–SINCE 1982–

Monthly Update – July 2018 – Seller Frequently Asked Questions



July 2018



Featured Clients this issue:
**Details of each client below article
– Servicing Restaurant Equipment #2017
– RELOCATABLE! Specialty Sports Construction #118
– Specialty Automotive Repair #618

More and more owners of small and medium sized companies are considering the advantages of selling their businesses these days. Of the close to one million businesses that will change hands this year, most will involve privately held companies selling for $500,000 to $15,000,000. Yet, until business owners experience a merger or acquisition, few will know what to expect or how to proceed.


In the lives of entrepreneurs, few events are more emotional, or significant, than selling their business. In order to maximize the value of their business, entrepreneurs should always be thinking about the possibility of selling. The smart business owner should start planning for a sale and create a file labeled “Sale of the Business” years before they have any intention of selling. Preparing in advance will not only help you to be ready when the time comes, but it can often help guide you to build your business into a more desirable, and therefore, more valuable business. Below are some questions that are frequently asked by existing business owners:
  • When is the best time to sell?
The optimum time to sell is before you are forced to do so by health or financial reasons. This places you in the strongest negotiating position. Planning should begin three to five years out, but you should actively start the process at least one to two years before you want to complete the transaction. It usually takes at least 6 to 12 months to sell a business and the buyer may ask you to stay on for a transition period after the sale. Larger or more complicated transactions may take longer than one year.
  • How much is my business worth?
There is no simple method to determine value, and there are numerous formulas for valuing a business. No matter what valuation method is used, the value of a business is ultimately determined by what a buyer is willing to pay. Our experience with completing over 1,000 transactions spanning four decades has shown that there are three key components that are used in valuation models: 1) earning power; 2) specific assets being sold; and 3) marketplace demand.


Earning Power – Earning power is a function of annual earnings. For larger businesses, particularly those with audited financial statements, an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) calculation is used. For smaller businesses, the calculation is adjusted to SDE (Seller’s Discretionary Earnings) by adding back the expenses attributable to private ownership and accounting for the salary of one owner.


Specific Assets Being Sold – The appraised or fair market value of the assets being transferred, as well as other value drivers unique to the specific business are also considered.


Marketplace Demand – These factors are overlaid on industry and transactional market data to come up with an appropriate capitalization rate, which is then applied to calculate a range of value for the specific business.


  • How do I get the best price?


To maximize your price, you need a steady record of profits, hard assets on your balance sheet, a proprietary product line or a strong market position, and backup management that can run the business in your absence. Good accounting records are one of the most critical tools in maximizing value.
  • What are buyers looking for in a business?
Most investors place extensive weight on the company’s ability to generate earnings, since the cash flow allows them to a) pay themselves a suitable salary; b) service the debt generally required to buy the business; and c) receive a return on investment. Other buyers could be looking to acquire market share, skilled employees, or an add-on business that helps them to vertically integrate their organization.
  • How do you find the right buyer?
Most offers don’t appear out of the blue…they must be solicited. Even so, discretion and confidentiality are usually crucial. Key employees, customers, and suppliers have been known to vanish if a company’s future seems in doubt. An experienced Business Intermediary will know how to confidentially market your business while optimally engaging the largest qualified buyer pool possible.
  • Do I need the assistance of a Business Intermediary?
Selling a company can be a long and time-consuming process. Generally, the best thing an owner can do is manage his business profitably while engaging an experienced Intermediary to prepare a presentation package, screen prospective buyers, negotiate and evaluate offers, and perform the myriad of other necessary tasks associated with the selling process. A knowledgeable Intermediary can help you avoid pitfalls, save time, reduce stress, and help you get the most value for your company.
The majority of our business is derived from referrals. Please consider referring our services if you encounter a situation involving the potential purchase or sale of a business.
Ronald V. Chernak


Inspiring business relationships since 1982!


Servicing Restaurant Equipment #2017







This Metro Denver company provides services for restaurant commercial equipment, including refrigeration, Hot Side equipment, HVAC, Hood and MUA, along with plumbing and electrical services. The company does only commercial service and maintenance work, which provides consistent recurring revenue. There are over 180 clients. Gross Sales and Seller’s Discretionary Earnings have nearly doubled over the past three years, and they continue to grow.  The company should appeal to: 1) a buyer already in the construction industry; 2) a buyer in a related field, such as plumbing, HVAC, or electrical contracting; or 3) an experienced business person. No construction-related licenses are required.







  • Purchase Price…$695,000
  • Down Payment…$140,000
  • Gross Sales…$962,085
  • SDE…$211,626
For more information contact Ron Brasch


RELOCATABLE! Specialty Sports Construction #118




This group of companies provides complementary services for a unique niche in the sports construction industry.   With a great reputation and many well-known complexes completed, this business has a solid foundation for new ownership to scale and expand nationally.   In addition, the specialized machinery and documented training program (essential for building this kind of business) are already in place to take advantage of the 2018 sales pipeline of $1M+ and growing through word-of-mouth advertising.   Management believes that through a more robust online and offline marketing program, the new owners can rapidly increase market share across the US.  The current owners are willing to fully train and make introductions as needed to help make the transition successful.




  • Purchase Price…TBS
  • Down Payment…TBS
  • Gross Sales…$857,108
  • SDE…$223,339
For more information contact Rob Amerine


Specialty Automotive Repair #618






Providing over 55 years of quality service, this highly respected and well maintained full-service automotive repair shop primarily services high-end foreign model vehicles. With no active advertising, this business brings in customers based solely on its reputation. The real estate for this business, valued at $249,000 (subject to appraisal) is to be purchased with the business. This business currently operates with two vehicle lifts, and there is opportunity for expansion into the adjacent property. Ideal acquisition for another mechanic looking for his own business.






  • Purchase Price…$199,500
  • Real Estate..$249,000
  • Gross Sales …$240,059
  • SDE…$100,218