It’s a surprise to many, but now is a great time to sell a business. Premiums are being paid.

How can this be?

First, there’s a massive supply-demand imbalance – lots of buyers and not many sellers. Private equity groups and strategic buyers are as aggressive as ever and hunting for acquisitions, but many would-be sellers are waiting due to the false belief it’s “not a good time.”

Second, the cost of debt is at an 80-year low. Shockingly low. Business purchase transactions are funded primarily with debt. Lower interest rates mean higher prices can be justified without sacrificing return on equity. And yes, commercial banks are lending.

Deals are getting done. Transaction volumes for 2011 are well ahead of last year’s pace, according to Mergerstat.

Third, taxes rates will probably never be lower. Wait a few years to sell and Uncle Sam will likely take a much larger bite.

Valuations continue to be based on the proven profit-generating ability of the business, and although prices – or “multiples” – are higher across the board, a healthy spread remains between deals – depending on the characteristics of the business. In addition to consistent profits, buyers tend to value customer diversification; management teams that are proven, stable and willing to remain; growth; niche products and markets; strong brands and proprietary products; growing industries and size.

Yes, larger businesses – in terms of revenues and profits – go for higher multiples.

Businesses with annual profit under $1 million are generally being purchased by individual buyers who live in the geographic vicinity of the business. These buyers will almost always run the business they purchase, and they can be a little harder to locate as they swiftly enter and exit the market. They can also be a little more of a challenge to work with. Most are inexperienced at buying.

Businesses with higher profits will tend to sell to private equity groups or industry buyers. These buyers are easier to find because they tend to stay in the market for long periods and make efforts to make themselves known.

What’s the key to getting absolute maximum? Very simple: multiple buyers “worked” simultaneously, with urgency. Multiple bidders push values higher, and offer prices will align themselves along a bell curve. Only by having all the offers on the table at one time can the seller identify the one that’s “furthest out to the right,” and choose it.

Important as well, by dealing with all the buyer prospects simultaneously the process is significantly shortened, which is critical for confidentiality. Start the process and complete it quickly.

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The federal government, via Small Business Administration loan guarantees, makes it easier for bankers to say yes. Interest rates are very low, which lowers the cost of debt financing and raises the purchase price that can be amortized. Banks just need sensible deals, just as they always have. A sensible deal is one that cash flows with a reasonable cushion (the exact amount hinging on risk factors such as volatility of earnings) and also has a meaningful secondary source of repayment, i.e., collateral or a good personal guarantee.

Equity contributed by the buyer will reduce the amount that must be borrowed and thereby improve the cash flow, i.e., “bankability” of the deal. And when the sum of the equity contributed and debt that can be borrowed falls short of the purchase price, the only way to make it up is seller financing. Most deals include some seller financing. That’s just the way it is. Yes, and the bank will want the seller note and payments subordinated to the bank.

“Banks get a lot of flak as being unfriendly to business, unjustifiably in many cases, in my view,” says Brit Callahan, a private business owner. True, banks are not set up to take much risk. They earn a slim profit on each loan, and one bad loan can wipe out profit earned on hundreds. “Many people get confused between equity investors and commercial lending institutions,” Britt adds. “Equity investors are ‘partners’ of the owner as they are in the same position, as holders of equity. It’s referred to as risk capital because they take larger degrees of risk. They only get what’s left over after the liabilities and cost of the same have been paid. As compensation for their more risky position, they have the chance to earn returns far in excess of their lenders.”

Cash Flow Is King

“It’s extremely difficult to sell a business that is not making a profit,” says Blayne Frieden, dealmaker with Acquisition Advisors. “Buyers just aren’t very imaginative. They assume what the business is doing now (and in the recent past) is what the business will do in the future. So if your business is performing well, this works in your favor. Storm clouds may even be on the horizon, but you will likely be able to get a deal done based on current (recent) cash flow. But if your business is not profitable, it’s almost impossible to sell the potential,” Frieden continues. “Try and you’ll almost certainly waste time and energy, unless you’re willing to give it away.”

And so the rich get richer. Those with profitable companies today can sell for a bit of a premium. This is because buyers of all types — individual, industry and private equity — are “out there” in great quantity; they just want profitable firms. Those earning profits today have the opportunity to sell for nice valuations as a multiple of cash flow. Owners of unprofitable businesses are stuck until they succeed in establishing a track record of profit.

Buyer Types and Selling Prices

“Much is written about business purchase prices and multiples,” says David L. Perkins, Jr., also of Acquisition Advisors, “but it’s not that darn complex and it doesn’t fluctuate all too much over time.“ Businesses with less than $500,000 in annual earnings almost exclusively sell to individual buyers at multiples of EBITDA in the 2.5 to 4.5 range, depending on risk factors and rate of growth. Private-equity groups and corporate buyers (primarily peers and competitors) will begin to enter the picture as possible buyers as annual EBITDA exceeds $500,000 but don’t become real players until annual profits exceed $1,000,000. Purchase prices (for all the non-cash assets and the assumption of working liabilities of a business) are in the 4x to 5x range. Higher growth rates can command higher multiples, as can synergies with the buyer. When annual EBITDA exceeds $3 million, the industry, i.e., corporate and private-equity buyers, come out in full force. These are the deals that have been bid up of late because of the supply-demand imbalance. Multiples of 6x are now pretty common, and growth and synergies can raise prices further. Look at it this way: It’s a reward for being able to operate profitably during a very weak economy.

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It’s a fine time to sell a business. Nothing is holding you back except, well, the performance of your business. Many businesses, of course, are struggling because of the moribund economy. Unfortunately, business salability and sale price are a function of current and near-term profit performance. There’s just no getting around it. If your business is performing well and you really want to do something different, it’s a fine time to exit. And you can expect to be rewarded for your business operating profitably during these difficult economic times.

We did not see this coming but Premiums are being paid for companies that are selling today. Companies that would have topped out at five or six times EBITDA three years ago are going for seven, even eight today.

The logic is simple — an imbalance of supply and demand.

On the supply side there are very few companies in play today. Most businesses have performed poorly during the recession and their owners are not proud of the financial performance. They know the time to sell is when profits are high.

On the demand side, the number of buyers has not declined from where it was three and four years ago. The numbers of individual buyers has held steady, maybe even increased. The number of industry (“corporate”) buyers has declined only slightly. The number of private equity groups has held steady and they’re more aggressive than ever.

The result is a huge imbalance between supply and demand that dramatically favors sellers. Lots of buyers picking over few quality companies available today. Buyers are paying, and sellers are receiving, premium prices. It’s times like these that deals get done. Business owners that wish to transition out at maximum value have, potentially, a window of opportunity here that might last a year.

The good news for management teams is that the most active buyers today are the private equity groups. They typically want and need existing management teams to stay in place. To continue to run the company. They typically will give existing and proven management teams stock options that will, in effect, give the managers a “piece of the action.” And in cases where a manager or managers owns a part of the selling company (or has other cash available to invest in “newco”), the manager can earn a nice payday and also roll some of his or her equity back into ownership in the business. Invest alongside the new investor at attractive rates. Most private equity groups welcome this — even encourage it.

Amazingly, today is a great time to get deals done. Whether it’s the business managers putting a deal together to buy out their owner or the owner working to cash out but wishing to place his loyal and tenured managers in an enhanced position going forward, today’s as good a time as there will ever be.

For assistance, call Acquisition Advisors today at 877-525-4321. Ask for a dealmaker.

What are these bugaboos that can rise out of nowhere to snatch defeat from the jaws of victory? Here are the most common:

Real Estate. In three classic situations, real estate can bite you. First, location is critical, but you can’t convey this to the buyer at a price certain for a sufficiently long time into the future. The second, you are obligated to a long-term lease, but the buyer wants to relocate the business. Third, you own the facility occupied by the business, the buyer wishes to relocate it, and you’re not confident you could find another buyer or tenant.

Unresolved Litigation. Business buyers avoid acquisitions that include assumption of unquantifiable liabilities. Unresolved disputes, litigation and threatened litigation are unquantifiable liabilities. That is, they carry a cost—in both time and money—that’s difficult or impossible to estimate.

Environmental Liability. Business buyers test the ground and groundwater beneath any business they consider purchasing. If contamination is found, the deal is as dead as the tree your letter of intent is made from. If there’s any chance you could have an issue here, talk to your lawyer about it—before you move to sell—going ahead and investigating the facts and remediating any problems.

Assignment of Contract. Any time a landlord, lessor, franchisor, distributor or licensor must approve a sale or transfer of control, the deal is not entirely in the hands of the buyer and seller. The time to avoid or minimize the clauses is when the agreements that contain them are established, or at the very least, well in advance of an attempted business sale.

Title Issues. Whenever rights to an asset are critical to the ongoing revenue stream or profitability of a business, buyers want total assurance that after their contemplated purchase they will have use of the asset. In some cases, assurance of exclusive usage is required. To the extent that buyers can secure use of the important asset but at an inflated price, the business purchase price goes down commensurately.

Unlicensed Use of Copyrighted Works. If you’re using a software program or other intellectual property on an unauthorized basis, your buyer may not be willing to “risk it” as you have been doing. Most buyers—during the pre-purchase audit—identify all intellectual property used by the company and then investigate whether the company’s use is authorized. If unauthorized use is identified, most buyers want to figure out the total cost of “going legit.” Such may include penalties plus ongoing costs. If the expense can be pinned down pre-closing, the purchase price can be reduced dollar for dollar. If it cannot, you may have a problem.

Debt Prepayment Penalties and Re-Price Triggers. Typically, interest-bearing debt of the seller is paid off in full at closing (by the seller, using monies paid by the buyer). If said debt has a prepay penalty, it could put a dent in the seller’s sale economics. Conversely, if the seller enjoys debt financing that’s attractive to the buyer, so-called change-of-control covenants could spoil the party.

Double Taxation. Uncle Sam takes a healthy cut whenever a gain is realized, but few sellers pull back from the closing table because of the taxes, that is, except when the selling entity is a C-corporation. C-corporation sellers face double taxation when the buyer buys assets. Yes, the seller could require the buyer to purchase the stock instead, but it’s not that easy. Buyers pay less when they are forced to acquire C-corporation stock. There are a few strategies for reducing taxes in a C-corporation asset sales (click here to read A Means For Reducing C-Corp Sale Taxes), but it’s an uphill battle. The best strategy is to convert to S-corporation status well in advance (eight or more years) of the anticipated sale date.

Minority Shareholders. If you don’t own 100% of your company, your deal could get held up. First, if the parties choose to effect the sale by purchase of stock, any minority shareholder could hold up the deal if you don’t have agreements in place that force them to accept terms agreed to by the controlling shareholders. This is because buyers almost always want to buy 100% of the outstanding stock. Second, minority owners can hold up asset sale transactions if a so-called super-majority provision exists in your governing documents.

When it comes to selling a business for maximum value, timing is everything. Start the process when the business’ performance is trending up, the economy is strong and buyers are aggressive. Get multiple buyers working and you’ve got it made—so long as you’ve cleared away the deal killers in advance.

Concentration risk is lack of diversification in revenue or profit sources.

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Kenneth F. Albright, a tax lawyer and transaction lawyer partner at the firm of Albright, Rusher and Hardcastle, contributed expertise to this article.

While every entrepreneur has his or her unique set of goals, virtually all share one in common — to one day sell for a boatload.

How much? Well, more is better. And so the question every business owner asks is: “What can I do today to maximize the eventual sale price of my business?”

To be sure, the answer depends on where the business is in its development and the time horizon of the business owner. But whatever the answers are to these questions there are things that can be done. Acquisition Advisors has put them on paper. A single piece of paper.

“When the goal is to get absolute maximum sale price, the task entails both building a business that possesses the characteristics desired by buyers and conducting the sale effort in a certain manner,” says David L. Perkins, Jr., managing director of Acquisition Advisors. “Our ‘Best Practice Map’ titled ‘Maximize Sale Price of a Business’ clearly and simply shows the important elements of both.”
Purchase your map today, click below.

The map format – as opposed to an article – allows a tremendous amount of information to be summarized in an easy-to-read format. The instructional “best practice” data is organized into four distinct sections. Each section is a phase in the journey that leads to the sale of the business at maximum value:

Phase 1: Build a Valuable Company
Phase 2: Plan and Prepare for Sale
Phase 3: Execute Sale Strategy
Phase 4: Post Closing

Under Phase 1, for example, two sections offer valuable guidance to business owners: “Accumulate Value Drivers” and “Eliminate Barriers to Marketability.” Listed are 18 value drivers and 11 barriers to marketability. Perkins explains, “To the extent a business owner can add the value drivers and eliminate the barriers to marketability listed, the value of his or her business will rise. Incidentally, the business will also enjoy enhanced profitability, lower risk and greater stability.”

Most of the map – indeed three of the four main sections – is dedicated to how a business owner should go about the process of preparing, packaging and selling his or her business.

“There’s definitely a right way and a wrong way to go about the sale of a business,” says Perkins. “Unfortunately, common sense does not lead the business owner down the right path. But, the lessons of experience have, over time, revealed the path that will take the business owner to absolute maximum sale price. The essential elements of this ‘best practice’ are displayed in our map.”

Purchase your map today, click below.

We’ve been reporting that premiums are now being paid for businesses that have managed to post decent earnings during the recession. One key reason is there are many more buyers than sellers right now. Lots of buyers fighting to win the few deals available means higher prices.

It’s a sellers market.

The swoon in supply, i.e. companies available for purchase, is due to the recession. Many businesses have performed poorly during the recession and their owners don’t want to sell when earnings have been down. Pretty simple.

On the demand side, the number of buyers has not declined from where it was three and four years ago. The numbers of individual buyers has increased due to layoffs. They’re competing to buy smaller companies. Competing for larger companies are industry (“corporate”) buyers and private equity groups. Sure, some companies have pulled back from the acquisition trail to focus on their own internal problems, but others are out in full force, hoping to pick up some deals at reasonable prices.

Private equity groups are organizations that buy companies. When the economy is bad they have nowhere to go. They have no interest in going elsewhere. What they like to do and want to do is buy good companies.

If private equity group buyers are not buying companies then they are neither making money nor having fun. So, as the numbers of sellers has plummeted over the past few years the private equity groups have seem slow times indeed. Sure, as the recession hit, many hesitated … waiting to see how things worked out … but most are now confident that the worst has been averted and they’re now back at work – buying companies. We’re getting at lease one call a day from private equity groups looking for deals.

If you own a company that has performed well during the recession you can actually get a premium today. That is, secure a price that is higher than you could have gotten two, three, four years ago. Call Acquisition Advisors today at 877-525-4321 and ask for an advosor.

The answer may be sponsorless recapitalization.

Traditional “Sponsored” Recapitalization

By way of explanation, common “sponsored” recapitalization involves a private-equity group. The equity “sponsor” purchases a significant portion of the equity of a business, from its shareholder(s), thereby providing them with a nice payday. For business owners who hire a mergers-and-acquisitions firm to represent them, the task — of course — is to secure the very best deal. Acquisition Advisors is the M&A firm of choice for owners of midsize U.S. businesses. This is because they are exceptional at quietly combing the market and garnering for their clients the very best deal terms.

The equity group “sponsor”, in almost every case, leverages the business to raise capital (as much as possible) that’s paid to the seller and thereby minimize the equity provider’s own equity contribution. The seller typically retains a minority ownership, but in some cases a controlling interest can be retained. Of course, how much the owner(s) sell(s) impacts how much the seller(s) receive.

Sponsorless Recapitalization

But some business sellers want to maintain control and/or minimize their dilution. In other words, they want to “cash in but not sell out.” Sponsorless recapitalization is raising a maximum amount of cash (that can be distributed to shareholders as dividend) without the owner selling any equity. This often involves use of mezzanine debt, also referred to as subordinate or junior debt, terms of which often include some equity-type incentives such as options for common stock or equity warrants. Even so, equity dilution is minimal. Cash raised by the owners, of course, is also lower.

One-Stop Shop

A few debt capital providers will contribute both senior and subordinated/mezzanine debt. Prudential Capital Partners, for example, headquartered in Dallas, is active in the lower-middle market. According to Vice President Tim Laczkowski, Prudential recently completed the sponsorless $57 million recapitalization of Clockwork Home Services. Prudential provided $32 million senior debt and $25 million in subordinated “mezz” capital. Laczkowski calls it “one-stop financing.” Certainly, dealing with just one institution in recapitalization of this type would be, and no doubt was, a luxury for the Sarasota, Florida-based owners of Clockwork.

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To be sure, most any recapitalization involves leveraging the business. So, whether you choose a sponsored or sponsorless recapitalization, your business will take on the financial risk that comes with leverage. But that’s the game of business.

Calculated risks

Once you take the cash home, it’s yours — so long as you don’t guarantee business debt. If you’ve been unable to extract yourself from the business debt guarantee, a sponsored recapitalization will almost certainly get you out of it. Will the unsponsored recap? It’s certainly possible, but – as you know – there’s no such thing as a free lunch.

Need to take some chips off the table but don’t want to sell out?

Reduce your risk and gain some experienced, well-capitalized and well-connected partners?

Consider leveraged recapitalization.

Typically, a leverage recapitalization involves:

• sale of equity
• borrowing or refinancing of debt

The equity purchase/sale can be for either a minority or control position. The seller can be any shareholder or group of shareholders selling all or just a portion of their holdings.

The term “recapitalization” comes from “capitalization,” which refers to how the company is capitalized (the “capital structure”). At issue here is simply how the assets (the left side of the balance sheet) are funded (the right side of the balance sheet).

Two main categories of capital are debt and equity. Quasi-debt and quasi-equity forms of capital also exist, such as preferred stock and mezzanine debt. Preferred stock typically has a claim on assets and/or earnings of the business that is senior to holders of common stock but subordinate to holders of debt. Holders of preferred stock or equity may also have a right to regular dividends, and the terms often allow common shareholders to pay off or buy out preferred debt holders at any time, with company funds.

“Mezz” is a form of debt capital subordinate to the senior debt holder’s claim on the assets and earnings of the business but senior to common and preferred stockholders. For this reason, mezz debt (also referred to as junior debt) is typically priced much higher than preferred debt but offers a lower overall return than is received by holders of common equity.

Sometimes, a business will grow to have considerable value. Owners, who often have most of their wealth tied up in the business, want to diversify. But they don’t want to sell. They want to continue to own and manage the company. So what are the options?

First, they could leverage the business with senior debt and, potentially, mezzanine debt. This would allow the owner(s) to take cash out of the business (subject to restrictions that may be required by the debt providers) tax-free. But there will certainly be limits on how much debt can be borrowed. The owner may take more “chips” off the table if he or she is willing to sell some of his or her equity.

Equity providers are often referred to as “sponsors.” Sponsors typically bring the debt and mezz capital providers. Sponsors are known for wanting to invest in companies that have in excess of $1 million in annual EBIT and proven management willing to remain. Private-equity groups can also bring a considerable amount of experience and contacts. Their aim and expertise is finding businesses and business managers, investing in them and making a lot of money. It almost always involves helping you grow your business rapidly and eventually selling the equity (with our without your equity portion) for big dollars.

Does it sound like a pretty good deal? It sure can be.

Recapitalization can also be a preferred method for buying out a controlling owner but allowing a remaining shareholder to continue to run the business. This type of deal can even be structured to increase ownership of the remaining shareholder(s).

So if you have a partner who wants to be bought out, or you simply want to have a little payday, consider leveraged recapitalization. Call Acquisition Advisors to confidentially discuss your particular situation, 877-525-4321. Ask to speak with a dealmaker.

“Should I stay or should I go now? If I go it could be trouble. If I stay it could be double.”

When business owner(s) need or want to take big money home, they have options.

Sell Out

Selling out is what most business owners consider when they want or need a nice payday. Implied is the sale of all equity interest in the business. This usually means transition out of active management of the business. Although this scenario will yield cash for the seller(s), retirement and/or departure from the business may not be what you had in mind. The good news is that there ARE other options for securing some liquidity.

“Sponsored” Recapitalization

A traditional, or “sponsored,” recapitalization means selling a 30%to 80% equity stake to a private-equity firm (“sponsor”). Almost always, the business is simultaneously leveraged with as much senior and subordinate debt as the business can handle. This type of transaction is commonly structured:

• with the owner-seller and/or the existing CEO or management team continuing to run the company
• to allow the owner-seller to take a maximum amount of money off the table
• so the owner-seller retains a material ownership interest

The liquidity event enjoyed by the owners under this type of transaction will be less than the 100% cash-out scenario, but it can be as high as 70% or 80% of what would be possible with the 100% sale, and the benefits to this approach are evident. For companies that are healthy, growing, and can attract the right equity sponsor, it’s not unusual for a seller to retain, say, a 20% interest that’s eventually worth as much or more than was his or her 100% interest.

Recapitalization is also a dynamite structure for the business owner who has a talented and loyal manager or management team that the seller wishes to reward. By finding the right equity sponsor, the manager or managers can gain some experienced and well-capitalized partners, continue to run the company, and increase their share of ownership.

If you’re interested in confidentially discussing your options with an M&A expert, call Acquisition Advisors at 877-525-4321. Ask for a dealmaker.

“Sponsorless” Recapitalization

A sponsorless recapitalization is recapitalization without an equity sponsor. Said in another way, it’s a recapitalization that minimizes the equity given up by the sellers. But it’s a little more aggressive than the simple debt-borrowing strategy below. This is because mezzanine capital providers are used, and a small equity interest is given up in the form of equity options or warrants. This is preferred by business owners who want to maximize their liquidity event – and get more than is possible via a simple senior debt round – while minimizing equity dilution.

Simple Debt Borrowing

Of course, every business owner can leverage his/her business to provide liquidity to fund a cash dividend. Currently, dividends are taxed at the same low rate as capital gains, so it’s also tax efficient. This option is for those who want to retain 100% control but need liquidity. The payout is typically less than 30% of what could be obtained by a total sellout.

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If you want or need to take some cash out of the business for your personal liquidity needs, it’s not a black-or-white decision – sell or not sell. At least not for businesses with $1 million or more in annual earnings. Consider simple debt borrowing or recapitalization: sponsored or sponsorless.

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Liquidity Options Example

Assume your company has the following characteristics:

• $10 million annual EBITDA
• Modest growth, meaningful diversification
• $60 million equity value
• No interest-bearing debt outstanding

Here’s a sample of what each of the liquidity options might yield:

^{* gross (pretax and pre-transaction fees)}

^{** equity taken by mezzanine capital provider typically in the form of options or warrants}

Selling a business is a sales endeavor, one that’s quite involved, at least when the mission is absolute maximum sale price.

The sale of a business is not like the sale of a house or car. Houses and cars exist in great quantities and are sold based on comparable sales data. Businesses are fewer in number and each is unique. There are no comparable sales data.

And here’s the good news for owners of businesses with more than $1 million in annual profit: Buyers are numerous, have plenty of money, will travel, and are prone to let their considerable egos influence their decision.

Yes, selling a quality business that’s well established, profitable, growing, and has a proven management team, is more like selling a fine work of art or representing a professional athlete. Packaging, process and dealmaker skill can add significantly to the sale price.

Think of your business as the fuselage of a rocket ship. It has value. It’s been carefully constructed at considerable time and expense. It can carry people into space and contains all the equipment and technology necessary for outer-space flight. But just as a rocket cannot fly without engines, a business cannot be sold without packaging, process and dealmaker skill. At least not successfully.

Enterprise Value:

A business has intrinsic value. Book value, if you will. Dealmakers, private equity groups and venture capitalists call it Enterprise Value. Keeping with our rocket ship analogy, Enterprise Value is the value of the ship without its rockets. It has value as it sits on the launching pad but it’s not going anywhere. For this reason, its value is considerably diminished.

Business owners who try to sell their business without preparing a professional package, or by waiting for buyers to knock on their door, find themselves sitting in their fuselage without engines. No thrust. No movement toward an exciting destination.

Packaging:

Much more than simply wrapping up the information and adding some pictures, business buyers want to see certain things. See certain data presented in a certain way. So experienced sell-side M&A advisors craft their packages accordingly.

Experienced, serial buyers of midsize businesses value their time to an incredibly high degree. So, they’ll tend to buy – and pay more for – businesses that are packaged and represented in a professional and orderly manner. This is especially true with private equity group buyers. They are not content buying a business. They want to buy many businesses. Many each year. They want to close a deal and move on to the next. To them, packaging and process matters and they will pay for it – in the form of a higher sale price. Even so, the information they want and need is extensive. Skilled sell-side advisors know what information buyers want and how they like it packaged.

Finally, with respect to packaging, is the ability to provide the data to many buyers simultaneously. Maximum value comes from working many high-quality buyers simultaneously. The packaging must accommodate this.

Process:

In concept, the process that maximizes sale price is simple. Identify the best buyers in the world for the particular business and then work them against each other, simultaneously. It takes a lot of work, time, energy, communication, experience and skill. The results, when done right, are literally golden.

Dealmaker Skill:

Shocking as it may be, buyers don’t like to be “worked.” They like to call the shots. Get things their way. If someone is getting worked, they like to be the one doing it.

Most experienced buyers of midsize companies are smart and confident. Strong personalities as well. They don’t like to simply be run through an auction process where the highest bidder wins, so here’s where the dealmaker skill comes in.

What does this mean for you, the prospective business seller who desires absolute maximum sale price? Secure the representation that can maneuver in this environment and win. Pick well and you can literally see magic at work. But hire a dud, and your rockets stall and you land in the sea.

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In summary, a business is like the fuselage of a rocket ship. It has value sitting on the launch pad but won’t make progress toward its mission of maximum sale price without the powerful triple engines of packaging, process and dealmaker skill. So if you have a proven, profitable business with more than $1 million in annual profit and you wish to sell for the absolute maximum, find an M&A firm that knows how to maximize sale price. That can power your journey to maximum sale price through skilled and savvy packaging, process and dealmaker skill.