selling a business
Ad Astra Equity
Our role as your advisor is to educate you on all your options, determine your goals moving forward, and work with you to create an exit plan. If the timing isn’t right to sell your company, we will not pressure you into doing so.
It may be three months, or three years down the road until you are ready to sell; and by working with us on a success-based fee only, you will be able to take your time during the planning process to feel confident the exit is done right.
Before AAE can begin the marketing process, it is important for the team to understand your timeline and goals. First, we will walk through each step of the M&A process in deeper detail to help give you a thorough understanding of what will take place in the months ahead. Next, we will go through all potential variations and the mechanics behind your potential transaction, with an eye on exceeding your goals and objectives.
For us to perfect the marketing of your Company, the AAE team needs a thorough understanding of it. This will require us to gather important information about both qualitative and quantitative aspects of your Company. We protect our clients’ confidential information and protect your reputation with employees, customers, and key knowledge or process of the business and industry.
Developing Marketing Material
Once the information has been gathered & questions answered, our team puts together two documents that are used to market your company to potential buyers.
The first document is your “Blind Profile,” which is an overview of your Company’s high-level information – highlighting the important investment merits. This document is “blind” meaning that it does not include any confidential or identifying information. We protect things like your name, exact location, and any further details that would give away who you are. The Blind Profile is shared with a broader base of buyers, to gauge interest and find the most serious parties who would be a good fit for you and your goals.
The second document is the “Confidential Information Memorandum” or the “CIM.” This is a much more in-depth report, giving detailed information about the intricacies of your company and investment proposal. This document is only shared with buyers that have a Non-Disclosure Agreement (NDA) in place and would be a good fit to meet your goals and blend with your culture.
Going To Market
Once the marketing materials are completed, Ad Astra will begin marketing your company. First, we work with you to identify the characteristics of a potential buyer for your Company. We use this information to develop a robust buyer list. After this list is compiled, we begin by sending out Blind Profiles to buyers on the list. The interested parties will inquire further, sign NDA’s (if there is not one in place), and the CIM will be sent to that respective buyer. After reviewing the CIM, buyers who have shown a high interest in your Company will reach out to our team to further inquire about your Company via a management meeting. We conduct some of those in person and some over virtual calls. You are still free to run your business as we make and receive hundreds of phone calls to build a competitive landscape.
Evaluating What You're Worth
At this stage in the process, we will counsel sellers on why the timing is right to execute now … or potentially request some patience to drive a better multiple in the near future. You will have “Indications of Interest” (IOI) in your hands by now. You’re at a crossroads and you have the real-world intel you need to make the right choice. Sometimes our advice is to address expenses or boost revenues before completing a sale. If we think 12 months could help leverage higher multiples, we will help you weigh a bird in the hand versus the risks of being more patient. In the end, we hope you match our sense of urgency if there is simply no legitimate reason to delay making a deal.
How much are you worth and what’s the right way to time your exit … getting to this phase of the process is only accurate way to answer both of those questions. Our process gives you those answers risk-free. Think of the difference in market intelligence versus the companies who claim they can put a valuation together on your company. You know how true the old saying is, “Your company is worth exactly what somebody else is willing to pay for it.” And now we know . . .
Now that we know what the market is offering and the direction we are heading, we will then determine if a value enhancement strategy is necessary by helping to identify key areas in which the business can improve its value. If we decide to pause, this helps our client drive their company in a forward direction so that when the day comes to sell, the client is prepared and ready to go to market. Ad Astra’s fee structure is dependent on getting you the best deal available, so our goals are aligned. If that means waiting 6 or 12 months to re-market your business, we have the patience. The evaluation and advice we provide allows our clients to remain engaged with our firm, at no risk, until the company is ready to re-market.
Once a buyer is properly acquainted with you and the Company, the highly interested buyers will submit offers via a Letter of Intent (LOI). Our goal is to bring you multiple offers from a pool of qualified buyers. That drives value and gives us leverage, while you choose the best offer and partner. The AAE team will walk you through each offer in detail and explain the ins and outs / pros and cons of each LOI.
Once you understand the offers and select the best potential buyers, then our team will start negotiations and begin to counter. Fast forward to your approval of an offer, and both parties will sign the LOI. Usually this is not a commitment to sell, but a commitment from the buyer to perform further due diligence on your company. They will request exclusivity from you entertaining other buyers for what is typically a 60-90 day period which allows them to perform due diligence.
Once the terms of the LOI are accepted and signed, the buyer will begin to perform due diligence. This process is comparable to an audit, where the buyer will perform an extensive analysis into your Company. They will make sure that everything presented to them was true, that nothing was left out, and there are no surprises or material changes that need to be addressed. During this time, the Purchase Agreement and definitive agreements (like new employment agreements) are drawn up by the buyer’s attorney. These are the legal documents that execute and bind the transaction. After your attorney and the buyer’s attorney go through several iterations of the documents, and they are acceptable by all parties, it is time to schedule the closing.
Closing The Transaction
On the day of closing, all parties will sign the document … the buyer will wire funds to you … they will take over the Company … and the transaction is complete. As we are purely a success-fee based firm, we will be celebrating together after the closing of the successful transaction. This is how we differ throughout the entire process because we completely align our incentives with yours. You can trust that we are always acting in your best interest to maximize the deal and find a partner who will carry on your legacy properly.
Selling your business is most likely the largest investment decision you will ever make. We offer a unique agreement for our clients so that they are 100% comfortable knowing that Ad Astra is working in their best interest at all times.
Since we know our clients deserve the best of the best, we offer the following characteristics within our agreement:
- Success-based fee only. This means that you, our client, will not pay any upfront retainers, monthly fees, or cancellation fees.
- Non-exclusivity. This allows you to market yourself with buyers that we have not identified to you.
This structure gives our clients a risk-free arrangement knowing that we will only be compensated if there is value given in return – a successful transaction.
Frequently asked questions
It doesn’t take much. Prior to getting engaged with us we want to take 30 minutes to a few hours understanding you, your business, and your goals. If you do not have set goals in mind, our job is to help you get there.
It may not be! By working with us on a success-based fee only model, will allow you to test the market and see if it is the right time to sell. You do not have to sell when we bring you offers, but it is never a bad idea to always have your finger on the trigger, in case the right offer and buyer come knocking.
We understand that business owners need to remain confidential from employees, customers, family, etc. knowing about a possibility of selling. We accomplish this by only working with you, or those you give us access to, and will only talk with buyers you have approved. We do not talk with anyone without your permission. If you allow us to talk with a buyer, we always require a Non-Disclosure Agreement to be signed, and the buyer only to contact us.
If you already have a buyer that you know you’re going to sell to, and have received a price you can live with, then probably not. However, there’s more to it then a buyer and a price. Talking with us, and allowing us to educate you in the discovery meeting, will ultimately help you determine if you need an advisor or not.