“So, who is the best buyer for my business?”
We get this question all the time at our educational exit planning conferences from business owners preparing to sell their company. At that point, it is far too early for us to answer because we need to spend several weeks getting to know the business through our in-depth evaluation process.
And, on top of that, we prefer the term “optimal” rather than “best.” Best implies perfection and that is hard to find in any business transaction. Optimal means the deal accomplishes the goals of both parties, a win-win all around (or as much as possible given that, in negotiations, each side must compromise a little in most cases to get an agreement completed).
So the answer to the question of who is the optimal buyer for your business is this:
It all depends on your personal financial goals, your goals for the company, and finally, what the buyer brings to the table, not only financially but also synergistically.
The first two factors you control; the latter is vital but really boils down to how good a fit you see between your company, your employees, your customers and the buyer. But let’s take each of the items above separately.
First, we highly recommend that you meet with your wealth manager long before your deal closes to determine how much you will need post-close to maintain your current lifestyle. Unfortunately, far too many wait until after selling their business and are disappointed to learn that if they had held the company a few more years and implemented some growth plans, they may have received more.
Side note: This is why the services of Generational Equity are so critical to our clients. Our first step is a thorough and complete valuation of the business to determine the current business enterprise value (BEV). This is based on the significant recasting and research we do on your business.
From this valuation, in addition to the BEV, flows our Roadmap for Enhancing Value. It provides you with concrete ideas and strategies about how to grow the business so that if the current BEV does not meet your financial goals, you may be able to eventually reach that number.
So two key points: In order for your wealth manager to create a plan for you, it is vital to know the BEV of your business and to determine if that meets your financial needs. If not, you need strategies to grow, which professional M&A advisory firms like Generational Equity provide.
It is very interesting to see the motivations of our clients change as they move through our process of selling their business. For most, at the beginning of the process the attitude is this: Get me the biggest deal and I will take it immediately.
However, after 3-9 months with us, as they really think about their exit, quite often they are willing to take less money if the buyer is willing to maintain or grow the legacy left behind for the employees and the community. This is especially true in 2nd and 3rd generation families. Often the history and preservation of the name, reputation, and opportunities for key employees become paramount.
You should carefully consider the legacy you want to leave behind as you contemplate your exit.
Because that leads us to the final point: synergies with the buyer. The new owners do not only have to be able to afford the deal, but their management style should also meld with how your company currently operates and thrives.
Sometimes we have clients walk away from deals because they simply do not like the potential buyers’ attitudes, manner, and style. Others will take substantially less in the transaction because they really like the buyer and his team, and can see the business thriving under him/her.
Get to know your buyer. Interview them. Find out what makes them tick and if the culture you have worked so hard to create will flourish under them.
This, in a nutshell, is your optimal deal:
If you can find these three features in a deal, you have done well indeed!
Frankly, these are the types of transactions the dealmakers with Generational Equity focus on finding for every client we engage and take to market. Our team has a proven track record of success that is second to none. That is probably why we have been recognized by our peers so many times over the past several years:
If you would like to learn more about creating an optimal deal for you and your company when you decide to sell, you should set aside time to attend a Generational Equity M&A conference near you. Completely complimentary and highly educational, you will gain a wealth of knowledge about creating optimal deals. Call us at 972-232-1121, fill out a contact form or visit our website to learn more.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2021 Generational Equity, LLC. All Rights Reserved.
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
The most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.Salvo Stoch, Founder and CEO of Sleeping Partners
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.JoAnn Ellis, Owner of Fondren 5 Star Kennels
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
Thanks to you, the entire GE team and especially Michael Goss for driving a great valuation, coaching me and driving the process across the finish line. Please let me know if there is anything I can do to support GE going forward. P.S. Given my experience with GE I felt comfortable enough to sign up with Generation Wealth Advisors!Tom Currier, Former President & CEO, Rackmount Solutions
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.Betty L. Brennan, President, Taylor Studios
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!JoAnn Ellis, Owner of Fondren 5 Star Kennels
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.Caroline Connelly, CEO, OptoTest
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
I wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.Shane and Johanna Kline, Owners of Vision Upfitters
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.Bryan D. Horn, Owner, Over Under Clothing
We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.Rick Greene of Dobbs Equity Partners LLC
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!Eric Erlandson, Owner, Action Fastenings, Inc.
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
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