The following 15 questions were taken from an article penned by Russell L. Brown about what a potential Business Seller should ask a Business Broker before listing a company with him. I found the questions comprehensive and compelling. Therefore, I have volunteered the following answers to help you to determine the advantages of placing your company listing with my firm and myself and I highly recommend asking any other potential listing broker these same questions.
I have successfully brokered 80 companies personally. In fact, I was the Broker of the Year and overall top producer for all 14 of the Link Business offices. The company sales that I have brokered range from very small to over $7,000,000. These are uniquely high numbers for a business broker. Our brokerage is currently one of the most successful offices in the US. What’s more, I acted as a dual agent in ¾ of my personal transactions. I owe much of my success to the fact that I can find both quality listings and match them with qualified buyers that I have also attracted. Being a dual agent allows me to act as a responsive intermediary to keep a transaction on a successful track to completion. My clients would confirm that this is one of the key services that I provided for them.
I have personally represented a wide range of businesses including services, manufacturing, distributors, medical, miscellaneous services, and retail. Our firm has experience in nearly every arena, having successfully brokered nearly many companies over this period.
From an annual gross sales standpoint, I have represented companies who’s annual sales range from $25 million down to very small.
We employ every means available for the promotion of Businesses for sale. First of all we analyze the company from a total business perspective. Then we focus on the sellable aspects as well as we identify any negatives and prepare appropriate responses. Of course, a critical part of our services is to determine the market value of the company. Then we summarize the company in a profile that includes all pertinent representation to help a potential buyer determine whether it meets his buying criteria. Meanwhile, the company’s representations are backed up by documentation that I keep on file for eventual verification. This profile is then “sanitized” by extracting any information that could otherwise enable the buyer to determine who the specific seller is until the buyer signs a confidentiality agreement with us. This “sanitized profile is then promoted via various means. First of all I have a personal database of 1000’s of qualified buyers who have contacted me the previously. These buyers are gleaned to determine which of them match the criteria that the seller represents. Next the company information is introduced to the other brokers that are associated with Link Business at one of our Wednesday morning company meetings that have mandatory broker attendance. Each of these brokers also have their own personal data base of potential buyers and do their own sort for potential buyers. I have personally developed the best business brokering web site on the Internet at www.socalbizbrokers.com, which showcases all of our listings in a very user-friendly presentation for both local and worldwide viewing. Additionally, our Business Team website, www.LinkBusiness.com, showcases all listings, both local and national, as well. We also “flood” over 75 other “business for sale” types of web sites whose focus and content is designed to match up buyers with sellers. We also pursue more traditional methods of advertising including newspaper, trade journal and direct mailing campaigns, depending on the company, as well.
The size and type of business that is to be valued dictates the most appropriate means of determining market value. Remember, our evaluation is performed to establish an accurate “market” price. Our goal is to determine the optimum price for the company that returns the most to the seller without pricing it out of the market. We employ multiple professional evaluation methods to determine our opinion of value including Discretionary Earnings and Excess Earnings Methods, as well as comparable business sales. My experience is that companies with a sell price under $3,000,000 and that are owned by one principal will often command the highest price (and the most front-end payment) when is it is sold to another individual. That individual buyer usually wants to take that over the seller’s ownership position and move the company to the next plateau. Hence, a primary focus is to determine all sources of income for the seller (including all “owner add-backs”) that accrues to the individual seller because the sum of that true discretionary net income will be what the new buyer will actually make. The buyer’s criteria will focus on this “total return to owner” and his offer price will usually be based on a “multiple” of that amount. Since most businesses are under $3,000,000 in sell price this is a very important valuation and one that I specialize in. Of course, we are professional and we are proficient in offering an opinion of value for any size company. Larger companies require marketing strategies that include proactive, industry specific, target marketing and investment oriented private equity group contact. The key for selling companies in the $2,000,000 to $20,000,000 is to determine the source for financing the transaction as most large acquisitions are dependent on “leveraging” the purchase. My buyers in this group include large “hedge funds”, family trusts, and strategic buyers in related industry companies.
This is one of the most crucial responsibilities that we assume as professional Business Brokers. Depending on the company’s circumstance it would be a potential disaster if employees, vendors, customers, bankers, or competitors got wind that a company was for sale. Therefore, we employ a very comprehensive process for insuring that anonymity of the company is maintained. First, the potential buyer signs a confidentiality agreement that is enforceable in a court of law. Beyond that we require that the potential buyer submit a personal, financial, and profession profile so that we can limit disclosure only to those buyers who appear qualified for the specific acquisition. As mentioned above, promotional advertising material is “sanitized” to maintain confidentiality.
Information is provided to qualified buyers on a confidential basis only when appropriate and only at the appropriate time. The seller can dictate at what point information is made available and normally that is after he has met the potential buyer and he has reviewed the buyer’s profile.
Professionally, I am a Certified Business Intermediary (CBI) and a Certified Mergers & Acquisitions Master Intermediary (M & AMI), Certified by the International Business Brokers Association ( www.ibba.org ). This is the highest certification a business broker can receive in the United States. The Certification is awarded only after fulfilling a series of demanding requirements including a minimum of 3 years of experience, many college level classes such as law, agency, valuation, etc., and after passing very grueling national examination similar to other professional certifications. I am also a Certified Business Broker with the California Association of Business Brokers. I received my Master’s Degree in Business from UCLA after receiving a Bachelors Degree in Economics (with a minor in psychology) from UC, Riverside. Business and particularly entrepreneurial business has been my focus since leaving corporate America to head up my own entrepreneurial ventures. I have since been the owner or president of eight companies. I personally initiated and consummated sales, purchases, and mergers in six of them. Hence, I have significant experience as both a business “buyer” and a business “seller”. This experience gives me a unique insight into the motivations and thoughts from the perspective of each party in the transaction. As a licensed business broker I have received professional training in all aspects of providing brokerage services, from business valuation, to business law, to the ethics of being a business intermediary.
From my extensive track record of successful transactions I have a long list of satisfied buyers and sellers that I will make available on request.
Introducing only qualified buyers is in both the seller’s and in my best interests. I work only for a success fee (commission) that is paid at the close of escrow. Hence, wasting time on unqualified buyers is extremely self-defeating to me as time is the only inventory that I have and I cannot waste it in unqualified situations. Thus, I take great care in verifying buyer qualification before introducing that potential buyer to the seller. The verification of buyer qualification includes a buyer’s Confidentiality Agreement, a Buyer Profile, a statement of financial capacity, and a matching of the buyer’s management and experience qualifications to the opportunity at hand.
I am a real estate agent in good standing, licensed to practice in the State of California under the auspices of the Department of Real Estate. DRE # 01262311.
We charge no fees upfront!!! Our fees are “success” fees only (commission) that are payable at the close of escrow and are based on industry standards. I will be happy to discuss fees with you on a direct contact basis. Again, our fee is based on a successful transaction only, with no commission paid until the seller closes escrow or the escrow’s equivalent.
Our firm requires an exclusive listing for a specific length of time. I look forward to discussing the agreement in detail on a direct contact basis. The length of time to sell varies widely and must be discussed on a business-by-business basis. Most of the company sales that I have brokered personally have closed in 3 to 6 months from the date of initial listing although some have taken longer.
Normally, the seller’s favorite method for funding the acquisition of his company is all cash. Reality dictates that buyers do not usually have all cash available. Conventional bank loans are extremely rare for financing the sale of entrepreneurial companies. Hence, there are two options for funding the sale. One is seller financing. This usually means a down payment with the seller carrying the balance for a period of time. Fortunately for the owner the other alternative offers all or nearly all cash down to the seller. That alternative is the SBA. The Small Business Administration provides a means of funding business sales through local banks that I endeavor to use in nearly every situation. SBA backed loans usually represent the best front-end financial return for a seller of a company. Nearly half of my transactions employed an SBA loan, which I helped to successfully orchestrate.
In order to determine all of the information necessary about your business I need to perform an initial analysis of your company. However, a minimum package normally includes 1) three years of year-end financial statements, 2) a current interim profit and loss statement, 3) three years of U.S. corporate tax returns or schedule C portion of individual tax returns, 4) a copy of the building lease, if leased, and 5) an itemization of assets that are included in the sale. Of course, much more goes into the orchestration of a successful business sale than just the answers mentioned above. As an example, a missing element in the above answers is the question of the “art” of making a successful transaction and how well a broker can execute that intangible talent. I can only offer the indirect proof of a very current and successful track record and my quantity of sales in the last 3 years to demonstrate my capacity in this area. I hope these answers will help you to determine that I am a qualified business broker that is worthy of the responsibility to sell your company.
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Roger Civalleri is a LINK Agent.
DISCLAIMER: All information contained in this website that relates to companies for sale resulted from representations by either the Seller or the Purchaser. LINK Business LA and its agents can not and will not verify the accuracy or completeness of any information. Sellers and Purchasers must verify any such information themselves and should engage legal and financial advisors to assist with this process.