Being a Business broker allows you the opportunity to be involved in many different processes and keeps life interesting. Recently I was approached by a business owner I have worked with for the last 6 or 7 years, to help his son raise finance to buy the family business.

No problem I said, after all this is a service I am involved in on most deals I complete anyway so how hard could it be? As usual you should never ask yourself that question; it’s not good for your karma.

It was a very interesting process; I thought there would be three banks that would be interested. ANZ, BNZ and Westpac (This would be a leveraged transaction and experience dictates that this is not ASB’s appetite).

So first step attempt to put a document together that represents the MBO (Management Buy Out) nature of the transaction. I created a standard draft IM showing the historical performance of the business and opportunities moving forward together and then needed to add all of the extras that would be required:

• Personal Property Valuation and Statement of Position of buyer
• Plant & Equipment Valuation
• Projections and Cash Flow statements to represent new entity performance; and debt servicing capabilities
• Commentary on direction of succession plan
• SAP (we had the outline of a deal but it needed to be written up)
• Business Plan
• Key staff breakdown
• Competitor Analysis
• Facility Requirements
• Client Testimonials

The most interesting part of the process was the fact that once you actually have a mandate from both the parties, negotiating on their behalf with banks, lawyers, accountants, valuers etc. it becomes easier than when you are in a normal business sale process. You have the mandate so things get done and normally the professionals especially have a low regard for brokers.

Well cutting a long story short we successfully gained three finance offers from the banks we offered it to, at excellent terms. All the parties seem happy with the process and in the next couple of weeks the business should change hands.

Would I do this again? You bet! Will actually be adding this service to my website and once the deal goes through will write up a case study.

The benefits of someone like myself running this process rather than an accountant is that you want a deal maker making the deal. A good business broker is a transactional sales person used to keeping multiple parties on track. Getting offers from all 3 institutions meant that we could pick the bits that worked from each and coax the successful bank into adding all of the features/rates to their bid.

All in all it was a fun process. If you think you need help raising finance on a business you are looking to purchase maybe you should give me a call.