Here are the typical steps in the sales process:
1) We Get to Know Each Other
We'll have a phone conversation to tell you more about us and answer any questions you may have. You'll also share with us some high-level information on your business and your goals in selling it.
Everything is kept strictly confidential.
2) Sign an Engagement Agreement
If we mutually agree that your company and Vestable are a good fit for each other, we'll sign an engagement agreement that highlights our responsibilities and obligations to you. It also includes our success fee of 6% of the closing sale price of the business (with our guarantee of getting you an offer within three months or else our fee is cut in half to 3%).
3) Document Gathering
This is the only stage in the process where you'll be doing most of the work. You'll send us specific financial documents and information necessary for vetted buyers to conduct due diligence. It's extremely important that these documents are accurate and in good order. It will be nearly impossible to sell your business otherwise.
Once we've reviewed your financial documents, we'll propose a fair valuation that you could expect to see offered for your business. Together we'll finalize a listing price.
We'll first put together an elegant looking web page promoting your business (example). The information on that page will be high-level and will not reveal the name or identity of your business.
Then we'll invest our own money and expertise into generating interest for your business. For starters, we'll email our proprietary database of qualified buyers in your area (we have over 170,000 qualified buyers across the country!). We'll also run ads on Facebook, Google, and relevant trade publications. Finally, we already have partnerships in place with other companies that have audiences of prospective buyers. This too is done without revealing the identity of your business.
5) Vetting of Buyers
Many people who express interest in your business will actually just be "tire kickers" (i.e. they aren't truly interested in acquiring a business). We will conduct interviews with all prospective buyers to verify that they are legitimately interested. We also do our own background checks on them by searching publicly available information. Finally, we require them to provide a proof of funds for how they will pay for the business.
Any buyers that are deemed as qualified will then be required to sign a Non-Disclosure Agreement (NDA) before being allowed to learn the name of your business or see any of your financial documents.
6) Initial Due Diligence
Qualified buyers will review all those documents you gave us in the Document Gathering phase. They'll undoubtedly ask us for some clarifying questions on the financials, and a variety of questions about the operations of your business, along with its strengths, vulnerabilities, and competitors. We'll do our best to answer these questions using the information you've already provided us. If there are questions to which we don't know the answer, we'll pass those questions along to you.
Like the previous two stages before this ("Marketing" and "Vetting of Buyers"), the goal here is to protect you from wasting your time.
Buyers will then submit an offer to you via a Letter of Intent (LOI). The LOI will include the deal structure (asset purchase vs equity purchase), price they're willing to pay, and any terms and conditions that they'd like to have. Examples of terms and conditions could be seller financing, training, due diligence checklist, projected close date, etc.
Once you accept the LOI (which is NOT a binding agreement for either you or the buyer), the buyer will have an exclusivity period to conduct final due diligence without you speaking with any other potential buyers.
8) Final Due Diligence
This stage will verify all of the information the buyer has already seen on the business. Also in this stage, the buyer will have a number of conversations with you and/or your team to dive deeper on things like: sustainability of revenue, growth prospects, supplier relationships, customer relationships, contracts, IT systems, key personnel, outstanding legal issues, etc.
Due diligence is hard work and is a crucial part of the process. But don't worry, we'll be with you every step of the way.
9) Purchase Agreement
The purchase agreement is the definitive and official document that solidifies the sale of your business. It encompasses everything such as purchase price, payment terms, representations, warranties, indemnifications, transition plan, closing conditions, etc.
It's rare for a buyer to have enough cash on hand to fund the purchase price of your business plus initial working capital needs. More often that not, the sale of your business will require one of the following forms of financing (and sometimes both). The good news is that we can help in both of these areas:
Third-Party Financing: This is typically a loan from a bank or investment firm that the buyer obtains in order to pay you out.
Seller Financing: This is where you receive a down payment and allow the buyer to pay you the remainder of the purchase price over time with interest. Like a typical loan, seller financing should have protections put in place for you, such as a lien on the business, collateral, personal guarantee, quarterly financial reporting, etc. If you're not willing to offer seller financing, you'll greatly limit the pool of potential buyers for your business. For some perspective, 60% of all small business sales include seller financing.