Frequently Asked Questions

• Do I need The Transition Companies or can I sell the Company myself?
  
• How do I present my Company's financial information?
  
• Can The Transition Companies advise me with valuing my Company?
  
• How important is confidentiality and can it be maintained during the process?
  
• How long will it take to sell my business?
  
• How long will a buyer expect that I remain with the Company?
  
• Is my transaction likely to be a stock sale or asset sale?
  
• What percentage of the purchase price am I likely to receive at closing and how is the balance likely to be financed?
  
• What is the first step we need to take to move forward?
  
• Should we negotiate with more than one buyer at a time?
  
• Will The Transition Companies be with me throughout the entire M&A process?
  
• Does The Transition Companies specialize in any one industry?
  

Do I need The Transition Companies or can I sell the Company myself?

The sale of a company is typically a once in a lifetime event for a business owner. Most owners cannot afford to experience a learning curve during the sale of their most important and valuable asset.

The Transition Companies provides unique insight capturing the intangible value of the company while packaging the Company as viewed from the buyer's perspective.

Our access to premium buyers is unparalleled. A typical target buyer list can be 400 to 500 prospective acquirers long including international acquirers.

95% of corporate buyers would prefer to deal with an investment banking firm such as The Transition Companies, even though they know they will pay more for the Company. GE, for example, looks at 1000 companies to acquire one. Investment banking opportunities receive top priority.

Hiring The Transition Companies tells the premium buyer the Seller is prepared and committed. Premium buyers will only invest time resources investigating an acquisition opportunity if they are convinced the seller is prepared and committed.

In a recent study of closed transactions, in only 8% of the time had Company owners even heard of the eventual buyer of their business. Those sellers would have missed 92% of the market.

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How do I present my Company's financial information?

Proper analysis and presentation of financial information is a crucial step in The Transition Companies M&A Process. Financial statements are typically prepared for tax purposes, and do not accurately reflect the true profitability of the company. The Transition Companies' M&A professionals work closely with owners to "recast" the Company's financial statements so that potential buyers accurately realize the true economic value of the company.

Recast financials combined with our analysis of the company provide the basis for showing buyers the true potential of the company. Greater potential translates to higher value.

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Can The Transition Companies advise me with valuing my Company?

Our extensive experience in closing transactions enables us to keep up-to-date and highly informed regarding business valuation. The Transition Companies has access to comparative data relative to recent transactions in a wide range of industries. Additionally, The Transition Companies' professional staff has valued well over a 1000 companies across industry lines. We have the insight to provide a market oriented valuation.

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How important is confidentiality and can it be maintained during the process?

During The Transition Companies M&A Process, it is imperative to take measures that will guard against competitors, employees, vendors and customers learning of the impending sale. No prospective buyer ever receives any information, including the identity of the Company without execution of a Confidentiality Agreement. Buyer visits, where possible, are held off site or after hours. Due diligence is part of The Transition Companies M&A Process.

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How long will it take to sell my business?

The Transition Companies M&A Process generally takes from 6 to 18 months to complete depending upon a variety of factors. The process is complex to execute and manage properly. Given the personal, business and market variables, The Transition Companies recommends opening a relationship within 3 years prior to a planned sale.

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How long will a buyer expect that I remain with the Company?

Depending on the nature of the business and owner dependency, transition periods range from 3 months to 1 year. It is common for the former owner to start the transition period on a full-time basis and then phase into a part-time consulting role. Initial transition periods usually do not include any compensation whereas subsequent consulting will involve compensation. Transition periods, are in all cases, part of the deal negotiation.

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Is my transaction likely to be a stock sale or asset sale?

Buyers are usually interested in structuring the deal as an asset type transaction. In this case the buyer is still buying the company. Buyers are primarily concerned about inheriting any potential or contingent liabilities flowing from the past operation of the Company. An asset transaction also enables the buyer to restate the value of the assets to fair market value and receive subsequent tax advantages.

Sellers generally prefer stock type sales of their companies. If the Company is a "C" Corporation, it is advantageous to sell the stock of the Company to avoid being taxed both at the corporate and individual level. If the Company is an "S" or "LLC" corporation, the tax liability is less than a "C" corporation.

There are a number of creative techniques in deal structuring that must be considered in order to minimize the tax impact for both buyer and seller. It is imperative to retain the advice of a CPA that is familiar with these strategies.

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What percentage of the purchase price am I likely to receive at closing and how is the balance likely to be financed?

A business owner should receive a substantial portion of the purchase price at the closing. A third party lender can significantly increase the percentage received at the closing. Most transactions involve "structure". Deal structure may include cash down, promissory notes, extended consulting agreements, employment agreements in excess of market rates or contingent pay outs. The key is to determine the most beneficial deal with the most suitable buyer and successor.

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What is the first step we need to take to move forward?

Consult with The Transition Companies professionals. Is the timing right from a personal, business sector, industry, company performance and overall economic perspective?

If considering selling the company within the next 3 years, now is the time to meet with The Transition Companies. Timing and being proactively informed and prepared will make a substantial difference in the proceeds from the sale.

Initially, The Transition Companies will analyze all aspects of the Company to develop a professional offering memorandum known as a Confidential Business Review ("CBR") The CBR will incorporate the tangible and intangible aspects of the business and capture it's upside value. Professionally prepared material sets the tone and first impression with premium buyers.

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Should we negotiate with more than one buyer at a time?

The Transition Companies M&A Process is designed to create a confidential limited auction that will maximize sales proceeds and proactively allow a seller to choose the best successor. With multiple potential buyers, the seller is in control. The Transition Companies actively negotiates with numerous buyers simultaneously. Having multiple options increases negotiating strength through less dependence on any one potential buyer. Experienced buyers are less likely to attempt to take advantage of a situation if they perceive that there are additional interested parties.

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Will The Transition Companies be with me throughout the entire M&A process?

As complex as analyzing and preparing a company is to enter The The Transition Companies M&A Process, a great deal of The Transition Companies' expertise is required during the closing phase of the transaction. Once the parties have agreed on terms for a transaction and signed a Letter of Intent ("LOI"), the transaction enters the closing phase. During the closing phases the buyer conducts a due diligence review and the various contracts are written that reflect the terms from the LOI. It is during the closing phase where all details and final negotiations take place.

Although the transaction terms have been agreed upon, this is the most critical phase of the M&A process. The Transition Companies’ professionals have the experience and expertise to recognize and begin solving issues before they occur.

The Transition Companies will assist and advise our clients through the entire process to a successful closing of the transaction.

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Does The Transition Companies specialize in any one industry?

The Transition Companies specializes in the confidential sales of profitable, successful, privately-held companies valued between 2 million and 50 million dollars. We provide our expertise across industry lines including manufacturing, distribution, services and technology. Specialization serving this market segment is more critical than specialization serving any one industry.

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