The Murphy Process for Selling a Business
Business Business For Sale For Sellers Sell a BusinessPosted by Mike Metzger on
The thought of selling your business on the open market can be intimidating and confusing. A business transfer is far more complex than say selling your house or other tangible asset. While no two transactions are exactly the same, Murphy has developed a proven, repeatable process to help manage the complexity and increase the probability of a successful transaction.
- Sellability: The first step is to determine if your business is actually sellable. That is, can the value you’ve built be transitioned to a new owner, and is there a market for your business. If the company is in a very specialized niche, or if all of the value of the company is derived from the owner alone, it can be difficult to sell.
- Valuation: Next, we need to determine the Most Probable Sales Price (MPSP) for your company based on financial performance, comparable sales, and other characteristics of the company. This is a mix of art and science, but realistic analysis here will increase our probability of attracting buyers. Overpricing a business only leads to frustration and disappointment.
- Marketing plan: Once we understand the value of the business, it’s time to create a detailed marketing plan. Chances are that you don’t want the entire world to know that your company is for sale. We work closely with you to develop a confidential listing that provides enough information to be enticing, but not so much as to compromise discretion. We’ll also work with you to develop a comprehensive document called a Confidential Information Memorandum, or CIM. This document is a detailed profile of your business from soup to nuts that will be shared with prospective buyers only after they have signed a Non-Disclosure Agreement.
- Implement the plan: Because Murphy is one of the largest brokerage firms in North America, we have access to a broad set of resources to get your listing the highest visibility. Additionally, since we’re right here in the Virginia market, we’ll leverage our extensive local network to find buyers. As we identify a prospective buyer, the first thing we do is have them sign a NDA and complete a Personal Financial Statement before sharing the Confidential Information Memorandum with them. By making sure the prospect has the financial ability and the business acumen to pursue this transaction, we eliminate the “tire kickers” right upfront (and there are plenty of them!). If and when we think this could be a good fit, we’ll make an introduction to you and actually visit the company in person.
- Negotiate offer: If both the buyer and the seller think that this could be a good fit, we begin to negotiate the deal in order to obtain a win/win for both parties. There are many variations of price and terms that come into play for a successful offer, and we’ll help you navigate those waters. In many cases, we’re able to create a scenario where you’ll receive multiple offers and we’ll help to control that process to ensure the best outcome.
- Perform Due Diligence: Once we have a signed offer or Letter of Intent, we enter a period called Due Diligence. At this time, the buyer will dig deeply into various aspects of the business including financials, customer base, employees and processes. We use a Virtual Deal Room to make sure that all materials are tracked and maintained in a secure online library. During this period, we’re also working closely with third parties like banks, realtors, and attorneys to ensure a smooth transaction. Almost invariably, we’ll hit a few bumps in the road along the way, but the broker will help you manage these.
- Closing: The final step in the process is closing the deal. We’ll help make sure that all of the moving parts come together at the closing table. This is a big day, and is the consummation of many months of hard work.
If you’d like to learn more about the Murphy process for selling a business, or would like do discuss your business confidentially, please feel free to contact me directly at (804)617-6328.