The IBG Process: Nine Steps to Selling Your Business for Maximum Value
The IBG Process starts as we work to help you formulate solid answers to key questions.
- What is my goal in selling my firm?
- Are my objectives realistic in the real world market?
- Is now the best time to sell my business?
- How do I sell my business for the best terms and full company value?
- What changes will maximize the value of my business and help me achieve my objectives?
The IBG Process clarifies what’s most important to you as you sell your business. Is it price, financial structure, estate planning or maybe tax considerations? For example, we can position selling clients so that they can choose to take 80 percent of sale proceeds and also keep a stake in the business as it goes forward with new energy, more capital and additional resources, but no personal responsibility for business debts or risks. This gives you, as the seller, a big “second bite at the apple” by selling your retained stake for even more money after the business has grown in value.
Private business owners typically find that 80 percent of their net worth is locked up in their business and without real time market condition data can make poor decisions.
Private business owners typically find that 80 percent of their net worth is locked up in their business, and therefore inaccessible, according to survey. Accurately determining your company’s value is crucial to planning your estate and should be completed before exposing your business to the market. A company’s appraised Fair Market Value (FMV) is a theoretical minimum value to target when selling a business in the open market. IBG Business identifies the most appropriate synergistic, strategic, industry and financial buyers – that is to say, the best buyers, to generate business sales often far above a firm’s “fair market value” and under superior terms.
Market assessment starts with knowing your business’ value. In no other aspect of selling your business is there so much misleading advice and ill-informed opinions as in determining realistic selling values; everyone wants a simple formula. That is just is not how the market works.
Real world valuation takes in-depth knowledge applied with practical experience. IBG’s business evaluations call on academic training, hands-on knowledge and current prevailing M&A market dynamics and values. Past and future earnings capacity is considered, as are similar sales, costs of capital, buyers consolidating industries and current market trends. IBG gives you an insider’s view of your company’s value through the buyer’s eyes – critical input to your business sale decision.
Knowing and understanding the current market conditions provides invaluable information for determining the optimal timing to divest or sell your business.
Knowing and understanding current markets provides invaluable information for determining the optimal timing to divest or sell your business to generate financial liquidity for your future. Considerations may include:
- What is the real business valuation, price and terms that you are likely to get?
- Where will the best market for your business be found?
- Who are the best buyers for your business?
- Should you sell now or hold on and attempt to grow?
- What business changes will maximize business value?
Value will vary, depending on the type of buyer that best fit your business sale. We will identify:
- Financial buyers, primarily interested in a company’s return on equity, investment, burden on management and cash flow.
- Strategic or synergistic buyers looking for companies that will create new and enhanced values within their existing businesses. These buyers may pay much more than intrinsic value for a business due to the unique acquisition attributes specific to that buyer.
- Industry buyers seek to acquire complementary businesses within industry for expansion, economies of scale or strategic value.
Before going to market, we consult with you to establish your optimal pricing strategy and asking price. Depending on specific characteristics of your company, your best strategy may be marketing your business with no stated asking price. A company’s worth varies substantially between buyers, but none will pay more than you ask.
Based upon your goals, the business evaluation of the firm, and market conditions, is this the best time to sell?
Based upon your goals, the business evaluation of the firm and market conditions, IBG can advise you as to whether the time is right for sale. When you and IBG are confident we can meet or exceed your goals, you have the opportunity to engage IBG to implement the IBG Sale Process.
The market assessment of value is the basis for weighing your options for selling now and making an informed decision. These options might include:
- Sell all, or part, of your business now
- Hold on and try to grow, making strategic changes to increase value
- Delay the business sale and try to pick market cycles to capture more value
IBG’s candid analysis of pros and cons of selling your firm now gives you vital information to compare options and decide how each may affect your business value.
If now is not the optimal moment to sell your firm, IBG will update your evaluation yearly for up to three years at no cost to you.
Attracting the best company buyers, including ones not currently looking to buy a business, requires three key steps.
Attracting the best company buyers, including ones not currently looking to buy a business, requires three key steps:
- Conveying complete and accurate information
- Articulating the value drivers
- Effectively communicating compelling reasons to acquire the firm
Telling buyers your story in today’s market takes careful preparation and clear communication through an exceptional Confidential Information Memorandum (CIM). Your CIM provides in-depth information, a clear story and a persuasive presentation of your firm’s value proposition and earnings capacity. It focuses on your firm’s attributes and compelling strengths. It positions weaknesses as opportunities to improve future results. IBG Business works with you to identify and describe your company’s unique value drivers and solutions to issues that potential acquirers may see as risks. Contents cover:
- Confidentiality Notices
- Executive Summary
- Company History
- Marketing Strategy
- Products, Operations and Technology
- Facilities and Leasing
- Growth Opportunities
- Financial Overview
- Industry Review
IBG recasts your financials to show true earning capacity, supported by facts. Buyers judge your firm by the content and quality of your CIM. We create materials that are effective and compelling for presenting your business. Your CIM is carefully designed for accuracy and to educate buyers to recognize your firm’s full strategic value.
A Confidential Seller Profile (CSP) is created to describe your business opportunity while protecting your identify to potential buyers. Your business name is not revealed in the CSP and your CIM is not released until a buyer has signed a non-disclosure agreement (NDA). You also pre-approve IBG’s materials to be used in selling your business before they are released to others.
The CIM and CSP are essential components in IBG’s Strategic Marketing Plan to sell your business for the best terms and value.
The Strategic Marketing Plan (SMP) is a customized plan to confidentially market your firm to targeted acquirers.
The Strategic Marketing Plan (SMP) is a customized plan to confidentially market your firm. Marketing materials are created for specific buyer markets that we have identified and targeted, nationally and internationally, and a database of the best buyer prospects for your business is built. Your SMP lays out the full process and discipline to promote and sell your business. Care is taken to ensure that the strongest messages are delivered, your confidentially is protected and we avoid targeting companies that you deem inappropriate. Before any content is used, you will review all aspects to approve accuracy and privacy protection.
We have spent decades building and continuously refining our proprietary market data. This data contains detailed acquisition criteria on many thousands of potential buyers. IBG’s proprietary market information helps assure you reach the best available buyer pool for your business. In most of IBG’s business sales, our selling clients did not even know the best buyer was a prospect before their introduction by IBG.
Confidential marketing methods beyond IBG’s targeted approach may be used to reach national or international buyers. As appropriate, we may also engage our international network of over 200 trusted intermediaries to discreetly access additional expertise and resources for your business sale. IBG calls on its entire team, resources and offices to collaborate in marketing your business.
IBG contacts the targeted buyers with your CSP, describing the business acquisition opportunity in enough detail to create interest without revealing your company. IBG requires interested prospects to meet certain financial qualifications and sign a NDA to protect your confidentiality. Only then is your company’s CIM shared with a buyer prospect. Protecting your confidentiality does not rely solely on an NDA; IBG’s business process is designed to protect your confidentiality by only releasing appropriate information to appropriate parties at the appropriate time. All information exchanges are designed to preserve your company’s confidentiality.
The goal of IBG's business approach is creating an efficient auction processes for delivering maximum value, while ensuring you can remain focused on operating your firm.
IBG is distinguished by its emphasis on filtering out marginal buyers. A goal of IBG’s business approach is creating efficient processes for delivering maximum value, while ensuring you can remain focused on operating your firm.
IBG reviews buyer candidates’:
- Operational fit,
- Financial capacity,
- Post-closing intentions,
and procures an Indication of Interest before consuming your valuable time. An Indication of Interest states the range of value a buyer is considering to acquire your firm. IBG works diligently to eliminate buyers that will not meet your price, terms and objectives in your business sale.
Subject to your approval, IBG coordinates all meetings, site visits and negotiations to obtain the most favorable purchase proposals. This process continues until a satisfactory Purchase Agreement is reached.
Our goal is to create a confidential but competitive auction environment. To maximize your value, multiple buyers are engaged simultaneously under a process designed to create multiple offers. IBG works to provide you a choice among multiple, high-quality, high-value offers. Through this managed process, you can be assured you receive optimal price and terms in the sale of a business.
IBG's management of the due diligence and closing process ensures full disclosure and navigating anticipated landmines.
When price and terms are agreed upon, your buyer and their lenders will undertake due diligence. They will look at all aspects of the company in detail to be sure what they are buying holds up to intense scrutiny compared to representations that have been made.
Due diligence is much like a comprehensive audit to test quality of accounting and earnings, asset values and business risks. Information is disclosed and exchanged. This is a critical step in completing a transaction. Setbacks occur frequently at this stage, and across the country, many, perhaps most, deals fail at this late stage. Failures are often due to unexpected issues, miscommunications and misunderstandings.
IBG seamlessly coordinates the involvement of both parties’ legal and accounting teams. We orchestrate the final transaction details with a definitive Purchase Agreement. IBG can help facilitate a buyer’s capital structure by introducing debt financing sources from our database of 2,200 lending institutions, private equity groups and mezzanine lenders.
Comprehensive experience enables your IBG team to anticipate, avoid and overcome the hazards inherent in due diligence and closing. IBG’s entire sale process is meticulously designed and carried out to avoid late stage deal failures. Throughout the selling process, IBG works vigilantly to anticipate problems and respond with creative solutions. If problems arise, IBG is ready to respond to keep the transaction on track with the best outcomes for our clients.
We begin the closing process by properly sequencing all steps and roles to build consensus, obtain commitment and maintain strict confidential protections. Third party advisor activities are managed to keep the deal on schedule, ensure open communication and facilitate the closing.
Your successful closing results from navigating complex issues and requirements. IBG’s expertise clears obstacles and paves the way for your best outcome.
IBG commits to the long-term success of a transaction. M&A advisory services do not end at the closing.
IBG commits to the long-term success of a transaction. M&A advisory services do not end at the closing; IBG can bring in its team of professionals and affiliates to provide:
- Transition assistance to ensure post-closing assimilation is successful
- Managed market announcements to maximize success
- Assistance in transiting payroll records, accounting systems and technology
- Solutions to customer and supplier concerns about new ownership’s impact on them
- Post-closing dispute management and mitigation
- Operational, marketing and financial consulting
- Team with nationally recognized wealth managers
What is IBG’s commitment to you?
Capture maximum value – Keep it confidential – Minimize business distraction