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Insights For Smooth & Profitable Transitions
The Big Exits Podcast
Frequently Asked Questions
Why should I hire an advisor to sell my company? Can't I just sell it myself?
Some entrepreneurs take a shot and try selling their businesses on their own. A very small handful have succeeded. But the odds are pretty terrible. And the risks are enormous. The chances go up drastically that confidentiality will be compromised in the sale process and that your employees, clients, vendors or crews will discover the company is on the market. It can be an exhausting and frustrating time-suck dealing with dozens of potential buyers at the outset, then working with lenders, attorneys, accountants, escrow officers and all the transaction professionals who will require attention. It’s not uncommon for transactions to take 9-12 months. Also, it’s not easy representing yourself. An intermediary often has much better luck in hammering home the major deal points. Then there’s the very real potential for a lawsuit from your buyer since you are the only person making representations and providing information about the company.
Can I list my business concurrently with another broker?
No, unfortunately. We require a minimum 6-month exclusive listing when representing a seller. We spend a good deal of time, money and energy finding buyers and going through the purchase process.
How do you determine the value of my company?
Our summary valuation will look at financial statements, client contracts, property rosters, market data, comparable sales, asset lists and other information to reach a real-world conclusion of value. Our founder, Brian Loring, carries the Certified Business Broker (CBB) certification with the California Association of Business Brokers as well as the Certified Value Builder designation. This summary valuation typically takes about a week. In select cases, he will recommend a more comprehensive certified valuation be conducted with a third-party valuation firm.
Is the company valuation price the same as the asking price of the business?
No, they are different. The asking price will take the summary valuation and make adjustments based on a variety of factors. Sometimes our asking price is higher than the valuation price, sometimes lower.
What information do you need in order to value my company?
We like to see the last 3 years of profit and loss statements along with the accompanying year-end balance sheets. We also ask for a Trailing 12 months P&L. Additionally, it helps to look at a list of properties under management and an asset list detailing vehicles and equipment which will be included in the sale.
How do you keep the sale of my business confidential?
We put tremendous importance on maintaining confidentiality throughout the transaction. We have two levels of marketing. The initial level goes to the general public, before the Non-Disclosure Agreement is signed. At this stage we do not disclose the business name, location, ownership or any detail which could lead someone to identify your business. Based on your instructions and sensitivity level, we may indicate a city, county or general area where the business is located. Sometimes we won’t say anything more than the state. In this initial confidential stage, we like to provide a good deal of financial and operational information in order for prospective buyers to get a solid understanding of your business. Once they’ve reviewed our anonymous teaser document, they contact us for more information. At that point, we have them fill out our NDA and buyer profile providing detailed information about their experience, financial capability, location, investment criteria and other goals. Upon completion, a ManageVisors staff member will call them on the phone to continue the buyer vetting process. WE DO NOT REVEAL THE IDENTITY OF YOUR BUSINESS UNTIL THE BUYER PROSPECT HAS SIGNED AND RETURNED OUR NDA, COMPLETED OUR BUYER PROFILE, FINISHED A LENGTHY PHONE CONVERSATION AND A HAD THEIR ONLINE PRESENCE REVIEWED BY A STAFF MEMBER.
How can you be sure a competitor or employee isn’t trying to find out about the sale?
No process is fullproof and we cannot make any guarantees. But after more than 15 years in brokerage, we have a feel for people and processes. We’ve turned away many requests for information over the years. Buyers of property management, landscaping or janitorial companies usually have previous or current experience we can pinpoint.
What happens once a buyer has been vetted and cleared?
Once we are comfortable with disclosing your company’s information, we send the buyer our Confidential Information Memorandum. This is the primary marketing “book” that is typically from 25 to 50 pages and provides detailed financial, operational and historical information. It tells the complete story of you and your company.
Why hire you rather than another company?
There are several important ways ManageVisors is different from other business brokerages. Topping that list is how we market and sell your company. The only businesses we sell are property management companies and related service enterprises like landscaping and janitorial firms. That’s it. We leave all those restaurants, gas stations and liquor stores to our competitors. Consequently, we’ve developed a highly targeted community of property managers, cashed-up buyers, family offices, private equity firms and strategics who are thirsty for this sector.
How do you actually find buyers for my business?
Most of our transactions are completed through private emails and personal connections within our curated client network, roughly 5,000 industry contacts throughout the U.S. Our office is in Los Angeles County and we intentionally concentrate on California-based companies. Nonetheless, this sector drives buyers and sellers to us from all over the U.S. In addition to regularly-scheduled email blasts to our network contacts, we also place premium ads on nearly a dozen business listing portals like BizBuySell, BizQuest, BizBen and others. We’ve also had excellent responses to good old-fashioned direct mail, usually in the form of personal letters informing prospects about your company for sale. We also make dozens of phone calls to prospects in our database once your listing hits the market. We’ve recently begun sending text blasts to folks who’ve opted into hearing about our listings on their phones. We always include your company when showing prospects our roster of current opportunities. We also send emails to our affiliated professionals who may have interested clients – attorneys, accountants, wealth advisors, financial planners, lenders, appraisers and many others. We also raise awareness of your offering when we attend industry seminars, webinars and conferences.
Should I tell people I’m looking to sell my business?
No, no, no. Resist the temptation to give your employees, clients or vendors any type of “heads-up” or advanced warning. This is almost always a bad idea. This is probably the most common mistake we see business owners make when preparing to sell. You want to wait until a deal is consummated, funds have been transferred and there’s no turning back. Why? When employees get wind of a sale, or your managed clients get nervous about the company’s future, your buyer will likely get nervous too, maybe even back out. There may be one or two key employees who need advanced warning about a sale, for various reasons. You must be 100% confident they will keep things confidential.
Who do you think will buy my business?
We separate the buyer pool into four categories:
- First-time buyers – These are typically people who’ve been working in the corporate world and looking for a life change. In our industry, they are often experienced property or association managers or landscape contractors who want to break out on their own. They often pool together funds from family and friends to buy a successful company.
- Financial buyers – They are highly focused on their return on investment. They’re also keenly interested in scalability. They will spend many hours pouring over your financial statements, performing investment analyses and assessing risk. They are generally hands-off in their approach to ownership. They won’t require much financial training but may need considerable hand-holding in understanding the sector and the players.
- Strategic buyers – They are already in your industry. They may be your direct competitors at the moment. They are interested in the opportunity from a “strap-on” perspective. Your company likely offers them something they don’t currently have in terms of location, client roster, property type, employee base or other competitive factors. They are likely to pay more than financial buyers because they see tremendous value in a potential acquisition. They often present challenges in a transition period because they will bring their existing systems, software and people from their existing business into your shop.
- Private equity – These are companies looking to buy other companies. It is typically a family office or private equity firm which could conceivably buy your business all-cash but will often opt to employ leverage in the transaction. They bring pooled funds to the table and are enormously focused on scalability. They will be looking for value-added opportunities, operational inefficiencies, over-leveraged owners and under-served markets.
How long will it take to sell my business?
It can happen quickly with property management companies, sometimes taking 3 months or less from hitting the market to closing. We recommend to business owners that they budget roughly 6 months from the start of the marketing period to the close of escrow. Property management companies and related service businesses are in high demand and typically sell faster than other industries. Yes, there are many cases where a deal has closed in less than 6 months. But there are probably more cases where companies took longer than 6 months to get through the process.