Business Broker and Mergers & Acquisition Services
As part of the long term financial planning for the small business owner, Enterprise Financial Advisors will assist the business owner with developing an exit strategy. This will involve preparing the Company internally as to its accounting system and support, upgrading its legal support, restructuring its finances/capital position, and improving the management team. The goal is to develop a long term plan for building the business value in order to maximize the price for a sale or merger into another company at a later date. In some cases, it may make sense to develop strategies for growing the company internally and in other cases, it makes sense to do so both through internal growth and through acquisitions. By acquiring a complimentary company or an add on company whose personnel, client base, products & services will merge well and add value to the existing company once it is properly integrated into the current business operation, the combined entity can cut costs, increase both revenues and margins making the company more valuable and attractive for purchase.
The difference between the Business Broker marketplace and the Mergers & Acquisitions marketplace is the size and complexity of the companies involved. Most business broker transactions involve smaller entities referred to as “main street” companies with a business value of less the $5.0M and are structured as an “asset purchase”, while the M&A market may involve an equity/stock sale and are larger companies with the revenue size in excess of $10.0M and EBITDA greater than $1.0M for a platform company, and smaller companies can be merged/acquired if they are considered a good fit to be “added’ to an existing platform company. These may also be in smaller situations asset purchases or they may involve investment banking services for the transfer of securities/equity ownership positions.
In either situation, the procedures for determining the business value and the due diligence effort prior to a buy/sell/merger transaction is similar, with the BB market being mostly a formula-driven valuation methodology with hard assets in consideration, while the M&A market will have much more complexity for a proper evaluation of the transaction and the sophistication of the parties involved are greater for a typical M&A transaction versus the small business sale transaction.
This affects both the cost and the involvement of professional personnel on both the accounting and the legal side for support to the parties involved. EFA knows where to go for this type of professional support and how to navigate the transaction for the benefit of either party to the transaction.
| Selling the Business | Buying a Business |
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