TVG was engaged to represent a well-qualified buyer who was ready to leave his job in corporate America.

This buyer was well positioned financially and poised to be an ideal business owner, judging from his background.

We found an ideal business with the right infrastructure, cash flow, location and in a growing industry. We moved quickly to submit an SBA financed offer, only to be informed that the seller accepted a full price cash offer from a competitor.

Yes, we were discouraged, but we worked diligently to find more options that satisfied the necessary buyer requirements. Over the next few months, we were outbid and in other cases, the businesses didn’t hold up to further scrutiny. At this point, some buyers would become frustrated, but this buyer understood the difficulty of a business acquisition and had confidence that TVG would find the right opportunity.

A buyer’s guide for a successful business acquisition:

  • Have your finances in order
  • Be Patient but be quick
  • Don’t get frustrated with the process
  • Understand you may lose your perfect deal for any number of reasons
  • There are people with more money than you
  • Be open regarding industries

Almost a year from the start of our campaign, we identified 2 very different businesses which the buyer felt comfortable closing on. We determined the business that had the most growth potential and made an offer that was accepted by the seller.  We were able to close the deal in December of 2017.


Did you know less than 40% of small businesses listed for sale, actually sell?

I know, scary! While the reasons vary, the main reason is that business owners do not have an action plan in place to sell their business.

When should a business owner start their exit plan?

The Vant Group recommends that the business owner start the exit planning process as soon as the business is established or acquired. Unfortunately, business owners do not think about exit planning until they experience a health scare or fatigue and then there is not enough time to incorporate systems and processes to maximize the business’s value. Many business owners invest time and resources into their business for years and are unable to monetize their investment, which is most often 80-90% of their net worth.

What are the best tips for a successful exit plan?

1) Set goals

It is very important for a business owner to develop an exit plan. The plan should be very detailed and address questions like:

(a) What age do I want to retire?

(b) How much do I need for retirement?

(c) Do I want to sell the business to my family or an unrelated third-party?

2) Obtain a business valuation

After the plan development, the next step is to assess the value of your company in today’s dollars. Assuming you have been in business for three (3) years or longer, it is necessary to obtain a business valuation from a qualified valuation person (business brokers and investments bankers are both good options).

3) Develop an action plan

At this step, identifying the obstacles or issues that decrease the value of your business and create an action plan to correct them.

The biggest issue TVG sees in small businesses is when business owners do not work “on” their business, instead, they work “in” their business. It is important to add the value of developed human capital to your business, giving employees the latitude of making decisions.
Business owners tend to depend on a few customers. It is easier to maintain and penetrate a few relationships than to manage a lot of different relationships. Unfortunately, your business value decreases when one customer represents more than 10% of the revenue.
Business owners must keep clean books and accurate records.

4) Assemble a deal team

It is important to develop a high-caliber team with the actual members of the team dependent on the business owner’s situation. The members of the team should be an attorney that understands business transfers, a CPA, and a merger and acquisition (M&A) intermediary – also known as a business broker or investment banker. Having a team around you will greatly increase your success and allow you to focus on running the business.

In the Forbes article, Study Shows Why Many Business Owners Can’t Sell When They Want To,  you will learn why selling a business is such a complex endeavor and some key ways to create a plan to increase the value of your business.

Need an action plan? Arm your business with The Vant Group, a team of senior investment banking professionals with a record success rate of completed transactions across a range of industries.  Specializing in providing merger & acquisition services for both sell-side and buy-side clients, TVG supports the client’s objective with expertise and professionalism in every engagement.


Deciding the market value of a business is the most difficult part of the selling process.

Business owners often have misconceptions, believing the business is worth more than the market value. A broker or a business valuation service is the best bet in determining a value that is in line with what the market is willing to pay for the business.

The largest component in determining business value is deciphering how much money the business makes. The financial statements are analyzed to create a base value and then subjective factors adjust the sale price either up or down.

Many buyers want to know how much of the business price is allocated to what they can feel and touch, or hard assets. Normally, the higher the value of the asset, the higher the sale price.

Often, a small business is valued by cash flow, hard assets and inventory. When A/R and/or AP are included in a business sale, the price is adjusted either up or down based on the A/R; A/P net values.

The terms of payment affect the business value. A business purchased using a high leverage factor is generally worth more, and sells quicker than one that requires all cash. Business transfers are either the purchase of a company’s assets or the sale of its stock. In the small business arena, a stock sale is usually most beneficial for a seller, while an asset sale is most beneficial for a buyer.

The subjective valuation factors of a business are years in business, employees, the reason for the sale, customer and supplier base and business desirability. Other factors that increase or decrease a company’s market value; market strength, industry growth, appearance, location and owner involvement.


Exit planning provides the road map to control your own destiny; to successfully sell your business and transition to the next stage of your life.

“If you don’t know where you are going, you will wind up somewhere else!”  Yogi Berra

An exit plan helps to establish realistic business, personal and financial goals with a path to achievement.  Your desires in these three aspects of your life must be consistent. Like a road map, you need to know where you are before you can determine where you are going.

A good exit plan begins with an assessment of your current financial situation, a baseline business valuation, and the value of other assets you own.  To establish longer-term goals such as how long you intend to own the business, what you intend to do after selling it and to whom you would like to sell the business (children, employees, third party).  This information lays the groundwork for that determines your future financial needs.

Here’s an article that further talks the need for an Exit Strategy for your business:

 


7 years ago, TVG represented a seller who was anxious to sell his business so he could enjoy the fruits of his labor.

Like most sellers he had a number in mind he wanted for the business and wasn’t too keen on the deal structure so long the purchase price matched the desired asking price. We were able to secure a buyer who offered the seller the number he wanted, however, it included a significant amount of seller financing. Despite our urging for the seller to consider slightly lower offers with more guaranteed upfront, the seller decided to take the higher offer with substantial seller financing.

Everything was going great for the first few months and about six payments in, the payments stop and the buyer was in default.TVG client spent eight months and over $100,000 in litigation costs to resume control of his business, which by then revenues were down 50%.

Solution
The TVG client worked hard to reestablish his business and slowly built the business back with revenue and cash flow stronger than before. TVG successfully helped the client sell the business again.

Key Takeaways

  • Strongly weigh the cons of a deal financed 100% by the seller
  • Trust your gut in judging the character of a potential buyer
  • Sometimes in life things don’t go well, it takes grit to survive

To ensure your business is healthy and ready to sell, it is important to reduce customer concentration by diversifying the client base.

It is a disadvantage when business owners focus all their energy on only their major customers.  To ensure a healthy mix of customers business owners should build relationships with current customers while seeking new customers. A general rule of customer mix is any customer over 10% of the business is too big.

A diversified client base is beneficial to scalability, valuation and maximizing cash received at closing.   Here’s an article that talks further about the mitigation of customer concentration:

 


You’ve made the decision to buy a business; now you must find the right deal.

The best business opportunities are found by using all or some of the resources listed below. 

Traditionally, buyers seek multiple business intermediaries to locate and handle a business purchase transaction. Business intermediaries have access to databases for buyer-directed searches and often to opportunities in advance of other buyers.

Questions to ask when interviewing prospective intermediaries:

  •  Are they in a brokerage network?
  •  Do they use this network to buy and sell deals with other intermediaries?
  •  Are there other intermediaries within the network covering the same geographic area?

The business section of local newspapers and national publication sources such as The Wall Street Journal are good sources for business opportunity listings. The Internet makes searching for business opportunities infinitely easier and is the closest source of a centralized information. Professional connections such as a bankers, CPAs and attorneys can augment the pursuit of viable businesses. Databases with powerful filtering options make direct mail campaigns a new resource for buyers. More importantly than resources, a buyer must be ready.  When the business type meets the requirements, do not waste time- act quickly and decisively.


The Vant Group represented the buyer in a Defense Contractor business acquisition.

The company recently secured a large new contract making it a perfect fit for the buyer. The seller accepted a purchase offer of $4.1MM.

Because the company financials did not reflect the revenue from the newly acquired contract, the bank returned a loan amount that was lower than the purchase price.  The original offer was fair, and the seller needed that price to dispose of their debt and fund their retirement.  Unfortunately, the buyer could not increase the down payment to fill the gap, so it looked like the deal was dead.

With 19 years and over 500 transactions, TVG had the experience to keep the deal alive. TVG structured a three-year term Consulting Agreement which provided payment to the seller for the difference of the sale price and the bank loan. In addition, the sellers were to share in any upside resulting from the new contract they secured before the sale.

 


The Vant Group represented a project based construction business for sale.   The business, in preparation for sale, created a forecast based on their upcoming projects. The report revealed that three of their largest projects were scheduled to start in the 4th quarter of the current year.   After the LOI was signed, a customer pushed their project to the next year.  The change affected projections and created a shortfall in the forecasted EBITDA.  Although a benefit to the buyer, he was uncertain that the gross profits would reflect the projected revenue.

To address the buyers’ uncertainty, the sales terms were restructured to include a portion of the purchase price as an ‘earn out’, tied to a gross profit percentage.   The owner’s note was converted into an ‘earn-out’ tied to a targeted gross profit.

The seller agreed to the conversion because he was 1) staying on with the company for 12 months to help with the transition and would continue to have an influence on the sales of the company and 2) had the backlog to support the targeted gross profit.  The seller felt confident that if the projects were again pushed back, he would still be able to win projects from other bids he had out.

The purchase price remained the same, and the buyer and seller agreed to the new deal terms.

 

 


The Vant group is excited to announce that Bill Massie has joined the firm.  He brings a wealth of experience in many facets of investment banking.

Bill has worked with entrepreneurs and high-growth companies for over 20 years. His experience ranges from venture capital raises to IPOs. He is highly skilled at sourcing early to intermediate stage equity and debt capital, structuring and placing mezzanine debt and selling privately-held companies.

Bill owned a Broker-Dealer firm for 15 years which specialized in private placements for high-growth entrepreneurs.  His understanding of the needs and opportunities of these businesses will be invaluable to The Vant Group as we expand our investment banking operations.

2018 looks to be a significant year for The Vant Group.  We have several large projects underway which will require significant capital raise expertise with market rollup opportunities for our clients as well as value creation for our investors.  Here are a few examples:

  • The Vant Group (TVG)is partnering with a firm to exploit opportunities in the cannabis business in Colorado and several other states this next year. Our efforts will include providing roll-up capital to consolidate and integrate disparate business operations, expand dispensary and production facilities, and develop new pharmaceutical products.  We believe that there is enormous profit potential as the cannabis industry grows and becomes more sophisticated. The Vant Group intends to play a leading role in providing financing, advisory, and investment banking services to this space;
  • TVG will spearhead a real estate development project in Broken Bow Oklahoma designed to meet the increasing demand of vacationers traveling to the area. Resort cabin rentals, purchases, and a corporate conference center will be among the offerings;
  • TVG, along with one of our partners, has engaged with an exceptional operating group to purchase and grow a well-known local restaurant chain with attending real estate assets in Uptown.

This sampling of 2018 projects is part of the exciting times at The Vant Group.  We are looking forward to working with our investment banking clients and capital sources as we seek to add value and make money for our partners.