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Q: My distributor business does not have any assets other
than a customer list and accounts receivable. Would anyone be interested
in buying it?
A:YES! There are many buyers out there that are searching
for distributorships with sales of at least $500,000.
Q: What kind of buyers would be interested in buying my distributorship?
A: Most of the buyers we work with are industry buyers that
are looking to grow through acquisition. Because many of them are larger
companies, they normally have extensive resources to bring to the table
that can help you grow your book of business.
Q: How long should a buyer expect me to stay on to transition
the company?
A: A normal transition period is 2 to 4 years from the close
of the sale. Most buyers would want you to stay on indefinitely as a
salesperson if you want.
Q: What is an “earnout”?
A: An earnout is money that will be paid to you in the future
based on the performance of the company. Because distributorships are
based mainly on relationships, many buyers will not pay the entire purchase
price at closing, but will defer a portion of it to future years. This
gives you the opportunity to make more money if the company grows and
keeps the buyer happy because you have a continuing vested interest in
the success of the company.
Q: How long will it take for CMC to sell my company?
A: We have sold companies in as little as 30 days, but a reasonable
timeframe is 6 months to 1 year. Smart sellers will list their companies
when they are ready to sell but not necessarily in a position where they
need to sell right away.
Q: I am not sure if I want to sell my company. Where do
I start?
A: The first thing you should do is get a valuation. Your company
is most likely the biggest asset you will ever own and it is important
to know how much it is worth so that you can adequately plan.
Q: Do fixed assets (land, building, machinery & equipment,
office equipment, etc.) increase the value of my business?
A: Generally not! Most buyers care little about the market
value of machinery you use or the style of office furniture you might
have. What they care about is that the equipment in place is capable
of producing the revenue stream your company generates. Age, working
condition and capacity of equipment will be factors buyers review when
considering future capital investment requirements.
Q: Is the product line
or category my operation produces important to my ability to sell
the company?
A: Many buyers prefer to acquire companies with similar or complimentary
lines to those they produce. However, just as many buyers are willing
to consider any product category as a means of diversifying their overall
offering.
Q: Will buyers close my operation and relocate it to their
own facility?
A: Many buyers will consider relocation as an option
when reviewing an acquisition. Relocation generally provides cost
savings that improve the buyer’s return on investment. But many buyers
purchase companies and operate them from the existing facility. You
should inform us of any requirements you may have with respect to relocation
so we can advise interested buyers accordingly.
Q: My company is on the “Preferred Supplier” list of many top distributors
in the Industry. Will this help the sale of my company?
A: Yes, it is an “independent” indication that your company
is providing quality products, service and communications. That isn’t
to say if your company isn’t a preferred supplier that it won’t be very
marketable.
Q: What is “working capital” and how does it affect the sale
of my company?
A: Simply stated, working capital is the difference
between current assets (accounts receivable, inventory, etc.) and current
liabilities (accounts payable, accrued wages, etc.). Buyers expect
to obtain a certain amount of working capital based upon historical
levels when they acquire a company allowing them to continue to operate
the business without interruption to customers. We can assist you
in defining what that level should be and how any changes might affect
the transaction value as a whole.
Q: My company imports many of the products we sell and then
decorates them domestically. How will that affect the value of selling
my company?
A: Importing products by itself will not improve the value of
your operation. Many suppliers in the Industry today do just that.
The combined value equation of price, service and quality together are
all important in meeting customer requirements. It does little good
to have a great price but not be able to deliver product for eight weeks
when the customer needs it in two.
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