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The timing of the process will depend on many factors, including, how ready are you for sale, how attractive is your business, how attractive is your industry, how active are buyers in your industry, etc. For a ‘typical’ deal in this market we estimate the process taking 6-12 months, see this chart for a graphic on how this timeline breaks down.

The cost of using an advisor will depend on the size and complexity of the transaction. A ‘typical’ fee structure would comprise of an upfront commitment fee, to ensure you are committed to the process, and a success fee, based on a % of the sales price, that is only due if a transaction closes. The success fee would normally be somewhere between 5%-10% depending on the size of the transaction. However, these fees are always covered by the fact that the process typically returns 4-5x of fees paid in additional value for the Seller compared with initial offers received from buyers.
As part of the process all information is kept in the strictest of confidence. All initial marketing materials are provided with very general details of the business (i.e. Manufacturing business in the Western US vs. Company Name). Once a buyer is interested in the company, they are required to sign a Confidentiality Agreement and beyond this information can be drip fed to them over time to ensure they only see information relevant to their decision making as needed. The level of confidentiality will also be dictated by the buyer (i.e. a direct competitor vs. a non competing entity).
Business valuation will vary by company, by value method and even by valuation expert. Most values are a combination of EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) and an applicable multiple thereof. Ultimately the value of a company in a sale will be dictated by the market, the way the company is presented and how well the process is managed. Click here to see how a business can be given very different valuations depending on the reason. Also please review our information on Market Value Studies to learn more about our approach to valuations for transactions.
There are many different types of buyers, depending on your business and your goals you may get the best value from strategic buyers (i.e. direct competitors, companies in complementary industries), financial buyers (i.e. Private Equity Groups) or even Employees or Family Members.
Your level of involvement after the sale will be determined by the structure of the deal (i.e. are you selling all of the Company or just a % of it) as well as your involvement in the Company. The more involved you are and the more critical you are to the day to day running of the business the more likely you will have to continue working for the business after the transaction.
Ideally you should be working on your exit strategy when you start your business. However, the longer runway you have prior to an exit the better your chance of maximizing your value when it comes time to exit. Many of the things you can do to increase value will take a while to implement and buyers like to see some successes in decision making, so ideally we recommend that exit planning should begin at least 2-3 years prior to an expected exit.
The market for your business will be determined by many things, including your industry, buyer activity and the economy. In order to assess whether there is a market for your business and what that market is likely to pay we have developed a Market Value Study to research your specific situation and get a sense of what your business is currently worth to your market.
There are many benefits to using an investment banker to sell your business, including:

  • Presenting your business in the best light to maximize value (See Value Creation example for more details)
  • Understanding of the process to maximize value (see The Selling Journey for more details of the selling process)
  • Allowing you to remain focused on the business during the process
  • Removing emotion from discussions with buyers and creating a barrier between you and the buyer that can preserve your relationship during negotiations
  • Communicating with the various professionals on both sides, ensuring the intent of the deal is accurately reflected in legal documents and assisting the seller understand in plain English what all the various legal and deal jargon means to them.

An investment banker’s primary role is to find a buyer for your business and maximize value. In the event you have already found a buyer an Investment Banker can still be beneficial for many reasons, such as:

  • Maintaining your relationship with the buyer by being the middleman during final negotiations
  • Keeping the buyer honest throughout the process
  • Ensuring the legal documents reflect the intent of the deal you negotiated
  • Highlighting any issues with the deal structure and commenting on items that might have been missed or not fully
  • negotiated early in the process
  • Keeping the deal moving fast enough to avoid deal fatigue on either side
  • Assisting with due diligence and allowing you to focus on your day to day business operations

Most Investment Banks will prefer to run a full process or maintain their standard fee structure. Our services and fee structures are tailored to your specific needs ensuring we help our clients in the most efficient and effective way possible. See our comparison chart for more information.

The faster you can get to closing the more likely chance you have of a successful deal. In order to achieve this and still maximize value, here are a few things you should be prepared to do:

  • Provide accurate and ‘clean’ financials as early on as possible
  • Have an audit performed and your tax returns up to date
  • Don’t get too detailed with Seller add backs (i.e. personal costs being run through the business), ideally remove these from the financials prior to embarking on a sale
  • Negotiate significant deal terms up front, don’t defer these to the last minute or later on in the deal. Most of the time this will result in buyers redoing due diligence or getting cold feet rather than rolling over and agreeing to them
  • Ensure all legal issues are readily available, including copies of contracts and latest status and legal opinion on any current legal cases

There are many things business owners can do to maximize value, many of these will be determined by the buyer type that they are selling to and their industry, but some of the most common techniques will include:

  • Diversifying your reliance on large customers and suppliers
  • Creating a strong management team
  • Documenting all Intellectual property, including processes as well as technology
  • Minimizing reliance on key individuals, especially the owner

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Our Location

BiggsKofford Capital
630 Southpointe Court, Suite 200
Colorado Springs, CO 80906

P: 719.579.9090 | F: 719.576.0126

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As a client of BiggsKofford CPA firm, it was an easy decision to use BiggsKofford Capital to assist with the merger of Benefit Resources into Hub International...
BiggsKofford Capital provides personal and business advice. We are very comfortable including the BKC Team in all major business decisions.
I love the thrill of being an entrepreneur and am always looking for ways to expand my business operations. I consider BiggsKofford Capital an important part of my business acquisition team and trust them...
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