Featured Clients this issue:
**Details of each client below article
– Recreational Facility Construction Contractor #319
– Top-Ranked Financial Services Franchise #1019
– B2B Value-Added Distributor #1618
THE IMPORTANCE OF CONFIDENTIALITY
Most entrepreneurs considering the sale of their company have a legitimate concern about keeping a potential sale confidential from employees, competitors, and customers, until the transition process can be appropriately managed. Owners would not want the employees to be concerned and leave for another job, they wouldn’t want their competitors to use the potential sale as leverage against them in a bidding process, and they don’t want customers to go elsewhere because of a potential change in ownership.
In most cases these concerns are well founded. The process starts with an appropriately drafted Confidentiality Agreement (“CA”). This is also an area where the use of an Intermediary firm can come into play, as it is difficult for the owner to retain confidentiality while interfacing directly with a buyer. At FBB, we operate on a “need to know” basis and start out with just enough information to get a buyer interested enough to sign a CA and to provide financial information and operational and financial capabilities, thus demonstrating the ability of that buyer to complete a transaction. This initial information is usually provided in the form of a one page Executive Summary, which identifies the business with a profile # rather than a name. The summary camouflages the identity of the business, while providing enough information to entice the buyer to go the next step.
Assuming that the buyer is deemed to be appropriate, the buyer then receives access to a fairly detailed Presentation Package on the business which identifies the business and ownership, and provides reasonably detailed financial, marketing, and operational information, without disclosing detailed customer or employee data. The purposes of the package is to
(1) enable the potential buyer to determine if they want to further pursue the transaction and
(2) enable the buyer to reasonably determine that the value appears appropriate. If the potential buyer is a competitor, the process becomes somewhat more complex , a nd it would not be unusual to get a more detailed and specific CA in place.
Assuming that the negotiations result in a fully executed Letter of Intent (“LOI”) or Asset Purchase Agreement (“APA”), the buyer would then be given access to more detailed information, usually via an electronic data room. Although the buyer would have access to this information, the buyer would be precluded from contacting employees, customers, and suppliers, at least until the financing was committed and the negotiations on the APA were finalized.
With the understanding that each situation is unique, confidentiality is an integral part of the business transfer process.
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!
Recreational Facility Construction Contractor #319
Recreational Facility Construction Contractor – Profits for 2018 are over $1,400,000 for this elite recreational facility contractor, which serves a specialized high-end niche of the construction industry. It has a backlog of $8,000,000. The company has very limited competition. It primarily serves the Colorado Front Range, but works throughout the state on major projects that have solid profit margins. The company has long-term client relationships, having been in business for over 30 years. The clients are mainly general contractors, engineering firms and architects. An experienced, well-trained workforce is in place. This business would be appealing to an individual experienced in construction or a construction-related firm looking to expand. The real estate is available for purchase. The business will qualify for a long-term SBA guaranteed loan with a relatively low down payment and provide the purchaser a return on investment of 91%. Working capital of $500,000 Accounts Receivable and $125,000 Inventory is included in the transaction. The price below includes Real Estate of $450,000.
- Purchase Price (Business)…$3,950,000
- Purchase Price (Real Estate)…$450,000
- Purchase Price Combined…$4,400,000
- Down Payment…$660,000
- Gross Sales…$6,206,958
- Adjusted EBITDA (Assumes purchase of business and real estate)…$1,421,274
For more information contact Ron Brasch, firstname.lastname@example.org.
Top-Ranked Financial Services Franchise #1019
This financial services business was rated one of the top two franchises of 85 national locations. Its performance is due to a prime Front Range location and the exceptional foundation built by the owner. The business has a well-trained staff, including a highly competent general manager, and effective marketing. The Franchisor provides valuable benefits and guidance in this regulated environment. The 2018 sales growth of 20% is on track to repeat in 2019. This business produces excellent cash flow, with low overhead, and low staffing requirements. In addition to high sales and cash flow growth, this can be run by a semi-absent owner. The Seller has identified multiple opportunities for additional expansion.
- Purchase Price…$795,000
- Down Payment…$160,000
- Gross Sales…$716,496
For more information contact Gary Curran, email@example.com.
B2B Specialty Equipment Service Business #1618
This RELOCATABLE value-added company provides custom park and playground equipment from around the world. With a focus on fun, creativity, and safety, it services landscape architects, general contractors/developers, parks departments, amusement parks, schools, child care centers, and HOAs…not individual homeowners.