FAQ

Business owners who have previously sold a business will likely tell you it is a long, stressful process. And if handled alone, the process will divert your focus away from the day-to-day operations of your business at a critical time when you should be increasing or at least maintaining your current business volume. A Business Broker has the experience and expertise to properly value your business, properly market your business, address all inquiries from potential buyers, and negotiate a deal through closing. A third party (Business Broker) handling your sale also allows you to better maintain confidentiality.

The President of the Bridgestone Group has earned and maintains nationally recognized credentials in both Business Valuations and Accounting…..we do not simply say we are experts, we back it up. Also, our team of diverse professionals will invest the extra time and effort to "Know Your Business" well enough to articulate the unique strengths of your business and develop growth strategies to present to potential buyers. The Bridgestone Group is not a franchise of a larger national company, but rather a locally based company focused on servicing businesses in East Tennessee.

Most likely, you do not want your employees, customers, or suppliers knowing you intend to sell your business. In certain cases, employees or customers might start looking elsewhere if they think the future is uncertain. And that is why "Confidentiality" is a critical issue for the Bridgestone Group. Our initial "public" marketing is designed to keep your business confidential. Any serious buyers, who are first vetted by the Bridgestone Group, are required to sign a Non-Disclosure Agreement before they receive an in-depth packet of information about your business.

The sooner you gather and organize the following documents, the better positioned you are to sell your business in a timely manner with minimal issues arising during the due diligence phase. Copies of such documents include:

• Annual Income Statements and Balance Sheets for the most recent 3 years
• Monthly Income Statements for the same period
• Federal Income Tax Returns for the same period
• Monthly Bank Statements for same period
• List of Key Employees, job descriptions, salary, education / training / experience, and length employed at your company
• Summary of all other employees: position categories, # of employees and job description for each category, and averages wages by category.
• List of reoccurring customers / clients and their share of annual revenue
• List of significant equipment and service / maintenance records
• Any lease agreements
• Any customer or vendor agreements
• Aging Chart for Receivables, Payables, and Inventory

Because we are confident in our ability to effectively market and sell your business, you pay nothing until closing. Our fee will be a percentage of the sales price, and if your business doesn't sell, we don't get paid. Thus, our interests are aligned with yours, meaning we do not get paid until you get paid, and it's in our interest to sell your business for the highest price possible. We are performance based, so you are guaranteed we work hard to sell your business.

The most common methods used to appropriately value a business are the Market Approach, Income Approach, and Asset Approach. At the Bridgestone Group, we calculate value using a combination of methods to ensure our initial valuation is most appropriate.

Then, what sets the Bridgestone Group apart is we understand these methods produce an "average" valuation for your business, simply based on a review of your financial statements. But your business is more than just a financial statement. This is why we emphasize the need to "Know Your Business" ! By knowing the strengths of your business operations, and if you aren't simply an average company, we are then positioned to support the rationale for adding premiums to the initial valuation.

There is a great deal of variation in the time it takes for a business to sell. Proper pricing is a key component to receiving a Letter of Intent. Then, the organization and presentation of your supporting documentation during Due Diligence is also a key factor. But at the Bridgestone Group, we have a company goal to have your business sold within seven months. While this may sound like a long time, all the facets of selling a business are time consuming. The type of business, pricing, location, condition of the facility, whether the business is growing year over year, effect the speed by which your business sells.

We recognize for each qualified buyer, there are typically several unqualified buyers who have expressed interest. To prioritize your time, we bring only the best candidates to you.

Therefore, we first evaluate whether they have the financial capacity, proper motivation and experience to buy your business. Once we successfully screened a buyer, and upon your approval, we will have them sign a Confidentiality Agreement, and provide them additional information to give them a better understanding of your business. They will have initial questions and we will work with them through this stage by answering all questions and facilitating the transfer of relevant documents. After much discussion and plenty of document review, a potential buyer will want to meet you and tour the facility before making an offer. These meetings typically remain high-level and related to strategy, company history, nature of business, etc. The smaller details and fact checking are typically handled during the Due Diligence phase, after a Letter of Intent has been accepted. Generally, a buyer will only request one in-person meeting before submitting an offer, referred to as a Letter of Intent (LOI).

It is typical when a potential buyer submits a Letter of Intent, they will make certain request of the seller. Such requests may include: 1) seller to finance 10% of the selling price, ie: buyer pays off 10% of the selling price to seller in equal monthly payments over a specified time; 2) seller agrees to work with / for buyer for a specified time to train / acclimate buyer to the business operations, and seller is paid a reasonable consultancy fee; and 3) seller can not compete with buyer for a specified period of time.

Many who plan to sell their business focus simply on the sales price, when in fact they should focus on the after-tax proceeds (net amount) retained by the seller. This dictates the seller not only strive to position the company to earn the highest sales price possible, but also equally focus on tax strategies to minimize Uncle Sam's cut. This is best accomplished by consulting with a CPA who has significant experience in Merger & Acquisition tax planning. Generally speaking, you will pay taxes on the sale, but with proper planning, you will strive to pay the Capital Gains Rate (a rate generally lower than your Ordinary Tax Rate) on your realized gain.

Though all things are negotiable, most small businesses are sold with the seller retaining cash, work in progress, debt and accounts receivables. A requisite level of inventory to operate the business is generally provided to the buyer.

Some sellers are hesitant to spend additional money on a CPA and Attorney. But, there are plenty of examples in the Merger & Acquisition arena where a mistake made can cost far more than the investment in an experienced Attorney. Furthermore, proper tax planning may save you far more in taxes than the investment in an experienced CPA. So yes, we strongly recommend you consult with an Attorney and CPA.