uying a business requires a unique approach depending on the type of buyer and the goals for the transaction.
Business buyers are interested in a business for various financial, and often personal reasons.
So there are numerous aspects that could make a business valuable.
But at the heart of a valuation process is cash flow, the amount of cash a business is producing, and the risks associated with maintaining or increasing that level of cash once the business is purchased.
Buyers determine cash flow risks by elevating such things as a company's unique position in the marketplace, the consistency of its sales process, and reliability of contacts with suppliers and key employees.
Having solid operational procedures and processes in place significantly reduces cash flow risk and increases the value, and marketability, of any business.
At Abraxas, we are particularly well-suited for working strategic acquisitions because the members of our team have actually sat in the chairs of multiple business disciplines - something we consider very important to evaluate investment potential.
We begin by understanding our client's objectives in terms of why they are acquiring the business and how it fits into their existing operation.
We next perform a targeted search, identify prospects and prepare a term sheet which highlights important business issues. The challenging part is getting from this term sheet to the Closing Table because there are so many moving parts, such as financing, due diligence, and the preparation of closing documents.
The most important thing to understand is that throughout the entire process, we are effectively managing the relationship and negotiation between client and seller.
Buying a business is complex. It's our role at Abraxas to understand our buyer's objectives and then to search out a business that best meets those objectives.
Once a prospect is identified, we prepare a term sheet, again with our buyer's objectives in mind.
During the entire negotiation, we manage the relationship between the buyer and seller - which helps to assure a smooth and efficient due diligence process.
Finally, we work with the attorneys, and other resources such as bankers and accountants, to develop closing documents that best meet our client's needs.