Aligning Buyers and Sellers in Successful Transactions
Many people ask me, " How did all of this come to be? I never knew you wanted to sell your business?"
I received an email from an associate one day asking for me to give him a call. Upon returning his call he asked me if I had ever considered selling my business. I chuckled a little bit thinking maybe he was somewhat kidding. It was his next question that really got me thinking. He asked, "Would you at least like to know what your business is worth in today's economy with no cost obligation or strings attached?" I paused for a second and thought, well why would I not want to know this valuable information. My response was ,"Sure, but how does this work?" He had a simple, yet effective plan to find the value without anyone in our local area knowing. We executed a simple non-disclosure agreement, which ensures the word will not get out locally to my competitors or employees but allows he and I to communicate about finances. Then he provided a simple list to complete of the past 3 years profit and loss statement and all personal expenses within the business. In a few days I sent the information to him. He even provided me the comfort of not having to be perfect; he told me “do not sweat the small stuff" regarding trying to make my financials perfect.
Then he built what is referred to as a CIM, which is a fancy acronym for a flyer on your business. It highlights what I would call the 10,000 ft view of your business to see what players are interested. Keep in mind, now I'm curious and I'm asking myself, "how much is it worth?". "What would I pay someone for a business just like this one?". In my mind I finally came to a valuation. In my mind I would pay someone $1 to $1.5 million for a similar business. Again, in my mind if I could get double that, then it was worth selling. What happened next is what shocked me.
What happened next...
He called me a few weeks after he built the CIM and said , "You ready for good news? We have about 10 different groups interested in giving you an offer on your business." The next question out of my mouth is very predictable. It was ,"what's it worth?"
Now something you must understand is when you sell a business you sign a lot of NDA papers so you can't just go running around disclosing the exact terms of the deal, but what I can tell you is that the interested parties in the business delivered offers that ranged from almost $6 million to well over $8 million. The rest was history.
I look at it like a partnering. The new group we partnered with weren't the evil corporate giants people like you often think of, they didn't want to fire anyone and operate at the bare minimum, they did not want to change the logo or the name, they didn't want to change anyone's pay. Actually, they wanted the opposite of all of these things. Not only was the partnering a good choice for me personally as no longer do I hold the liability of the company, or worried about where the next payroll is coming from, or where to get the next service tech from but the partnering was the best decision the business has ever made. They had recruiters to help find people, they had an entire onboarding team, they had a dedicated HR team, etc. So, as you can see, they had pieces we as a small business just cannot afford to have. They also were able to save us money. Imagine being able to save 35% on equipment purchases. That is very impactful to the new business. The best part is they embraced our company culture and encouraged it, which was important to me. I decided to stay on and help transition the team to ensure success of the existing employees as the company grows.
So, the next question is, do you want to know what your business is worth in today's economy?