We keep moving forward, opening new doors, and doing new things, because we’re curious and curiosity keeps leading us down new paths.” -Walt Disney
Developing the best strategic direction for your company and your future can seem overwhelming. As a business owner, it is important to constantly explore numerous opportunities and to research and understand the answers to all of your questions or doubts.
At The Stansberry Firm, we strongly believe in forward action and are dedicated to providing honest, dependable guidance to help business owners realize their goals and maximize the ultimate value of their companies.
Below are some of the frequently asked questions we receive about business sale, operational consulting and fair market business valuations. We are more than happy to speak with you one-on-one to further discuss these or any other questions you may have. All consultations are fully confidential and at no financial or contractual obligation to you.
This is the most common question we are asked and there is no simple, “one size fits all” formula or answer; it’s not fair to you or us to give you an “off the cuff” answer as to valuation. There are a number of factors to consider when rendering an opinion of value including revenue trends, composition/sources of revenue, cash flow/EBITDA, customer concentration, asset value and age, demographics of market, quality of company infrastructure (including facilities, management and many others).
If you are considering a sale of all or part of your business, we will give you our verbal impressions of both the value and marketability of your business, but we will need an in-depth discussion with you as the owner as well as some hard data. Contact us and we can discuss your specific situation at no cost or obligation to you. Within a few days of our discussion and after receiving the necessary data, we can give you a more accurate opinion regarding the value of your business.
For construction and industrial rental stores, you may also find our RER Magazine article about whether or not now is the time to expand or sell helpful and informative.
For owners looking for a formal valuation report regarding current value of your company, we recommend contacting us to discuss performing a fair market business valuation of your company. Based on our experience selling businesses, we give you an in-depth analysis of how a third party acquirer would view and value your business in an open market transaction in today’s market. We not only give an opinion of what we think the business is worth, but why. We can suggest ways to improve the value of your business. This service is most frequently used to pass ownership between partners, to an employee or family member, establishing a value for an estate or for divorce purposes.
Right now, the market is very good for business owners looking to sell. There are a number of active financial and strategic buyers; financing for acquirers is generally available and the pricing for transactions is good. The determining factors of whether or not it’s the right time to sell your business depends on the unique characteristics of your business and its performance over the past 12-36 months.
If you are interested in exploring the opportunity of selling all or a portion of your business, you need to fully understand your company’s position in the market, the ultimate sale price it would bring and what the likely structure of the transaction would look like. The Stansberry Firm specializes in business sale representation and we are more than happy to provide you with a free, confidential consultation to discuss whether or not now is the right time to explore a sale. Contact us to discuss your specific needs.
Our experience is that most business sales take about six months from the day we are engaged as your business sale representatives until the day closing papers are signed; however, some sales may happen sooner and some may extend longer. The Stansberry Firm’s typical contract has a six month life span because we firmly believe the marketing process should prove successful or unsuccessful by the end of the six month time period.
Normally, we expect the process of identifying a potential acquirer to last about three months, at which point we often have a successfully negotiated letter of intent between the buyer and seller. Once a letter of intent is signed, the due diligence process typically lasts about 60-90 days and the sale is finalized at the day of closing.
A business sale can be either an exit strategy or a way of taking on an investment partner for additional capital needed for accelerated growth or to lower your personal risk. In either case, the investment criteria acquirers seek is very much the same.
Most strategic acquirers (acquirers that already have complementary operations) are generally looking for a 100% buyout. A full buyout is a true exit from your investment, although many business owners may stay on for a transition period that ranges from a few months to a number of years. The future incentive for the owner may be becoming an integral part of management of the acquired entity and the ability to participate in bonus plans and overall incentives offered by the acquired company.
Financial investors may look to acquire less than a 100% stake in the selling business. Usually these investors wish to acquire controlling interest of anywhere from 51% to 90%, though a few groups may be comfortable with a minority percentage. These investors consider themselves “partners” with selling owners or management being “invested” both literally and figuratively in the future success of the business. They look to the business owner to continue to provide the operational know-how to to run the business while the investor provides strategic guidance and capital for future growth. Most of these investors will be looking to grow the business then sell again in a period of three to seven years. In an ideal case, where growth initiatives and operational efficiency have been fully realized, the business owner that retained the minority equity percentage can realize proceeds equal to or greater than the original sale to the investor group.
“I know that if The Stansberry Firm is representing the seller in an acquisition, we [the acquirer] will end up paying more.”-Quote from an acquisitions executive with a well known and active acquirer
“I was very impressed with The Stansberry Firm’s expertise, knowledge and contacts. They quickly brought several serious and qualified buyers to the table.” -Sam Lovett, Owner of Hebbronville Lone Star Rentals
With the rental industry thriving, there are many acquirers very actively seeking opportunities. Most industry acquirers have experienced, professional financial and legal teams that will naturally seek the lowest purchase price possible- with deal structure and terms falling in their favor. The business sale process is extremely complex, with key terms that need to be negotiated in order to not only guarantee you receive the highest offer, but also that the terms of the deal are in your favor.
Buyers have experienced professionals on their side; you need experienced professionals on your side. If you have been approached by an acquirer, we highly recommend you gain insight on what your company is truly worth by contacting The Stansberry Firm for a free, confidential consultation. We will also give you guidance what a potential transaction would likely look like and discuss other potential acquirers who could be approached as well.
We can provide references of former clients that you can contact, who will tell you that with our help, not only did they achieved the maximum sale price in their business sale, but we were able to bring multiple, qualified buyers to the transaction process. They will also share their experience that our involvement was “self-funding” and gave them piece of mind that their transaction was handled correctly.
Read the 6 points to consider when deciding if professional representation or self representation is best for your transaction.
“It’s not the size of the firm that represents your business that matters, it’s who’s leading the transaction and who’s giving the advice.” -The Stansberry Firm
A strategic advisor in your business sale should be your partner, someone who will dedicate the time to treat your business as if they were an integral part of the company. Moreover, your strategic advisor should be knowledgeable and experienced within your specific industry and be able to leverage industry contacts and knowledge to identify the best acquirer for your company.
The Stansberry Firm is a specialized boutique firm with specific experience related to the rental, distribution, manufacturing and energy industries. We are not a large corporate firm and cannot field a softball team with our staff, but we do have “corporate” experience, a large qualified and diverse buyer network, a proven track record of success and, we guarantee a very personalized turn-key service. Read more about how we succeed over a larger, general advisory group. We can also provide references of former clients that you can contact, who will tell you that with our help, they achieved the maximum sale price in their business sale. They will also share their experience that our involvement was “self-funding” and gave them piece of mind that their transaction was handled correctly.
Taxation can be very complex in a business sale and the amount of taxes you pay will depend upon the type of legal entity you have, the basis in your assets or stock and the overall structure of the transaction.
Taxation is one reason why we highly recommend considering professional representation in a business sale; The Stansberry Firm has experience with more than 100 business sale transactions totaling over $1 billion in transaction value. Our client companies can benefit from our experience, working in conjunction with your tax advisors, structuring the transaction to ensure you receive the maximum number of dollars from the sale of your business.
“The commonality we find among successful rental companies is that owners, management and employees are actively engaged and understand what the key metrics of the business are.” -Gary Stansberry
Cash-flow can be drastically affected by several different aspects of the business including payroll, rental rates, fleet management, sales strategies and facility costs and set-up, among many other factors, and often, maximizing cash-flow is a function of improving several of those factors. It’s important for business owners and management to understand industry benchmarks and practices in order to develop realistic goals that will help the company maximize cash-flow potential.
Our operational consulting services are designed to take an in-depth look at your company to determine the business’ strengths and weaknesses; we focus on operational and financial metrics that can be improved in order to develop the best strategy to increase cash-flow and competitive advantage.
The rental industry is thriving, attracting new investors, strengthening competitors and throwing many companies into rapid growth mode. In order to guarantee your rental business comes out on top, it is essential to understand your current metrics and be able to adapt rapidly while still complying with industry standards.
We consult with companies across North America, both small and large. By analyzing your present operations and applying our knowledge and experience with companies who have been in your shoes, we can help guide you in the right path. Whether your best expansion strategy is better managing your or expanding your fleet, adding to your sales team, establishing a green-field start, exploring acquisition of other rental companies or a combination of those options, we can work together to develop a solid plan for success.