![Page 1: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/1.jpg)
Selling or Buying
a Professional Services Firm
![Page 2: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/2.jpg)
Learning Objectives1. Deciding to transition, how to, and to whom?
2. Valuing your business
3. Making the Sale – the process
4. Making the Acquisition– the process
![Page 3: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/3.jpg)
Question 1
“I’m 60 years old and I need to start thinking about transition. I want to keep working but I want to cut back my hours
and get rid of ownership duties while leaving a legacy for my employees and
team.”
![Page 4: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/4.jpg)
Deciding to Transition – Selling Your Business
You are thinking about retirement, other business opportunities, and/or suffering burnout.
You are tired of the responsibilities of business ownership like payroll, taxes, insurance, HR but would like do what you do best and continue in business.
Or, you need to get out of the gap by expanding people and resources, and wish you were bigger to play in bigger markets.
![Page 5: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/5.jpg)
Question 2
“I’ve been thinking about selling or merging or partnering with another
organization to help with that. What do you think of that?”
![Page 6: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/6.jpg)
Ways to Transition (sell) your Business
1. Sell to family members
2. Sell to employees
3. Sell to fellow partners if any
4. Sell to Venture Capitalist/Private Equity companies
5. Sell to larger firm in your industry, i.e., strategic acquisition
![Page 7: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/7.jpg)
Question 3
“What is your process of representing me and my firm if I decide to approach the
open market to be acquired/sell my business?”
![Page 8: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/8.jpg)
The Selling Process Engagement Agreement Exclusivity Fees Valuation Cost Valuation Process Marketing Package Target Marketing Discussion
![Page 9: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/9.jpg)
Question 4
“What is the timing of all that?”
![Page 10: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/10.jpg)
Timing Preparation – Valuation and Marketing Package First Wave of Marketing Subsequent Waves of Marketing Initial Conference Call Visit and More Review LOI Due Diligence Closing
![Page 11: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/11.jpg)
Question 5
“How do I protect the confidentiality of the situation?”
![Page 12: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/12.jpg)
Confidentiality General Approach to the Market Non – Disclosure Agreement Continual Reinforcement
![Page 13: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/13.jpg)
Question 6
“How is Value Determined?”
![Page 14: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/14.jpg)
Question 7
“What kind of information will you want for the valuation”
![Page 15: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/15.jpg)
Question 8
“How long is a typical transition and
what goes in to it”
![Page 16: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/16.jpg)
Employment Agreements – Staying On With New Company
Are there premiums for being a past owner Will the seller be paid the same even though
there are less ownership duties Will the seller become billable What is the length of time –
specified or ongoing
Photo Supplied by FreeDigitalPhotos.net
![Page 17: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/17.jpg)
Employment Agreements – Staying On With New Company
How are benefits like insurance handled? Is this part of the purchase agreement? Are there any considerations for employment
agreements as it relates to SBA financing?
Photo Supplied by FreeDigitalPhotos.net
![Page 18: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/18.jpg)
Question 9
“What is the market like now?”
![Page 19: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/19.jpg)
Question 10
“Can we get references?”
![Page 20: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/20.jpg)
References
Email us for references:
Al Lautenslager - [email protected]
Patrick Neal - [email protected]
![Page 21: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/21.jpg)
Question 11
“How do we get started?”
![Page 22: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/22.jpg)
Buy Side Considerations
Question 1 – “Why should I consider an acquisition?”
![Page 23: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/23.jpg)
Considering an Acquisition
In the Gap A need to diversify projects and services New geography The need of people Capacity
![Page 24: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/24.jpg)
Question 2
“What is the process to acquire a firm?”
![Page 25: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/25.jpg)
Acquisition Process Respond to Business Opportunity Summary after
signing NDA. Schedule a conference call and/or personal visit Submit a non-binding letter of intent Due Diligence Determining how to fund the acquisition Prepare closing documents and agreements Closing
![Page 26: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/26.jpg)
Question 3
“How Do I Fund an Acquisition?”
![Page 27: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/27.jpg)
Acquisition Funding Cash Local Bank SBA backed funding Promissory Note with Seller Earn-out – How is this defined and when is it
used? Incentives
![Page 28: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/28.jpg)
Question 4
“What does the structure of a deal typically look like?”
![Page 29: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/29.jpg)
Question 5
“What should I expect to pay for a firm that I am acquiring?”
![Page 30: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/30.jpg)
Doing Things On Your Own VS. Using an M & A Advisor
![Page 31: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/31.jpg)
Things To Watch Out For
1. Beware of the M&A firm that is charging a large retainer fee up front, does not deduct it from the final fee and does not perform.
2. Beware of the M&A firm that does not have a focus in the Architectural / Engineering / Construction / Interior Design markets.
3. Beware of the M&A firm that lists businesses for sale, online and then adapt a “hope” strategy, especially in the A/E/C industry, with no targeted selling.
4. Beware of firms with a lack of experience in your markets.
5. Make sure you work with a firm that understands value, the valuation process and pricing of the business to be sold.
![Page 32: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/32.jpg)
Things to Consider – Internal Transition vs. External Sale
Do you have an effective leader to replace you? Can a new leader(s) work together as a team like you did Do they have money to pay you upon a sale Are they willing to take on debt for a sale and can they
make debt payments Will new cash flow allow for growth? Do they have an entrepreneurial mindset - steady
paycheck vs. ebb and flow of ownership Is a larger, acquiring firm more appealing
![Page 33: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/33.jpg)
Wrap-Up/Summary Selling Your Business
Transition Planning Contact Stonemill Partners – Engagement Valuation Marketing Package Approaching Targeted Prospective Buyers Entering the buying process once a
prospective buyer is interested
![Page 34: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/34.jpg)
Wrap-Up/Summary Acquiring a Business
Review a Business Opportunity Summary (BOS) Initial Conference Call/Visit with Seller Review of Information Letter of Intent Due Diligence Financing Agreement Preparation Closing
![Page 35: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/35.jpg)
Wrap-Up/Summary Using an M & A Advisor - Advantages Things to Watch Out for Internal vs. External Transition – Things to
Consider & External Advantages
![Page 36: Selling the professional services firm role play version - 60 minutes iii](https://reader035.vdocuments.site/reader035/viewer/2022070523/58ecc2231a28ab36358b4651/html5/thumbnails/36.jpg)
Thank You Its your business Your future depends on your decision Sell to capture value Buy to increase value and grow Rely on Experts Capitalize on your dreams, vision and
passions!