GBB Partners will request financial information including Profit Loss Statements, Balance Sheet, Inventory List, Property Description and History of the Company. Once we receive and analyze this information we provide a Most Probable Selling Price (MPSP).
GBB Partners use several methods to provide a value for your business or a MPSP. Our valuation includes the following methods Comparable Sales, Multiple of Discretionary Earnings, Excess Earnings and Discretionary Cash Flow (DCF). In some instances an appraisal will be required, in these cases we outsource the appraisal to a third party licensed to conduct such appraisals. Despite the valuation and appraisals it is important to remember that the value of a business is always the highest price a buyer will pay and the lowest price a seller will accept.
Once information has be received and a MPSP has been identified GBB Partners creates a representation agreement which spells out how a company will be marketing and the fees associated with the process.
The CIM is the marketing package for your company. It contains in depth information about your business including history, industry, financials, products/services and key personnel descriptions. It also contains in depth industry data and trends. The CIM is the first step in finding a buyer. Our network of large investors, strategic industry partners and Private Equity Groups (PEGs) receive hundreds of these CIM's a year - ours stand out because of our unique blend of content and design.
There are any types of buyers for each and every company. Some companies are looking to expand in to new regions and want to do so through acquisitions. Other companies operate in a static industry - one with little or no growth - and the only way to expand their business is by buying competitors. Lastly, and perhaps the most attractive, is the private investment groups who are looking a safe return on their investors capital. These groups typically want to buy a large stake of a company (80% or more) and allow the seller to retain the balance and continue to operate the business.
An LOI is an offer with conditions. It is an informal agreement where a buyer agrees to a price range based on a certain set of conditions. These conditions may be verification of financials, appraisals of real estate or agreed upon payouts. While the LOI is primary non-binding, it does verify that a buyer is serious since the verifying the conditions set forth require a commitment to capital.
Due Diligence (DD) is the period of time where all the claims made by the seller are verified. Is inventory what was claimed? What is the Net Work Capital (NWC) required to operate the business. NWC is a major condition of most sales since a normalized level is assumed to be part of the value of the company. Many owner/operators neglect to include that in their valuation but all buyers expect that level to be retained within the company.
Once both sides are in agreement on a price, transition strategy, capital structure and all agencies have approved of the transaction the deal is finalize and close is documented. In a good deal both sides walk away as winners - this is the true talent of GBB Partners. We make sure a deal is acceptable by all stakeholders.