The Vant Business Selling Process is Proven Based on Years of Practice.
Business Intermediary explains what’s involved in the selling process. Questions of the seller are answered regarding the business operation, history and future prospects of the seller’s firm.
TVG team begins “recasting” technique to determine owner’s discretionary cash flow of the company. Spreadsheet analysis is then used to compare the three previous years of financial operations and the current year to date.
Once the financial review is complete the TVG team works to assign applicable multipliers to the owner’s cash flow and to determine the applicable deal structure. Care is taken to use multiple standardized valuation techniques to determine a recommended selling price to the seller in addition to researching industry comps.
The TVG intermediary preliminary fills out the engagement agreement for the seller’s legal council to review with the appropriate monetary amounts and any conditions agreed upon. The seller’s attorney will usually have comments for the seller’s consideration before signing.
After the engagement agreement is fully executed, the next step by TVG team members is to obtain a comprehensive list of documents from the seller to develop the marketing package for purchasers. A business questionnaire, fixed asset list, copies of building lease and other documents are requested by the Business Intermediary to complete the marketing package.
Developing the marketing package for sellers requires input from all TVG team members. The document in finalized form is an excellent roadmap of operational, financial, tax and other information frequently asked by buyers and their support groups. TVG takes pride in having one of the best marketing packages in the industry for marketing the businesses that they sell.
TVG will not market a business until the seller(s) have signed off on the accuracy of the marketing package and also the summary for the business listing website. Sellers are encouraged to thoroughly review both documents for any necessary corrections, clarifications, and additions.
Once the marketing package is completed and reviewed by the sellers, the TVG team will begin looking for qualified purchasers. An email notification of the new listing is sent to the TVG buyer database of over 10,000 potential acquirers. A very confidential written 100 page executive summary of the business is published on various web sites informing interested buyers. Qualified buyers are not informed of the location or name of the company until first supplying a signed and dated financial summary and a confidentiality agreement.
Interested buyers are entered into the TVG system in relation to the company they are inquiring about. Both TVG staff and business intermediaries will analyze the buyer profiles and speak with the buyer prospect to determine if they are appropriate to pursue in the opportunity. Interviews are then set up in person, where possible, or by teleconference, if necessary.
The initial meeting between buyer and seller allows the buyer to tour the seller’s facility and to ask the seller questions about the operation. The buyer should be prepared to open the meeting with comments about professional experience, acquisition goals, and why they feel, at least initially that the subject company is a possible target. The initial meeting is often followed by questions from the buyer that arose as a result of both his first meeting and continued analysis of the marketing information prepared about the selling firm.
The most used technique to start the actual negotiations is the Letter of Intent to purchase (LOI). This document, although non-binding, is the roadmap by which negotiations follow. It will usually lead the parties through the due diligence process, the funding options of the buyer, and the final purchase contract which is generally drawn up just prior to closing.
The TVG Business Intermediary is responsible for keeping the negotiating process moving forward, and maintaining an arms-length transaction between the parties.
The basic deal points of price and deal structure usually lead the way in negotiations and will be the first items to get handled between the parties. Frequently, the LOI document will be changed several times before being signed by all involved.
Third party lenders have their own due diligence checklists which often stretch the closing process. Other financing vehicles such as conventional loans are usually quicker. Seller financing, where applicable is usually the quickest of all funding methods often only taking weeks to a closing.
Both parties should have their own legal and tax representatives contribute to review the final purchase agreement. As one would surmise, this process can take time to get all parties to reach agreement about the final “definitive agreement.”
TVG Business Intermediaries are responsible for setting up the closing at a venue acceptable to all parties. Each party will receive a buyer and seller’s closing statement outlining the proceeds/expense of sale. The closing will also encompass the buyer finalizing the loan process with any third party lenders. Closing generally takes one to three hours and is the final step in the sales process.