Selling or buying a business can feel like a daunting task, but with HNR on your side, it’s easy, efficient and profitable. After an in-depth analysis of the value of your business and its associated real estate, we assign the right price for it to move in the marketplace. Together, we will work together to streamline the transaction and get you the results you expect at a price that makes sense, for everyone.
The HNR Difference:
Unlike buying a house or a plant/warehouse/retail space, buying and selling a business involves a lot of details beyond “I want to buy a restaurant because I like cooking.” Buying a house involves personal living choices, not making a living off the purchase. Likewise, buying a building involves the business that is going to use the building. HNR Associates provides value to buyers and sellers of businesses by understanding all the details of the business, estimating the future value of the business and conducting a search for potential buyers and sellers that recognize that future value.
We have created a three-step process that guides
us from objectives to successful transactions:
We review the past three years of financial statements, both IRS Tax Returns and Company Prepared Statements, to determine where your company has been as well as to chart future performance. Both buyers and sellers want companies that are cash flow positive and show potential for future growth. We will recast your historical statements to show how much compensation is paid to the owner. The past financial performance is then forecast for the next three to five years. The result is a portrait of the company’s earnings, cash flow and resultant balance sheet. There are hundreds of assumptions made throughout the process that lay the foundation for the company’s value and most likely selling price. The buyer/seller has to verify and feel comfortable defending each assumption.
This work is combined to produce the most likely selling price based on three methods of value. The first is the income approach which is based on discounting future cash flows at a rate consistent with the buyers expected return of capital. The second method is comparing the business to previous sales of similar businesses. The third method is “rules of thumb” based on interviews with other experienced business brokers. We then work with sellers to set the selling price consistent with these three methods.
Lastly, we prepare a sales prospectus that describes the company and justifies the selling price.
We will advertise the business on a confidential basis on Business Sales Web-sites. These web sites are open to new potential buyers. Simultaneously we will start a direct marketing campaign to find the best buyer for the business.
We will locate companies that may want to acquire the company either to expand its current product line or diversify into a new product line. We will develop a target list of companies that we contact directly.
Within a couple of months, we should be able to confirm both demand for the company and verify an appropriate selling price.
This last step involves representing the company in “due diligence” meetings to justify the selling price. We also assist the buyer with arranging financing through local banks. Many times, there is an element of seller financing. This financing has to be structured to co-exist with bank financing.
Lastly, we work with business lawyers to develop the Purchase and Sales Agreement. The entire selling process usually takes about nine months.