“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.
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
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
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.
Dear Chris and Andre, I just wanted to say thanks for all your help. Even though this process was not an easy one, it was comforting to know that I had a capable team standing beside me. You made me feel like we were almost your only client or at least the most important one. Thanks again, and I will recommend your service in the future.Shenille Engelhart, Owner – CLS Technology
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 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
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.
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
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
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
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.
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.
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
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
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
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
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
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
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
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.
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
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
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