As I have indicated in recent, prior eNewsletters, the business transfer market in Colorado is very robust. Similar to 2007, the previous peak in M&A activity, we are generating offers from multiple buyers on attractively positioned businesses. If you are a Seller, options are nice, but multiple offers can lead to their own set of problems.
The FBB Group typically represents Sellers. In doing so, part of our job to help the Sellers achieve their goals. Although maximizing the price paid for a business may be a goal, there are numerous other goals that should be considered. Below are some of the goals that we discuss with our clients:
- Is the target closing date right for them and the business?
- Does the proposed deal structure mitigate the tax liabilities? We often use the phrase "It is not what you get, but rather what you keep that is most important."
- What will happen to the employees as a result of the transaction? In the majority of transfers, all or most of the employees are retained, but there are exceptions.
Certainty of Closing
- Unfortunately, not all deals close due to problems with financing, due diligence or other factors. The buyer that offers the highest price may not have the experience or financial resources to assure a high probability of closing.
- Even though the buyer may have the financial resources to close the deal, the buyer may not have the skill set or the personality to succeed in operating the business. Most Sellers want to see their "baby" prosper under the new ownership.
These are a few of the many goals that should be considered and prioritized prior to receiving an offer. If multiple offers are involved, it gets even more challenging to respond to the various proposals in a timely manner, so as not to wind up losing all of the buyers and having to start over again with a new group of buyers.
By being able to prioritize goals, the Seller can choose the buyer or buyers that meet the criteria established by the Seller and go back to the qualified buyers with a request for a second or third proposal that incorporates terms favorable to the Seller.