example, tell their employees they are looking for additional capital, which is generally part of the reason for the sale.

How will you identify likely buyers?
We first search our database of over 4000 financial groups that buy companies, and we screen for those that have an interest in companies of your size, in your industry, at your stage of development and those located in your region. We talk with you about logical candidates you may know of and which trade publications may contain names of likely candidates. We then perform independent research using numerous external databases, M&A listing services, and the Internet to identify potential candidates. When our list is complete, we review it with you before any contacts are made.

What is the difference between a “Strategic” buyer and a “Financial” Buyer?
A strategic buyer is an operating company that would buy your business to further its growth and capabilities. Strategic buyers typically perceive certain synergies from combining your company with theirs. They may be looking to expand into a new market, add new products, access new customers, or increase in scale. They are more likely to make organizational changes after the deal closes, but if they perceive significant profit opportunities from combining the entities, they can afford to pay a higher price.

A financial buyer is an investment fund or individual that acquires companies purely for financial returns. They are more likely to leave the company alone if it is profitable, but will take an active role in the governance of the company if performance fails to meet expectations. Financial buyers generally want to sell the company or take it public in 3 to 7 years to provide liquidity for the institutions and/or individuals whose money they are investing.

How do Financial Buyers (Private Equity Funds) differ from one another?
Private equity funds come in a variety of shapes and sizes. The main concern of the business owner (besides the value of the offer) should be the cultural fit between the investor and the company’s management. The investor will likely have representatives on the board. Some funds are more active than others in managing the affairs of the business. Some are staffed with former operating executives, while others are staffed with young MBAs. Some specialize in certain industries, while others are geographically focused or more generalists. Each fund has criteria for the minimum and maximum investment. Some like to invest along side of other funds; others prefer to invest solo. Generally, the funds are self-selecting—they seek deals that meet the parameters of your company or they wouldn’t consider the transaction.

What security measures have you taken to protect my company’s information?
The data you submit to us is encrypted using 128-bit Secure Socket Layer encryption technology provided by Verisign, the industry leader in data security.

How will the buyer pay me for my stock?
If you are selling your company, you might receive cash, stock of the buyer, a note from the buyer, or a variety of other forms of consideration. Often more than one of these are components of the offer. One common component of a purchase price (particularly when the owner’s role in the future success of the company is important or when the parties have different expectations for the future) is an “Earnout” which is a contract to pay additional sums based upon future events. For example, an earnout might be a 3-year agreement to pay the owners 10% of the profits that exceed a certain amount. The key when negotiating the structure of the purchase price is to fully understand the desires of the owner(s) and the resources and strategic interests of the buyer so the best fit between the two can be achieved.

What other advisors will I need to sell my company?
Your financial advisor is responsible for managing the process, identifying buyers/investors and negotiating and structuring the business terms of the transaction. Other parties are also needed to close a deal. Lawyers are required to address the legal issues, including preparing the necessary documents and agreements. Typically a CPA is required to make sure the deal is structured favorably for the seller from a tax standpoint.

What is a Letter of Intent?
A Letter of Intent is a document outlining the basic terms of a transaction designed to make sure both parties have a common understanding of what has been agreed to verbally. The terms in the Letter of Intent are generally not legally binding.

What is a Purchase Agreement?
The Purchase Agreement is the legally binding document that spells out all the details of the transaction. A purchase agreement can be quite lengthy and involved. It addresses many nuances that business owners are unfamiliar with, so it is important to make sure you are represented by a lawyer who has experience in corporate law involving transactions. You would not let your family doctor perform heart surgery; you need a specialist to help you through what may be the most important transaction of your career.

What is Due Diligence?
Due diligence is the process of collecting the information a buyer/investor needs to know to feel secure that they understand your business.