Frank Arcoleo on How To Sell Your Business | GP 12

Frank Arcoleo and How to You Sell Your Business | GP 12

Do you know what a business broker is and how could they help you if you are looking to sell your business? What are the different ways to sell a business? What is the sale process of a business?

In this podcast episode, Alison Pidgeon speaks with Frank Arcoleo on how to sell your business and some mistakes to avoid.

Meet Frank Arcoleo

Frank Arcoleo is a member of A Neumann & Associates, a full-service Mergers & Acquisitions Advisor to small business owners, generally businesses with $1 – $100 million in revenues. Frank has been in the M&A field for about 8 years.

Prior to that, he was a management consultant for KPMG and other national and regional consulting firms in the NY metropolitan area, then as an independent consultant. Frank is a Louisiana CPA and has earned an MBA in Management from the Wharton School of the University of Pennsylvania.

Visit Frank’s website or email him at f.arcoleo@neumannassociates.com

In This Podcast

  • Definition of a business broker
  • What business owners can do in order to prepare their business for sale
  • Business evaluation and the aspects involved
  • Some ways to sell a business
  • Non-disclosure agreement
  • Advantages and disadvantages of buying an existing group practice vs starting your own
  • Mistakes that business owners make when buying and selling
  • The sale process of a business

Definition of a business broker

We put buyers and sellers together and get an agreement so that the deal can take place.

  • Work with small business owners to prepare the business in order to sell from a process or structure standpoint.
  • Help business owners to establish what their business is worth and what their asking price should be.
  • Locate buyers and facilitate the sale.
  • Do not work for the CPA or an attorney firm.

What business owners can do in order to prepare their business for sale

Always begin with the end in mind.

The biggest inhibitor to a business being able to be sold as well as the price at which it can be sold is if the business is too dependent on the owner.

  • Ensure that there is a team structure within the business and delegate responsibilities to them.
  • Less intervention by the owner the better the outcome of the sale.
  • Create a vision and mission that you would like the business to accomplish.
  • Ensure that the business is profitable.
  • Create procedures that are simple enough to replicate.
  • Create a financial and management structure.

Business valuation and the aspects involved

The business evaluation should be done independently and objectively. There are three steps to the business valuation and those include:

  1. The value of the assets.
  2. The value of the cash flow.
  3. Comparisons to other businesses.

Some ways to sell a business

  1. Passing the business down to a family member.
  2. Transfer of the business to an employee or other related party involved in business
  3. Transfer of the business to an unrelated third party.

In both options 2&3 there is a combination of cash down payment, financing through a bank/non-bank entity or seller note/earn-out.

Non-disclosure agreement

In a situation where it becomes known that the business is for sale there is a grave possibility of losing your best clients and best employees.

An NDA is important as it serves as a protection against the loss of customers and employees.  Instead what is done is create a short description of the business for the potential buyer to look at without giving the name of the business away. If someone is interested they will need to prove that they can be a legitimate buying candidate. If they can, they are sent a restrictive NDA to complete, once this is signed they will receive a confidential memorandum that contains information on the business structure, products or services, growth opportunities, and it’s competitive advantage.

Advantages and disadvantages of buying an existing practice vs starting your own

Starting your own practice

Advantages include the fact that the business structure is created by you and you hire all your employees.

Disadvantages include the fact that starting up a business is time-consuming and can be costly.

Buying an existing practice

Advantages include that it can be a great way to build wealth and structures are already in place that are able to generate a substantial amount of profit.

Disadvantages include a high staff turnover which can negatively affect an already existing business.

Mistakes that business owners make when buying and selling

Typically, buying and selling are not symettrical.

  • Sellers make the mistake of trying to do the sale on their own. Therefore the pricing is incorrect or there is a lack of confidentiality.
  • Buyers make the mistake of not carrying out their due diligence efficiently enough or not doing a sufficient amount of research before purchasing an already existing business.

The sale process of a business

  • The process can take up to a year or more.
  • Brokers will first have to establish if the business is saleable.
  • They will also have to assess if the business is too dependent on the owner.
  • The value of the business needs to be profitable before a sale can take place.

Useful Links:

Meet Alison Pidgeon

Alison Pidgeon | Grow A Group Practice PodcastAlison is a serial entrepreneur with four businesses, one of which is a 15 clinician group practice. She’s also a mom to three boys, wife, coffee drinker and loves to travel. She started her practice in 2015 and, four years later, has two locations. With a specialization in women’s issues, the practices have made a positive impact on the community by offering different types of specialties not being offered anywhere else in the area.

Alison has been working with Practice of the Practice since 2016 and has helped over 70 therapist entrepreneurs start and grow their businesses, through mastermind groups and individual consulting.

Thanks For Listening!

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