Topic: General Posts

Subject: Seeking creative ways to sell $5.5M PR firm to employees
Eric Fishbein
Member: 2014
Posts:9
Submitted on 06-09-16 9:15 am
Message:

I am looking for creative ways to sell a $5.5M PR firm in "nitch" area to employees as exit strategy for owner.  Already considering ESOP.


 


Any thoughts?


 


Thanks.


 


Eric

 
1  
Replies
Tom Comer
Member: 2001
Posts: 4

Subject: Re:Seeking creative ways to sell $5.5M PR firm to employees

Submitted on 06-15-16 12:07 pm.
Message:

1. ESOPs are not as simple as one might think.  One misstep with the highly technical regulations can obliterate the tax savings.  The best advice is to utilize one of the many ESOP firms out there, however, they are not cheap and it is doubtful that a company with $5.5M revenue can support the cost.


2. Investment bankers have all the creative solutions, however, just like the above unfairness, their fees don't support small businesses. 


3. Try VR Business Sales.  Their fees are in the 6% - 10% of sales price range.  And this is precisely their "niche".


4. If this is truly an "exit" play, beware that there are underlying issues that haven't even been identified yet. Often, AFTER the deal is closed, the seller laments, "if only I had known that  {fill in the blank}  would be the result".  See:  http://exitplanningexchange.com/connecticut/directory  for some ideas.


Through XPX CT, I have gotten to know an individual who, imho, is t-h-e expert in small business exits - from beginning to end, not just the final price.  Let me know if you'd like an introduction.


TOM COMER   (203) 981-2620   TComer25@hotmail.com

 
Eric Fishbein
Member: 2014
Posts: 9

Subject: Re:Seeking creative ways to sell $5.5M PR firm to employees

Submitted on 06-15-16 12:46 pm.
Message:

Thanks Tom


 


I agree, an ESOP is likely not appropriate for this situation.


I will take a look at the resource you provided and would appreciate an introduction.


My direct email is: efishbein1@gmail.com


Thanks.


 


Eric

 
Tom Freeman
Member: 2016
Posts: 2

Subject: Re:Seeking creative ways to sell $5.5M PR firm to employees

Submitted on 06-21-16 1:30 pm.
Message:

Eric - I spent the last fifteen months preparing a private equity sponsored company for sale.  I also have extensive experience acquiring privately owned companies of all sizes.  Please call me if you would like to discuss this further.


 


Tom Freeman


973-303-8151.

 
Don Grava
Member: 2016
Posts: 1

Subject: Re:Seeking creative ways to sell $5.5M PR firm to employees

Submitted on 06-21-16 11:19 pm.
Message:

If the objective is to sell the business to the employees, it's really a matter of structure.  An M&A firm, which traditionally looks for several buyers to create an auction, probably isn't the solution.  And, ESOPs are not a good solution.


I have some ideas that I'd be happy to share, if you'd like to contact me directly.


 


Don Grava


Founder and President


Versailles Group, Ltd.


617-449-3325


dgrava@versaillesgroup.com

 
Tom Loftus
Member: 2011
Posts: 1

Subject: Re:Seeking creative ways to sell $5.5M PR firm to employees

Submitted on 06-30-16 3:37 pm.
Message:

Eric,


You might ask the owner if one or more of the senior people would be interested, and have the financial capcity, to purchase the company.


Sincerely,


Tom Loftus

 
David Worrell
Member: 2015
Posts: 3

Subject: Re:Seeking creative ways to sell $5.5M PR firm to employees

Submitted on 07-05-16 5:58 pm.
Message:

What a great question.


I agree with all of the above... except for the recommended VR Broker route.  I think you'll find very little value in the traditional "multiple listing" model that VR uses.  In my experience, they invest very little time into helping you prepare for the sale, optimize your price, optimize tax consequences, or even get clean books.  Like a real estate agent, a typical business broker wants to list your business and sell to the first buyer...


Look for a "consultative" group (like mine -- Fuse Financial Partners in Charlotte!) who can help you polish up your financial performance, examine all the different exit strategies, work with your executive team to help them buy it, organize a capital stack that makes sense, and create a real win-win.  In our case, we typically accomplish this for LESS than the typical broker by taking a small monthly retainer as we go.  This reduces our risk, which reduces our price.  Again... win-win.


As for specific mechanisms....  We know a lot of PE Groups who would love to sponsor your executive team in a buy-out.  Some would probably bring a new CEO in too ... but you'd have that choice anyway.


Hope you find a route that makes sense.  


David Worrell
FUSE FINANCIAL PARTNERS

 
Eric Fishbein
Member: 2014
Posts: 9

Subject: Re:Seeking creative ways to sell $5.5M PR firm to employees

Submitted on 07-06-16 8:18 am.
Message:

Thanks all for your responses, your insight and phone calls.  Greatly appreciated.


 


Eric

 
Brian McGuinness
Member: 2009
Posts: 2

Subject: Re:Seeking creative ways to sell $5.5M PR firm to employees

Submitted on 07-22-16 10:43 am.
Message:

The first question I would ask is who are you selling to and what would be the management/ownership structure?


Is the transaction arms length?


How was the price determined?


 


Brian McGuinness

 
Eric Fishbein
Member: 2014
Posts: 9

Subject: Re:Seeking creative ways to sell $5.5M PR firm to employees

Submitted on 08-18-16 9:16 am.
Message:

Thanks Brian.


 


The sale will likely be to key employees.


 


The value determined by an independent valuation company (though I have done a rough valuation myself to get an idea where it will be).


 


Thanks again.


 


Eric

 
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