The preferable way to get paid at the Closing Table is in cash. A Buyer assembles that cash from various sources: the Buyer's own resources, investors, a commercial loan from a bank, or other types of loans such as mezzanine financing. 

Often times, there are seller notes, where the seller loans the buyer money to buy the business.

These seller notes can be thought of as bridging the gap between what the buyer and seller think the business is worth and what the lender thinks the business is worth and is willing to loan against. 

Seller notes are typically secured, just like a home mortgage, but they are always subordinate to the bank loans. 

There are occasionally contingent payments made to the seller depending on events after the close. For instance, perhaps an earn-out is paid if the revenues in the first year after the close are equal to or greater than the revenues in the year before the close. 

How you get paid is every bit as important as how much you get paid, and your Abraxas Advisor will work with you to get a deal in place that satisfies you on both dimensions.  

The value of the business must be viewed from the perspective of a buyer. A buyer is looking for a solid operational structure that can exist without depending on the expertise of the current owner.

What are the characteristics of your business that a buyer would pay a premium for, such as a highly competent management team or a well-developed brand name?

Conversely, what are the areas of your business that a perspective buyer would view as a detriment, such as customer concentration risk or the business's reliance on you as the owner?

An Exit Plan can help you, the owner, understand the business from the buyer's perspective and will identify the gaps in your business that will need to be filled. 

Another Business value is not an easily calculated number, as it depends on many variables.

At  Abraxas, we think that enterprise value equals cash flow divided by risk.

Cash flow is the amount of money generated by the operation of the business before the owner takes a salary or benefit out of the business. This is called different things, often owner's discretionary earnings or adjusted EBITDA. 

Different cash flows have different values: for instance, the cash flow generated by a manufacturing business is worth more than the cash flow generated by a professional-services business. 

And, two businesses in the same industry, with the same cash flow can have different values. This is where the concept of risk comes in.  Here we define risk  as a function of the sustainability of the cash flow: what are the chances of the cash flow after the sale will be equal to or greater than the cash flow before the sale. Factors that could impact this include:

• Strength of the management team
• The importance of the seller in generating the revenues of the business
• Customer concentration 

At Abraxas, we strongly believe there is, in fact, process for selling a business.

The basic approach is this:

• We get to know your business at a detailed level and use that knowledge to write a book that describes your business in ways that are compelling to a prospective buyer.
• We source buyers for the business.
• We assist the prospective buyer in assessing the business, and we negotiate with the buyer to get to an agreed letter of intent or term sheet.
• From the offer to the Closing Table is a tortuous journey. The buyer's bankers come in and do their own assessment of the company. The buyer's due diligence team comes in and does detailed reviews of the seller's books of record, assets, corporate standing, and operations. And the transaction attorney's negotiate all of the documents needed to close the transaction.
• During this period from offer to Closing Table, the deal is incredibly fragile. Through our management of the moving parts and, just as importantly, our management of the relationship between our client and the buyer, we have been inordinately successful in getting our deals to the Closing Table. 

It takes a village to raise a child...

...and it take a team to sell a business.

Think of Abraxas as the quarterback that is going to get you to the Closing Table. To be successful, we need three other position players on our team to prepare for the final negotiations.

• A Transaction Attorney whose everyday job is negotiating corporate transactions for businesses the size of yours. This attorney needs to have access to many different types of legal expertise, from employment law to real-estate law to intellectual property.
• A Tax Accountant who has deep experience on the tax law as applied to business transactions. While most tax accountants are very adept at compliance - filing the various returns each quarter and each year, we need a tax accountant that is an expert on looking at tax treatment of the sale of a business. 
• A Financial Planner. It is Abraxas's job to get as much as possible for your business. It's the financial planner's job to help you keep as much as possible from what you get paid for the business. 

There are three principle types of buyers:

• An Individual Buyer who is buying a business that will generate income for himself.
• A Financial Buyer, such as a private-equity firm, that is buying the cash flow of the business to benefit the investors represented by the firm.
• A Strategic Buyer - a company who is buying another company to complement or enhance another business.