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Not Recommended for Companies with Sales Greater than $1 Million
PURPOSE: To provide a quick guide to business owners that desire to sell their business but do not want a significant portion of the transaction value to go to a business broker or M&A intermediary.
1. Have an idea what your company is worth. The most common rule of thumb is that buyers usually pay a multiple of EBITDA. The normal range is a selling price between 3 and 5 times EBITDA. There are exceptions to this rule, but if you have a main street business, you generally fall in that range. If you are a member of an industry association, they may be helpful to you in identifying industry multiples or resources that can help you determine a selling price range.
2. Create a blind profile. It is a brief summary of your company and is designed to communicate the key points about your acquisition opportunity without giving away your company's identity.
3. Have a Confidentiality Agreement or a Non Disclosure Agreement executed if a potential buyer shows interest in your company.
Dave Kauppi is a Merger and Acquisition Advisor with MidMarket Capital Advisors, LLC. MMCA is a private investment banking and business broker firm specializing in providing corporate finance and business intermediary services to entrepreneurs and middle market corporate clients in a variety of industries. The firm counsels clients in the areas of M&A and divestiture, family business succession planning, valuations, minority interest shareholder sales, business sales and business acquisition. Dave is a Certified Business Intermediary (CBI), a licensed business broker, and a member of IBBA (International Business Brokers Association) and the MBBI ( Midwest Business Brokers and Intermediaries). Contact Dave Kauppi at (630) 325-0123, email davekauppi@midmarkcap.com or visit our Web page www.midmarkcap.com.
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