That depends on a lot of factors. Before any engagement, we do a valuation that encompasses both the financial performance of the company as well as the operations and market position. Business valuation is part art and part science, but should incorporate all aspects of the business. We use a variety of valuation approaches to ensure accuracy, but at the end of the day, your business is worth what a buyer is willing to pay.
In the simplest terms, we start with an in-depth evaluation of your company. We then provide you with an expectation of Selling Price. With that you can determine whether it makes sense to move forward with the confidential marketing process. It isn’t until this stage that we request a commitment from you. Once we have a Letter of Engagement, we begin outreach to strategic, financial and individual buyers as appropriate for your business. We encourage competitive bidding to drive up the purchase price and negotiate the best terms on your behalf. From there we guide you through due diligence and the closing process.
Aside from a modest retainer at the time of engagement, our advisory fees are contingent on our success in selling your company. We charge a percentage of the total transaction in most cases, so it’s in our best interest to negotiate the best price and terms on your behalf. Since it takes a team to get a deal closed, you should also expect to pay your CPA, transaction attorney, and tax accountant for their input and professional advice. Those fees can vary widely depending on the complexity and size of the transaction. The biggest transaction of your life should not be left to chance, nor should it be handled by anyone but seasoned professionals. Good advice doesn’t come cheap, but it does pay for itself.
Although we can’t make any guarantees, our client’s businesses usually sell between 9-18 months from the time of engagement. There are a lot of factors that can affect the timeline of your transaction, so allow for enough time for the transaction process as well as the transition or training period required of most buyers. Post-closing transition can take several weeks to a few years, so don’t wait until you are ready to throw in the towel to start the selling process. It pays to plan several years in advance, when possible.
The Romaco Group specializes in selling client companies to strategic buyers, although we work with all types and sizes of investors – from individuals to large corporations. Depending on the size of your business, there could be up to three different types of buyers that might have interest in acquiring your business. A strategic buyer is one that can realize some form of synergy (i.e. cost savings, economies of scale, cross selling products, complementary services, etc.) through the acquisition. A strategic buyer is almost always going to yield the highest offer for a target company. Financial buyers have a singular motivation-getting a return on that investment. Financial buyers frequently seek businesses that can continue operating independently with the existing management team. This could be an especially attractive option for a business owner that is interested in taking some of their “chips off the table” or that is in need of capital for future growth. Individuals are typically seeking a business that provides an opportunity to be actively involved in the operations of the company while maintaining a certain lifestyle. Currently, a high number of individual buyers are in the market due to dissatisfaction with corporate employment.
Romaco Group takes our clients’ confidentiality very seriously. We know that knowledge of your intentions can jeopardize your company’s standing before a sale. The potential impact from employee panic or loss of customers could be devastating to a business preparing for an ownership change. To protect you, Romaco Group has a rigorous screening process, starting with a Confidentiality Agreement that has been used in hundreds of transactions and thousands of buyer inquiries to protect our clients’ sensitive information. We further vet a buyer’s financial ability, intention and level of motivation before they are provided access to any confidential client information. Our clients approve all marketing materials used and all target buyer lists before outreach begins, ensuring you are in control of your transaction at all times.
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