Jacobs Capital, LLC

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How long will it take to sell my company? Much longer than most people expect. From the day you begin the process until the deal closes generally takes from 6 to 9 months. We have closed deals in as little as two months and seen others take over a year. What do I tell my employees while I am selling my company? There is no standard answer to this question; it depends on a lot of factors, so consult with your advisor. In general, business owners significantly overestimate the problems that arise among employees while a transition in ownership occurs. If the matter is handled properly, disruption can be minimized. Some key questions to consider include the following: How will you identify likely buyers? We first search our database of over 4000 financial groups that buy companies, and we screen for those that have an interest in companies of your size, in your industry, at your stage of development and those located in your region. We talk with you about logical candidates you may know of and which trade publications may contain names of likely candidates. We then perform independent research using numerous external databases, M&A listing services, and the Internet to identify potential candidates. When our list is complete, we review it with you before any contacts are made. What is the difference between a “Strategic” buyer and a “Financial” Buyer? A strategic buyer is an operating company that would buy your business to further its growth and capabilities. Strategic buyers typically perceive certain synergies from combining your company with theirs. They may be looking to expand into a new market, add new products, access new customers, or increase in scale. They are more likely to make organizational changes after the deal closes, but if they perceive significant profit opportunities from combining the entities, they can afford to pay a higher price. A financial buyer is an investment fund or individual that acquires companies purely for financial returns. They are more likely to leave the company alone if it is profitable, but will take an active role in the governance of the company if performance fails to meet expectations. Financial buyers generally want to sell the company or take it public in 3 to 7 years to provide liquidity for the institutions and/or individuals whose money they are investing. How do Financial Buyers (Private Equity Funds) differ from one another? Private equity funds come in a variety of shapes and sizes. The main concern of the business owner (besides the value of the offer) should be the cultural fit between the investor and the company’s management. The investor will likely have representatives on the board. Some funds are more active than others in managing the affairs of the business. Some are staffed with former operating executives, while others are staffed with young MBAs. Some specialize in certain industries, while others are geographically focused or more generalists. Each fund has criteria for the minimum and maximum investment. Some like to invest along side of other funds; others prefer to invest solo.

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