M & A Sale Announcement - National Medical Staffing Agency

Playbook Advisory Brokers the Sale of a Chicago based National Staffing Agency

• Jim Peddle acted as the exclusive buyer representative

• 90% SBA Financing provided by 5/3rd Bank

Playbook Advisory announced the sale of a $4mm Chicago area medical staffing agency to a successful serial entrepreneur and private investor.

"Our firm acted as the Buy Side Adviser for the Buyer, who was seeking to purchase a profitable area company for the past two years. Once we determined the buyers needs, our firm provided a quick introduction to an area company that fit the profile the Buyer outlined at the first meeting." Said Jim Peddle, President & Founder, Playbook Advisory.

"It's a great fit for the buyer and the seller is excited to pass on their legacy to someone who will continue to grow the company with the existing staff."

Financing for this transaction was provided by the Chicago office of 5/3rd Bank, which continues to expand their SBA financing programs for small businesses. The team at 5/3rd offered 90% financing (supported by a standby seller note) to go along with a line of credit to support the balance sheet and to provide growth capital.

If you are an interested buyer and would like to discuss your search please contact Jim Peddle at 312-525-9622 to learn more about our Buy-Side solutions as well as financing options.

We have a proven model for targeting, soliciting and closing Buy-Side engagements. With both a retainer and non-retainer/success fee approach, we are flexible as to providing the services you need. We can provide buyers everything they need to successfully close a transaction. Let our expertise help your search & purchase!

Please let us know if you would like additional information on any listings currently for sale with Playbook Advisory or go to our website for up to date information on companies for sale.

To reach Jim by email: 

president@playbookadvisory.com

To reach Jim by phone:

312-525-9622  

To reach our website:

Company Website

Other Buy-Side Posts

SBA Examples - Financing & Fees

Keeping Confidentiality

Structuring a $1.8mm SBA Deal

Ten Questions a Buyer Should ask Themselves Before Buying a Business!

The M&A market has continued to be very strong and active in early 2020 despite the headwinds from continued fighting between the two political parties, Donald Trump tariffs with China and the poor business climate in the State of Illinois. At our firm we typically see 50-60 buyers for every listing we bring to market so their is a tremendous amount of demand for profitable and stable businesses. With the increasing number of baby boomers now retiring each month, there is a strong demand for qualified Buyers. By qualified, we don’t just mean those who are financially capable of buying a business. In this post we address some key points buyers should consider when buying a business.

1. Are you 100% convinced you are an entrepreneur? Can you handle the financial commitment you will need to make as well as handle the risk of putting at risk your savings and credit rating that have been built over the years?

As compared to the average person, entrepreneurs often have higher levels of risk tolerance. As the saying goes, there are rarely "free lunches" in the capitalist marketplace. To reap the rewards of a successful business venture, aspiring owners will most likely need to assume risks-perhaps sizeable ones. If you are the type of person that lies in bed all night worrying about the performance of your investments, risking a significant sum of your hard-earned personal capital in order to purchase your own business might not be your calling. A business buyer must assess their level of competency. 
 

2. Who is funding your business purchase? Do you have the capital for the purchase as well as the working capital?

 Aspiring owners need to consider not only the initial capital necessary to fund the purchase, but also the potential future capital requirements the business will require either to grow or to continue to exist as an ongoing concern. Invariably, most industries fall on hard times at some point. When and if these times come, owners may be forced to fund their operations differently. Capital markets may tighten, forcing owners to provide direct capital infusions or requiring owners to forgo salaries and benefits for an extended period of time. This question should be fully considered  by the business buyer prior to incurring the expensive transaction costs related to a potential business purchase.
 

3. Are you comfortable with the impact to your personal life as a result of owning your own business?

 Business owners typically work very long hours for the benefit of their business and their livelihood. This hard work may come at the expense of family or social commitments. If aspiring owners are not willing to make these sacrifices and are still committed to buying a business, they will likely need to pay someone else for their sacrifices. This compensation typically is in the form of additional cash or a slice of equity ownership, which will dilute the expected investment return of the business owner.
 
4. Do you really possess an in-depth understanding of the industry?

 Aspiring owners need to have a firm grasp of the competitive dynamics of the industry where the business they are considering purchasing resides. For example, do they know the competitors, the industry trends, how the business is positioned against these trends, the competitive advantages of the business, how defensible these competitive advantages are and whether the industry is at risk of becoming commoditized? Answers to these and other industry dynamic questions prior to making an offer for the business will go a long way in helping to avoid overpaying for the business, while at the same time presenting a reasonable and compelling offer to the seller.
 
5. Are you qualified to lead and manage the business, or will you need to employ professional management and a board of advisors?
 
Owners of businesses, particularly small businesses, oftentimes wear more than one functional hat (i.e., operations, human resources, strategy, finance). If an aspiring owner's experiences have been narrow in scope, he or she may need to hire an experienced CEO to effectively run the organization. In either case, no matter how talented aspiring owners are, they will need to surround themselves with strong individuals in order for their business to be successful over time. Having an existing management team in place that knows the business will help the business buyer and ensure a smoother transition upon the change in control.
 
6. Have you considered the opportunity cost of the potential investment?
 
Presumably, one of the reasons an aspiring business buyer is interested in purchasing their own business is to make money. Oftentimes this will require a significant up-front payment on their part. Aspiring owners not only need to consider the expected return on the proposed investment, but also how this compares to other investment opportunities available in the marketplace. These other investment opportunities (which could include controlling positions in other businesses, stocks, bonds, commodities, real estate, private equity and venture capital) may offer higher expected returns for a similar or lower level of risk.
 
7. Are you experienced in navigating through the complex M&A process?
 
There are many steps in the M&A process. These can include: identifying the industry and business, valuing the enterprise, performing due diligence (financial, operational, legal, etc.) and negotiating the purchase price and definitive legal agreements. If you are not experienced in each of these areas, aspiring owners will need to surround themselves with experienced M&A advisors that can guide them through the M&A process. The benefits (i.e., reduced purchase price, legal protections) of surrounding yourself with seasoned experts should far outweigh the costs for their advice.
 
8. Have you considered what you will do in the event that the business fails?
 
While aspiring owners may believe this will never happen to their business, factors beyond their control may force them to eventually liquidate the business (i.e., severe economic recession, loss of key customers to competitor). If aspiring owners are beyond middle age, it might be difficult to reenter the corporate world, let alone at the compensation level commensurate with their years of experience.
 
9. Ask the current owner why they are interested in selling their business?
 
Understanding the seller's motivations will not only help in negotiations (i.e., buyer will have more leverage if the current owner is desperate for liquidity), but can also raise red flags for a potential buyer. For instance, if the current owner intends to purchase another company with the proceeds from the sale, this may signal that they believe that the business has peaked.
 
10. A business buyer should consider the timing and avenue of their future exit strategy
 
To the aspiring owner, this may not seem like a critical item to consider at the onset of the process, but it is one of the most important. Unforeseen circumstances may require owners that intended to hold onto their business for decades to sell it prematurely. The majority of an owner's expected financial return may very well come from monetizing their investment. Aspiring owners need to consider the likely buyer of the business in the future (competitor or financial buyer), as well as whether there are any other parties interested in purchasing the business today, or if the aspiring owner's bid is the only "bid in town."
 
Owning a business is a challenging task. While this list of questions is not comprehensive, your answers can help dictate whether you are ready to purchase and operate a business. Not being fully prepared prior to entering into an agreement could be the difference between a successful transaction and the failure of a business venture.
 
Jim Peddle, Author & Business Broker,

All Rights Reserved

Other Posts for Reading:

Letter of Intent Best Practices

Example of an SBA Loan Structure & Fees

Why You Need an M&A Attorney

Your Business hasn't Sold...Now What?

We estimate that over 80-90% of businesses coming to market don’t sell.”

Jim Peddle, Business Broker, President

Understanding Why Your Business Hasn’t Sold & What You Can Do About It

Key Reasons Your Business Isn’t Selling - Tips for Business Owners Exiting their Business

Despite your efforts, not every business listed for sale finds a buyer quickly. This post explores common reasons your business might not be selling and offers strategic solutions to address these challenges effectively.

common issues preventing sales;

• High Listing Price: Often, businesses are priced too high relative to their cash flow or Seller’s Discretionary Earnings (“SDE”) The Listing Price is too high relative to the cash flow or “SDE” (Learn about SDE here)

• Customer concentration is significant - any customer greater than 20% can be problematic for buyers as well as lenders who prefer a broad customer base.

• High Working Capital Needs: If your business requires significant capital to operate, it can be less attractive to potential buyers.

• Low Cash Flow: Businesses generating less than $250,000 a year in SDE may struggle to attract serious interest.

• Key Employee Dependencies: Lack of Key Employees or established processes for staff can turn off potential buyers. Too much dependency or perceived dependency on the seller is an issue as well.

• Unorganized Facilities: Messy and Unorganized Facilities suggests management issues.

Addressing the Common Issues with actionable solutions;

Customer Concentration Challenges:

This specific issue is really common, banks don’t like it and buyers always want to knock down the price of business because the risk of losing one customer changes the value of the business tremendously. In my experience, the relationship is usually very strong with the Seller and there are good reasons for the buyer to retain this relationship. If you are the owner, ask the client for a contract that can be open-ended or is for 2-3 years in length. If this isn’t an option then look to structure contingent payments with the Buyer post-closing. Or negotiate an employment agreement that carves out this relationship and you the Seller help manage it for a time period after closing.

Possible Solutions:

A) Offer the Buyer heavy seller financing & an earn-out structure, or future royalty payments

B) Sell to a larger strategic competitor that dilutes the concentration risk

Declining Sales:

Another tough issue to deal with for a Seller and Business Broker. How significant is the decline? 1-5% is different than losing a top 5 customer and seeing declines of 15-20%. Banks don’t like to underwrite deals with negative year over year revenues, in addition, most Buyers aren’t able to always determine what is the added risk. Sellers should assess the reasons for the decline prior to going to market. Can the issue be remedied? If yes, read on, if no, go to the end of this article for final recommendations

Possible Solutions

(A) Offer heavy seller financing & earn-out, royalty payments

(B) Sell to a larger strategic competitor that is less concerned with declining sales

(C) Delay selling and make an investment in sales & marketing. **

Older Staff Members Near Retirement:

I recently had this issue as the Company’s employee census uncovered an experienced staff, but also the majority of employees close or beyond the age of normal retirement. One of the staff members was in their 80’s. Of all the issues for a business, this one can be properly managed with the help of a strong training and transition agreement with the Seller.

Possible Solution:

A) Offer Buyer extended training & transition to a buyer to alleviate concerns about staff,

B) Cross train existing staff, document the staffing responsibilities

Real Estate - Facility Issues:

When the property is worth more than the Current Business Can Afford to Pay**-This one is so common here in my hometown of Chicago, IL. Almost every week I come across a business that has a free and clear real estate with no mortgages and the financials show business with below-market facility costs. Due to the complexity, of this issue I strongly recommend Business Owners speak to an experienced real estate professional to best determine the plan of dealing with this prior to listing the company for sale.

Other Possible Solutions

A) Offer Buyer a rent structure that has below-market rent for a period of time

Note: Beware of SBA Requirements

B) Offer a Lease Option to Buy Structure

C) Offer a Credit to Buyer to move the business & equipment

Weak Company Financials:

No business owner should attempt to sell with messy or incomplete financials. You either never sell or end up financing a buyer who will only underpay to offset their risk.

Other Possible Solutions

A) Get professional help- ask your business broker for a CPA referral or bookkeeper to take over this job.

B) Switch accountants - Pay for an upgrade of the books and have a CPA complete monthly or quarterlies for you.

If you would like to discuss your individual situation directly with us feel free to email or call Jim Peddle at 312-525-9622 or president@playbookadvisory.com. Our experienced team of business brokers have significant experience that can overcome many of the above related issues when selling.

Other Reading:

• Ten Issues Sellers Need to Review Prior to Listing a Business

• Selling your Business in 2025

• Maximize your Profit: Hiring a business broker is Smart Business

• Sold: Recent Business Sales from Playbook Advisory