Value & Sell Your Business

The M&A Guide To Help Sell A Business

Considering to sell a business in the lower middle-market segment can be overwhelming in California. Without a proper, well prepared exit plan, and a professional business intermediary or M&A Advisor to facilitate the sell-side M&A process, there is no way to guarantee that you make the right decisions.

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Selling a Business

Whether you were an entrepreneur from the get-go or built your business later in life, you're likely here because the lure of retirement or the desire to change paths has you ready to exit your lower middle market or middle-market company. Among the many learning curves that come with business ownership, understanding the process of selling a company can be overwhelming.


If you've said to yourself, "I want to sell my business" and, after having mulled it over, decided that the time is good for you, you've come to the right place. We'll cover the importance of exit plans, getting financial paperwork in order, and understanding tax implications. All of this is critical to a successful exit strategy.


Top Reasons to Consider an Exit Strategy


Exit strategies are the foundation of successfully selling your business. They'll help set up your business to maximize its value, identify the best fit potential buyers, and ensure you have your paperwork in order when a prospective buyer goes through the due diligence process.


Some business owners try to put together their own exit strategy. However, those who don't have previous experience selling a business usually find themselves overwhelmed with paperwork, technicalities, and closing on a lower price than their business deserves. Check out these pros and cons when considering or initiating a business exit strategy plan.


For these reasons, when looking at the typical business owner exit strategy versus an M&A exit strategy, hiring the help of an M&A specialist brings many advantages. We'll talk more about the role of an M&A Advisor soon. For now, let's look at ten reasons why having a well-planned exit strategy is critical before you sell your business.


1. Identifying Buyers 


Exit strategies vary according to the seller's needs. Business buyers/investors are only willing to purchase businesses that have exit strategies conducive to their own interests and desires. An advantage of this is that you'll attract the best-fit buyers for your company if you have a detailed exit strategy.


2. Taxes


Buyers want to know that they're receiving the best arrangement possible to reduce taxes. Therefore, an exit strategy should minimize the amount of taxes that transfer to the new owner. Additionally, the exit strategy should clarify that the seller is willing to act quickly in the event of an upcoming tax law change, should it negatively impact the amount of taxes the buyer would have to pay.


3. Preparation for Opportunities 


Sometimes, a company may be taken back by an unexpected offer. Most commonly, this is the case with growth acquisitions in competitive industries. By having an exit strategy, you'll be able to work through even the most unexpected sales methodically. 


4. Foundation for Goals


Without a business exit strategy, it can be easy to get wrapped up in the process of selling a business and lose sight of the outcome you wanted by agreeing to deviations from your plan. Setting goals will also help your company make choices that mirror the vision you have moving forward as you prepare to sell your business.


5. Business Valuation


Buyers want to know that they're receiving a fair price for the business they're buying. By having a professional valuation conducted in your exit strategy plan, you have a higher chance of attracting the right—and higher-paying—buyers. 


6. Seamless Transition


Transitions from old to new ownership can be sensitive, especially for employees, vendors, and suppliers. An exit plan for your middle market business will detail how the buyer is required to handle human resources, including whether it's okay to let go of employees.


7. Timing


An exit strategy framework identifies the peak time to put a business up for sale. You'll want to aim for a period when your profits are the highest since you'll be able to sell your company for a higher value. It's also important to sell your company at a time when the market conditions are favorable. A business exit strategy will help you determine this.


8. Personal Emergencies


Selling a business doesn't happen overnight, and, because of that, personal emergencies can arise. By having an exit plan in place, the sales process can continue while you tend to your personal matters. In this case, an M&A Advisor would be beneficial since they would already be managing the sale of your business.


9. Offer Options


As you're likely gathering, many different situations can pop up when you're trying to sell your business. An exit strategy will help prepare you for different scenarios by including various options built into the plan. That way, you'll be able to maximize your company's value.


10. Recession


Here's a surprising fact—the most successful exit strategies involve planning years before you intend to sell your business. By doing so, you'll gain preparation for how to handle unwanted situations, such as an economic depression. That way, you'll be able to lessen the impact such a recession has on the value of your business.

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how to sell a business

How to Sell a Business

Now, you might be asking yourself "how to sell my business?" let’s look at the steps involved for selling your lower middle-market business.

Preparing to Sell Your Business—Designing an Exit Plan


Are you wondering to yourself, how do I sell my business? It's a common question, and we'll be addressing the different aspects of it throughout this article. For now, as a business owner, you should consider the following questions as you prepare your exit strategy framework:


  1. Does the sale make sense economically? What kind of profit would your business give you if you continued operating it without selling?
  2. What would be the price you'd receive for your business after paying taxes and advisors? Note: It's important to calculate all current and future dividends or distributions.
  3. How will you use the profits from the sale of your business? What rate of return can you get?
  4. If you're a co-owner, are your partners on board with selling the business?


Wanting to know how to prepare an exit strategy is one of the first topics business owners ask when getting ready to sell their business. Because of how complicated business exit strategy planning is, you should enlist the support of a professional low middle to middle-market M&A advisor.


Types of Lower Middle Market Companies


Lower middle market companies have a revenue bracket between $3 million and $50 million. There are many of these types of companies in California. Examples include:



Due Diligence Checklist for Selling a Business


Avoid these common mistakes before you sell your lower middle market business, below are some questions you should ask yourself to make sure you're covering your bases.


  1. Do you have all the documents of your business ready to show potential buyers?
  2. How is the data system of your business? Buyers will want to see financial statements, invoices, payroll, and vendor lists, among anything else critical to operation.
  3. What kinds of add-backs and adjustments are needed to know the EBITDA of your company?
  4. What would happen if you changed the sale price? How would that affect your taxes?


If you are a business seller or buyer, would you like a copy of our business checklist? Our Business Transition Checklist will help get you started in the right direction.


Business Valuation: What is Your California Company Worth?


Getting a business valuation is one of the most important steps in preparing to sell your California business. It'll give you an idea of how much money you can expect to receive if you were to sell your business right now. Just as important, it'll show potential buyers that you've taken the proper steps in the sales process and any third party lenders offering finance to the buyer. 


Factors Affecting Business Valuation


Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is one method of evaluating a company's financial strength among other business valuation methods. By taking the items in its name out of the equation, EBITDA demonstrates what earnings look like prior to accounting and financial deductions.


To better understand EBITDA, it's essential to clarify some of its parts. For example, taxes are strictly related to state and federal income taxes. For example, interest, this is usually interest generated from loans, whether that be from banks, shareholders, or other financial institutions.


EBITDA is most commonly calculated based on the most recent twelve months of operation as well as the last three to five years of operation. Therefore, if you have a newer company with less than twelve months of data, calculating the EBITDA isn't possible.


Once an EBITDA calculation is made, its used as part of the method to value a business.  These methods can include the Discounted Cash Flow (DCF) method. The DCF offers an overview of a business's equity value because it takes into account the yearly projection of your company's future cash flows, balance sheets, and income statements for the coming years.


However, there's a downside to the DCF method; it's challenging to determine the discount rates needed to calculate the present value of your company's future cash flows. Various factors impact discount rates, including current debt, fluctuations in debt, and the rate of return on your equity capital.

What is the Role of M&A Advisors in Selling a Company?

M&A Advisors are professionals with experience in supporting clients with the buying and selling of businesses. When you hire an M&A Advisor, you're hiring an advocate or a Trusted Advisor. Your advisor will look out for you and your business' best interests, trying to secure the best terms for selling your company. 


There are at least three leading roles that M&A Advisors have. They include:


  1. Identifying potential buyers, marketing your business, and vetting offers.
  2. Negotiating the terms of the sale, including helping you to get the best price possible.
  3. Managing paperwork and ensuring a smooth transition to the new owner.


Throughout this next section, we'll be delving into more detail about each of these topics.


Buyer Analysis—Qualifying Potential Buyers


Once you or your M&A Advisor starts marketing your business, it's exciting to see buyers showing interest. However, it's critical to proceed with caution since you don't want to expose sensitive information about your company to just anyone. You also don't want to spend lots of time with someone who was never a good fit from the get-go.


If you have an M&A Advisor, you'll benefit from their experience in vetting potential buyers. Things they look out for are previous experience in your company's industry, whether they're already a business owner, how quickly they're willing to act, and, most importantly, if they can prove that they have the funding (cash or loans) to take the leap.


There are lots of California businesses for sale at any given time. Whether or not you own an acquisition-oriented business, you might be wondering: What can you do to increase your chances of success in finding potential buyers? That question is particularly critical if your goal is strategic growth. 


Below are some excellent ways you can prepare:


  1. Give yourself at least a year to get ready before you sell. Work with an M&A Advisor to identify areas where you can improve your business to generate a higher sales price.
  2. Get organized. Make sure all your financial statements are in order, and you have easy access to your documents. It can help to hire an accountant and attorney to ensure all your bases are covered.  Or ask Rogerson Business Services for suggestions as they are a member of CalCPA and the Sacramento County Bar Association.
  3. Find a way to maintain stable sales or grow sales. Prospective buyers- especially acquisition-oriented buyers- are attracted to companies that have consistent revenue year-round and its increasing.
  4. Be prepared to share a lot of information—but not so much that it gives away your company's secrets. During the due diligence process, buyers will want to see that you're giving them access to your company so that they can determine whether or not it's a good fit for them and if the price you've set is fair. 


Now, you might be wondering: what kinds of buyers will you encounter? Prospective buyers come from an array of backgrounds. They include, but aren't limited to, the following:


  • Competitors
  • Employees
  • Investors (individual, strategic, synergistic, or corporate)
  • Private Equity Groups
  • Family offices


Should any person looking to buy your business be a competitor, you must withhold sensitive information. Otherwise, if the deal doesn't happen, they could use the information you share with them to improve their business. It's an especially painful mistake if you ultimately decide not to sell your business.

 

If you own a business that's attractive for acquisition buyers, you'll soon learn that these prospective buyers have acquisition programs designed to help them expand. For this reason, it's critical to seek the support of low middle market to middle-market M&A Advisors since they'll be able to help you negotiate the best deal. 


Why You Should Hire an M&A Advisor


M&A Advisors are a necessity for any lower middle market business owner lacking experience in selling a company. Since M&A Advisors have experience and connections in your industry, they know how to perform the most accurate business valuation. They also might have suggestions for prospective buyers before you even begin marketing your business.


The paperwork and legalities involved with selling a business are overwhelming. By hiring an M&A Advisor to support you with selling your lower middle-market company, they'll be responsible for making sure everything is in order. 


Having an M&A Advisor by your side is also valuable because it can improve potential buyers' perceptions of your seriousness about selling your business and avoid these 6 common mistakes. It's an indication that you plan to move forward with the sale and that they can expect your paperwork to be in order. 


Among the many advantages that come with seeking the support of an M&A Advisor, one of the most attractive for business owners is that an M&A Advisor is almost always able to negotiate a higher price than if you try to sell the business on your own.


How an M&A Advisor can Get You the Best Deal


Lower middle-market M&A Advisors can get you the best deal because they understand the kinds of mid-market companies for sale. They know the ins and outs of market trends and can advise you on whether it's a good time to try selling your business.


However, before putting your lower middle-market business up for sale, M&A Advisors often work with their clients 12 months before they intend to sell their company. By doing so, they can help you identify opportunities for improving your business, which should improve your business valuation. Get a business valuation sample to learn more.

Steps that M&A Advisors Will Manage

Steps that M&A Advisors Will Manage

By now, you know that there is a lot of moving parts to put a business up for sale. Below is the process you can expect your M&A Advisor to go through when preparing to sell your company. Remember—it's their job to have a deep understanding of the mid-market businesses for sale in your area. 


Your M&A Advisor will stick with you through the closing transaction to ensure all paperwork is in order. That way, your business will undergo a smooth transition of ownership, and you will be on a faster track to enjoying your retirement or new life endeavor.


Let's have a detailed look at the sell side m&a process.

Step 1: Exit Plan


An exit plan is a foundation for selling your business. It involves your M&A Advisor detailing the strategy they'll use for listing your business for sale. 


You may be wondering how to calculate the value of a business for sale, and your M&A Advisor will take care of this. They'll perform a Business Valuation with the goal of helping you receive the highest value for your business. To do so, it may involve them recommending you make actionable changes before you put your business up for sale.


Effective marketing is critical for attracting the right buyers, so your M&A Advisor will list all the marketing activities they'll perform on your behalf. Finally, the exit plan includes a list of buyers. Your M&A Advisor will have vetted the buyers, convinced that they'll offer you the best price for your business. Together, you and your M&A Advisor will review the buyers and decide who they'll contact to secure the best deal for your business.


Step 2: Deal Origination


Once your M&A Advisor establishes an exit plan that you're happy with, they'll begin the process of contacting the vetted buyers, trying to generate interest and excitement about your company. They'll work on spreading the word about your business through their social contacts and do any target contact marketing that your exit plan indicates.


Once your M&A Advisor gathers offers, they'll evaluate them and perform a market offer analysis. They'll share the proposals and this analysis with you so that together you can sort through them to find the offer(s) that interest you the most.


Step 3: Negotiation


Once the excitement of choosing the best offer passes, the next step involves tedious work that your advisor will manage as part of their M&A financial due diligence checklist. First, your Advisor will ask the potential buyer to sign a Letter of Intent (LOI). As a non-binding agreement between you and the prospective buyer, the LOI establishes the different aspects of the tentative business deal.


Buyer due diligence is the next step. During this time, the buyer expects that you'll be able to show them the following documents as a kind of financial due diligence checklist:


  • Income statements
  • Records of Accounts Receivable and Payable
  • Balance Sheets and Tax Returns (including business activity statements) from the last 3 – 5 years
  • Profit and loss records from the last 2 – 3 years
  • Cash deposit and payment records
  • Utility accounts
  • Any bank loans and lines or letters of credit you may have
  • Minutes of director and management meetings
  • Audit work paper files; if they're available
  • Seller's claims about their business (for example, your reason for selling and your business' reputation)
  • Privacy details including that of employees, trading partners, and/or customers
  • Stock information
  • Detailed account of your plant, equipment, fixtures, and vehicles, including their condition and whether they're licensed
  • Intellectual assets of your business (e.g., intellectual property, trademarks, and patents)
  • Any existing contracts you may have with your clients or staff
  • Partnership agreements
  • Lease agreements
  • Details of your company's automated financial systems
  • Details of any credit and historical searches for your business
  • Value of the business, as the potential buyer will want to check if the asking price is fair


Warning Signs for the Buyer 


Just like you're looking out for warning signs as the seller, so is the buyer. Below are some of the most common scenarios that will make an otherwise interested buyer shy away from a business deal.


  1. Failure to disclose critical information. Examples include reasons for selling your business, financial statements, licenses, permits, and staff contracts. 
  2. Refusal to agree to a trial period or sufficient time for the prospective buyer to perform due diligence. Thirty days is industry standard.
  3. Pushback when they request an introduction to your suppliers, landlord, or professional advisors.
  4. Currently in the middle of legal proceedings.
  5. Eagerness to close the deal quickly.
  6. Poor credit record and history.


Before you put your business up for sale, your M&A Advisor will ensure you have all the documents needed to sell a business so that you avoid these pitfalls.


Step 4: Negotiation via the Definitive Purchase Agreement


A Definitive Purchase Agreement is a critical part of negotiations as you work on selling your California company. These agreements protect both you and the buyer. 


There are three primary types of Definitive Purchase Agreement. They include:

 

  1. Asset Purchases: The buyer isn't required to purchase your liabilities. They can pick and choose which liabilities they would like to take on.
  2. Stock Transfers: The seller will receive a transfer of your business's capital stock only. That way, you aren't required to pay off liabilities because it continues operating without changing hands.
  3. Owner's Agreement: An ideal situation if you'll be doing a partial transfer. An owner's agreement ensures both the buyer and seller will have protection in the case of a disgruntled ex-spouse or creditor.

 

M&A Advisors have experience in understanding Definitive Purchase Agreements and will ensure a smooth transfer of your business. That said, below are some common Definitive Purchase Agreement pitfalls, most commonly experienced by the buyer and not by you as the seller.


  • Assumption of Liability: The buyer of a business can unknowingly take on the responsibility of unresolved claims and complaints. For example, if an employee files an unpaid wage claim, the new business owner may have to pay it, depending on the wording in the buy-sell agreement.
  • Taxes: Buyers need to assess the differences between corporate obligation and personal liability. In the case of an S-Corporation, shareholders must pay income taxes even if they don't receive them at that time.
  • Indemnity: An indemnity clause protects a buyer from your liability. However, you can also protect yourself by instating an indemnity clause so that you aren't liable for any issues with your business after you close on it.
  • Warranties and Representations: A particularly vital component if you'll be doing a stock transfer, warranties and representations protect the seller from a costly situation if you accidentally fail to transfer the right for them to withdraw earnings.
  • Due Diligence: When comparing stock purchase transactions and asset purchase transactions, due diligence is extra essential for stock purchases because it offers the buyer the opportunity to assess your business's financial statements.


Here's the bottom line: A Definitive Purchase Agreement is a document customized for each buyer and seller's situation and should be your top priority. A qualified attorney licensed in the State of California should prepare your Definitive Purchase Agreement to ensure there aren't any pitfalls. 


Selling a Business in California


Every state has different requirements for selling a business. If your business requires a license to operate, your California license will need to be up-to-date before you begin vetting buyers. 

California is unique because they require an escrow for almost every business sale transaction. You may balk at the thought of yet another step to sell your business. However, escrows are important because they protect both you and the seller. 


Taxes are another essential factor to consider before selling your business since you'll need to pay both California state and federal taxes. Often, a stock sale is better for you as a seller, and an asset sale is better for the buyer in terms of how much taxes you'll be required to pay.  However, for the transaction to be fair to both parties, compromising on the taxes just like the other negotiations in the deal will be necessary.


Step 5: Closing


After the buyer has done due diligence and you complete the negotiation phase, it'll finally be time for you to close the deal. Your M&A Advisor will finalize the paperwork and continue working with you to facilitate a smooth business transition.

Mistakes to Avoid: Selling a Business in California

As you work with your M&A Advisor on running a business valuation, you may come to a shocking realization—your business isn't worth as much as you expected it to be. Before you toss your dreams of retirement out the window, know that a part of your M&A Advisor's role is to identify areas for how you can increase the value of your business. 


In addition to helping you improve your business' profit potential, your M&A Advisor will help you avoid the following mistakes made by business owners trying to sell their company on their own:


  • Disorganized record keeping.
  • Too many tax deductions or questionable deductions.
  • Too many or few employees for the business size
  • Employees' salaries too high for industry standards.
  • Hiding something about the company from the buyer.
  • Incorrect business valuation.
  • Revealing too much information that competitors could use against you.


It's also important to ensure you have all the proper certification or licenses for selling your business to a buy-side M&A in California. The buyer will want to see this before closing the sale.


As a final note, one of the mistakes business owners make when selling their business is not hiring an M&A Advisor. Buyers feel more comfortable purchasing a company that's overseen by an advisor because they know it'll likely be a smoother sales process. It also means the paperwork should already be in order when they go through due diligence.

Problems in Growth Through Acquisition

Various issues can occur with buyers who use the growth through acquisition strategy, and it's an M&A Advisor's job to ensure they don't arise. Some of the most common problems with taking on a new company include:


  • Lack of due diligence
  • Incorrect business alignments
  • Rocky transitions
  • Issues with employees and management


Employees, vendors, and suppliers are among the most valuable assets when an acquisition buyer purchases a business. However, these people are often leery of new management and the concept of growth through acquisition. 


For this reason, it's helpful to work with an M&A Advisor so they can help smooth over this transition and be a liaison between current human resources and new management.

FAQs: Selling a Business

Now that you have a better idea of what selling your lower middle market California business entails, we've compiled some of the most common questions people have about selling their business.


If I sell my business, how much tax will I pay?


The amount of state and federal tax you'll have to pay depends on various factors, including how you approach the sale and the plan laid out in your exit strategy. Your M&A Advisor will be able to help you understand the tax implications under different scenarios once they've completed your business valuation or refer you to a qualified resource.


How much can I sell my business for?


It's important to know how to value a business based on revenue to determine how much you can sell your business. To do so, you'll need to perform a business valuation. Although you can try to do a business valuation yourself, you should hire an M&A professional to attract serious buyers.


How much is my business worth?


Your business worth fluctuates depending on factors such as your revenue, expenses, amount of competition, and the market. An M&A Advisor can help you determine the current worth of your business and offer ideas for how you can increase its value.


How do I sell my business privately?


People who sell their businesses privately often do so because someone approached them about purchasing their company. While you can sell your business privately, there's a big learning curve with the paperwork, and it can be challenging to negotiate a deal that works in your favor. For this reason, it's ideal to seek the support of an M&A Advisor.


I want to sell my business—where do I start?


We've put together a Business Transition Checklist, which will show you the steps you'll need to take to begin the process of selling your business.

Guide for Selling a Business in California

Congratulations on deciding to sell your business. It's an exciting but overwhelming time, given the number of steps and paperwork involved to transfer your company to new hands. Rest easy; we're here to guide you through the process to help you understand everything from how to get the best price for your company to the documents needed to sell a business.

Top Reasons to Sell a Business

You've likely poured thousands of hours into planning and executing your lower middle market business. During a company's infancy, business owners often don't think about the possibility of selling their business someday. There's no doubt about it—it's a difficult decision to make. 


The reasons people decide to sell their business vary greatly and, in some cases, are unexpected for the business owner. Let's look at some of the common reasons people choose to sell their business.


Overworked


Running a business is a massive time and financial commitment. If your company isn't to the point of earning a lot (or any) profit, you might not even have employees to help lessen your workload. Or, perhaps your company had been making a lot of money, but then an external factor came in that offset your earning potential. 


These scenarios cause business owners to become demotivated and burned out, leading them down the path of wanting to sell their business.


New Endeavors


Many business owners are serial entrepreneurs. If they think of a new business idea or meet a new business partner, they may not have the time to dedicate to their current business, regardless of how successful it is. In this case, selling their current company can support them with their new business's start-up costs.


Lack of Profit


There are countless reasons why a business isn't bringing in a profit, ranging from a flawed business plan to a global economic recession. Some people choose to stick with their business during these challenging times, while others decide that selling is the best option for them.


Changes Within the Industry


Owning a business comes with risks, and one of those risks is that the industry could change to make the company's products or services less useful. Changes in the law are another common reason the industry changes. In California, stronger laws protecting the environment can negatively impact a company's profit.


Issues with Business Partners


In an ideal world, everyone would get along. Since we all know that's not the case, even if you and your business partner start as a dream team, you could find yourself in a situation where the relationship fouls. When this happens, business partners often choose to divest.


Economic Reasons


Even if a business is profitable, an owner may inadvertently make a poor financial choice. Most commonly, this can happen when they want to grow their business, overextending themselves on loans and credit card debt. 


If the growth doesn't perform as they expected, they may struggle to pay their employees and vendors. In this case, they may need to sell their business to cut their losses.


Personal Reasons


There are many reasons outside of business performance why a person may choose to sell their company. Some people might realize that business ownership isn't for them, and they want to pursue a new career. Others may enjoy being an entrepreneur, but perhaps they learn that they'd prefer to start a non-profit rather than run an ecommerce business. 


Regardless of your reason for wanting to sell your business, the most important aspect is that you feel good about your decision. Once you're ready to move forward, you'll want to perform a business valuation.

Business Valuation: How to Get the Best Price When Selling a Business

If you're getting ready to sell your business, you might be wondering: what's the value of my business?


Here's the good news—your business is worth multiple of its cashflow or profit. However, just how many times over your company is worth from its profit will be determined during a business valuation as there is a deliberate process the appraiser uses. 


Business valuations are a way to determine the financial state of your company. They're useful for various scenarios, but for what we're talking about, they're used to help you determine how much you should list your business for and to help a seller determine if the listing price is fair.


Various factors can encompass a business valuation. They include:


  • Analyzing the current market for similar businesses in your industry.
  • Looking at your return on investment.
  • Calculating what your future profits will likely be.
  • Taking into account your company's assets and goodwill.
  • Determining how much it cost to start your company.


As far as methods of business valuation go, in the scenario of selling your business, you'll want to gather a Most Probable Selling Price (MPSP). You can do this by utilizing the following three valuation methods:


  1. Market Data
  2. Income
  3. Cost (or Asset) Approach


While there's no harm in performing an informal business valuation yourself, keep in mind that you'll almost always have more success with selling your business if you hire a lower middle-market M&A Advisor. That way, you'll know you're getting the most accurate quote. Additionally, sellers will view an objective business assessment more favorably than the one you put together.

Selling a Business: 10 Questions You Should Ask

Depending on the circumstances, some people want to know how to sell a business quickly, while others may have a two year or more plan. In either case, selling a business contract involves the same questions. Let's take a look at ten questions you should ask yourself before you make a move to sell your lower middle-market company.


1. How soon are you ready to sell?


It's essential to take a look at your finances and run a business valuation to understand how much money you can expect to receive from your business. If you have one or more business partners, they must all be on board.


2. Can you handle scrutiny?


Your business is your baby. You've likely kept a lot of its inside workings a secret from the outside world—especially competitors. 


However, once you've decided to sell, you must be comfortable with people poking around at personal information. Some questions might seem critical and personal, but they're often necessary for a buyer to have a better understanding of your business. 


3. Do you have time to dedicate to the sales process?


You'll need to factor in the time it'll take to vet potential buyers, go through negotiations, and finalize all the paperwork. In the case of most business owners, you'll also need to allot time to learn how to do all of these tasks.


Because of how easy it is for the selling process to go wrong, most business owners choose to hire an M&A Advisor to support them with selling their business. By doing so, you'll be able to spend more time on getting your company in tip-top shape for its new owner.


4. Have you gathered all the paperwork on your business?


Potential buyers will expect detailed data and paperwork on your company. It's critical to prepare these documents in advance so you can act right away when someone makes an offer. If you're working with an M&A advisor, they'll make sure you have all the necessary paperwork together during the exit strategy process.


5. What kind of support do you have?


By now, you know the value of having an M&A Advisor on your side as you work on selling your business. However, you'll also need an accountant, attorney, and a few employees to support the process for a successful sale.


If you're unsure where to find a knowledgeable accountant and attorney, your M&A Advisor will be able to recommend you trustworthy options.


6. Do you know how to identify a qualified buyer?


Receiving interest in your business is exciting once you put it on the market, but not all buyers will be the right fit for you. In fact, many buyers may not even have intentions of purchasing your business. 


There are four main types of potential buyers: those who don't have a business plan or funding, a new entrepreneur with funding secured, an experienced entrepreneur, and investors and private equity groups. The last two buyer types typically make for a quicker and smoother sale experience.


Choosing qualified buyers for your business is time-consuming. If you have an M&A Advisor at your side, their job will be to vet the buyers and show you only those with good potential.


7. Are you familiar with Letters of Intent and due diligence?


Once you've chosen a buyer, the next step will be for that buyer to give you a Letter of Intent (LOI). In doing so, they're committing to putting an offer on your business provided that all the information you've told them proves to be correct.


The LOI also states how long the buyer will have to perform due diligence. It's a tedious process for the buyer to go through due diligence, as they'll have to go through all your paperwork and fact check. They'll also likely reach out to you with questions.


8. What do you want for your employees?

 

Change of ownership is often a nerve-racking time for employees since it means they could lose their job or work under management with policies different than yours. It's important to know whether you want continuity for your team and to make sure you find a buyer that aligns with what you want for your employees.


It's also important to consider when you'll tell your employees about selling your business. There's no right answer, but keep in mind that telling your employees about it too soon could create tension among your staff members, suppliers, and vendors.


9. Are you willing to offer owner finance?


You'll no doubt choose a buyer with at least some of their own financing or cash. However, in some cases, you may need to offer owner finance if you want to make the sale. Your M&A Advisor will go over these scenarios with you, so you're not caught off guard if this topic arises.


10. How will you handle your business' transition?


Business transitions look different for everyone, so it's essential to consider how much you want to be involved with your company's change of ownership. So, an important question to think about is this: how long will you remain available after you sell your business? Most people choose to support the transition for a little while, so you might not want to plan your first retirement vacation the day after you close.


While many people want to know how to sell a business privately, we strongly encourage you to seek the support of a low middle-market M&A Advisor. Our team at Rogerson Business Services has years of experience in the sales process, so don't hesitate to reach out to us with any questions you have.

Need help in finding how much does your company worth?

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Steps to Selling Your Business

If you think it will be a breeze to sell your business thanks to online marketplaces, think again. Your business is far more complicated than selling a product on Amazon; it deserves serious treatment, and buyers will expect this from you as they do their due diligence. 


Lower middle-market companies share the following steps you'll need to complete during the sell side M&A process.


Step 1: Determine If You are Ready to Sell


Go over your finances, talk with any business partners you may have, and take time to mull things over before you decide to sell your business.


Step 2: Determine If You will Sell Your Business by Yourself


Spoiler alert: it's strongly discouraged to sell your business on your own if you don't have previous experience selling companies. There are countless opportunities for errors, plus you'll likely receive a lower offer than if you hire an M&A Advisor to help you out. They'll take care of all paperwork for you, including the business bill of sale.


Step 3: Hire Consultants & Get a Business Valuation


Whether you hire an M&A advisor or not, you'll need an accountant and lawyer to help you with the legal side of transferring your business to a new owner. You'll also need to perform a business valuation. Prospective buyers will take you more seriously if an M&A Advisor does the evaluation.


Step 4: Get Your Documents in Order


Want to know how to sell your business to a competitor? It boils down to being prepared.

Potential sellers will expect to see your company's financial records, legal paperwork (including any licenses), commercial information, and forecasting documents, among others. It's critical to have this paperwork together before you list your business on the market; sellers will expect to see it when they make an offer.


Step 5: Market Your Company


Once you've put your business up for sale, you will need to market it if you don't have buyers.  You could consider approaching any buyers who asked if you wanted to sell your company in the past but chances are they will have moved on.  Alternatively, if you have already found a lower middle market or middle-market M&A firm, they'll do the marketing legwork for you and vet prospective buyers.


Step 6: Negotiate


The negotiation phase is critical to securing the best terms possible for transferring your business to the new owner. During this time, the potential buyer will perform due diligence to ensure everything you told them is accurate.


Step 7: Transferring Hands


Once the final paperwork is submitted and escrow closes, it's common for the old business owner to stay around the business for a little while to ensure a smooth transition. The duration that you stay for is dependent on what you agreed on in the closing paperwork.

Different Kinds of Businesses You Can Sell in California

California's business acquisitions and sales involves a range of types of businesses. Below are some of the most popular kinds of businesses you can sell in the state of California. Rogerson Business Services works in all these industry and business sectors, so we're happy to support you with questions you may have about any of them. If you loudly said: I want to hire an M&A Broker to sell my business, grab a ten minute discovery call with Andrew Rogerson, certified M&A Advisor, on his calendar


Selling a Manufacturing Business


Manufacturing products include items such as food and beverages, chemicals, computers, and electronics, among many more. Thanks to universities and tech hubs in cities like San Francisco and Silicon Valley, there's a strong manufacturing industry in California. 


As a result of automation innovations, prospective buyers in the manufacturing industry recognize the opportunity for less paid labor and more profits. For this reason, now is an excellent time to consider selling your manufacturing business.


Selling Business Services


Business services is an industry that offers help to other businesses. Examples of business services include administrative work, hiring employees, security, booking travel, and pest control. If your company provides such services to private customers, your business also falls under this category.


It's best to sell your business services-oriented company when there's healthy economic growth in California. One of the challenges for this sector is that technology can rapidly change demand. Large companies can also have a stronghold on competitive contracts. However, if you have a well-established local business, you'll be in an excellent position to sell.


Selling a Professional Services Company


Professional services refer to intangible products such as consulting for marketing, finance, and legal aspects. Due to growing technology and online services, some people in California even sell their professional services business online.


Since most professional services companies don't involve tangible assets, going through the business valuation and sales process looks different from businesses with physical equipment. It's best to hire a local M&A Advisor so that you can be sure you're getting a fair price for your company.


Selling a Construction Business


The construction business is doing well in California. Whether your company specializes in renovations, new developments, or remodeling, you can expect to receive decent profits.


As a general rule, the more disposable money a population has, the stronger the construction sector is. For this reason, you should aim to sell your construction business when the economy is doing well, keeping in mind that the local economy, not the national economy, is what's most critical for this industry. For this reason, now is a great time to consider selling.


Selling a Wholesale Distribution Business


There's no better time to sell your wholesale distribution business in California than now. With the rise of eCommerce, wholesale distribution companies that manage nondurable and durable goods are in demand. In fact, this sector rakes in over $7 trillion every year.


Selling your wholesale distribution business comes with hurdles since your company's value can fluctuate depending on energy and oil prices. However, given that interest rates are low and many distributors rely on loans to purchase their inventory, you should be able to lock in a great price for your company if you sell now. 


Selling a Medical Practice


Medical practices run the gamut from private practices to urgent care centers to medical specialties. Let's face it—there will always be a need for medical practices in California. That's great news for you as the owner of a medical practice since you can expect to receive an excellent price from selling your business.


That said, selling a medical practice in California is challenging because of special regulations and licensing. If your buyer isn't from California, they'll need to educate themselves on state laws, as California might not accept the buyer's medical license.


Selling a Transportation Logistics Business


There are many specialties in the transportation logistics industry, including trucking and postal services, all of which are critical to keeping our country running. Improved logistics software over the years means that lower middle-market companies stand a chance against more prominent competitors. As a result, it's become a profitable industry for selling.


However, there are some complications that transportation logistics businesses encounter. They include retaining qualified employees and ensuring employees have a healthy work environment. Therefore, investors wanting to buy transportation logistics businesses in California look for companies with excellent management and organization.


Selling a Consumer Product Business


The consumer product business is continuously evolving thanks, in part, to demand from consumers for organic and environmentally friendly products. Consumer products can range from plastics to personal care. 


Consumer product companies in California encounter more challenges than other business sectors because of strict state and local regulations. However, assuming you've successfully navigated California's laws, your business will be an attractive option for buyers.


Selling an Industrial Product Company


Industrial product manufacturing and distribution are booming in California. However, this is a peculiar industry that's mostly dependent on overseas competition. 


Nonetheless, due to recent events, there's expected to be an influx of orders meaning that now could be a great time to receive an excellent price on the sale of your industrial product business.


Selling an Industrial Service Provider Business


Industrial service provider businesses are attractive for buyers in California because of their ability to diversify with ease during recessions. Examples of industrial services include hazardous waste management and staffing services.


Success in the industrial services industry is dependent on the performance of its clients. Therefore, selling your business when your clients are struggling can result in less money when you go to sell your company. For this reason, it's crucial to be proactive about diversifying your services before any downward trends occur. 


Selling an IT Business

 

With booming California tech areas like Silicon Valley, it'll likely come as no surprise that you can make an excellent profit from selling your information technology business. The IT sector covers everything from computer systems design to software support.


To increase your chances of a lucrative sale, you should make sure that your IT company has niche elements, as competition from Amazon and overseas industries is present. Additionally, buyers are attracted to IT businesses that focus on environmental sustainability.


Selling an Aerospace or Defense Company


From future fighter jets to the new Space Force division of the U.S. military, opportunities are plentiful for selling your aerospace or defense company at a good profit. An advantage of this industry is that government contracts tend to be long-term.


However, government spending on aerospace and defense fluctuates greatly depending on who's in office and the current political situation. For this reason, it's advantageous if your business is conducive for the private sector; private space exploration and travel show a promising future. 


Selling an Automotive Business


As a result of the pandemic, the automotive industry's growth projections aren't as high as before. However, manufacturing and innovation for travel are still strong, meaning that now might be an excellent time for you to sell your California automotive business if it falls under these categories.


To set your business up for the greatest success of a sale, it's ideal if your automotive company includes or has the potential to incorporate electric technology. 


Selling a Telecommunications Company


Now more than ever, people are relying on telecommunications as massive parts of the population work remotely. In order for your California telecommunications business to be competitive on the market, it should embrace the latest technology and address communication concerns for people who live in more rural areas. 


It's projected that the telecommunications industry will continue to experience double-digit growth. Therefore, it's an excellent time to consider designing an exit plan with your M&A Advisor so you can maximize your profit.


Selling an Education Business


Selling your education business in California may or may not be a good strategy at the moment. In-person education demands have plummeted as a result of the pandemic. However, distance learning is seeing tremendous growth. Therefore, if your business deals with online education, there's a good chance you'll be able to find interested buyers.


If your company doesn't yet take advantage of the earning potential of enrolment and subscription services, it would be helpful to develop a plan for this before attempting to sell. Buyers are most interested in purchasing companies that prove they have strong student demand and retention.


Selling a Packaging Company


The packaging sector involves anything from manufacturing and selling paper products to plastic packages. As a result of increased public pressure for environmental sustainability and California's strict environmental laws, selling your packaging company can be a complicated process.


The good news is that the packaging industry should grow in the coming years, with companies that focus on recyclable and biodegradable packaging leading the way. If you own a company with innovative, environmentally friendly packaging technology, it's an excellent time to look at selling your business.

Need help with valuing and selling your business?


Rogerson Business Services (RBS Advisors) is an M&A Advisory firm for lower middle market businesses.  It is built on trust and ethics. Andrew Rogerson, Certified M&A Advisor, can help you find answers to all your questions, introduce you to better opportunities, and manage the buying and selling process's integrity while keeping every aspect of sales confidential.


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Mistakes to Avoid When Selling Your Business

Below are six of the most common reasons why businesses have a lower value than expected. We also have talked more about mistakes to avoid when selling a business in more details. Learn more .


1. Your Business Revolves Around Dependency


A business that relies on a single person to run smoothly isn't attractive for potential buyers. The dependent individual can be an employee, customer, or vendor. As a general rule, you should aim to have no more than 10 – 15% of your revenue dependent on a single person, so your M&A Advisor can assess your company and recommend ways to lower your business' dependency percentage. 


Once you're able to offset dependency, you'll likely be amazed by how much your business's value increases.


2. Lack of Growth Strategy


A stagnant business is a cause for concern among potential buyers. Buyers want to see that you've been proactive in finding new growth opportunities and that there's potential for continued growth. 


The good news is that you don't have to execute the growth strategies; the buyer will be satisfied with seeing that you've put together a list of potential acquisitions and that your business has the capacity to handle more work. Thankfully, this work doesn't have to fall on you; your M&A Advisor can put together such lists.


3. Not Enough (or No) Cash Flow


The bottom line of a business is to make money. Companies who have too little or no cash flow don't receive as high of a sale price as those who do. By hiring an M&A Advisor, they'll review your cash flow and suggest ways for increasing it before you sell your business.


The two most common ways to improve cash flow include accelerating accounts receivable and extending accounts payable. Examples of how you can achieve these include offering discounts to get your customers to pay early and asking your suppliers to extend payment deadlines.


4. Lack of Recurring Revenue


Technology companies have shown modern-day business owners the value of subscription-based models. As a result, businesses with a promised source of income each month are an attractive feature for potential buyers and significantly improve your business' value. If you're unsure how you can incorporate recurring revenue into your business model, your M&A Advisor will be happy to offer suggestions.


5. High Competition


If you have a commoditized business, you naturally need to keep your products' price lower to attract consumers. Commoditized businesses almost always sell at a lower price than niche businesses with less competition. Your M&A Advisor will work with you to see if there are ways to differentiate your business from your competitors to increase your company's sale price.


6. Dependency on You


In the first point, we covered dependency on a single individual within your business, but it's a different type of situation if the person your company depends on is you. Most prospective buyers are interested in self-sufficient companies. 


If your business is mostly dependent on you, you'll need to work with your M&A Advisor, as well as your employees, to transition the company so that it's more self-sufficient before you attempt to put it up for sale.

Free Business Valuation Guide

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Financing a Business Sale

Financing a business sale or Seller Finance isn't a decision to take lightly since it means that you agree to fund a percentage of your company's sale price personally. The advantage of this is that it increases the opportunity for a quicker sale. Of course, the downside is that you'll be financially strapped to your old business long after you sell it.


Below are some tips to help you determine whether financing a business sale is the right decision for you.


  • Assess the risks. In the long run, financing a business sale can be lucrative since you'd receive the principal with interest. However, there's the chance that the new owner fails to pay.
  • Look at the opportunity. If the seller follows through with paying, the business you sell will make you far more than its original sale price. That can be a lucrative and steady source of income that lasts you well into your retirement years.
  • Ask for a down payment. A sizeable down payment will reduce the risk of seller finance. Work with the prospective buyer to determine an amount you're both comfortable with and take comfort in knowing that it brings you tax advantages.
  • Get help. Although financing a business sale sounds like an under-the-table transaction, it's vital that you receive guidance from a professional to ensure you're legally protected if the new owner doesn't pay you. That's the last thing you'll want as you transition into the next stage of your life.
  • Know your limits. If at any point you become uncomfortable with financing a business sale, say so. You're under no obligation to offer this to buyers. Give it some time, and the right buyer will surely be knocking on your door.


Finally, if you decide that you're open to financing a business sale, make sure to make this known when you put your business up for sale. It's an attractive selling point for many buyers. 

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Closing the deal on a business acquisition

Conclusion

Whether you've been dreaming of retiring so you can enjoy slow-paced mornings with a cup of coffee or you want to sell your business to pursue other goals, there's a lot that goes into preparing and executing the sale of a company. 


Lower middle market business owners value having a professional RBS M&A Advisor in their side. As a trusted consultant, your RBS M&A Advisor will be your company's biggest advocate and help you get the best price for your business. If you'd like to take the leap and talk to an RBS Advisor, Rogerson Business Services in the lower middle market M&A segment is ready to support you.

how to ready business for sale

Get Started: Learn How To Get Ready Your Business For a Successful Exit

We walk you through all the steps and dive in with worksheets and take-a-ways for you to download. 

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Sell-Side M&A

Four steps sell-side M&A process to market your California lower middle market business for sale

01 Exit Plan - business valuation

Your potential buyers can come from many areas. Employees, individual and group investors, Private Equity Groups, and even competitors who may have an interest in purchasing your business. If a competitor is interested, you don't want to reveal too much information about your business, especially anything that could hurt your business if the deal falls through.


Once you decide to sell, get your business ready, and get help from a trusted and accredited California M&A Advisor.


An M&A Advisor will vet potential buyers to make sure they are qualified and are serious about purchasing your business.


A California Licensed M&A Advisor knows the ins and outs of selling a California business and can help you get your business in shape to get you the best deal.

02 Buyer Analysis

One of the first things your M&A Advisor will do, is help you to create an exit plan. An M&A Advisor knows exactly how to plan an M&A exit strategy. In fact, you might get a M&A Advisor to help you with an exit plan long before you're ready to sell your California company. 


An M&A Advisor is knowledgeable about how to calculate the value of a business to sell and will aim to get the highest value for your business. Once everything is ready to go, they'll list your business for sale. An M&A Advisor will be an expert at listing a California businesses for sale.


After your business is listed, the M&A Advisor will handle all the marketing of your business to promote deal origination and get you in front of potential buyers. They'll also set a buyer list and work with you to figure out who to go after for the best value. 

03 Deal Origination - marketing

An M&A Advisor will then work to get you as many qualified and motivated buyers of your business as possible.


They will market your business through the proper channels, including social selling and targeting and generating interest. They'll vet and follow up with interested buyers whether off-market or publicly listed.


Once the offers come in, your M&A Advisor will evaluate all offers and conduct market offer analysis to make sure you're getting the best deal.

04 Negotiation & Closing

Buyer Due Diligence

Once a buyer is performing their own due diligence, the M&A Advisor will help you navigate the process to make sure everything is running smoothly. They'll negotiate a Letter Of Intent between you and the buyer to lay out the proposed aspects of the deal. Your M&A Advisor will also help you gather all of the necessary paperwork discussed above. If the buyer asks for additional documentation, your M&A Advisor can help guide you.


As a buyer is going through the due diligence process, they will be on the lookout for red flags about your business. An experienced M&A Advisor is knowledgeable about these warning signs and can help you prevent them. Red flags may include refusing to disclose why you're selling, not allowing time to conduct due diligence, refusal to introduce the buyer to employees, suppliers, landlords, and more. 


Definitive Purchase Agreement

The M&A Advisor will oversee the Definitive Purchase Agreement with the help of the transaction attorneys to make sure both parties are happy with the terms. A Definitive Purchase Agreement protects both you and the buyer as it will clearly state exactly what is and is not being sold. It can also protect the buyer from certain liabilities. A Definitive Purchase Agreement will also help you deal with the legal complexities of selling a California lower middle market business.


Once the Definitive Purchase Agreement is finalized, the M&A Advisor will help with any final items that need to be done as part of the closing process including working with a California Licensed Escrow company.


Closing - Finalize the Transaction and Close the Deal

Finally, your M&A Advisor will help prepare the close of your transaction. Once the closing is complete, they'll assist with overseeing the transition of the business change of ownership.

M&A LOWER MIDDLE MARKET ADVISORY

Why Work With RBS Advisors?

Business Valuation

Many sellers neglect the business valuation and methodology early in the process, only to become frustrated after the deal has been finalized.  Rogerson Business Services can help you understand the value of your business based on different methodologies.

Legal Due Diligence

When selling a business, the legal standing of the business determines the smoothness, efficiency, and speed at which the transaction is finalized. M&A Advisors offer a sell-side M&A process backed by the viability of a California Licensed business or transaction attorney. With a licensed California M&A Advisor, you can be certain the legal documents involved in the sell-side M&A process is detailed and accurate. 

Business Analysis

To avoid wasting time with unqualified buyers, get help from a trusted, licensed, and accredited California M&A Advisor. An M&A Advisor will vet potential buyers to make sure they're legitimate and are serious about purchasing your business. An M&A Advisor knows the ins and outs of selling a lower middle market business and can also help you get your business in shape to get you the best deal.

Financial Due Diligence

Our service includes deal team professionals to assist you. From financial to legal documents to tax and procedures, we want to make sure you are covered.

If you have your own in-house team of advisors, Rogerson Business Services can help make the M&A sell-side process as easy as possible by offering insights that help the team understand and are in alignment with the same goals as yours. 

Definitive Purchase Agreement

The Definitive Purchase Agreement is usually extremely complex. It is easy to overlook all the terms and legal jargon, but every paragraph is important and duly considered. It is therefore critical to ask questions and ensure you are comfortable with the final set of legal documents you need to sign.

M&A Sell-Side Targeting

Rogerson Business Services provide Mergers & Acquisition M&A Sell-Side Advisory. We zero target off-market, accretive, private equity and strategic buyers with an interest in lower to middle market companies or businesses  to maximize incremental growth value.

Ten Reasons to Plan a Business Exit Strategy with

Rogerson Business Services

1.  Ethics 

Rogerson Business Services are members of the M&A Source, International Business Brokers Association (IBBA) and California Association of Business Brokers (CABB) and adhere to their code of ethics.

2.  Confidentiality

Rogerson Business Services assists you professionally in a highly confidential manner to protect your personal and financial details.

M&A Advisor - Andrew Rogerson

3.  Vetted businesses for sale

Rogerson Business Services have access to an inventory of businesses including unlisted businesses for sale in California.

4.  Facilitator

Rogerson Business Services are specialists in business transitions and understand the need to respect all parties in the transaction. There are many steps to value, sell and buy a business. Rogerson Business Services have successfully navigated these steps many, many times.

5.  Valuation

Rogerson Business Services can provide you an opinion of value of a business you wish to sell or buy.

6.  Due diligence and escrow 

Rogerson Business Services has the knowledge to work through leases, franchise agreements, finance requirements, licensing, California escrow requirement and many other items so the sale of a business is successful.

7. Negotiation

Rogerson Business Services practice win/win negotiation skills. Negotiations are rarely perfect and so a win/win approach is the best way forward.

8.  Financing and funding 

Rogerson Business Services has professional lenders that can assist with finance to successfully buy a business.

9.  Resource 

Rogerson Business Services is an active member in the associations of the M&A and Business Broker industry including M&A Source, the International Business Brokers Association (IBBA), California Association of Business Brokers (CABB), International Society of Business Appraisers (ISBA) as well as other professional organizations.

10.  Closing and transfer 

Rogerson Business Services works with you each step of the way. This includes managing the buying or selling of your business through initial negotiations, due diligence, escrow and the all-important closing.

Interested in a confidential chat about what your exit options look like?


Fill in the form or click to set up a discovery call.

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FAQ's

Sell-Side M&A

Sell a Business

  • How long does it take to sell my business?

    This is a common and really good question, but the answer is not an easy one. The answer depends a lot on the type of business you are selling, the price you set, how long it takes the buyer to do their due diligence, and the state of the industry you are in as well as the economy.


    According to the California Association of Business Brokers, on average it takes about 8 months but only about 25% of businesses sell.


    Read more about how quickly you can sell your business here.

  • What is the first step if I want to sell my business?

    The first step in selling any business is a business valuation. You need to know what your business is worth and this includes 'normalizing' the income and expenses of your business for the last 3 to 5 years.   Business valuation is more complicated than just valuing your house though.


    There are a lot of things that go into the process, including recasting your books, valuing assets and real estate, and other elements. Read more about business valuations here.

  • What are some challenges when selling a business?

    There are two primary challenges when selling a business. The first is that you need to find the right buyer at the right time including the motivation to work through the entire process.  That is why it is important to know what makes a qualified buyer.


    The second is that you must sell your business at the right time. If it is growing and you are doing well, you can get more for your business. If you are not making money, the offers you receive will be much lower. The health of your business, the season, and even the outlook for your industry all play a factor. Knowing the right time to sell your business is vital.

  • How do I sell my business?

    Most people think, "I want to sell my business," but aren't sure where to start after that. You should begin by contacting an M&A Broker. 


    They will talk with you about your current situation, suggest areas of your business you may want to improve upon before you try to sell, and help you create a detailed exit strategy.

  • If I sell my business, how much tax will I pay?

    You should work with a certified accountant and your M&A Broker to determine the estimated amount of taxes you'd have to pay by selling your business. 


    Different states have different laws for selling companies, so it's important to hire professionals experienced with your state's policies.

  • How much can I sell my business for?

    If you're wondering how much your business is worth, a portion of this involves how to value a business based on revenue.  What is more important is how much the owner keeps after paying all expenses.  This is not only what the buyer wants to know, but also any third-party finance options the buyer needs to close the sale.


    Many factors go into determining how much you can sell your business for.


    It would be best if you began by getting a professional business valuation. The valuation is equally important for you, as the seller, and the buyer, who will want to know that they're paying a fair price for your company.

  • Is there a buying and selling business checklist?

    Rogerson Business Services offers a comprehensive business transition checklist to help you as you prepare to buy or sell a business. 


    The checklist contains items like organizational matters, titles, encumbrances, licenses, and business contracts, among many others.

  • Is there an M&A financial due diligence checklist?

    For more information about this question, please go to the section above in this article titled "Due Diligence Checklist for Selling a Business". It includes questions you can ask yourself—and your M&A Advisor —to ensure you cover your due diligence.

  • What are the documents needed to sell a business?

    There are many documents you'll need to show potential buyers who want to purchase your business. We help you with this information including many other free resources to get you started, some of which you can view here. 


    Cash flow profit and loss, balance sheets, and financial projection models are among the many documents you'll need to maximize income from selling your business.

  • How do I sell my business privately?

    It is possible to sell your business privately if you already know someone interested in buying it. Nevertheless, this can be a difficult endeavor since it's easy to overlook the right disclosures, legal agreements,  escrow process, and more that needs completing. 


    For this reason, it's smart to hire the right M&A Advisor. 


    Your M&A Advisor will guide you through the sales process, helping you get your business ready pre-sale and ensuring you receive the maximum amount of money from the chosen buyer.

Business Valuation

  • How do you value a business?

    A business is valued using several approaches or methods.  This includes reviewing your assets, your business income, and expenses, projected growth, and the health of both your business and your industry.


    Valuing a business is a complicated process. If you need help understanding business valuation or having your business valued,
     feel free to get in touch today.

  • Is a business valuation different from an equipment appraisal?

    The answer is yes.  An equipment appraisal looks at the value of your hard assets or things if you dropped on your foot they would hurt.


    A business valuation includes the value of the hard assets but looks at the income and expenses of the business to arrive at its Adjusted Net or EBITDA or cash flow and therefore the value of the business.   If you plan to sell the equipment with the business, the value of that equipment adds to the overall business value.


    If you need either a business valuation, an equipment valuation, or both, feel free to reach out anytime.

  • Should I get a Business Valuation before selling my business?

    Yes! The first step in selling any business is to get a business valuation. That is how you know what your business is worth. Don’t just guess. There are many questions to answer to arrive at an accurate set of numbers so the business valuation can be accurate.  Get a professional business valuation before you do anything else if you want to increase the chances of selling your business.

  • How do you calculate the value of a business for sale?

    To calculate the value of a business and then sell, you should perform a full business valuation. 


    Your M&A Advisor will be able to help you with doing this valuation to ensure it's thorough and accurately represents your company's financial status.  After all, if there are mistakes in the business valuation they will continue and damage the potential sale of the business.

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RBS Advisors provide Mergers & Acquisition Sell-Side Advisory to lower middle market businesses in California. We zero target off-market, accretive, private equity and strategic byers in lower middle market companies to maximize incremental growth value.

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