Business Sales Group is pleased to announce the sale of a mechanical and electrical engineering firm on the East Coast. The buyer was a large national strategic buyer so the two firms were merged. The owners are excited and will remain for years to come, working with their new partner. Congratulations to Bob Bowers and Lauri Wood of theCBI Group, Atlanta, Georgia who worked diligently to make this transaction happen.
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What do you need to consider if you are thinking about selling your business after COVID19? Times have changed and you need to know what is important if you are thinking about selling your business.
Business Sales Group is pleased to announce the successful sale of an Aluminum Casting and Foundry company in the Rocky Mountain Region. They are industry leaders in their field with customers nationwide. Business Sales Group was the advisor for the transaction. The deal size was under $10 Million. This transaction was unique due the utilization of a CAPS Trust to eliminate $783,000 of taxes for a C-corporation and defer $2.1 Million of Capital Gains Taxes.
Business Sales Group is pleased to announce the successful sale of a mid-sized MEP Engineering/architectural firm on the East Coast. BSG was a sale-side advisor for the transaction offering valuation and advisory services to the owners. Deal size was under $10 Million. We want to give a thank you to Bob Bowers of CBI Group who was instrumental in getting this transaction to market and across the finish line.
Rick Krebs was recently endorsed by Charlie Fusco to sell a business.
We recently saved Adam and Julie a whopping $1.2 Million when they sold their business. Visit www.CAPSTrust.com for details.
As a M&A professional representing Sellers and Buyers I see a lot of sales structures and deal types. I wanted to share 4 of the most common structures that I see for the sale of a business. These are based on a $1.5 Million Sales Price.
A. All Cash. This is usually paid in full at close, but at a discount from the full Asking Price, usually 10-20%. You could expect to see $1,350,000 – $1,200,000 at Close for a $1.5 Million Sales Price.
Advantages: Quick and you don’t have to rely on a bank for funding. Disadvantages: Buyers generally aren’t willing to pay full price for an all cash structure.
B. Cash with Seller Carry. I usually see 10% Seller Carry so you would get $1,350,000 at Close (for $1.5 M sale) and be paid over time, generally 3-5 years for the remaining $150,000. If the interest rate is 6% the Seller would get paid $190,000 total so they make more money with this, but have to wait 3-5 years for the remaining money.
Advantages: Sellers get more money for their business in the form of interest and can save money on taxes. Disadvantages: Purchasers sometimes don’t pay and Sellers run the risk of non-payment.
C. Earnout. This includes an up-front down payment, usually at least 50% of the Sales Price and then the rest of the Sales Price is earned over time and variable. Using a 50% down scenario, the Seller would get $750,000 up front and be paid based on the profitability of the company over 3-10 years for the rest of the money and potentially “earn” more money for the business.
Advantages: The advantages to this are: Sellers could be paid much more for the business if it does well. This usually works well when the owners are staying to work in the business and not retiring from it at Close. If the business does better than expected, the Sellers get more money for their business over time. Disadvantages: Sellers have to wait to get paid and if the business does poorly under new management. Sellers can get less money than the other options.
D. Seller financing of 100% of the purchase price. This is used most often for a partner buy-out or buy-in. The Purchaser gains ownership from the beginning and his/her share of the profits are used to buy his/her share of the business.
Advantages: A Purchaser can own a business with little or zero down payment. The sales prices is established based on some set criteria negotiated and can be higher than the market price. Disadvantages: Sellers get paid over time versus up front.