What To Expect


The TAS in TAS Marketing for over two centuries has stood for Telephone Answering Service (TAS) Marketing. But growing and changing with this new paradigm has out dated the term referring to TAS. We now serve the Teleservices or phonically spelled Tel-A-Services industry therefore creating a new meaning for the name TAS that will take our hallmark company well into the 21st century and beyond. TAS Marketing has expanded its service level to include not only Telephone Answering Services but also Voice Mail and Call Center companies.

Generating Leads

1. Steve Michaels and his associates, will begin to solicit prospective Buyers who have called TAS Marketing wanting to purchase a business in your area. Each prospective Buyer will be required to sign a non-disclosure form to protect you and your confidentiality.

2. Your business listing described in general terms, will be emailed to over 1500 businesses from our up-to-date “Constant Contact” database in our popular “TAS Tips’ newsletter.

3. TAS Marketing has a web site that is updated with our most current business listings every week. Here leads are generated from prospective buyers surfing the web. Depending upon the size, we may also advertise your business in the Wall Street Journal. Many leads from outside the industry are generated using this method. We also submit our web site on a monthly basis to web placement companies guaranteeing TAS Marketing to be in the top ten listing of most search engines.

Showing your Business

For confidentiality purposes, we require all prospective Buyers to sign a non-disclosure. After receiving their signed agreement, we send them the Market Listing sheet describing your business along with a current P&L statement. But often there may be other questions relating to the sale of your business, which we cannot answer. At this point, these questions may be either directed through us, or you may elect to talk directly to the prospective Buyer, who may also want to set up a time to see your business.

I recommend that the prospective Buyer be walked through your facility posing as a potential client, someone interested in your particular equipment or someone looking at getting into the business. Make it brief so as not to alert your operators or staff of the potential sale and then go out to lunch for any further discussion.

Being Prepared

As in the purchase of anything major the more information you have on your business, the better. The following information will be needed so our accountant can put a financial package together for presentation to prospective Buyers:

  • Profit and loss statement
  • Last 1 – 3 years tax returns
  • Bank statements showing deposits
  • Analysis of accounts without name and DID #

(Never show them your account listings or DID numbers)

Receiving Offers

Once the prospective Buyer has seen your facility, done their preliminary due diligence and is ready to make an offer, simply direct them to our office. Tell the Buyer that you have hired us to do the negotiating for you and that any offers will have to be submitted through us. We will then put our years of experience to work for you to get the best deal possible. Some Sellers try to do the negotiating themselves and that is their prerogative, but beware of the “third party syndrome.” The Buyer would like to deal with you directly because you have an emotional involvement in the business.

Here is an example:
When you purchase a car from a dealership, the salesman is your best friend and will tell you that he is prepared to give you the best deal possible. After your offer, he or she always goes to the back room to negotiate your deal with the manager/owner. This tactic is called the “third party syndrome” and does not leave you in a very good negotiating position. In an answering service acquisition, when you are dealing with the Buyer, it is sometimes difficult to negotiate from strength because your feelings are getting in the way. This is your baby that you have nurtured for many years and any sly comment from the buyer may quickly escalate and become very upsetting creating the negotiations to close down quickly. The car salesman always comes back with a counteroffer and seems to be on your side. He says that he’ll fight for you to get you the best deal; but at the same time, his commission depends on the sales prices of the car. This is a conflict of interest, but it works… in his favor.

The same scenario holds true when you are selling your business. If you want to negotiate the sale of your business, it is up to you. But one reason that you hired a broker was to get you the right deal and the best price. We have no emotional tie to your business and therefore can negotiate from a position of strength letting the potential buyer know that you are receiving other offers and that you have something special to sell.

After we have received the offer, we will pass that offer on to you for your perusal. You are not obliged to take the first offer, but remember the likelihood of your business selling decreases with time. Your best offers will come within the first week. We will discuss the pros and cons of every offer, but ultimately the decision is yours to make.

Offer Accepted

Once the acquisition price and terms have been negotiated, TAS Marketing will draft a Letter of Intent (LOI) to be signed by both parties. The buyer is then required to open escrow with an earnest money deposit for two reasons: First, the deposit will assure us that the Buyer is serious. Second, it will take the listing off the market. The time between the Letter of Intent and closing may be used by the Buyer to complete their due diligence also giving you time to gather the due diligence materials necessary for the transaction. If you are electing to take terms, this will also give you time to do your due diligence on the buyer.

Selling Accounts Only

If you are selling your account base to another answering service, the new Buyer is going to need time, (2 to 3 weeks), to input the account information. Once the Buyer has done their due diligence and is satisfied with your financials and the business as a whole, you then have the option to have them sign a “Satisfaction of Due Diligence” agreement so that you may release the customer account information to them before closing while still protecting your assets. They will not be taking any calls prior to closing, and this is just an option.

In this document, it states that due diligence has been performed to the satisfaction of the Buyer and that the Buyer is ready to proceed to closing of the purchase.

If for any reason the deal is not consummated, the buyer will give back your customer information and is not allowed to contact any of your customers for a period of five years. If one of your customers signed up with the potential buyer, than the buyer will have to pay you the multiple agreed upon in the LOI for that customer.

Closing

Once the Letter of Intent has been accepted, Christine Michaels will take over the process and begin to draft the “Asset Purchase Agreement“. This may take several days, as this undertaking is very tedious and time consuming. Any questions or changes to the contract should be directed to your attorney. This contract has been reviewed and rewritten by over 300 attorneys throughout the years, so the protection and guarantees that you desire have been well established.

The Contract has been drafted, the Promissory Note is in order, if you elect to take terms, and there may be a personal guarantee along with a UCC statement required. All these documents, along with a Non-Complete Agreement (usually 100 miles for 5 years), will be ready for signing upon closing and will be drafted by TAS Marketing.

You may elect to have your attorney present the day of closing when you and the Buyer sign the papers, receive your down payment, shake hands, and close the deal. It is not necessary for the Broker to be there.

Telling Your Staff

This is probably the most difficult part of the sale, especially if they have been loyal and are possibly out of a job. You never want to let the staff know that you are selling before closing. I have heard of owners who did and the employees got nervous and started jumping ship, which is the last thing you need to have happen just before a closing.

If the buyer is purchasing your entire business, then they will probably need your operators and staff. If they are purchasing your accounts only, there is a good possibility they will need operators for their new influx of customers and may want to hire them as remote operators.

Telling Your Customers

The less your customers know the better. People hate change… period. So anytime there is a change, there is a potential for a loss in customers. The more change the more loss. For example if you’ve sold your small account base, who were accustomed to being babied and pampered, to a much larger service who doesn’t offer such service, here are some of the changes that may be involved:

  • New DID number
  • New operators answering calls
    (not Sally who always answered the calls before)
  • New equipment
  • New call-in number
  • New billing address
  • Possibly a new billing structure

The more you limit the change, the less likely you will suffer any account loss.

Prior to closing, a letter could be drafted by both the Buyer and Seller and mailed to the customers stating that the service is merging with the new operation to better serve the customer.

For example:
“We are merging with ABC Answering Service to offer you more enhanced services such as Voice Mail, Fax & E-mail delivery etc.” Make it sound as though the acquisition is for the customer’s benefit. It is also important for you the Seller, to stay on board for at least 30 days to help with the transition and answer questions.

It is good public relations for you to be there to hold the hands of any reluctant customers who are hesitant to move over to the new owner. Remember, the more customers that transfer to the Buyer, the greater chance you will have of being paid if you elect to take terms. This is especially true if there is a retention clause in your contract.

In some cases, the buyer may elect to not “rock the boat” and say nothing to the customers about the transition of new ownership. To date – this has been the preferred method of not disclosing new ownership to the customers.

Considerations

Some would think that the offer with the most money would be the one to accept. But, other factors should also be considered:

  • Do you want to sell your accounts only, or the accounts and equipment?
  • What about your staff and their jobs?
  • What about your customer base? One service may be better able to serve your existing client base over another. Also, did a lot of your present customers come from the potential buyer?
  • Do you trust the buyer? (In some cases you may be carrying a note from the Buyer, it is reasonable to require financials from them.)
  • Are you selling to the local competition, or to someone who is out-of-state? Are there time zone differences or even speech and dialect differences (i.e a service in New York City buying a customer base in the south)? Are your clients going to stay with the new Buyer? If the Buyer loses a majority of your accounts, it will be difficult for them to make any note payment.
  • Do you really want all cash? Sometimes this can be detrimental due to capital gains tax. Consult your CPA.

Facts

All information and documents relating to the sale of your business will be faxed to you while you are standing at your fax machine or e-mailed to your private email address. We will always call you first to make certain that you, and only you will receive this confidential information.

TAS Marketing will prepare all of the legal documents for the sale of your business. Since we are not CPA’s nor attorneys, this service is provided free of charge and we encourage you to confer with your financial and legal counsel.

WHAT IS EXPECTED FROM YOU

Accurate, Up-to-Date Information On Your Business

My role as a Broker is to bring you qualified leads and prospective buyers who are interested in the acquisition of your business. To do my job successfully, I will require the following from you:

An Accurate Market Listing Sheet

When a prospective Buyer looks at the market listing sheet and finds misinformation or no information at all, it tends to send up a red flag, making them wonder what else may be wrong with the business. Current, up-to-date statistics and financial information on your business is a requirement.

Current Financial Data

This is the most important information you have on your business. It tells whether you are making or losing money and informs the Buyer as to its cash flow and what will be needed to run the business profitably. A prospective buyer will need the following information:

  • Balance sheet
  • Profit and loss statement
  • Last 1 – 3 years tax returns
  • Bank statements showing deposits
  • Analysis of accounts without name and DID #

Be Readily Available

I understand that you do not want your operators or staff to know about the sale. However, you have to be available to answer questions, set up appointments, talk with your Broker about offers, etc. This must be done through a cell or home phone, voice mail, email, or private office number for confidentiality. But it is imperative that you are willing to communicate on a regular basis with the Broker.

Be Willing to Negotiate

As with the sale of a house, the prospective Buyer likes to feel that they are getting a deal and may not always offer you the listing price. Be prepared for this and be flexible.

Be Truthful and Honest

I don’t like to state the obvious, but in the past I have had clients either state their monthly billing was a certain amount when it wasn’t, or try to conceal tax liens against their business. One party tried to sell a business that wasn’t even theirs! You must be truthful! A buyer may run a lien search and these items will surface.

With all of the legal verification and due diligence that goes on with a business acquisition, the truth will surface. So it is better to be honest, up-front and save yourself the time, aggravation and embarrassment.