Custom Casket Company - The Southern Funeral Director Magazine
Custom Casket Company - The Southern Funeral Director Magazine
Custom Casket Company - The Southern Funeral Director Magazine
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14<br />
Selling Your Business Made Simple<br />
By Daniel M. Isard, MSFS<br />
Picture you are at your high school reunion. Imagine<br />
you are addressing the class of peers you have known<br />
for your lifetime. Can you feel the tension going<br />
through your body and soul? Can you imagine the<br />
anxiety leading up to this moment? Now, imagine<br />
you are totally naked and there is no podium. That is<br />
the same feeling you will have when you get ready to<br />
sell your business. Is this a metaphor or a Freudian<br />
example? I don’t know. I do know that different<br />
people handle the matter differently but the better<br />
prepared someone is, will result in a better outcome.<br />
<strong>The</strong> first thing you have to do is to decide if you are<br />
going to represent yourself or use a qualified M&A<br />
Consultant. Notice, I used the phrase qualified.<br />
<strong>The</strong>re are many scoundrals out there. Some call<br />
you up and say, “I have a buyer for your business”,<br />
but of course you have to retain the caller. No! If<br />
an M&A Consultant has a buying client that client<br />
is going to pay them for their efforts, not you. Some<br />
are local real estate people that have no idea of what<br />
the value of your business is or even what the usual<br />
and customary terms of a sale would be. <strong>The</strong>re is a<br />
difference in a qualified and non-qualified advisor!<br />
Qualified Advisors (“QA”) have fees for their services.<br />
<strong>The</strong> fee’s can range from 7% of the sale price to<br />
something less. Often there is a decreasing fee. It<br />
could be 7% of the first $2,000,000 and then decrease<br />
by 1% each $2,000,000 thereafter. Some will charge<br />
an hourly rate before closing but back out that hourly<br />
rate from the closing fee. <strong>The</strong>y do that to keep their<br />
objectivity. I know that there have been some clients<br />
I have had to tell them not to continue to close on an<br />
offer. By charging this hourly rate, we were paid for<br />
our time to date. We are not just paid at the closing. I<br />
am able to retain my objectivity this way.<br />
You should ask if a QA can earn their fee. In many<br />
cases the answer is yes, several times over. Any<br />
advisor is paid for their time and experience. <strong>The</strong> QA<br />
has more applicable experience which should result in<br />
a better result. <strong>The</strong>re are several ways in which a QA<br />
pays for their fee.<br />
<strong>The</strong> <strong>Southern</strong> <strong>Funeral</strong> <strong>Director</strong> w Alliance NFDA & CANA Pre Convention 2011<br />
• Time to get the deal done. <strong>The</strong>re is a matter<br />
of confidentiality and at some point the<br />
confidentiality is going to get blown by someone.<br />
<strong>The</strong> QA is usually able to get the deal done quicker<br />
as they know how to move the transaction along.<br />
• Legal and Accounting fees. We have done<br />
more than 500 transactions. For us to do the<br />
tax analysis takes very little time. For the legal<br />
issues, if someone doesn’t know the funeral or<br />
cemetery profession it is filled with unusual legal<br />
concepts that have to be memorialized in a sale<br />
document. We can usually get a better document<br />
sooner and get your lawyer to the closing table<br />
with fewer costs.<br />
• Get more value. We know how to negotiate to<br />
get the most value and get it in the most secured<br />
fashion. This is a direct reward to the client by<br />
putting more money in their pocket.<br />
Your second step is going to decide who to invite to<br />
your dance. <strong>The</strong>re are usually national and regional<br />
operating companies that might have an interest in<br />
being your successor. <strong>The</strong>re may also be local and<br />
regional competitors that should have an interest<br />
in your business. You want to decide who you are<br />
willing to sell your business to and if there is anyone<br />
that you will not sell to. Once you get that list made,<br />
then you can move forward.<br />
When you get ready to sell your business you are<br />
vulnerable. You are going to be showing the intimate<br />
financial and operating details of your business to<br />
strangers and maybe some people that were heretofore<br />
competition. It is one thing to claim you sold three<br />
bronze caskets at the bar at a state convention but it is<br />
another thing to prove it in your financials.<br />
You want to have a Non-Disclosure Agreement in<br />
place with all receiving your data. In some cases<br />
you are going to want to have a mutual disclosure<br />
from them as well, to prove that they are financially<br />
able to secure the financing for the transaction. A<br />
Non-Disclosure Agreement is important to protect<br />
your confidential information and even the fact you<br />
are considering selling the business. It is especially<br />
important when you have a buyer’s data as well.