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Should I sell?
There are a number of issues to
consider when deciding to sell your company. What are
your personal and business financial goals? What will
you do after a sale is complete? Are you ready to fully
commit yourself to selling and doing what is required to
complete a sale? Another consideration is the market and
whether it is a favorable environment to maximize the
value of your company.
What is my business worth?
The simple answer is that your
business is worth whatever one is willing to pay for it.
Mergers and acquisitions are cyclical and timing is a
very important consideration. Basically, a business is
worth some function of its profitability. It could be a
multiple of earnings or revenue. It could be a
calculation based on cash flow. There is no "cookie
cutter" approach to determining value. Sales and
earnings growth are key factors in obtaining maximum
value. It is crucial that the business continues to grow
during the sales process.
Why do I need a broker?
Most business owners will sell one
company in their lifetime. It is important to keep doing
those things that have made the business successful and
attractive to potential buyers. A seasoned merger and
acquisition firm is in the "business of selling
businesses". A reputable and experienced merger and
acquisition firm has excellent relationships with the
industry buyers; understands the valuation process and
what can maximize a company’s worth; and has the
technical knowledge and experience necessary to
structure the most beneficial transaction for a business
owner. In most cases an experienced broker will obtain
value for a company substantially greater than what a
business owner could get himself or herself.
What should I expect during the
process?
The first thing a business owner must
do is assemble a team of professionals to represent his
or her best interest. This team should include someone
within the company that is very familiar with the
financial and operational aspects of the business.
Additionally, the team should include an attorney and
accountant who can evaluate a potential offer and
negotiate favorable terms in the purchase agreement. A
merger and acquisition company should also be chosen to
represent the business owner to facilitate the
transaction and contact the buyers who are paying the
most for companies in the industry.
How is a deal structured?
There are many ways in which a deal
can be structured. The first question is what type of
organization is the selling company. Is it a ‘C’ or
‘S’ corporation?
The type of organizational structure will determine
whether the broker must pursue a stock or asset
transaction. Other considerations are what debt must be
satisfied with the sale; what guarantees might be
expected by the buyer; whether an earn-out is feasible;
or whether the business owner will consider taking stock
instead of cash or receive notes as part of the
transaction. The bottom line is that a business owner
must outline his or her goals before selling and have a
deal structure to meet those goals. A competent teams must
be assembled to ensure the best possible transaction is
structured.
What about tax consequences?
The structure of the transaction will
determine the tax consequences. There are many questions
to be answered before the tax consequences can be
determined. Each transaction is different and each
business owner will have unique issues to complete a
successful transaction. It is important to have a
knowledgeable team on your side to structure a
transaction to minimize the tax consequences and
maximize the proceeds.
What differentiates Paragon Ventures
from other brokers?
Paragon Ventures is an experienced merger and
acquisition firm. We have relationships with industry
buyers and have an in-depth knowledge of how each buyer
prefers to structure transactions. We use this to our
benefit when negotiating on our client’s behalf. We have
a tax attorney and certified public accountant on staff
to assist our client’s professional team and ensure a
smooth acquisition process.
During the process, a principal of Paragon Ventures will
work directly with the business owner and his or her
team. We are available 24 hours a day and our clients
have our business, home, and mobile phone numbers. Every
client is important and we work diligently and
aggressively until the business is sold.
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