The IBG Process:
Nine Steps to Selling Your Business for Maximum Value
1. We help you formulate solid answers to key questions
- Why do I want to sell my company? What are my objectives?
- Are my objectives realistic?
- Is now the best time to sell my business?
- How will I sell my business for the best price and terms?
- What changes within my company will maximize its selling price and help me achieve my objectives?
The IBG Process helps you clarify what is most important to you in selling your business. Is it price? The financial structure? Personal freedom? Estate planning or tax considerations? The freedom and resources to pursue other opportunities?
For example, in this recent scenario, which might align with your priorities, the seller:
- took 80% of the sale proceeds;
- kept a stake in the business, as it moved forward with new energy, more capital and additional resources;
- bore no personal responsibility for business debts or risks; and
- after the business had grown in value, received a big “second bite at the apple” when he sold his retained stake for even more money.
2. We provide real-time data that provides an initial market value for your company.
IBG helps you see your company and its value through the buyer’s eyes – a critical step in generating business sales far above a business’s “fair market value” and under superior terms.
Your company’s fair market value (FMV) is not an asking price or expected sale price – it is a theoretical value.
Market assessment starts with determining your company’s value to a “best fit” buyer – based not on simplistic formulas and shortcuts but on real-world, in-depth knowledge applied with practical experience.
IBG’s market valuations call on academic training, hands-on knowledge, and 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.
3. Armed with knowledge about your company’s value, you direct your focus on other important factors.
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 price and terms are you 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 changes in your business will maximize its 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.
Ultimately, your price and terms will depend on the type of buyer that best fits your business sale. In the ensuing steps, 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 their industry for expansion, economies of scale, or strategic value.
4. After crystalizing your objectives, and gaining a sharper understanding of market conditions and your company’s value, you can know with confidence whether now is the time to sell.
IBG’s candid analysis of the pros and cons of selling at this time helps you compare options and decide how each may affect the value of your business.
The market assessment of value is essential to 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.
If now is not the optimal moment to sell your business, IBG will update your evaluation yearly for up to three years, at no cost to you.
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.
5. If you decide to sell your company, we develop a compelling description designed to attract your best buyers – including prospects not currently looking to buy a business.
Attracting the best company buyers involves three key steps:
- Conveying complete and accurate information
- Articulating your company’s value drivers
- Effectively communicating compelling reasons to acquire the business
Those steps are supported by two essential components of an IBG Strategic Marketing Plan (see Step 6) to sell your business for the best price and terms: (1) a Confidential Seller Profile (CSP) and (2) a Confidential Information Memorandum (CIM).
The CSP is created to describe the business opportunity while protecting your identity from potential buyers. Your business name is not revealed in the CSP.
The CIM is the result of meticulous preparation. It is not released until a buyer has signed a non-disclosure agreement (NDA). It clearly tells your company’s story in greater detail. Your CIM is carefully designed for accuracy and to help buyers recognize your business’s full strategic value.
IBG’s properly crafted CIM:
- provides in-depth information, a concise story, and a persuasive presentation of your business’s value proposition and earnings capacity;
- focuses on your business’s attributes and compelling strengths;
- recasts your financials to show true earning capacity, supported by facts; and
- describes weaknesses as opportunities to improve future results.
Your CIM’s contents are organized under these headings:
- Confidentiality Notices
- Executive Summary
- Company History
- Marketing Strategy
- Products, Operations and Technology
- Facilities and Leasing
- Growth Opportunities
- Financial Overview
- Industry Review
Before they are released to others, you will at all have the opportunity to pre-approve IBG’s materials to be used in selling your business.
6. Our Strategic Marketing Plan confidentially markets your business to targeted acquirers.
An IBG Strategic Marketing Plan (SMP) is a comprehensive, customized plan to confidentially market your business.
With the CSP and CIM in place (see Step 5), IBG moves on to more substantial steps:
- developing marketing materials for specific buyer markets that we have identified and targeted, nationally and internationally, and
- building a database of the best buyer prospects for your business.
About Our Proprietary Data. 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.
Your SMP lays out the full process and discipline to promote and sell your business. Care is taken to ensure that we deliver your strongest messages, protect your confidentially, and avoid targeting companies that you deem inappropriate. Before any content is used, you will review all aspects to approve accuracy and privacy protection.
Confidential marketing methods 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 an 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 releasing appropriate information only to appropriate parties at the appropriate time. All information exchanges are designed to preserve your company’s confidentiality.
7. IBG seeks to filter out marginal buyers, qualify legitimate prospects, and generate multiple offers.
When appropriate for your business, our goal is to create a confidential, competitive auction environment. IBG works to give 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.
Throughout that process, IBG handles the heavy lifting, allowing you to remain focused on operating your business. We also seek to minimize distractions to you by filtering out any marginal buyers. Toward that objective, IBG reviews buyer candidates’:
- operational fit
- financial capacity
- post-closing intentions.
We further qualify a buyer candidate by obtaining an “Indication of Interest,” which states the range of value a buyer is considering to acquire your business. 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.
8. IBG manages the due diligence and closing process, ensuring full disclosure and navigating anticipated landmines.
When price and terms are agreed upon, your buyer and their lenders will undertake due diligence. They will carefully scrutinize all aspects of your company, to ensure that what they are buying measures up to your representations. Information is disclosed and exchanged. Due diligence is much like a comprehensive audit to test earning statements, asset values, and business risks.
This is a critical step in completing a transaction. It is here that setbacks can occur and closings are jeopardized – often due to unexpected issues, miscommunications and misunderstandings.
IBG seamlessly coordinates the involvement of both parties’ legal and accounting teams, orchestrates the final transaction details, and, if financing snags occur, 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 deal 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 will result in large part from our skill in navigating complex issues and requirements. IBG’s expertise clears obstacles and paves the way for your best outcome.
9. After the closing, IBG continues to add value to the deal.
M&A advisory services do not end at the closing. IBG commits to the long-term success of a transaction, and our team of professionals and affiliates can provide:
- Transition assistance to enhance post-closing assimilation
- 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
- Introductions to nationally recognized wealth managers
What is IBG’s commitment to you? Keep it confidential. Minimize business distraction. Capture maximum value.