How long does it take to prepare my business to go to market?

We don’t just market a business – we prepare it to be “sold”.

Every company needs to have ‘preparation’ work done, and businesses which sell for over $500,000 will likely have sophisticated buyers that are expecting a well prepared and presented business.  No ‘wild’ errors, no missing data, and no subterfuge…in short a business that is ready to be purchased.

This preparation work doesn’t come easy or quick, and we’re not going to lie, there’s a bit of what we call “brain damage” involved. Why is this so extensive? As stated before, sophisticated buyers who are purchasing large businesses need that level of detail. Additionally, most of the data compiled will be needed for a banker later in the process as well, so you might as well get it all compiled and ‘straight’ before we have a buyer (and banker) at hand because buyers more than likely are not just looking at your business, but at several others too.  Look at it like pre-due diligence.   Most of the time we have 4 to 6 weeks in the preparation and valuation of your business which also gives us enough time to work with bankers to work out deal structure…All of this BEFORE we go to market. We start with a basic request of financial reports which literally will take you only a couple of minutes to pull. Before we can submit to valuation we will create a 30 to 60 page report on your company (we call it a ‘profile’) which will take some time to compile the data and assemble, and we need your help to do it.  A couple examples of questions we ask are, how many hours a week do you work in the business, and what do you do on a daily basis.  The point is, this is really important information for a whole host of people who will be reviewing your company.

Real World Story:

Here is a real world example of a business I recently was considering purchasing.  I was reviewing a 1.5 million dollar company.  I signed the NDA and received some information on the company. The ad stated specific earnings and sales of the business. However, when I reviewed the information provided to me, those sales/earnings numbers were nowhere to be found.  When I asked the ‘broker’ for a breakdown of the discretionary earnings, he literally used a highlighter pen and highlighted some numbers on the report and faxed the report back to me.  I had to try to locate his ‘highlighted’ numbers in the report and add them up myself – It was futile – I never could come up with solid discretionary earnings using his highlighted numbers. I then requested an Excel spreadsheet so I could recast the reports myself. After several days of waiting, he finally sent the spreadsheet reports.  I went to work and found that over the last three years there was at least $20,000 to $75,000 (each year) in earnings that were not found by the ‘broker’ and were not even part of his add-backs to the net profit. There was no real package – he just provided a short one-page narrative and some Adobe pdf financial statements.  Clearly this business was NOT properly packaged and certainly NOT ready for market. The ‘broker’ had no idea if he could get bank financing and he really had no deal structure outline.  After reviewing several companies (that I personally tried to buy) in the last 6 months, this was the norm, and they were all businesses priced over $1,200,000!

The point is, properly packaged businesses have a better chance of selling FASTER and for more money, as well as lending solid credibility that you have a GOOD company to purchase.  In fact, we have had bankers contact us on multiple occasions stating that we have the best packages prepared on businesses they have ever seen, and on several deals these detailed profiles have been instrumental in getting the company sold quicker and with what we call less “brain damage”.