Frequently Asked Questions
You have invested your time, finances, and effort into constructing, managing, and operating your business, which may represent the culmination of your life’s work.
However, until business owners go through a merger or acquisition, few are acquainted with what to anticipate or how to navigate the process. For entrepreneurs, few occurrences are as emotionally charged or impactful as the sale of their business.
If you’ve determined that the present moment is opportune to sell your business in the Mid Atlantic region, seeking top-tier professional guidance is crucial.
For achieving the maximum price and optimal terms in the sale, partnering with Terranova Business Group can be a game-changer.
On this page, we have addressed some of the typical subjects and inquiries posed by sellers.
WHEN TO CONSIDER SELLING YOUR COMPANY:
It is advisable for every business owner to have an exit plan, ideally commencing the planning process two to three years in advance. Working with an industry-savvy M&A advisor during this phase ensures an accurate valuation and valuable insights into enhancing business value. Terranova Business Group, although not labeled as a business brokerage firm, provides comprehensive services, including valuations, to prepare businesses for an optimal sale.
WHAT BUYERS SEEK:
Buyers predominantly seek businesses with robust cash flow. Aligning with an accountant or bookkeeper to organize financial statements, with emphasis on cash flow, is paramount. Buyers scrutinize profit and loss statements, tax returns, family compensation, discretionary expenses, one-time costs, non-cash items, interest expenses, and owner prerequisites. Terranova Business Group, acting beyond traditional brokers, assists clients in these evaluations, aiding in achieving the best-selling price.
IDEAL TIMING TO SELL:
Selling when the business excels operationally and financially is ideal. Commencing the process 12 to 24 months in advance is recommended, considering a potential 6 to 12 months for sale completion. The optimal time is before external factors necessitate a sale, ensuring a robust negotiating position.
VALUATION METHODS:
Terranova’s valuation process starts with a meticulous review and recasting of financial data for the past three years, factoring in discretionary or nonrecurring elements. Benchmarking against comparable business sales data and considering various business aspects like industry, customer diversity, and management strength culminates in determining the most probable selling price.
NEGOTIATING PRICE AND FINDING BUYERS:
Maximizing price involves maintaining steady profits, possessing hard assets, and having capable backup management. Keen accounting records are vital, and soliciting offers is often necessary. Terranova goes beyond typical brokerage services, creating customized marketing plans and detailed Confidential Information Memorandums (CIMs) to present businesses comprehensively.
SIGNIFICANCE OF CONFIDENTIALITY:
Confidentiality is paramount, as disclosure of a sale can jeopardize relationships with employees, creditors, suppliers, competitors, and customers. Terranova mandates confidentiality agreements and buyer profiles to limit information until a buyer’s legitimacy is established.
M&A ADVISOR ASSISTANCE:
Engaging an experienced M&A advisor is advisable to handle the complexities of the selling process, ensuring effective buyer identification, qualification, and negotiations. Terranova’s fee structure is based on successful transactions, minimizing financial risks for clients. Professional expertise mitigates risks associated with selling a business and allows owners to focus on day-to-day operations.
Terranova Business Group, with a team of M&A advisors who are former business owners, offers extensive experience and a network of qualified buyers. For those contemplating selling a business in the Mid Atlantic, Terranova provides confidential, obligation-free consultations, explaining services, fee structures, business valuations, and the potential benefits of collaboration.