Process of Selling a Business in Pittsburgh
You know your business a lot better than anyone. We know how to sell businesses. You have concerns, such as:
- Protecting the confidentiality of your business through the sale process
- Making sure you maximize the after-tax proceeds
- Assuring your business will be presented only to qualified buyer prospects
- Having the best expert possible to manage the entire process
You need a true expert, not a rookie who is hoping to cash in at your expense. are fully versed in all aspects transferring business ownership, including the emotional ride you’ll be on.
STEP 1: VALUATION
We have performed thousands of valuations. We have also purchased businesses for ourselves. There are many scams pertaining to business valuations, and we recommend no one every pay for a valuation. Your real estate agent provides you an estimate of your home value for free. We welcome you to challenge our valuation and have your accountant do the same. On our valuation, we estimate your expenses, taxes, and debt payoff to give you an after-tax estimate of your proceeds on a sale. It is important that the expectation is set early to avoid surprises later in the process.
STEP 2: CONTRACT
A contractual listing agreement is typically used when selling a business. We have never had an agreement cancelled. We serve as an Advisor, not a broker who is only worried about protecting his/her own commission.
STEP 3: PREPARATION
There is a document put together to explain the business. This document is called a pitch deck or CIM (Confidential Information Memorandum). This document provides extensive information and prevents you from having to answer the same questions many times. This is a critical step to selling a business. The thoroughness and professionalism in this document is a significant factor in selling the business and for the amount a buyer is willing to pay.
STEP 4: FINDING THE RIGHT BUYER
There are a lot of buyers. We meet with potential buyers frequently to sort out the serious ones from the pretenders. Many people want to own a successful business, but only a few people are willing and able to take the leap and take the risk. A buyer’s personality also needs to be a fit for the business, the employees and the industry.
STEP 5: THE MEETING BETWEEN BUYER AND SELLER
We schedule meetings between buyers and sellers at your convenience, during or after business hours, on-site of off-site. A prospective buyer will have already reviewed the CIM and financials and likely had several discussions with us. It is not a problem for sellers to require that all such meetings be held during evening hours to not alert employees. This meeting is to help the buyer ask questions to determine if he/she is a fit for the business.
STEP 6: OFFERS
Offers include many items other than just price. Payment terms, transition duties and timeframe, the allocation of price and many more items are part of the negotiation. By having TOG handle all negotiations you are avoiding getting put into an uncomfortable situation. Before we present you an offer, we translate the offer into what you will actually receive, i.e. your aftertax proceeds.
STEP 7: DUE DILIGENCE PROCESS
Once a Letter of Intent has been executed between the buyer and seller outlining the price and the various terms of the sale, the due diligence process begins. We serve as the quarterback for the due diligence process. This is the step when the buyer requests documents and materials needed to verify all representations made by the seller are accurate. This process typically takes two to six weeks.
STEP 8: CONTRACT NEGOTIATIONS
This is the least understood step for sellers. Regardless of the size or type of the business, there are a lot of legal documents. In a typical business sale, there is a purchase agreement, non-compete agreement, assignment and assumption agreements, resolutions, and many other ancillary documents. TOG is very involved in this process. We typically lead the draft of the disclosure schedules, which is one the most significant (and most critical) set of documents in a sale. The disclosure schedules, when developed properly, help protect the seller’s interests after a sale.
STEP 9: THE CLOSING
The closing is normally a one-hour event. This is when the Seller gets paid and typically becomes a Consultant to transfer his knowledge of the business and industry. This is the day everyone has been working towards.