IBA, as a business brokerage firm that has successfully sold over 4200 businesses, has worked with entrepreneur clients with a large spectrum of motivations for wanting to sell their privately held companies and family businesses. The three most common reasons people come to us to sell their businesses are to retire, in recognition that their executive ability and/or capital resources are impacting the growth of their company, or a desire to move on to another entrepreneurial or corporate opportunity. All three of these scenarios allow for a sale process where a premium market value and the most qualified executive management successor can be sought. Traditionally, this sale process takes three to nine months for IBA clients from contractual engagement for our services to the close of escrow and disbursement of cash.
The three motivations for sale identified in the proceeding paragraph consistently account for a majority of IBA’s projects annually. However, many more motivations exist for the engagement of a professional mergers & acquisitions intermediary firm by a business owner. The next largest slice of IBA business sale projects fall into a group we identify as “time sensitive” or “distressed” sales. These engagements involve situations where the timing of the sale carries as much weight in the decision process of buyer selection, as the value paid by the party.
The following are short descriptions of the most common business sale motivations that fall into this grouping:
Illness or Injury – Mahatma Gandhi famously said, “It is health that is real wealth and not pieces of gold and silver”. It is common for parties to come to IBA to sell their businesses who are motivated by health issues facing themselves, spouses, parents, or children. Charged with the important task of facilitating a timely sale at a fair market value, IBA consistently has satisfied the transactional objectives of this group of clients while maintaining in strict confidence the motivation for sale, as to not diminish the negotiating position.
Death – In the movie Glory there is a memorable scene when the commanding officer asks his troops, if the man carrying the American flag falls, who will take his place (https://www.youtube.com/watch?v=UfXzJwExWeA) and another soldier steps forward and says “I will”. In most privately held companies and family businesses, the owner is the standard bearer. Frequently, there is not an individual on the team capable of filling their shoes long term, if they should die while in the President/CEO chair. However, the death of a business owner should not result in the death of a robust business. IBA has experience working with heirs, professionals handling the estate, and remaining management to successful transition ownership in a timely manner to facilitate business continuity, the deceased owner’s positive, entrepreneurial legacy, continued employment of the business family, customer needs, and asset value protection for surviving family members. One tool available at IBA for this purpose is our Buyer Database of qualified, motivated buyers actively looking for acquisitions. For the right business, in the right location, sales have occurred to parties in this resource in as little as 60 days from a business being brought on the market.
Partnership Breakup – It is common for the motivations and objectives of business partners to diverge over time. A common separation point is when one party wants to enjoy the fruits of success in terms of profit distributions while the other wants to invest in the business seeking growth and increased market share. If an internal solution/reconciliation cannot be achieved, the sale of the company can be a positive solution for dividing assets. IBA’s highly skilled team of professional negotiators is very good at listening to parties from a neutral, problem-solving position and incorporating all shared objectives into a comprehensive strategy enroute to achieving a positive outcome. As an example, IBA recently negotiated a sale where several partners stayed with the company in a corporate merger with excellent employment contracts while others exited stage right into retirement.
Divorce – A business can be a substantial component in the mutual asset portfolio of a married couple. Frequently, this asset needs to be converted into cash in the division of property between the parties to achieve appropriate balance at time of divorce. This commonly emotionally charged environment requires knowledge, experience, and skill to navigate for attorneys, CPA’s, and professional intermediaries. Few firms have the training of IBA business brokers on how to facilitate a two front negotiation where the sophisticated dynamics of facilitating the purchase and sale of a business between a buyer and seller also involves intermediation between parties in the decision process where trust is lost and ulterior motives are anticipated.
Retirement of a Key Employee – Quality executives surround themselves with superior, high performing people. Frequently, business owners recognize the importance of specific personnel to the success of their companies. It is common for entrepreneurs to come into our offices with an interest in selling their businesses because a key employee has announced their likely retirement in a year. It is their strong preference to sell the company with the individual still employed rather than have to navigate the replacement and training of the person’s successor. This motivation for sale is becoming more frequent in our office as the Baby Boomer generation starts to retire. Baby Boomers occupy a significant percentage of the positions of knowledge, experience, and skill in the economy. It is our recommendation that entrepreneurs assess the longevity of key members of their team and strategically plan for transition of positions due to retirement. If the desire does not exist to train and develop the next generation of key employees, we stand by to help you execute an exit strategy before their departure.
Accumulated Liabilities – Unfortunately sometimes the only path to addressing accumulated debt is with the sale of a company. Debt can accrue through bad management decisions (e.g., aggressive expansion), poor financial controls (e.g., delinquent taxes, embezzlement, etc.), or bad luck (e.g., COVID-19 navigation). An outcome where an entrepreneur can exit with integrity, their credit rating intact, and capital to start their next company can often create a positive result out of a bad situation.
Good situations, like the first three articulated, commonly generate the motivation for sale by our clients at IBA. However, we also have people approach us for professional representation in the sale of their companies because they no longer need to work due to an inheritance, spouse’s stock options, or winning the lottery. Whatever, the reason for sale, if you have a company in the Pacific Northwest and want to sell for a strong market value in a transaction facilitated with knowledge, experience, and skill employing best practices, we would welcome the opportunity to provide an overview of our services. All communication with IBA is held in strict confidence and 100% of our fees are paid on performance upon completion of the sale of your business.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned 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”.