1. Selling or Buying a Professional Services Firm

2. Learning Objectives Deciding to transition, how to, and to whom?
Valuing your business
Making the Sale – the process
Making the Acquisition– the process

3. Question 1
“I’m 60 years old and I need to start thinking about transition. I want to keep working but I want to cut back my hours and get rid of ownership duties while leaving a legacy for my employees and team.”

4. Deciding to Transition – Selling Your Business
You are thinking about retirement, other business opportunities, and/or suffering burnout.
You are tired of the responsibilities of business ownership like payroll, taxes, insurance, HR but would like do what you do best and continue in business.
Or, you need to get out of the gap by expanding people and resources, and wish you were bigger to play in bigger markets.

5. Question 2
“I’ve been thinking about selling or merging or partnering with another organization to help with that. What do you think of that?”

6. Ways to Transition (sell) your Business
Sell to family members
Sell to employees
Sell to fellow partners if any
Sell to Venture Capitalist/Private Equity companies
Sell to larger firm in your industry, i.e., strategic acquisition

7. Question 3
“What is your process of representing me and my firm if I decide to approach the open market to be acquired/sell my business?”

8. The Selling Process Engagement Agreement Exclusivity Fees
Valuation Cost
Valuation Process
Marketing Package
Target Marketing Discussion

9. “What is the timing of all that?”
Question 4
“What is the timing of all that?”

10. Timing Preparation – Valuation and Marketing Package
First Wave of Marketing
Subsequent Waves of Marketing
Initial Conference Call
Visit and More Review
LOI
Due Diligence
Closing

11. “How do I protect the confidentiality of the situation?”
Question 5
“How do I protect the confidentiality of the situation?”

12. Confidentiality General Approach to the Market
Non – Disclosure Agreement
Continual Reinforcement

13. “How is Value Determined?”
Question 6
“How is Value Determined?”

14. “What kind of information will you want for the valuation”
Question 7
“What kind of information will you want for the valuation”

15. “How long is a typical transition and what goes in to it”
Question 8
“How long is a typical transition and what goes in to it”

16. Employment Agreements – Staying On With New Company
Are there premiums for being a past owner
Will the seller be paid the same even though there are less ownership duties
Will the seller become billable
What is the length of time – specified or ongoing
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17. Employment Agreements – Staying On With New Company
How are benefits like insurance handled?
Is this part of the purchase agreement?
Are there any considerations for employment agreements as it relates to SBA financing?
Photo Supplied by FreeDigitalPhotos.net

18. “What is the market like now?”
Question 9
“What is the market like now?”

19. “Can we get references?”
Question 10
“Can we get references?”

20. References
us for references: Al Lautenslager - Patrick Neal -

21. Question 11
“How do we get started?”

22. Buy Side Considerations
Question 1 – “Why should I consider an acquisition?”

23. Considering an Acquisition
In the Gap
A need to diversify projects and services
New geography
The need of people
Capacity

24. “What is the process to acquire a firm?”
Question 2
“What is the process to acquire a firm?”

25. Acquisition Process
Respond to Business Opportunity Summary after signing NDA.
Schedule a conference call and/or personal visit
Submit a non-binding letter of intent
Due Diligence
Determining how to fund the acquisition
Prepare closing documents and agreements
Closing

26. “How Do I Fund an Acquisition?”
Question 3
“How Do I Fund an Acquisition?”

27. Acquisition Funding Cash Local Bank SBA backed funding
Promissory Note with Seller
Earn-out – How is this defined and when is it used?
Incentives

28. “What does the structure of a deal typically look like?”
Question 4
“What does the structure of a deal typically look like?”

29. “What should I expect to pay for a firm that I am acquiring?”
Question 5
“What should I expect to pay for a firm that I am acquiring?”

30. Doing Things On Your Own VS.
Using an M & A Advisor

31. Things To Watch Out For
1.     Beware of the M&A firm that is charging a large retainer fee up front, does not deduct it from the final fee and does not perform.
2.     Beware of the M&A firm that does not have a focus in the Architectural / Engineering / Construction / Interior Design markets.
3.     Beware of the M&A firm that lists businesses for sale, online and then adapt a “hope” strategy, especially in the A/E/C industry, with no targeted selling.
4.     Beware of firms with a lack of experience in your markets.
5. Make sure you work with a firm that understands value, the valuation process and pricing of the business to be sold.

32. Things to Consider – Internal Transition vs. External Sale
Do you have an effective leader to replace you?
Can a new leader(s) work together as a team like you did
Do they have money to pay you upon a sale
Are they willing to take on debt for a sale and can they make debt payments
Will new cash flow allow for growth?
Do they have an entrepreneurial mindset - steady paycheck vs. ebb and flow of ownership
Is a larger, acquiring firm more appealing 

33. Wrap-Up/Summary Selling Your Business Transition Planning
Contact Stonemill Partners – Engagement
Valuation
Marketing Package
Approaching Targeted Prospective Buyers
Entering the buying process once a prospective buyer is interested

34. Wrap-Up/Summary Acquiring a Business
Review a Business Opportunity Summary (BOS)
Initial Conference Call/Visit with Seller
Review of Information
Letter of Intent
Due Diligence
Financing
Agreement Preparation
Closing

35. Wrap-Up/Summary Using an M & A Advisor - Advantages
Things to Watch Out for
Internal vs. External Transition – Things to Consider & External Advantages

36. Thank You Its your business Your future depends on your decision
Sell to capture value
Buy to increase value and grow
Rely on Experts
Capitalize on your dreams, vision and passions!

37. Contact Us: Al Lautenslager - al@stonemillpartners.com
Patrick Neal -