Selling your company is much like starring in a movie. There’s a cast of characters, and we typically navigate through a 9-act feature. There's a clear beginning and a definitive end.

Dennis Spector · March 2nd, 2024

Act. 1: It’s Time to Sell

You have this feeling that you need to rest, to retire to smell the roses. Your wholelife has been devoted to your business and that is good, because we get our self-worth from our accomplishments. And you have accomplished a lot. It’s time to enjoy your family, your hobbies, the world and all the rest of life. How do I get there?

Why do you feel this way now?

A lot of reasons:

You are getting old and want to have the time to enjoy your life. You realize that anything can happen. A client built an insurance business with $5,000,000 yearly in commissions. He was good, real good; he was even granted more territory. His 2 kids had worked in other companies and were now ready to take over. They had passed the licensing exams. He took a month off in the winter to Fla to play golf and he and his wife were very happy. He took a month off to tour Europe. He and his wife loved it. Six months later cancer. A year later he died. At least he had the happiness of seeing his family well situated and few great vacations.

"It makes sense to work hard when you are old, so you don’t have to work when you are old."

Your kids do not want to take over the business. We would not work this hard if we did not want to make life better for our loved ones. Adjust to the reality.

Competition is heating up. How much longer can I compete. A client made remanufactured aftermarket diesel engine parts. He was very worried about electronic vehicles. He had worked at this since he was 16, 44 years. He was getting truly burnt out. Time to cash out. He is 62 and a very happy man.

I’d love to play golf twice a week! I’d like to take one of those European River Cruises or the Orient Express from Paris to Istanbul.

For whatever reason you need to find out your alternatives. So, let us go shopping for help. A place to start.

Act. 2: Shopping

OK, time to find somebody to help me sell my company.

“Who do I look for?”

“Whether you go to the web or ask friends you will find a gigantic number of groups. They’ll call themselves; business brokers, investment bankers, M & A Firms, Sell Side M & A Group, Exit Consultants, etc., etc. Whatever the name they are all the same.”

“Tell me what is the issue with these guys?”

“They’re paid on a % of the sales price and therefore motivated to sell. The good ones help you a lot, the bad ones sign you up, tie you up for a year and want to get a quick sale and on the average they do very little. They will own the right to sell for usually one year. You’ll be lucky if one out of ten are decent. You cannot blame them – 3% to 4% of twenty million is a brass ring. Yes, too many want to get your signature and then peddle. And you are then SOL.”

“That is not good. Then how do I choose the good one?”

“A few basics first. If you are in the middle market of under $50,000,000 in sales, you want to go with a smaller group, maybe three to four people. The larger groups have 20 to 30 people and you’ll get lost in the shuffle. You want to go with sell side only. That means they only represent sellers like you. Buy-side is where they are on the lookout for buyers, and guess where their bread is buttered? A lot do both sell side and buy side. They all will claim to have a history of success to sell you. Any references will be their pets, while you want to check them out be wary. Then there’s local vs. national groups. If you are in Minneapolis you probably want to use a Minneapolis group, they still will offer your company nationally. Make sure that you see a lot of their offering documents. They’ll try to give you one or two – their best pet clients; no ask to about 4 or 5.”

“And, all of them will tell you the following: valuation of your company, the information that they need to prepare the offering document (they will even give you a form to fill out), to get a Quality of Earnings Assessment (an economic analysis of the numbers by a CPA firm), and ideas to make you more saleable.”

“You have not answered how to select?”

“Here’s how. Ask the following.”

“What do you do to help me sell?”

“If they say study your business and work with you to get ready, you are on track.”

“What do you do to get to know my company?”

“Evasive answers, as almost all groups don’t care, they just want to sell your company. They make their money on quantity, not quality.”

“What is your opinion as to environmental issues that I face?”

“If you are a manufacturer or handle potential problem items, then environmental can be an issue. Most companies want a ‘Get Out of Jail Certificate’ from the state that says no issues. If they do not have knowledge in this area, then run. And, it is essential to know the parameters of the environmental issues early on.”

“I’d like to get to know you. Can we get to work together first before I commit to the year?”

“Most will tell you that they require a $100,000 upfront payment as an offset to their commission to show your seriousness – then the answer is give me the money – NO we do not get to know each other.”

“What do I need in the way of other people to help me sell?”

“They have a raft full. Lawyers at $300,000 or more; which makes no sense as the other side writes the purchase agreement. And you prepare all the schedules/exhibits. CPA’s do help you with the Quality of Earnings Assessment (called a Q of A) for $100,000 or more. This also makes no sense for two reasons. First, if your books are in shape and you can answer the expected questions/issues, then it is not needed. Second, even with a Q of A, the other side will do their own due diligence – it is really for your helper to cover his ass – and look innocent with the questions and the due diligence period.”

“What do you do to follow-up with the companies that you send the offering document to?”

“Most will say nothing, they let them call us. But, a few will say we call those who have not called. A call helps, explanation and answers always helps.”

“How do you handle the issues if I am unhappy with the offer?”

“We want to sell your company, it is not easy but we will negotiate for you the best deal possible.”

“Bad answer.”

“Tell me some situations, example of what I’ll face and then how we will handle them, please be specific. Look for answers in your favor – fighting for you.”

To sum up, once you go to market and choose a suiter, the power balance changes and the power is their hands as they really take apart the issues to make sure their millions are well spent. YES, they will try to lower the price. The strength that you have is to be growing and be organized to address their issues and questions. We had a client that we advised wait until he solved a problem and showed the profits. He did and got a 10 multiple. Also, you can clearly see that getting to know your business – it’s culture, market position, competitors, plans and you – are important.

Act. 3: Deciding

The decision becomes easier if you learn from Act 2. No guarantee, but a favorable percent in your favor that you will get the help that you need.

"Honest men write down what they agreed to so that they can remember what they agreed to. You just can’t write a contract with a dishonest man."

Act. 4. Getting Ready

This is a lot of work, and you are busy running the company.

There are 4 stages to get ready.

First, you need to get the information together for the offering document.

Second, is when the companies that have expressed interest are allowed to look at the company details. They’ve signed an NDA (Non-Disclosure Agreement) and you have a cloud based Virtual Data Room with all the documents (provided by your help & they charge $10,000 for this when you can buy it for $500). There will be some questions, but not overly excessive. Providing quick answers says you know what you are doing.

"Honest men write down what they agreed to so that they can remember what they agreed to."

You just can’t write a contract with a dishonest man!

Third, you need to get ready for the first round of due diligence. This first round of due diligence is when you select the 6 or 7 companies that are interested and you invite them in to talk to you and see firsthand – boots on the ground.

Fourth, once you choose a suiter, the power balance changes and the power is in their hands as they really take apart the issues to make sure their millions are well spent and they would also like to get the price down – yes they will. The strength that you have is to be growing and be organized to address their issues and questions – so you win. We had a client that we advised wait until he solved a problem and showed the profits.

Here is what happens:

Their lawyers will scrutinize you. One closing had 145 questions to be answered and they asked for 35 schedules/exhibits & warranties & representations. They want to close, but they also want to find issues so they earn their money. On the go-in, you’ll be told we can close in 60 days – yes if everybody does their job and you are ready -- not really more like 120 to 150 days. Why? There are 4 reasons; you are not ready, they are not ready, legitimate delays or they want to wear you down (lawyers and CPAs are real good at that). You need to be able to push when needed. One client kept the real estate and wanted to hold it as an investment. The buyer had not gotten the renters insurance, this would delay the closing a couple of weeks – we said no we will just keep our insurance on it and you will pay us for it. Their CPA firm will take your books apart. Here are some of the types of questions asked. A client was importing more and more product from overseas in a semi-finished form and doing the last mile themselves. Sales were growing but gross margins per unit and as a percent of sales were declining due to higher purchase costs. But, the profit was growing. The CPAs focused on gross margins and wanted to know if this was going to be a trend and therefore kill profits. I had an analysis proving while the gross margin as a percent of sales was declining the total dollars were holding up because were getting greater productivity out of each person. More important was that the bottom line was increasing as overhead was being held firm due to improvements. Voila! They felt that the inventory was not costed correctly & we showed that it was.

Their environmental expert will scrutinize you. If there are no problems you will need proof and if there are potential problems that needs to be defined. That can be hard to obtain thus you will need proven help.

You and you staff will be asked to explain your plans. You’ll need a complete strategic plan – marketing, operations, product development, cost savings, etc. A client was quite worried about carrying this off. He had built a $30,000,000 business and barely graduated high school. We prepared a complete plan and prepped him.

When he was asked how did you decide on the marketing plans; he answered: “All marketing is about the relationship of the product to the customer and we know what he wants and them make it easy for him to buy.” He was off to a running start. At every meeting he was able to say; “This month we are running 15% ahead of last year or 20%. Our marketing plan is working.” They’d say; “We are looking at the past, we are not buying the future.” He answered; “I thought you wanted to know and this growth is the past months.” To sum up, he was in control.

Act. 5: I'm On The Shelf

You now know how to handle the time period time of the final due diligence – usually 4 to 5 months event though they say they will do it in 2 months.

We have been discussing how you handle all of the issues facing you. The final due dilligence requires you to stay tootally focaussed on the business and reQUIRES YOU TO Aanswer clearly and show the buyer that comapny is solid and you know what you're doing. and we've prepared you for that.

Act. 6: They’re Looking Everywhere.
Even In My Underwear Draw!

You now know how to handle the time period time of the final due diligence – usually 4 to 5 months event though they say they will do it in 2 months.

We have been discussing how you handle all of the issues facing you. The final due dilligence requires you to stay tootally focaussed on the business and reQUIRES YOU TO Aanswer clearly and show the buyer that comapny is solid and you know what you're doing. and we've prepared you for that.

Act. 7: We Close & We Get The Money

Right up front the buyer committed to a financial arrangement – he is paying so much, you will have three escrows, your obligation as to continued employment is set (and that is another reason to leave now – you may be required to stay for 3 to 5 more years – we’ll handle that soon, and how much equity (skin in the game – aka rollover equity) you will leave in.

Here’s a lot of the details you will need to know.

There will be a formal Purchase Agreement. It will have been begun upon the start of this final due diligence and worked over a lot. The main items you will have to worry about are:

Warranties & Representations – This is where your attorney comes in to make sure they are limited in time and scope to protect you. The best way to handle is to make sure all exhibits/schedules and statements are accurate and that you and the buyer agree.

Overall document – make sure the terms are clear and you are protected. Escrows – clearly set up and limited in scope, amount and time. Usually three: working capital (issue is providing enough to open the doors for the buyer and whether it is a 6 or 12 month average),warranty/representation and environmental (this is the biggie).

Resolution of Issues: Should be in the state that the acquisition takes place and have an arbitration procedure. They will want to settle in Delaware and no arbitration – Why? – scary & expensive.

Price: Make sure that the original price is maintained and all payments are accurate.

Taxes: The tax issues resolve around is it a purchase of assets or a purchase of stock. This is resolved way up front.

The key is “Prior Planning Prevents Piss Poor Performance”. And, you are supposed to be running the company at the same time while all of this is going on. Good luck! – see why you need help?

Real Estate: If you own the real estate and they do not want it – which is usually the case, then the real estate has to be spun off in a tax-free exchange and either sold by you or leased back to the buyer.

Equity Rollover: How much equity you keep in the game has to be clearly defined and how it is documented is an issue along with any restrictions.

Employment Agreement: They will want you to stay for a bit – usually 3 to 5 years. It is not that hard to ease out the time – in the first & second year you get two 30-day vacations, in the third year you work 4 days a week, in the fourth year you work 3 days a week and in year 5 you are on call not to exceed 25% of the time. You can get this if you’ve maintained control and we have shown how to set that scene. You’ve got to keep their appetite up. At the end – the last week or so – there will be some open questions or things to clean up. You and your team have to be ready to handle any issues. This means dedication of time.

The key is “Prior Planning Prevents Piss Poor Performance”. And, you are supposed to be running the company at the same time while all of this is going on. Good luck! – see why you need help?

Act. 8: After The Close The Music Stops & A New Tune Starts

Once it is done, you have a new role. You are an employee and a minority shareholder. Your job is the same but you’ve got to answer to the boss. Best advice is to make sure these people are the one you want to be in bed with. But that can conflict with maximizing your sale price.

Knowledge and help conforming and changing is the key. Hopefully you’ve picked a group that sticks with you after the sale to help – because no one has a crystal ball to see the future. Taxes become key to hold on to the money. Basis, loss carryforwards, capital gains vs. ordinary income, deferrals, tax free exchanges are all part of this. And, believe it or not it has a lot to do with the nature of the business. Enough said.

Act. 9: Spector Solutions

Hhere is our act to solve the issues.

We want to get to know you before we commit to you. We have six items on our menu and you can pick and choose. We only go with you if we fit together and trust each other – and even more important we can make you and therefore us MONEY. Why pay the price of the ticket if the trip is not worth that price.

Here are the 6 phases:


Quick and Easy Valuation Analysis - We conduct a preliminary valuation analysis to determine a range of values and identify any critical issues.


Complete-Thorough Valuation Analysis - We conduct a detailed valuation analysis, including a plan with strengths and weaknesses and ideas for sales and profit improvements.


Development of a Detailed Strategic Plan - We work with you to create a detailed strategic plan that includes marketing and sales strategies, operational plans, functional plans, and intelligent implementation plans.


We find that a good marketing plan to attain growth requires an excellent web site.

Web Development - We design and build custom programs, databases, and e-commerce solutions to improve your online presence. You've got to be in a growing posture with excellent plans in order to maximize the value of your business. The other side has to know what you are doing!


Preparation of the Offering Document to Targets - We prepare a well-written, professional prospectus that describes your business to potential buyers and generate interest through communications.


Final Selection and Closing - We guide you through the final selection process, due diligence visits, negotiations, and preparation of all legal sales agreements and related schedules. We also finalize financial and legal documents and work with your CPA to finalize the tax strategy.

We will take the time to get you ready. This can take a year. We do not pull punches.

The future will look like the past unless you do something different. The famous “What’s past is prologue.”

We will do most of the legal logistics, and therefore keep that cost way down. Yes, we prepare the strategic plan, to include all parts – especially marketing. If needed we will prepare a new web site as part of the plan. We use open source software thus it is no cost. We even host it. Yes, we implement it with no future licensing fees. You own it. We’ve been able to take companies from page 7 or 8 on google to page one. Look at our backgrounds. And, we usually find that you have not had the time to do the web maximally.

We will work with your CPA to make sure we are ready. And will do almost all the work. Your CPA has a business to run and will not be able to do the work required but is an integral part. You trust him and he should also feel we are ok. YES, we will make sure that you have the freedom to run the business and get ready to sell. We will make sure that you are protected. We will make sure that you maximize and stay in control.

Very important, we do not own your efforts for a year. We can end our relationship any time. That is why trust is so important. I always tell my clients that; “Honest people write down what they agree to, so that they can remember what they agreed to. And, it is impossible write a contract with a dishonest person.”

Yes, we do care and take pride in our work and commitments.

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