Teamwork in the Sale of a Business

Mar 1, 2016

Prior to joining IBA in 1994, I was a college basketball coach. As the calendar turns to March and talk of March Madness begins to permeate the media, I often fondly reflect on my coaching career and the components of the game of basketball that I like best. One of those components is the concept of teamwork and how each player contributes to the success of the team based on their abilities & effort.

Teamwork is also important in the purchase & sale of a privately held company. IBA, a business brokerage firm that primarily represents the seller side of transactions, traditionally fills the point guard position when facilitating deals. It is our job to advance the ball for our client with the goal of achieving a satisfactory end result. Joining IBA on the seller’s team are traditionally an accountant & attorney. The roles filled by the accountant include assistance with and/or confirmation of the valuation of the business performed by IBA, facilitation of due diligence, and providing guidance to their client regarding tax allocation. IBA is unique in the business brokerage industry in our ability to internally value privately held companies combining accounting & investment practices with market knowledge. Firms that do not have the knowledge & experience to value businesses internally are at a competitive disadvantage when attempting to sell a business, as they do not have the knowledge & experience necessary to justify a price in the marketplace, but instead simply parrot the work of a business appraiser who frequently perform their valuations virtually without ever visiting the business or meeting in person with the owner. It is recommended that business owners vet the valuation skills of their potential business broker prior to entering into a representation agreement or risk an extended time on the market and/or not being able to achieve their transaction goals. Nothing is worse than having a point guard that cannot advance the ball or finish the play successfully.

No transaction should ever be completed without proper legal representation to address trailing liability. It is common for owners of privately held companies to not to have an established relationship with a business attorney. IBA frequently helps fill this void for our client with a referral of an experienced business attorney from our referral database. The attorneys in this professional network have successfully completed transactions involving companies represented for sale by IBA and include some of the most experienced & knowledgeable legal minds in the Pacific Northwest. They are dealmakers that have played a fundamental role in helping IBA complete over 4000 transactions in the Washington, Oregon, & Alaska since 1975. It is recommended when selecting a transactional attorney that parties pick an individual with relevant experience & knowledge. Business transaction law is a very specific legal niche with many nuances that can only be mastered through going through the process numerous times. Many transactions have been lost by attorneys for their clients by taking positions that are outside of the normal parameters of industry standards. The injured party in these situations is always the client, as the attorney who fumbled the negotiation was likely compensated for their time regardless of whether the outcome was successful or not.
The members of the buyer’s transaction team also should include an accountant & attorney. Both serve very important roles. The accountant assists the buyer with business valuation, due diligence, and tax allocation. The attorney will address issues ranging from trailing liability to the safe harbor for successful operation of the business post transaction provided by a proper non-competition agreement. Business buyers that have not assembled a transaction team prior to locating a business they wish to acquire will be encouraged by IBA to assemble their transaction team and their participation welcomed. IBA is a frequent source of referrals of accountants & attorneys to business buyers based on our desire to facilitate transactions employing “best practices” in an environment of full disclosure. A 41 year history of facilitating “win-win” transactions frequently results in buyers of businesses returning to IBA for representation when they are ready to sell. This is the best testimonial we can receive that we did a good job representing a prior client.

Another common member of the buyer’s transaction team is a business banker. Business bankers are also members of IBA’s referral database and as the President of IBA since 2000; I can honestly say that there has not been a transaction during the last 16 years that we have sought financing for that has not been successfully financed. I would like to take this moment to thank Key Bank, Wells Fargo, US Bank, Chase, HomeStreet Bank, Banner Bank, Union Bank, Banc of California, Coastal Community Bank, Kitsap Bank, and Columbia Bank for their assistance helping IBA to successfully complete transactions. Our firm was also honored to represent Joanna Bruno in the retirement sale of her company, J.R. Bruno & Associates, in 2015. J.R. Bruno & Associates is a professional consulting firm with a national clientele that helps banks & credit unions build successful SBA & commercial lending departments employing “best practices”. Ms. Bruno sought out IBA specifically to sell her company based on our knowledge, experience, and reputation in the entrepreneurial community.

Entrepreneurs are traditionally self-confident, knowledgeable individuals that want to facilitate negotiations directly with IBA to maintain control and make sure that all actions are taken in their “best interest” with complete knowledge. For this reason, it is very common for entrepreneurs to successfully negotiate acquisitions with support from their attorney & accountant without support of a buyer’s broker. IBA’s employment of “best practices” and desire to create an environment of full disclosure in the transactions we facilitate also contributes to self-representation by buyers without concern. However, buyer’s brokers are also welcome in transactions by IBA. Surprisingly, this is not true for all business brokerage firms, as some of our competitors appear to lose sight of their primary objective, selling their client’s company, and focus only on transactions where they can secure 100% of the commission payable for representation. Business sellers are encouraged to inquire about a firm’s co-brokerage policy prior to entering into a representation agreement. It is not in their best interest to list a business for sale with a company that will not co-broker a transaction, as they are eliminating a portion of their potential buyer pool. IBA willingly co-brokers transactions with buyer’s brokers and shares the commission outlined in our representation agreement with our client, when appropriate. Three of IBA’s favorite buyer’s brokers in the Pacific Northwest to work with are John Martinka, Curt Maier, and Aaron Muller. If buyer representation is desired, we recommend the representation services offered by each of them without hesitation. Each provides quality representation employing “best practices” and has a track record of successful negotiations.

The goal when selling a business is to complete a transaction in a timely manner at the best possible market terms. Successful achievement of that goal requires a team of professionals with the knowledge, experience, and professionalism to get the job done. If you are thinking of selling a business in the Pacific Northwest in 2016, please consider including IBA in your interview process when selecting a business broker. We are confident that if you comparison shop mergers & acquisitions professionals that you will find that the business brokers at IBA have superior knowledge, experience, and business acumen to our competition. We encourage you to put the ball in our hands and give us an opportunity to add your transaction to the over 4000 successful business sale we have completed since 1975 in Washington, Oregon, & Alaska.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media and the mergers & acquisitions community on confidentiality and any other subjects relevant to the purchase & sale of a business.