eNewsletter
March 2019

Featured Clients this issue:
**Details of each client below article

- Ecommerce Distributor of Consumables #918
- Specialty Vehicle Maintenance and Repair #1718
- Commercial Maintenance Service #2018
What to do if you receive an unsolicited offer 
for your business

Over the years, we have be contacted by numerous business owners that are in a panic because they have been contacted "out of the blue" by a potential buyer for their business and don't know what to do. Usually the potential buyer is a competitor, or if the business is large enough, it might be a Private Equity Group ("PEG"). Additionally, it might be a solicitation by an intermediary firm indicating that they have a buyer that is interested in acquiring the business. In today's world there are business lists available and it is fairly easy for buyers to buy a list and go fishing for deals. The frequency of these types of contacts is increasing.

Be Prepared - In Advance

The first thing to do is to be prepared by knowing what your business is worth and if you can afford to sell after paying off debt, fees, and taxes. Ideally, you know whether or not you and your business are prepared to engage in discussions. If it is not the right time for you to sell or if your business is not positioned to obtain optimum value, it is probably best to capture the buyer's contact information and delay discussions, until the time is right for you.

It Takes a Team to Do it Right

However, if you believe that the time is right and you have been positioning your business to go to market, you should have the buyer execute a Confidentiality Agreement ("CA"). We recommend that you obtain a CA from your attorney rather than pulling one off the internet or using one supplied by the buyer, as there are some significant nuances in CAs that can be traps for the unwary. This is particularly true if the potential buyer is a competitor. At some point in time the identities and details relating to your vendors, employees, and customers will be revealed to the buyer, potentially putting your business at risk. Having an experienced advisor knowing how and when to proceed can be invaluable at this point. Remember the buyer may have engaged in this process many times and a typical tactic is to isolate the target company to obtain a below market value on terms favorable to the buyer. Having a team of advisors to assist in this process is critical. Usually the team would consist of at a minimum of your CPA, a transaction attorney, and an intermediary, but might also include your wealth planner, banker, and insurance professional.

Proceed in a Disciplined Manner

It is important to remember that the sale of your business may be the largest and most significant financial transaction of your life, so it is important to proceed in a disciplined manner with a team of experienced advisors.

March 1st marks the 37th Anniversary of the founding of our firm and I have been blessed over the years to be surrounded by a great team of coworkers, wonderful clients, and talented professionals involved in the over one thousand transactions that we have completed to date.

The majority of our business is derived from referrals. Please consider referring our services if you encounter a situation involving the potential purchase or sale of a business.   
  RVC signature
 

Ronald V. Chernak
President

Inspiring business relationships since 1982!
Ecommerce Distributor of Consumables #918
This Rocky Mountain business specializes in commercial distribution of office-related consumables to contracted clients.  With its steady history of growth in both sales and profit. This is an excellent opportunity for not only a synergistic acquirer, but also an entrepreneur looking for the next venture.  Sales of $24.7+M for the first ten months of 2018 were up nearly 10% over 2017; Adjusted EBITDA of $1.2M was up 34%!  
  • Purchase Price...To Be Suggested by Purchaser
  • Gross Sales...$28+ million
  • SDE...$1.3+ million

For more information contact Mem Garrison, mem@fbb.com.
Specialty Vehicle Maintenance and Repair #1718
This well-established vehicle repair business specializes in in class 6, 7, and 8 truck products and repairs for commercial accounts, as well as the general public. With several large bays, the company is able to accommodate very large vehicles, such as trash and cement trucks. The company is well known for providing the best full-service truck parts and repairs to Southern Colorado. The customer base is well diversified with the top commercial accounts responsible for just 11% of gross sales with the next 10 largest commercial accounts making up just over 20% of total sales. We believe this would make an excellent acquisition candidate for an industry acquirer looking to expand their operation into Southern Colorado, or an individual acquirer with mechanical experience.    
  • Purchase Price...$1,295,000
  • Down Payment...$200,000
  • Purchase Price - Real Estate...$598,000
  • Down Payment - Real Estate...$60,000
  • Gross Sales...$2,114,591
  • SDE...$461,031

For more information contact Rob Amerine, rob@fbb.com.
Commercial Maintenance Service #2018
This well-established and respected Denver area business provides unparalleled service to its long-term commercial customers.  Approximately 90% of the work performed is recurring.  The company is set up to attract commercial clients seeking reputable, insured, and capable professional service.  Relocatable, although its current location is centrally located near the bulk of its customers.  
  • Purchase Price...$895,000
  • Down Payment...$180,000
  • Gross Sales...$1,528,704
  • SDE...$338,563

For more information contact Scott A. Densmore, scott@fbb.com.
**Terms & Definitions

TBS (To be suggested by Purchaser) - Seller, in his/her sole discretion, has the right to accept or reject all offers.

Seller's Discretionary Earnings (SDE):  A term used to denote a business's cash flow or the amount of pretax money a buyer can expect to earn in first-year operations.

EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization):   All interest, tax, depreciation and amortization entries in the Income Statement are reversed out from the bottom line Net Income (It purports to measure cash earnings without accrual accounting, canceling tax-jurisdiction effects, and canceling the effects of different capital structures.)
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