Are You Planning to Buy or Sell a Business?


Genesis Business Solutions offers a full range of services to help buyers and sellers transition their business ownership. We work closely with many business brokers and real estate professionals and provide additional value added services, far beyond just finding a buyer, like business valuations, structuring advice, assistance in negotiating deal terms and coordinating due diligence. By working with us both Buyers and Sellers can benefit as we provide a unique dimension in the transaction process.

 

We work closely with intermediaries that confidentially bring buyers and sellers of businesses to us. We are experienced in valuing and marketing businesses. Our role is to (1) value a business, (2) package and market that business, (3) play a role in the negotiation of the terms of sale and (4) guide buyers and sellers through the process of due diligence and business transfer. We also provide access to all the related professional and financing services required to facilitate a successful closing and work collaboratively with other professionals as we have found that the best exit plans are developed and achieved by a team. The exit process we follow ensures that an owner and their family are able to accomplish their personal and financial goals.

 


Buying a Business:


The key to successfully buying a business is to fully prepare and investigate.

 

Questions that need to be asked include:

  1. What's the future of the product or service? Are sales expanding?
  2. What about location? Are any zoning changes planned?
  3. Is there an established market with a good repeat customer base?
  4. What about the labor situation? Will the key personnel stay? Must salaries be adjusted?
  5. What is seller's role and will he train and assist post-sale?
  6. What about warranties and liabilities?
  7. How did you value the business?
  8. Is working capital included in the purchase price or will you have to come up with more money?

We can can help with many of the above items, and can help identify suitable targets, to value those targets, to negotiate the terms of the acquisition and to arrange financing for the purchase.

Acquisition Transaction Services

We can also provide the following services for clients that are in an acquisition mode:

  • Identify and contact target companies and ascertain whether there is an interest in selling;
  • Obtain financial, operating and legal information to assist the Client in its review and assessment;
  • Provide assistance and advice on the feasibility, form and structure of an offer, and pricing strategies;
  • Assist in conducting negotiations regarding the acquisition;
  • Assist in the preparation and oversight of closing documentation for an acquisition transaction.


Selling a Business:


Pre-Sale

Selling a business is a complex and multifaceted event that many business owners have never gone through. The use of an experienced advisor is highly recommended throughout the process because of the complexity and the specialization needed in today's business, tax and regulatory environment. The process typically lasts six to eight months but in some circumstances may take longer. The earlier the options are considered the better. A big mistake that owners and families make is not considering what they lose by simply waiting for an event to become a high probability before they begin planning for it. We provide recommendations on the optimal steps for every part of the process and often become constant advisors to the business owner until the conclusion of the sale.

In the months preceding the sale, an owner's energy needs to be focused on the preparation of the business for sale. It is important to fine tune the business to improve profitability and thus the investment case for a future investor. Management and staff contracts may need to be strengthened (and put properly in place sometimes for the first time). Sometimes there is also a need to properly separate personal assets (especially real estate) from the business for tax reasons.

Confidentiality

Confidentiality, for our clients, is perhaps the most important element that must be considered during the sale process. This is clear from a business perspective; competitors, employees, suppliers all have their own vested interests. Information leaks at any time can harm the business, either competitively or at the relationship level with employees, suppliers and customers. Once the sale process has begun, information control mechanisms, must be an integral part of the process. During the pre-sale period, information related to, or that could be perceived as indicative of, a sale must be carefully controlled.

One of the reasons for the importance of confidentiality is that each business phase can demand conflicting strategies. For example, when developing a business, tax minimization is generally a clear priority. Often, this requires presenting financial statements and asset values at their lowest market values. However, when selling, showing the highest values is obviously preferable. Business owners need to appreciate this conflict and the associated tax liability issues they may face if the presentation is not handled properly and confidentially.

The Process we follow to help Sell Your Business.

Step 1 - Price the Business For Sale

The first step, is to review the last four to five years financial statements. We provide you with our "Asking Price" opinion. Our valuation is based on the financial analysis of the business and current market conditions (particular to your industry). This is used to defend the price of the business to buyers and their advisors and is also used by banks when it comes to financing the acquisition. We use all the traditional valuation methods standard in the industry and look (among other things) at the history, at the earnings and at cash-flow projections.

Step 2 - Package and Market the business

Most businesses are unique. We design each client's marketing program from scratch based on that client's unique business and personal objectives. We try and think "outside the box" as to who the best buyers may be. We actively market your business in a confidential and controlled manner and prepare all the relevant information. To attract the attention of financial and corporate buyers a company must be marketed in a very targeted way and presented in a format that these types of buyers expect.

We analyze the market that you operate in, your customer base, your competition, human resources, future growth potential and present your business in the best possible light, with all relevant information properly presented. We confidentially expose your business to as many qualified buyers as possible through targeted advertising, direct contact with industry and synergistic buyers, contacting individual buyers, private equity groups and other intermediaries looking to buy businesses that we have previously worked with.

Marketing a business requires careful thought and planning. We make direct confidential contact and initiate dialogue with buyers. We establish that any potential buyer meets an appropriate level of expertise and have the financial ability to proceed. All potential buyers execute a binding Non-Disclosure Agreement. The marketing material we provide them with explains the business clearly and in detail - its history, its assets, all things included in the sale and also information relative to competition and potential growth opportunities. We also screen potential buyers as no one wants to waste time or money talking or working with unqualified buyers.

We convey information to the right contacts at the appropriate time, we maintain contact and forward updates until we have a genuine interest from a qualified buyer to prepare an offer to purchase. We consult and work with each party (in conjunction with their respective legal counsel, accountants and bankers) to ensure the beginning of a successful transaction based on clear understanding and agreement of all the issues involved.

Step 3 - Negotiate Terms

Awareness of tax, legal and employee issues and creative solutions to them are crucial. We negotiate and help in the preparation of an Offering Document, which establishes the terms and conditions that become the cornerstone of the final deal, which all parties and their advisors work towards. Being aware of and overcoming the obstacles to find an agreeable and fair deal is a key role we play. Issues related to employees, financing, working capital amounts, holdbacks, non-competition, training and transition must all be satisfactorily managed.

Step 4 - Close the Deal

We manage the due-diligence process including associated advisors (brokers, lawyers, bankers and accountants) in order to conclude the transaction. From our experience we know and can anticipate what information a buyer will likely request to validate the legal and financial condition of the company, its assets, employee status, etc. We work with our clients to compile this data so that there are no surprises at this stage. Due-diligence can take from two weeks up to two months and involves the increased presence of advisors who introduce new perspectives. The need to maintain momentum at this stage is crucial and is one of the key roles we undertake.

Building a business into a valuable, going concern takes years. However, the perceived value of a business by a buyer may be at odds with that of the seller, especially one who has been deeply involved with its creation. Companies with long-term contracts, a history of growing revenues and profitability and potential for continuing cash flow in the future will always be attractive. Any business, however, can suffer from a few bad years or other issues that may complicate negotiations, leading a potential buyer to demand a lower price. Again this is why preparation for a sale is so important to ensure that specific (and potentially problematic) issues have been managed beforehand. Once a sale is initiated, the due diligence process will bring out all outstanding issues, but the ability to control them at that time will likely be more limited.

Problems typically encounter include:

  • Lack of separation of real estate assets from a holding company when the sale of the holding company is desired, but the sale of the real estate is not.
  • Tax issues that were appropriate in the context of the business many years ago, but that may lead to tax liabilities under the audit conditions required at sale.
  • Undervalue their companies leaving hard-earned wealth on the table.
  • Lose control over the exit process.
  • Lack of shareholder agreements.


Buying or Selling, We can Help

We enjoy working with entrepreneurs - people that are passionate about their work and their life. This applies to both those that are ending their careers and those that are just beginning. Sometimes it becomes necessary or prudent to sell a family-owned or medium sized business, at the same time new entrepreneurs or business immigrants want to go out on their own and buy a business they feel they can grow quickly. To them the benefits of an established market niche and cash flow cannot be under estimated and can be very appealing.

The ability to professionally and objectively present a business, introduce a qualified buyer and negotiate and conclude the sale transaction confidentially is a valuable service for business owners who have never completed such a transaction before or who only have limited experience and knowledge. There are many business owners who expect to sell their businesses in the next five to ten years. Businesses do not sell themselves. The more planning and preparation you do the better the chances of a successful conclusion.

 

For more information or to get a custom quote, please Call (604) 628-1976 or eMail info@genbussolutions.com

About Us:

Genesis Business Solutions (GBS) provides specialized business and financial planning, marketing and advisory services to small and medium sized businesses in the Lower Mainland. If you want to start or grow a business, we’ll show you how to start making money doing what you’re passionate about. Whether you’re launching a lifestyle business or a global brand, we know how to make your ideas come to life and make sense. We will get to know you, your business and your numbers and help you put your ideas and vision on paper and make your business goals possible. (Find out more)

Genesis Business Solutions
Suite 2300-2850 Shaughnessy Street
Port Coquitlam, B.C. V3C 6K5

eMail Contact info@genbussolutions.com
Telephone Contact (604) 628-1976


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