Selling My Business with Palmer
In the marketing world, a business is valued by applying a multiple to your company’s Adjusted EBITDA. It is crucial to determine your Adjusted EBITDA, and accurately represent the true profitability a future owner could expect to receive post-transaction. For example, any personal costs, non-recurring expenses, or salary adjustments can create a significant delta between your net income and Adjusted EBITDA. Once your true Adjusted EBITDA is determined, a market standard multiple is applied. The more profitable your business is, the larger the multiple will be. Take a look at the multiples we’re seeing in the market below!
- Adjusted EBITDA < $1M can expect a 2x-4x multiple
- Adjusted EBITDA between $1M-$2M can expect a 3x-5x multiple
- Adjusted EBITDA between > $3M-$5M can expect a 5x-7x multiple
- Adjusted EBITDA > $5M can expect a 7x-10x multiple
Yes the numbers drive the valuation, but they aren’t everything! Where your business falls in the multiple range is governed by the qualitative factors outside of your financial statements. These qualitative factors include:
- Revenue Source
- Specialization (Services & Industry)
- Client Breakdown
- Quality of Clients
- Team & Founder Involvement
- Business Devleopment Process
- Brand Recognition
- Growth Potential
- Transition Process
The Sell-Side Process
Schedule a Call and Meet the Team!
Meet with the Palmer team via Zoom to learn more about your agency, explore acquisition process & timeline, and gain a deeper understanding of our services & expertise.
Get a Valuation
We'll ask for some financial states to evaluate and determine the market value of your business.
Sign the Listing Agreement
Once we've determined the go-to-market value, we'll have you sign our Listing Agreement to officially get the ball rolling!
Compile Materials
As we prepare to go to market, we'll request additional information about your agency to highlight what makes you special. We'll showcase elements like your team, services, client breakdown and more in our marketing materials.
Buyer Outreach & Engagement
We tap into our robust database and actively reach out to new buyers who are an ideal match for your agency. Interested buyers will sign an NDA to learn more about your business. We'll take care of the vetting and setting up virtual buyer meetings.
Letter of Intent Submission & Negotiation
Prospective buyers will provide a Letter of Intent, which we'll negotiate on your behalf. Rest assured, we've got your best interest in mind.
Sign Letter of Intent & Due Diligence
Once you've found the buyer you want to move forward with, you'll sign the Letter of Intent to ensure all parties are on the same page. We'll support you through the Due Diligence process which is a time for a buyer to look under the car hood.
Closing
You made it, congrats! We'll ensure the correct documents are in place and ensure you & the buyer are aligned on closing deliverables.
Palmer IS
Ready for your success
FAQs
The process to sell your business typically takes 4-7 months from engagement to the closing of the transaction. We’re there every step of the way to ensure we’re on track and can close on a quick timeline.
It’s never too early to explore the option of selling your business. Our team is here to support every step of the way! Schedule a time to chat with us to learn about Palmer’s process and get a valuation of your agency.
Several factors contribute to the success of an M&A transaction. Here are a few!
- Strong Financials: Having strong financials show to a buyer you have a solid foundation and have consistent year-over-year growth.
- Non-Risky Qualitative Factors: Think in the mind of the buyer. A buyer will take into account the risk associated with acquiring your agency. It’s crucial to demonstrate elements such as recurring revenue streams, a strong team, and a well-defined business development process. These factors significantly enhance the attractiveness of your business to potential buyers.
- Open Mindset: An open-minded Seller facilitates a smoother process and creates a collaborative atmosphere. It’s important to meet various buyers to ensure you have a strong idea of who the buyers are in the market and what types of deal structures you can receive.
- Seller Who Can Effectively Convey the Value of Their Business: A seller who can adequately communicate the value of their business plays a critical role. Let’s not forget – you’re selling your business! Present it in the best possible light to maximize success.
Ensuring confidentiality in the M&A process is a top priority to us; we don’t take this lightly. Any potential buyer undergoes thorough vetting by the Palmer team and must sign a Non-Disclosure Agreement (NDA) before receiving access to additional information. Additionally, we establish communication methods that make sense to you, whether it’s via text, Slack, or FaceTime – we’ll make it work. We’re committed to maintaining the utmost confidentiality throughout the process.
Deal structures may differ depending on the buyer, but let’s get one thing straight: expecting 100% cash at closing might not be a reality. In agency transactions, it’s common to see a blend of cash, earn outs, equity and seller’s financing. At Palmer, we fight for the highest amount of cash upfront. After all, cash is king. We’ll work to secure the best possible terms for you.