Protegrity Advisors


Why use Protegrity?

Protegrity's business expertise is providing advice relating to the buying and selling of family-run or closely-held businesses with revenue of between $5 million and $100 million. Our active involvement allows companies to remain focused on their own core expertise, and by allowing us to run a managed, competitive, and confidential process, the odds that a transaction will happen, be in the right price range, and be with a qualified buyer or seller are substantially increased. Clients net ends up being substantially greater, typically making a multiple of our fees several times over.

What is Protegrity's role in the sales process?

We allow business owners and management teams to remain focused on running their company, securing multiple offers when possible, and generating value substantially greater than our fees. This requires an initial and open knowledge transfer so that we can become familiar with the critical aspects and nuances of the business - both good and bad. Our services generally consist of preparing companies ahead of time and before being under the scrutiny of potential buyers; researching, identifying, qualifying and contacting prospective buyers; developing marketing materials; preparing and presenting financial statements in a manner consistent with buyer expectations; negotiating the purchase price and related terms in letters of intent; supervising the exchange of information and the due diligence process; quarterbacking legal, accounting, wealth management, and other services providers; and providing other assistance as may reasonably be needed in furtherance of completing the transaction.

How does Protegrity help maximize my sale price?

The best strategy to get maximum financial and other terms when selling a company is to negotiate from a position of strength. This can be accomplished only with proper advance preparation, knowing how to package and position the company, understanding the true value that you bring to different categories of potential buyers, and generating interest from multiple parties, all of which are part of our attack plan. Although we have been successful in substantially increasing sales prices even we are engaged by clients after they already received an unsolicited offer, the benefit of our involvement is maximized when we are involved well in advance. It is never too soon to begin preparing for a future exit event.

What do you charge?

Our compensation model is designed to align our interests with those of our clients and to generate value substantially greater than our fee. It is therefore heavily weighted toward a success fee, to be paid at closing and thereafter as applicable, such as when there are escrow or earn-out provisions. However, for a variety of reasons, it is not possible for us to effectively operate purely on a success fee basis, and our model also incorporates a modest monthly fee which may be credited back 100% toward the success fee. These reasons include the importance of having clients being committed to the sale process, and the fact that it is ultimately up to our client as to whether any offers are accepted. In addition, because of the time and attention we give to clients, there is an opportunity cost to us when we can take on a new client.

What types of businesses do you work with?

We are industry agnostic and service clients across a wide range of industries. Most clients have revenue between $5 million and $100 million, and (adjusted) EBITDA of between $1 million and $7 million. We have experts on staff with experience in a variety of industries, as well as an extensive network of longstanding relationships with industry veterans upon whom we can call to join us for a particular assignment. A list of industries covered can be found here

What are some critical mistakes that business owners make?

Success in building and running a business does not necessarily equate to building a business that someone else would want to purchase at a high valuation. For example, a company that has had a long-term and profitable relationship with a customer that represents 25% or more of its overall revenue presents a substantial risk to a potential buyer, and an allocation of that risk would be reflected in the financial and legal terms of a purchase agreement.

Other examples of critical mistakes in the sale context include not having the legal house in order when it comes to contracts (such as restrictive covenants with key employees, proper assignment of intellectual property rights, or restrictions in the ability to assign customer contracts); being unaware of the current metrics used to value companies in their industry and reviewing those metrics on a recurring basis; not developing a management team which can effectively function without the owner; believing that when the business is doing well is not the time to explore a sale, when it is in fact when the leverage is the strongest; and not knowing how much money is actually needed for the owner to lead his or her preferred lifestyle post-transaction.

Bringing Protegrity Advisors on board to prepare for a future sale is a sound investment of time and money and can result in generating value many times more than our fees.