Selling A Business
Selling a business is a complex event. Most people sell a business only once or perhaps twice in a lifetime. Having Capitol Technologies work with you takes the mystery out of the process of selling a business. We explain each step to you, our client, and work with you from the initial meeting to the closing table. Here is an overview of how the process works.
STEP 1 – Initial Meeting
Selling a business with Capitol Technologies starts with an initial contact followed by a first meeting where we learn more about your business and have an opportunity to explain more about our services. This meeting typically determines the course of action required to sell your business, based on our experience and tailored to your business needs. The next step is to determine a marketing price and strategy for your business.
STEP 2 – Business Valuation
When selling a business market value can be defined as the highest price a ready, willing and able buyer would pay and the lowest price a ready, willing and able seller would accept, neither being under any pressure to act. Every owner wants to get the best price that he or she can for selling a business. Therefore, one of the key elements to selling a business is pricing the business at an amount reflective of what the market can accept.
Determining this value can be complicated since the value is affected by a variety of factors, including cash flow, assets, liabilities, and management, as well as market conditions in the electronic industry. It is often helpful, as a seller, to put yourself in the position of someone interested in buying a business. The amount of cash that a buyer expects to generate from the business is very important. This cash flow must be sufficient to, among other things, service any debt the buyer uses to buy a business, provide a reasonable return on the buyer’s cash investment and, for owner-operated businesses, compensate the buyer for any active participation with the business (e.g. salary).
If the asking price is too high to support these basic needs, it will be difficult to find a buyer willing to invest hard earned dollars to operate at a loss (which would require ongoing investment on their part). Any lending institution will look at these same factors in determining whether or not they will loan money for the transaction. Certainly, there can be exceptions to this “reality check” analysis but, as a general rule, the cash flow expected by the buyer must support the sales price.
Capitol Technologies will work with you to determine a realistic price that makes sense in the market. In the end, we help our clients to achieve their goal of selling a business at the best price the market will support.
STEP 3 – Marketing and Selling a Business
Selling a business is quite different from selling anything else that you own. For other assets, such as residential real estate, the seller generally wants everyone to know that the asset is for sale. Everyone knows a house is for sale since the realtor puts a “for-sale” sign in the front yard and openly advertises. Most business owners cringe at the thought of such publicity, and rightfully so. There are many reasons to keep the intention of selling a business confidential - such as protecting vendor, customer and employee relationships - until the owner decides to make it public.
Capitol Technologies has implemented a Confidential Business Sale Process through which we market and sell a business, establishing protections to the company’s identity. This process allows us to attract interested buyers to the offering while helping to maintain the confidentiality of the business for sale’s identity. A potential business buyer must agree to extensive nondisclosure provisions before learning the details regarding a business for sale.
Every business is strategically marketed through a number of channels to attract the maximum number of interested buyers. We combine extensive technology resources, personal contacts, advertising and other methods to sell a business. We work to create demand by getting multiple parties interested in buying a business at the same time, thereby increasing the business owner’s bargaining power.
STEP 4 – Negotiations
We will assist you with negotiations and will play as large or as small a role as you desire in this part of the process of selling your business. We recognize that every seller is different and may want to participate in negotiations to differing extents. Capitol Technologies is very skilled at negotiations and will always work in the best interest of our clients.
Working with Others
Capitol Technologies recommends that our clients obtain advice and counsel from their CPAs and attorneys. We have an extensive background dealing with CPAs, attorneys, bankers and other professional advisors. Our experience with different types of transactions including asset sales, stock sales and mergers and acquisitions facilitates working with these and other professionals in a very effective manner. Since we are able to “speak the language” and understand their concerns and advice, we are able to work as a team with your advisors in an expedited manner to achieve the common goal of the best transaction structure, and to sell a business at the best possible price and terms.
Capitol Technologies will work in a professional, ethical and confidential manner to help you sell your business or find the right business to buy. We work closely with you and all others involved to help assure a smooth closing and transfer of the business so you can quickly get on to the next phase of your life.