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Confidentiality

Confidentiality is the hallmark of every step of our marketing process. Libey adheres to the medical profession’s first law: Do no harm. Every potential buyer requesting confidential information is required to sign a Confidentiality Agreement. Every effort is made by Libey to assure any transaction activity is off the radar screen. We do not want our transactions to be known until after the fact, and then only with the permission of the owners and buyers.

Libey’s preferred method of selling a direct marketing business differs greatly from that used by most investment banking firms. We focus on “pre-emptive sales” rather than auctions. Where most firms will open the transaction to as many potential buyers as possible in order to drive the highest sale price, Libey’s experience is that this approach is difficult to manage, at best.

Our method of choice is to carefully analyze who is the most logical buyer best qualified to purchase the business for the right reasons at the right price. Then, we offer that potential buyer a time-limited, short period of exclusivity to evaluate preliminary information and data in order to provide the owner with a satisfactory Range of Value. If that Range of Value meets or exceeds the owner’s pre-determined sale price expectation, the prospective buyer is then given a second time-limited, short period of exclusivity to conduct preliminary due diligence and to provide the owner with an acceptable Letter of Intent to purchase. If the Letter of Intent meets or exceeds the owner’s terms and expectations, the prospective buyer is given a third time-limited period of exclusivity to conduct legal due diligence and provide the owner with a Sale Agreement and move to closing.

In contrast, the auction approach requires the seller to host numerous visits and requests for due diligence, often all at the same time, and many of which can simply be non-productive and revealing competitive “fishing expeditions” and “tire-kicking.”  Libey adamantly believes that total confidentiality is always in the client’s best interest and that “shopping” a business on the open market is always detrimental to the future options of that owner.

For competitors that are included in the process, we control the timing and the depth marketing materials provided to the buyer in order to ensure that sensitive information is never revealed until there is an appropriate degree of qualified interest.

The pre-emptive approach to selling requires the owner to come to a personal definition of an “acceptable selling price.” This is critical to the Libey method. When an owner allows “tire-kicking” to “test” the sale price, the outcome is almost always negative. The owner will attempt to “chase” the price until there is no one left to purchase the business. The erroneous belief is that “you can always get a higher price.”  Libey’s experience is that this is almost always false and that a satisfactory achievement of a pre-determined selling price—one that is fair and realistic—is the definition of a successful transaction.

In reality, here is the truth: The right price is that price where it no longer matters how much money you get from the sale of the business.  Or, said another way: When the owner thinks, ‘How much more do I need,’ then the right price has been defined. Libey gets to that definition with the owner before the sale process begins. It just works better.

Speed

Libey believes when buying or selling a business (but particularly in selling), time is always the enemy. External events, including economic changes or developments within the direct marketer’s business or market, can negate a sale or purchase almost instantly. In 2001, Libey had a transaction that was to close around September 20th.. We all remember what happened on September 11th. Needless to say, the transaction was lost after two years of hard work by all parties involved. Therefore, by experience Libey has learned that the quickest and most efficient time to close the transaction lowers the risk of failure to close. Provided, of course, the fast service never compromises the quality or outcome for the client.

Emotion

An intermediary has another important role: to deflect and absorb the emotion the owner will inevitably experience when selling or buying. During the sale process, is it critical that the business continues to operate and to achieve its projections. The buyer will be looking at those projections and any deviation can result in an unpleasant change in valuation. Libey’s role is to reduce to the greatest possible degree the stress and emotional buffeting so the owner can run the business efficiently and with total focus.

Emotion can be a deal killer. Emotion is also a very personal thing. The seller is giving up what may have been a life’s work; it is similar to seeing a son or daughter being married. A buyer will, all too often, be buoyed by excess enthusiasm for a potential acquisition. The intermediary’s role is to neutralize this dangerous emotional competition for common sense and discipline. There is no more important period demanding clear discipline and absolute common sense than the period during which a business is being bought or sold.

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