Information For Sellers… 

 Typical questions asked by owners of BD’s, once they have decided to sell, are “What is my company worth?” and “How does the process work, and how long does it take?”. Below is a written description designed to give you a conceptual understanding of the process, as well as the time involved.

In practice, the time required from initial request to closing date will vary depending on a number of factors - complexity of the arrangements, how prompt the parties are in production of necessary documentation, and what kind of work load the regulators are under at time of submission of documentation for review. Market conditions are also a factor.

Given the regulatory hurdles involved in selling a BD, it is well to note that if the transaction is not structured properly, there can be significant down time for the BD. However - If structured correctly, it is possible to sell an operational BD to a buyer with NO downtime. BDM specializes in this niche market and can guide you to a smooth transition.

Identification and Introduction:

>> A potential Seller of a BD typically contacts BDM, and confidentially discusses his goals. Once the Seller understands the process, and the Seller is interested in proceeding, BDM will ask relevant questions to perform a valuation. BDM’s valuation model is based on certain relevant factors combined with current market conditions. The model has proven very effective in identifying value with the resultant potential sales price reflecting the a very acceptable price which the current market will bear.   Provided the proposed sales price is acceptable to Seller, Seller signs Agency Agreement.

>> BDM goes to work to find a suitable match. BDM has been in this niche market for many years, and has facilitated thousands of transactions. Consequently, we can often locate a qualified Buyer, based on the Sellers needs, in a much shorter time frame than might be imagined.

Once an appropriate Buyer has been identified, potential Buyer is brought to the attention of Seller. If seller is interested in Buyer, introductions are made, and Buyer is provided with all publicly available documentation on the Seller, including (but not limited to) audited financials, current focus report and business plan. At this time, the seller will produce two due diligence packages – and when notified that a good faith deposit is in escrow, the seller should send one to the potential buyer, and guard the second copy, just in case the first buyer does not follow throug

Exploration:

>> If the Buyer now wishes to do due diligence, he will place a refundable deposit in escrow, in order to take the BD off the market for a short time, to complete due diligence without fear of the company selling out to another buyer. Once a deposit has been received, BDM will advise the Seller. Seller will now send out the due diligence package to the potential buyer. Experience has shown us that by this time, Buyers have typically found a match and will have their decision confirmed by due diligence. 9 out of 10 deposits lead to a completed transaction.

>> Once due diligence has been successfully completed, and there has been a meeting of the minds, BDM will send skeleton purchase agreements to the Buyer and Seller, and both will tailor these agreements to suit their specifics, management arrangement, etc.

>> Buyer will send a written offer to BDM.  It is forwarded to Seller, and, if acceptable to seller, Buyer and Seller agree to closing date no sooner than 30 days after written notification to the Nasd of the pending transaction. Meanwhile, Buyer will wait to receive a 1017 package from the local Nasd office. It is important to note that the Buyer will have only 30 days to create and file the 1017 package. There is a significant amount of work involved in preparation of the 1017, and preparation of this package can take a lot of hours, so buyer should be prepared for this effort, and Seller should be ready to assist with any necessary information.

Close:

>> Depending upon the particular arrangement the buyer and seller have made, closing may take place prior to, or at the same time as the conclusion of the Nasd review of the Change in Membership (1017), when, as and if approved. Please note that depending upon the current work burden that the district regulators are facing, review times will be affected. Often, the review takes 30 to 60 days. Infrequently, the review takes as long as several months.

BDM has shepherded thousands of successful transactions, and will guide the Seller through all phases of the process.  Should additional help be required, with the Due Diligence Package, for example, consider using BDM’s proven team of consultants. Our consultants have significant transactional experience, and can make the process easier and smoother.

For more information, please see the "F.A.Q. For Sellers".