Broderick Capital

Typical timeline of a business sale has 5 main components.

Selling a business is a cumbersome process, therefore many businesses hire an advisor to help carry out the sale process smoothly. Hiring an advisor enables the Management Team to focus on operating the business, while the sale process is run parallelly. Following are the key steps and timelines during a sale process:

1. Strategize and Preparation for Marketing (~4-8 weeks): Once an advisor is hired by the company to carry out the sale process, the advisor conducts its due diligence, where in the deal team conducts meetings with the management / owner of the company to thoroughly understand the company’s operations, products / solutions, industry, competitors, financials, etc. Based on the information gathered, the advisor prepares multiple marketing materials for the company, including confidential information memorandum (CIM), and company teaser. The advisor also prepares a financial model for the company. These are prepared to be shared with potential buyers during the sale process.

2. Marketing to Potential Buyers (~4-16 weeks): After the marketing materials are prepared, the advisor starts contacting and holding initial meetings with potential buyers. The advisor shares the CIM / teaser, circulates the NDA, and answers any initial questions posed by the potential buyer. With the consent of the client, the advisor solicits initial indication of interest (IOI) from the potential buyer.

3. Management Meeting and Due Diligence (~4-16 weeks): If the terms of the IOI are acceptable to the client, the advisor advances the process to facilitate management meetings and presentations, provides access to the data room to the buyer, and helps carry out the detailed business, financial, legal, tax, and accounting due diligence process.

4. Solicit Detailed Bids and Final Negotiation (~2-4 weeks): Once the due diligence process is complete, the advisor solicits the final bids from potential buyers, and helps the client analyze, negotiate, and select the best offer. The advisor helps draft the purchase agreement and related documents in conjunction with each parties’ lawyers. Once complete, the final due diligence and negotiation is carried out, and the deal is signed, closed, and announced.

5. Closing of Transaction (~8-12 weeks) - Once the Purchase agreement is signed between the buyer and seller , each party works on the outstanding closing conditions which includes third party and regulatory approvals, contract assignments, remaining diligence

Please reach out to us at Broderick Capital, if you are interested in selling your small business.

Please email [email protected]

Are you looking to sell your small business? – Here are the 5 things that should be on your to do list:

1. Prepare an exit strategy in advance: Often times, an owner waits till the last moment to sell his/her business, assuming that there is still time. However, one should always be prepared for a lucrative opportunity or for an unforeseen event. Planning ahead will ensure that your business is sold at the right time to the right buyer, at mutually optimal terms.

2. Determine the fair value of your business: Once you have decided to sell your business, it is important to get a fair value assessment for your business. There are many methods to arrive at the fair value for a business, for e.g., using discounted cash flow analysis, relative value analysis, net asset valuation, etc. It is best advised to reach out to an expert financial adviser to help you understand the fair value of your business.

3. Organize your books and records: One of the biggest impediments to deal closure is the time it takes to complete the due diligence process, especially, when the books and records of a business are not organized. Being organized with the last three years of financials, corporate documents, and any material contracts, will save a lot of time during the diligence process, leading to a quick and painless sale process.

4. Understand who can buy your business: There are primarily two types of buyers, a strategic buyer and a financial buyer. Strategic buyers are companies that operate in the same industry as your company, where as, financial buyers can be industry consolidators, private / growth equity investors, etc. Even if you do a fair valuation of your business, the value of your business can be different for different buying groups, depending on how synergist the acquisition is for them.

5. Hire a consultant / broker: Going through the sale process can be cumbersome, hence many business owners hire consultants / brokers, who have an expertise in advising sellers through the sale process. Usually, consultants / brokers have an existing network of buyers, to whom they can showcase your business, thus expediting the sale process.

Please reach out to us at Broderick Capital, if you are interested in selling your small business.

[email protected]