How We Sell Mid-Market Businesses
One word: Transparency.
As with anything you accomplish in life, there are hurdles to leap and obstacles to avoid. Selling a middle market business – those worth between $1 and $50 million – is no exception. Being prepared for those hurdles and obstacles is tantamount to your successful sale.
Our job is to help you put everything in order so that:
- Potential buyers can clearly see and understand the value they will receive by acquiring your business…
- These buyers bid for the right to acquire your business…
- And the due diligence process further underscores the value instead of undermining the value.
Why Transparency?
When any transaction is commonplace, be it a Starbucks Latte or a car, most people understand the value of the item relative to the cost. Information about the product is readily available, and aside from a little haggling here and there, both parties in the transaction can quickly agree on the terms of the sale.
Selling a business in the middle market is different. Imagine business sales on a spectrum:
Well over 90% of all business sale transactions are for “Main Street” businesses that sell for under $1 million. In fact, the average sale price for roughly 95% of all businesses sold is in the ballpark of $150,000.
That’s a sale price of $150,000 – roughly double our minimum fees for selling a business.
A large chunk of the remaining business sale transactions are “Wall Street” – sale prices of $100 million and more, and generally with publicly-traded companies or IPO candidates.
Information about these businesses is readily available, and in the case of Main Street businesses, the value of the business is relatively easy to determine because of the frequency and volume of similar transactions.
On the other hand, there simply isn’t the volume of privately-held mid-market business sale transactions to create the same kind of “transparent” space that happens with commodities and smaller businesses.
Bringing Transparency to Selling a Business
Thus, the secret to our success as M&A Advisors lies in the transparency we bring to the entire business sale transaction.
We are transparent with the Seller by speaking plainly and honestly about business valuation, and the “readiness” of the business to sell. We explain how best to increase the value, and work with the Seller for as long as it takes to get themselves and the business ready for the sale.
And, we bring transparency to the process by spending extra time up front to find and document any potential issue that might cause the Buyer to hesitate during the sales process.
Finally, by being completely transparent with the Deal Book we prepare for potential buyers, we create a “bidding war” for your business that can’t happen if every potential buyer does not fully understand your business.
I trust Kris. He’s a man of high integrity. He looks for the best situation for my clients, and he’s not going to try to talk them into doing anything that doesn’t make sense for them. ~ Pam Hedblad, CPA
To learn more about how we do what we do, we suggest that you read the following pages on our website:
Selling a business is a competitive process, and buyout firms are busy. When they know that an offering is well prepared and honestly presented, they’ll look more closely a deal they might otherwise disregard. That’s one way we bring value to the deal: buyers know Bowman/Hanson, and trust that the Deal Book is accurate, complete, and fairly presented.