Selling Your Business

Even the special terminology used in sale transactions is often unfamiliar and Segal can guide you carefully ensuring you are comfortable with the process and events.

Business Sale Strategies to Maximize Results

Selling your business is never something to be taken lightly. It requires a great deal of thought, planning and expertise. That business more often than not represents your life’s work and typically is your largest asset. Funds from the sale of your business could positively or negatively impact your retirement.

It starts with the decision to sell and ideally this happens several years in advance of the actual sale.

A special area of consideration is the tax implication of the transaction. We understand the tax tips and traps. We can help negotiate creatively to maximize your after tax transaction results.

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Some transactions in which we have been closely involved include:

    • A software company sold to a Fortune 500 Company for $18m
    • A U.S. manufacturer sold for $45m
    • A consulting company sold in the UK for $27m
    • A funeral home sold for $6m
    • A U.S. marketing company sold in California for $18m
    • A manufacturing business under negotiation for $75m
    • A publishing business sold for $5.5m

and many smaller transactions.

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Initial questions that clients put to us include:

  • What is my business is worth?
  • What drives the value of my business?
  • How is value determined?
  • How can I increase its value?
  • How do I prepare for a sale?
  • When is the best time for me to sell?
  • Who are the most likely buyers?
  • What data should I provide and when?
  • How do I minimize taxes?

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The process typically involves:

  • Confidential Information Memorandum
  • Non-Disclosure Agreement
  • Supplementary Data
  • Memorandum of Understanding
  • Due Diligence
  • Legals & Close

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What you get for your business depends on many factors including:

  • The number of interested parties
  • The “environment”
  • Their negotiating skills and strengths, and your team’s strengths and experience.
  • The terms of the deal
  • The type of buyer

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What drives the value of my business?

  • Leadership in marketplace
  • Brand or company reputation
  • Distribution network
  • Management depth
  • Customer base and loyalty
  • Employee knowledge
  • Minimal reliance on single product or customer
  • Perceived synergy to acquirer
  • Contracts

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So how is my business valued?

  • Earnings are first “Normalized”
  • Typically, summarized over the past 5 years
  • Any unusual circumstances are adjusted for.
  • An earnings multiple is applied using a High & Low factor and interest-bearing debt deducted.
  • Any redundant assets are added.
  • The result is an estimate of the fair market value of the equity.
  • This value can then be tested against similar transactions, asset backing, return on equity and return on capital employed.

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Tax considerations include:

  • Methods of Selling
  • Asset Sale vs. Share Sale
  • Bias of Purchaser
  • Step-up in cost base of acquired assets
  • No contingent liabilities desired
  • Bias of Vendor
  • Tax minimization
  • Capital gains exemption

Private Sale Process Graphics ›

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4600 entities in North America (100 in Canada) including:

  • Private Equity
  • Individuals
  • Venture Capital
  • Financial Institutions
  • Corporations

We can search by:

  • Location
  • Industry Preferences
  • Geographic Interest
  • Deal Size
  • Capital Under Management
  • Amount Invested Annually
  • Stage Preference
  • Minimum Investment
  • Minimum Company Sales

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Segal guided me through the process, negotiating on my behalf, clearly the architect of my sale. They not only successfully negotiated an excellent sale, but also supervised the creation of the purchase documents, interacted with the attorneys, and collected or created all the necessary backup information. They worked tirelessly, as always, to affect a brilliant outcome. I achieved more for the company than I ever imagined would be possible.

It isn’t often that I can unconditionally recommend someone. There is always some weak point or downside. However, I can unconditionally recommend Michael Daren. His integrity, intelligence, competence, and energy make him a unique choice for this role. You simply can’t do better.

Adrienne Albert
President, The Marketing Directors. Inc.,
New York