Autumn often triggers memories for me of my first love of my life, basketball, and profession after graduating from the University of Texas, as a college basketball coach. Team success on the basketball court is built on execution of individual fundamentals within a framework of strategic objectives designed to achieve specific end results. For example, a successful fastbreak basket can be broken down into the components of a transition offense that start with a rebound, progress to an outlet pass received at a specific spot, which leads to another pass to a sprinting player running an anticipated lane to the basket, which is caught, dribbled, and placed off the backboard in a defined area which drops into the net. The process watched as a fan can take only a few seconds. Players and coaches recognize that numerous hours of thought and practice over many years were necessary for the play to be executed flawlessly.
Successful execution of a business sale by a business broker requires significant knowledge, experience, and skill. The process starts with the valuation of the company being sold. In college basketball, a coach will watch film of a future opponent to learn their strengths, weaknesses, and methodology of play before engaging with them on the court. Valuation of a privately held company by a M&A intermediary serves a similar purpose as it allows for identification of the assets, liabilities, and business operational processes of an entity before taking the business to market and facing opposition who could prevent the sale. In business brokerage, five opponents traditionally exist on the field of play which need to be overcome to achieve transactional success. A business broker needs to justify the business value to each of these parties or victory will not be achieved. The parties are the buyer, their CPA/CFO, attorney, bank/investors, and frequently a landlord. If a company is not properly valued initially the probability of a successful outcome is significantly diminished.
The ball now on the court and the clock running, a business broker’s next task is to create market demand for their product. This can be as difficult as breaking down an unfamiliar zone defense in a business sale due to the business owner’s likely desire to keep the sale confidential to protect relationships with employees, customers, and vendors. Systems, processes, and legal documentation deployed with knowledge, experience, and skill can protect ownership while at the same time identifying motivated, qualified buyers with the desire and ability to execute on a transaction.
Potential buyers identified the next step in a business sale process is to negotiate mutually acceptable terms for the transaction. In basketball, points can be put on the scoreboard through dunks, layups, jump shots, hooks, three pointers, and free throws. All contribute to a positive final outcome. In a business sale, agreement needs to be reached on the price, methodology of payment, transition period, non-competition agreement, tax allocation, etc. or a successful transaction will not be completed. In basketball, numerous passes are often necessary before a bucket can be scored. In business brokerage, it is not uncommon for multiple attempts at shaking hands to be sought before a firm grip occurs and the proper up and down motion achieved.
The fourth quarter is where games are won and lost on the basketball court. In business brokerage, agreement on a letter of intent is a promising indication that good things are ahead, but significant heavy lifting is still required ranging from transitioning the LOI to a purchase & sale agreement, confirming preliminary assessments during due diligence, and obtaining financing. Failure to execute on these transactional elements with knowledge, experience, and skill and anticipated victory for the buyer & seller in a negotiated “win-win” transaction can dissipate and potentially disappear as an exit strategy option.
In college basketball, programs like Gonzaga, Connecticut, Villanova, Kansas, North Carolina, Duke, and Kentucky consistently achieve success. In business brokerage, every city & region has dominant business brokerage firms with a legacy of completed transactions over an extended period of time. In the Pacific Northwest, the gold standard for business brokerage firms has been IBA since 1975. The company out of its nine offices (Bellevue, Bellingham, Everett, Federal Way, Olympia, Wenatchee, and Spokane in Washington and Portland & Bend in Oregon) has facilitated over 4300 transactions involving privately held companies, family businesses, and associated real estate across a spectrum of industries ( https://ibainc.com/industries-served/). No other firm in Washington or Oregon has achieved professional excellence for longer or comes close the number of wins tallied by IBA through the successful sale of companies for its sell side entrepreneurial clients.
The college basketball season has just started and will run until early April, six months on the horizon, before a champion will be crowned. Business brokerage has two strong sales seasons. January – June and September to November. If a business sale is desired in 2025, the fundamentally sound way to set yourself up to achieve that goal is to have your business valued by a professional with knowledge of the industry, market conditions, and the geographic area in the next 90 days and have the company on the market in Q1. IBA welcomes the opportunity to meet with business owners confidentially in person and provide a complimentary, professional opinion of the market value of a business for potential clients as a means of demonstrating our knowledge, experience, and superior customer service. 2024 has been another winning season for IBA during the first three quarters of the year (https://ibainc.com/blog/gregory-kovsky/iba-autumn-2024-update/). Numerous additional transactions are expected to be completed by the firm between now and the end of the year. It is anticipated that 2025 will be equally strong in achievement based on the projects in our pipeline. Laptop, cell phone, and padfolio in hand, our team of twenty M&A intermediaries is mentally sharp, experienced, and ready to execute for you employing time tested fundamentals and strategies of excellence for our clients.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, legal, accounting, banking, and wealth management communities on subjects relevant to the purchase & sale of privately held companies and family businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.