Large businesses in general can use the services of Mergers and Acquisitions (M&A) specialist advisors when seeking to buy or sell a firm. Small businesses are left to use business brokers. These brokers advertise the business for sale and may offer it to investors with whom they are familiar. They charge ten percent of the sales price for their services. We do it differently.
Results Associates LLC is dedicated to serving this market with the same high-quality M&A services at a fraction of the cost. Their services start with a face-to-face free meeting in which we learn why customers want to sell. Often, a business in trouble can be salvaged, and we assist in turning around the company if desired. If a customer is committed to the sale, then we offer M&A services. We determine the parameters for a sale. For example, one needs to receive at least $2M net of debt, payment is required in cash only; do not sell to someone who intends to relocate the firm, etc.
The first step in the process is a valuation. Using all the tools of accountancy and business assessment we provide the owner with a fair market value for his company. We usually examine assets, historical earnings, and future maintainable earnings. We look at relative value based on comparable transactions and discounted cash flow. This does not guarantee that the customer can sell it at that price, but it gives him an idea of what he might obtain for his business.
Next we develop a tailored candidate buyer list. Unlike brokers, we use decades of deal-making experience to seek out companies that can extract value from the acquisition.
We look for companies with gaps in their offerings that can be filled, or needing entry to a market segment served by the firm. We seek out companies worldwide that might use the client’s product(s) in their own manufacture or assembly. We look for companies opening new markets for a customer’s product(s), markets that might not be accessible to the client. In all cases, we identify the proper point of entry to the candidate buyer firm by name and title.
We then create the Deal Book, describing what is to be conveyed and the general terms of sale. We create marketing materials for the sale of the client’s firm, and send them with a cover letter to the candidate buyers.
Each buyer package is unique. Hence we take the time to identify the business case for a specific buyer and lay it out in the marketing material. We propose where the client’s product(s) will fit into the buyer’s offerings, and which current or potential markets can be better penetrated, or initially penetrated, by using the client’s products. We include a pro forma of the reasonable results of the purchase.
We send the tailored packages to the candidate buyers and request a Non-Disclosure Agreement prior to sending the Deal Book. We follow up on the initial package with a phone call and offer to answer any questions the potential buyer may have.
Finally, a Results Associates LLC Principal opens negotiations with all firms displaying interest. Their primary objective is to give the client the best possible compensation for his equity. We encourage sellers to engage their own accountants in this process to advise on tax, estate and other consequences of the sale.
When we receive a realistic offer for the client’s business, we bring it to the client’s attention and explain the details. Similar to attorneys, we are obligated to bring every offer to the client for a decision. With multiple interested parties, we will sequentially conduct negotiations for sales price and terms.
WE present the recommended offer to the customer and advise them to obtain a Fairness Opinion of the deal. They typically recommend that the owner turn to his own accountant for that service.
This is the process used by companies such as General Electric, Microsoft and other large firms when buying and selling companies. Results Associates LLC believes that all small companies deserve the same.
All fees and expenses incurred during the process are deducted from the commission at the close of the sale. Most M&A companies use the Lehman Formula for determining a commission. This takes 5% of the first $1M US, 4% of the second $M US, etc. Results Associates LLC has no jet-setting lifestyle to support and, as a virtual entity, has a low overhead. Our commission rates at 3% of the first $1M, 2.5% of the next $M, etc, reaching 1% of everything over $4M.
Any customer, who is interested in learning if selling their business is an option, can call us for a free consultation. If the business can be saved, and a customer is keen on saving it, Results Associates LLC believes that should be pursued first. We believe that small businesses deserve the same services and quality as large ones, and are dedicated to providing it.