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Buying a Business: Should I utilize a Consultant?

Buying a Business: Should I utilize a Consultant?

Whether you are a first-time business buyer, or an experienced strategic buyer, having an expert in your corner can make all the difference.  Consultants experienced in business sales can add a lot of value.  Here’s how:

  • Buyer pursuing a For Sale by Owner:  This is another example where a consultant, often working on an hourly fee, can help the buyer calculate business value, terms and financing options.  The consultant can also help identify risk and growth opportunities.
  • Buyers pursuing a listing that is represented by a business broker: a consultant is a professional in the buyer’s corner that can help them analyze price, terms, deal structure, financing, letters of intent, exclusivity and much more.
  • Employee buyouts: Consultants act as a voice of reason and a buffer between current ownership and employees who are interested in becoming the next generation of owners. If business owners don’t handle this correctly it can cost them the deal and sometimes even cost them a key employee.
  • Buyer and Seller who have a general deal in mind but would like some help reviewing the deal and connecting to resources (financing, experienced and affordable attorneys, etc.)
  • Financing: Many buyers lose their deals because of financing problems. An experienced consultant will help you explore financing options (SBA, conventional, seller financing) and help you shop banks.
  • Access to private market data: Private company sales are just that, private.  So limited public information is available to buyers on what businesses are selling for.  Consultants who specialize in business sales have access to recent, local, private transactions.

The good news is that Sunbelt Business Advisors offers consulting services to buyers.  If you have identified a company you want to buy but want someone in your corner, Sunbelt can help.  Our advisors put their experience from hundreds of transactions to work for you.  A typical consulting agreement includes:

  • Financial Analysis to calculate normalized profits of the company (SDE or EBITDA)
  • Examine Value Drivers such as customer concentrations, management team & employees, supply chain and many more
  • Industry Insight via industry reports
  • Most Probable Selling Price based on market data. As mentioned above consultants who specialize in business sales have access to proprietary data not available to the public.
  • Bank financing options
  • Analyze what assets are INCLUDED in the price. For example, is accounts receivable included?  If not does the business have the working capital it needs?
  • Identify contingencies for the offer beyond just due diligence. Will the sale require third party consents from landlords, suppliers or others?

 

If you would like to chat with an advisor about consulting services please email us at web@sunbeltmidwest.com or call 612-455-0880.