10 Tips On How To Sell Your Propane Business We understand that you have choices when it comes to selling your business. Pinnacle Propane is focused on pursuing opportunities in the propane industry and offering a unique exit strategy for propane operators when selling your business. Unlike many of our larger counterparts in the propane industry, we are committed to staying local and continuing the legacy you have built. Our goal is to bring innovation to the propane industry while remaining steadfast in our mission to help deliver safe, reliable propane service to our customers. The Pinnacle Propane Acquisition Program is designed to help you easily transition your business from owner to seller while giving you the peace of mind that our objective is to build on your success and remain committed to your community. Much like our operating model, our integration process is focused on service. We provide service to you and your employees during the process to make the transition as seamless and efficient as possible. As part of our commitment to the propane business owners we acquire and the way we believe the propane business should be conducted, we are pleased to share the following white paper, “Ten Tips on How to Sell Your Propane Business Guide.” We understand the magnitude of items to consider in deciding to sell your business. This guide provides helpful tips that we’ve learned through our experience and we offer it as a resource to help you in your decision to sell your propane business. Sincerely, Robert Chalmers SVP Corporate Development JP Energy Partners 10 Tips On How To Sell Your Propane Business When it comes to selling your propane business there are a number of items you’ll want to check off from finding the right buyer, to your due diligence process to the timing and closing of the sale. We’ve prepared the following ten tips to help guide you through that process and ensure a smooth transition from owner to seller. We hope you find this guide useful and informative. 1 2 How to get a fair evaluation of your business. Your propane business is worth as much as its ability to generate profits. However, to ensure you get a fair valuation for your business the buyer must do a thorough analysis of several years of the business operation and be knowledgeable enough to factor in the future outlook of the industry, economy and how it will continue to compete. Plus, you’ll need to ensure your selling price includes all closing costs, transfers and fees. To help the buyer in the due diligence process it is important to ensure your records are accurate and up to date and you don’t have any unreported cash sales, which is difficult to value. Finding the right buyer. This is your propane business that you’ve put the long hours in to build and making the decision to sell is one you probably didn’t make lightly. When reviewing possible buyers, you’ll want to get as complete a picture you can of how the acquiring company conducts business and understand if the operating model is a good fit with yours in order to make the transition as smooth as possible for you, your employees and your customers. It’s important to understand the mission and values of the company as well and how those align with your current business. 3 Conducting due diligence on the buying company. 4 Protecting your customers and employees interests. 5 Planning stages for selling your business. Much like you would if you were buying a new business, you should plan to conduct your own due diligence on the company looking to acquire yours. You’ll want to know that you are selling to a reputable business. Be prepared to ask for the information you need in order to evaluate the buyer. Important things to consider in your review include if the company is involved in any litigation, has the company obtained all licenses and permits and does the company have the necessary equipment and infrastructure in place for continued growth? What’s the company’s strategy regarding customer service, retaining employees and commitment to the community. Once your due diligence is complete, you should have a clear picture of the acquiring company’s business today and future plans. Your customers depend on you for service and your employees depend on you for their income. Ensuring that the acquiring company has a plan in place for the transition of both is an important part of the selling process. The company you choose to sell your business to should provide you with a complete transition plan that takes into account both your customers and your employees. This plan should include detailed outline of how the business will be structured going forward and communications plans for customers and employees. Ideally you want to sell your business in a vibrant economy with an active M&A market and to a company with strong cash flow, but having all of these factors align can be a challenge. It is often helpful to seek the advice or assistance of an M&A expert or organization to help you find the right time to sell as well as the right acquirer and to guide you through the negotiation process. 6 Exit strategies that work for the seller. 7 Pulling together the selling documents. You’ve decided the right exit strategy is to sell your business and you’re looking for or have found the right buyer. Now it is time to prepare your business for your exit. Part of the negotiation with the acquiring company is to ensure the exit strategy is in line with how you plan to transition the business. For example, will you stay on in an advisory role for a set period of time or will you turn the business over immediately. These terms should be agreed to prior to completing the sale. The key document required for the sale of your propane business is the sales agreement. It is important to make sure the document is accurate and incorporates all the terms of the purchase, including all assets, customer lists, intellectual property and goodwill. It is recommended the sales agreement be reviewed by an attorney. You can find a quick check list for putting together the terms of the agreement on the SBA.gov website, http://www.sba.gov/content/selling-your-business. 8 Ensuring a transparent and smooth transition from seller to buyer. As part of the acquisition process, the acquiring company should have an integration process in place in order to make the transition as seamless and efficient as possible for both your employees and the customers. When doing your due diligence on the buyer it is important to fully understand the company’s focus. Will the company be committed to staying local and building on your success? What has it done with past acquisitions? What is the level of service provided to you during the transition process? All of these things can factor into a smoother transition from seller to buyer. 9 10 The importance of timing in the sale. Selling a business takes time and preparation. If you are thinking of selling your business, you should begin preparing for this well in advance. A few key things to keep in mind leading up to your final decision to sell include, keeping an eye on the market in order to pick a time when the market seems optimistic, define your selling parameters and personal goals, consider leasing if new equipment is needed a year prior as you may not get that money back in your selling price and most importantly, be prepared to devote the time you will need to selling your business. Closing the sale. Once the selling price has been agreed to and the sales agreement paperwork has been signed, there are a number of legal and regulatory obligations, that must be fulfilled in order to finalize the close. A few of the steps that may be required depending on your current business structure, include filing forms in your state for the dissolution or cancellation of a partnership, LLC, or corporation, cancellation of any permits or licenses you hold, processing your final employee tax forms such as payroll taxes, withholding reports and notifying your local Commissioner of Revenue about your changed business status. Visit or contact us today! 972.444.0300 www.pinnpropane.com