James Stan

My Top Five FAQs

Scroll down to find the answers
  1. “Will you be able to find a buyer?” or, “Is my business sellable?”
  2. “Will I get the best price? How will I know?”
  3. “What do your services cost?”
  4. “How do you protect my confidential information?”
  5. “How long will it take to sell my company?”
If your questions are more discerning, penetrating, sensitive… even perspicacious, I will do my best to provide an answer.
(I had never heard of the word either. It means, ‘knowledgeable/shrewd/smart’. The writer likes it and he doesn’t get many wins, so we keep it.)

1

FAQ

Is my business sellable? (or same question…)
Will you be able to find a buyer?

I suppose there are unsellable businesses, but I haven’t encountered one. However, you can make a business impossible to sell by insisting on an unreasonable price or terms. If we accept your engagement, which includes agreement on a price and terms, then we will have buyers.

You might be assuming that finding a buyer is the big challenge. It isn’t. Active buyers subscribe to the business-for-sale sites, and we will announce your opportunity on the best of those. One site alone has 1.3 million buyer-visits every month, and about 120,000 registered Canadian buyers plus many more who didn’t register but still monitor the sites. Add we don’t stop there. If your business is suitable, announcements will go out to private equity groups and strategic buyers. All of our clients attract buyers.

The real challenges will arise as we negotiate the deal. The success of your transaction will depend on how differences of opinion are handled. Emotions will be high. You will need an experienced broker whose diplomatic skills, patience, ingenuity and dedication will keep the deal from falling apart.

The 3 Types of Buyers

Owner - Operators buy smaller companies; usually under $3M.

Strategic Buyers are companies with connections in your industry. These companies may not be looking, but could be interested if properly approached.

Equity Groups purchase companies for their cashflow or their synergy with companies already in their portfolio.

2

FAQ

Will I get the best price?
How will I know?

One of our primary goals is to maximize your cash at closing.

We will calculate your most probable selling price – and we’ll show you how it was done. Then we’ll look for ways to increase the value and make your company more appealing to buyers.

Each buyer’s concerns will materialize in variations of the payment terms, including transition assistance, ongoing consulting, hold-backs, earn-outs, noncash compensation, and others. We can also show you the maximum amount a buyer could pay (excluding strategic buyers), beyond which the buyer cannot manage both the business expenses and the debt repayment.

Learn more… ask for any of the following to learn more:

The Plan – Our 50-page guide to the selling process
Samples of our various price and marketing analytical tools,
EquitasMA.ca, our main website contains a number of articles that you might find useful.

3

FAQ

What do your services cost?

PRE-ENGAGEMENT EXPLORATION:

Discovery Meeting       Free

Business Analysis Report     Free

WHEN ENGAGEMENT IS FORMALIZED:

Market Value Assessment Two levels of detail are available: $5,750 or $9,750 These costs are credited toward Success Fees.

OR Retainer      Min $3,000, but based on transaction size. Fully credited to Success Fees

WHEN ENGAGEMENT IS SUCCESSFULLY CONCLUDED:

Success Fees      Calculated on a descending percentage scale: 10% of the first 2 million dollars 7.5% of the 3rd and 4th million dollars 4.5% of anything over 5 million dollars

Please note that my Success Fee rates are lower than the brokerage recommends

‘Skin in the Game’

In the beginning, we invest a few hundred dollars to learn about your business and let you learn about us.

Once an engagement is signed, we begin a process that costs us several thousands of dollars; usually more than $50,000.

We believe that you need to have some ‘skin in the game’ too, so we offer a choice: buy a Market Value Assessment or pay a small retainer.

4

FAQ

I’m concerned about confidentiality.
How do you accomplish that?

First, we provide you with a signed confidentiality agreement from us. That usually happens before we begin our discovery interview.

Before we ‘go to market’ with your company, we create the following documents. Items 1 and 3 require your approval before we use them:

  1. A blind profile: (‘blind’ means your identity is hidden) a brief description of the business to allow buyers to decide if there is interest enough to procced.
  2. Our comprehensive Non-disclosure Agreement (NDA) and personal profile. Signing this agreement is the only way a buyer can get additional information (your CIM). The NDA expressly forbids a buyer from speaking to employees, suppliers, customers and competitors. The personal profile asks for their net worth, work experience and ability to obtain financing. I review their answers and decide if they are qualified to receive your CIM.
  3. Your Confidential Information Memorandum (CIM); a detailed document with financial summaries and enough information to have a buyer create an offer in the form of a Letter of Intent (LOI).
  4. The LOI restates and references the NDA to ensure continued confidentiality.

Your Plan… at some point, you will need to tell people:

• Employees

• Suppliers

 • Customers
It’s best to work with the buyer to develop a plan that minimizes
concerns and disruptions. I can
provide some guidance, but an expert might be required for employees.

5

FAQ

How long will it take to sell
my business?

Timing it from signing the engagement, which officially allows us to start the process, to the closing day, the normal process is six to nine months, but there are so many factors, it’s not possible to predict it with any accuracy.
Some of the more likely steps to get extended are:
  1. Fixing the seller’s poor record-keeping.
  2. The seller declining every offer, always hoping for a better one.
  3. Buyers having difficulty getting financing.
  4. Sellers changing the price because they had a good year.

If you have a tight schedule based on other pressures, let me know as soon as we start and we’ll do our best to meet your dates.