1. Assessment and Valuation
Business Assessment
The first step in the process is to assess the readiness of the business for sale. This step is critical in maximizing the value of the business and the amount of money going to the owners. If there are ways to increase the value of the business, we often recommend that owners delay selling the business until changes have been made.
As part of the business assessment, we will evaluate key financial indicators that every business should be monitoring and will prepare a report of our findings. If you are not sure that selling your business is right thing to do, the business assessment report will assist you in making that decision.
Brokers Opinion of Value
The Brokers Opinion of Value (BOV) derives the “Most Probable Selling Price” of the business based on the Market Approach for valuation. This approach is less subjective then others because we use data from real world transactions of like kind businesses to statistically identify the multiplier for discretionary earnings and sales revenue.
A Brokers Opinion of Value is best used as a guide to assist owners who are preparing their business for sale. It is not meant to replace a fully certified business valuation. A complete Business Valuation will be conducted prior to marketing your business and soliciting potential buyers.
Listing Agreement or Engagement Letter
Assuming you are comfortable with the value of your business and are motivated to sale, we ask you to sign a listing agreement or engagement letter, granting us the exclusive right to market and sell your business for a period of at least one year.
Business Valuation
It is very important to have a neutral third party conducting the Business Valuation in order to prevent inherent conflicts of interest between the business owner, broker, accountant, lawyer, or any other professional advisor.
We hire certified business appraisers to perform the valuation and generate the report. The appraisers we hire have been certified and hold the designations that qualify them to perform the valuation accurately and professionally. They have the latest tools, technology, and data needed to perform the valuation.
2. Marketing
Business Documentation
The next step in the process is to collect all the materials and prepare the documents that will be used to sale the business.
Confidential Profile – The confidential profile is snapshot of information available to any potential buyer. Information that is confidential such as the name and location of the business and the name of the business owner is not included in the profile. The confidential profile is used in our management system and on our website.
Confidential Business Review (CBR) – The CBR is a comprehensive presentation given to buyers that agree to the terms of the confidentiality agreement. This document becomes the primary tool for presenting the business to potential buyers.
Targeted Buyers Search
If your company is a possible acquisition candidate, then we will contact companies within the industry or similar industries to regarding the acquisition opportunity. If none of our qualified buyers are interested in making an offer to purchase, then we place a written narrative on the top 10-12 web sites that deal in business brokerage. We also advertise your business in the local newspapers, trade magazines, and – if applicable – the Wall Street Journal. This exposes your listing to the broadest possible audience of motivated buyers.
Registered Buyers Search
The Bristol Group keeps a list of buyers that are looking for businesses to buy. Some of these buyers register with us and we have their information on file. We will attempt to make your business with one of our registered buyers.
3.
Negotiation
Buyer Screening and Qualification – We spend an enormous amount of time sorting through the responses and inquiries from potential buyers who appear to be interested. Our job is to qualify buyers as to their financial strength and their commitment to maintain confidentiality.
All qualified buyers are, in turn, provided with a complete marketing prospectus – the Confidential Business Memorandum – for their review. This sorting process may take months before we identify the two or three serious candidates, which we bring to your table for an initial meeting.
Buyer and Seller Meeting – If the buyer and seller have positive initial meeting and seem to “connect” with each other, then the chances of the deal being satisfactorily completed are greatly enhanced.
Offer to Purchase – We work with the prospective buyer in helping them to structure a formal written offer to purchase. And we orchestrate the process of having both the buyer and the seller reach agreement on price and terms of the transaction. The buyer submits this offer along with an earnest money check (usually 10% of the asking price or $5,000-$10,000), which is held in escrow until closing.
4. Closing
Due Diligence Process – We manage the process of due diligence, during which the buyer is given the opportunity to review all aspects of the business he is purchasing.
Drafting the Definite Agreement – The definitive agreement is drafted and reviewed by both parties Legal Advisors. This agreement is often called the Asset Purchase Agreement and includes standard representations and warranties of each party. The agreement may also include a bill of sale for the personal property as well as the appropriate deeds for the real property being transferred.
Closing the Transaction – After an appropriate period of time to complete the due diligence process (usually 15 days), we set a closing date (through an escrow company or closing attorney) at which time the buyer and seller meet, to review, have explained, and sign all legal documents relevant to the transfer of ownership of this business. At closing, the buyer brings a cashier's check for the balance of the down payment, and the seller pays the brokers commission out of the proceeds dispersed by the closing attorney.