Dale Nolder

With all the consolidation occurring in the solid waste industry, you may be contemplating jumping on the bandwagon and selling your business to a larger corporation.

Perhaps visions of early retirement and a life of leisure have convinced you to check out your options. Or maybe a corporation has approached you with an offer.

Before you jump into negotiations, however, you should take the time to think it through and do your homework to ensure that you will have no regrets further down the road.

If the thought of selling your business is intriguing, you first should identify your goals from both a financial and non-financial position. These might need to be reviewed from immediate- and long-term perspectives, depending upon your family and stage of life.

One of the more common reasons that negotiations fail is when the seller decides - at the last minute - that he is not ready to sell. No matter what your situation, your personal needs and goals are important and should be reviewed and considered before entering negotiations.

Issues that could influence your decision to sell your business and how you want the sale to be structured include:

*Current quality of life. Are you still excited about your business and its future? Do you wish you had more time for the trips you always wanted to take? Do you want the ability to spend more time with your family? The quality of your health also should be considered.

*Business goals. What are your business goals and can they be achieved with your current resources?

Evaluate your position in the market: Can you compete effectively into the future? Have the growing costs of insurance and bonding made it impossible for you to compete for larger contracts? Do you have the resources to keep up with changing laws and regulations?

Would selling your business provide the resources to grow it better and faster than you would be able to without the added capital? Will there be advantages to your customers, such as new trucks and lower costs?

*Retirement goals. Do you have enough money saved to pay college tuition for your children or buy that retirement home you always wanted? Would you be better off running this business and saving money on an ongoing basis, or selling it and investing for the future?

*Goals for your employees. The costs of health insurance plans and retirement benefits are on the rise. Can you provide competitive wages and benefits to retain employees in a shrinking labor pool? Do your managers have greater career and salary goals than you can provide? Would their job security be a major concern for you in negotiating the sale?

*Succession planning. Do you have a child or loyal employee who wants to own or manage the business someday? Can they make the move now, or could you arrange a management position for them with the potential buyer? How will they react if you decide to consider selling your business? It pays to work out these issues ahead of time, so you don't burn bridges with family members and trusted employees.

*Estate planning. This may take a substantial amount of time if it involves the restructuring of more than one business. The size of your family and the estate also may contribute.

*Career goals. You should think about how you want to spend your time after the sale. Do you want to retire? Do you want to become a manager and run the usiness without having the ownership responsibility?

Another option is to remain with the business short-term as a transition manager to help the new management team or to serve as a mentor to a younger person you have in mind to take over your operation. You could become a consultant for the buyer.

Most acquisitions contain a non-competition clause that prohibits you from providing these services to a competitor, but you could try to sell your services to another type of business.

Reflect on your strengths and what you enjoy doing most both professionally and personally.

Doing Your Homework Either prior to or as you begin negotiations, organize a team of professionals that you trust and are comfortable with

Don't skimp; hire top quality professionals. This is probably the largest transaction of your life, and you want to reap the maximum value for your company. Your team should include an:

*Attorney. Hire a lawyer that is familiar with estate planning, the tax strategies of selling a business and who has experience in negotiating the sale of a business. The deal should favor both you and the buyer from a tax standpoint.

Be aware that many deals are not cash alone. Some offer a mix of stock ownership and cash, partnerships or interest pooling. Your attorney, with your accountant, will analyze which structure best suits your needs. The attorney also will perform due diligence and will interpret documents, agreements and complications.

*Accountant. This professional will provide the necessary financial statements and reports to report the financial condition of your business. This will help the buyer determine your company's value and establish a purchase price. You will need to provide the accountant with current and correct information to speed up the process and receive an accurate and desirable purchase price.

Ideally, your accountant will consult with your attorney on the transaction's tax structure. *Engineer and/or environmental advisor. This professional prepares the specific documents on the operation's size and scope, such as available yards of landfill airspace.

They also will determine if any environmental concerns may require remediation. By obtaining accurate information, your business will be valued fairly, which will help avoid the problems of discovering a factual discrepancy late in the process.

Investment counselor. After the transaction is complete, hire an investment counselor to help you manage your newly acquired wealth. Before you enter into negotiations, know the condition of your service contracts. For example, if your contracts are going to expire soon, the appeal of your business will be affected because the new owners may not have any guaranteed revenue.

You should hold off selling the business until you can re-negotiate those contracts and re-position yourself better financially. To a prospective buyer, your revenue's quality is just as critical as its quantity.

Finding the Right Buyer Remember, money isn't everything. Find a buyer with the right blend of financial benefits and corporate culture.

Choosing the wrong buyer can cause much heartache and disappointment for your employees and customers.

You can research potential buyers through:

*Recent acquisitions. Have a candid conversation with the buyer's recent acquisitions - both the former owner and the employees who now work with the new employer. Ask them about the transition and how they feel about the buyer's actions before, during and after the sale.

*Site visits. Visit one of the buyer's operating locations and talk to employees and the manager. Observe how the employees are treated. Also, meet the operating vice-president or other key executives that you and/ or your business would be working with.

*Marketing strategies. Determine the buyer's marketing plans for the year and the basis for its strategies. Some corporations create their plans at a central headquarters while others rely on general managers (GM) to determine the budget and plan for their specific operating locations.

Ask potential buyers about their projections for growth in current markets and commitments to new markets. Request to be briefed on acquiring companies' five-year plans.

*Management structure. Some companies have a clean sweep, centralized approach to management, holding most operational control at the main office.

Others are decentralized, giving decision-making authority largely to the local operation's GM.

Find out how the buyer approaches management decisions and determine if this fits your vision for your business and employees.

*Financial practices. Ask about the potential buyer's short- and long-term growth goals and financial commitments. How does it manage its debt? What is its financial track record? Ask your accountant for an opinion on the buyer's financial well-being.

*Operational structure. Inquire about the buyer's current operation's locations. How does it integrate acquisitions into its structure? Will your company be considered a regional operation for a specific area or will it be a regional tuck-in? What are its specific plans for that operating area? Does it correlate with your vision and goals for the business?

*Marketing and employee communications materials. Ask the buyer for annual reports, employee benefit packages, press releases and recent articles featuring the company for additional insights into its culture and business practices. Review these materials carefully and read between the lines to find out what the company really is saying to its employees and customers.

The information will provide you with an overall company image that will control and manage your business.

After you have gathered and thoroughly researched this information, compare each buyer's strengths and weaknesses, and the deal that they have presented to you. Decide which offers the best overall fit and opportunities for you and your employees ,and options for profit.

Has the buyer gained and kept your trust, confidence and respect throughout the negotiations? If so, and you feel confident that all other issues and concerns have been resolved, close the deal.

*Asking price *Billing information *Business description *Competition descriptions *Copies of major contracts *Current assets listing *Debt obligations *Depreciation and amortization schedules *Description of ownership structure *Employment agreements *Environmental assessment reports *Financial projections (if available) *Financial statements and history *Fleet and route information *Letter of confidentiality *List of stockholders *Market descriptions *Operation plan *Outstanding lawsuits *Payroll information *Permits *Personnel files *Preferred method of payment *Public relations efforts *Services *Statistics on operations *Tax records

1.What is your management structure and philosophy (i.e. centralized, decentralized)?

2.How will my employees and customers fare with the sale of the business?

3.What is the culture of your business? Do you have this defined?

4.May I have a copy of your annual report, prospectus and press releases on earnings? (If the company is privately held, ask to see the financial statements.)

5.What is the current financial state of your company? What is your track record? How do you manage your debt?

6.Can you structure the deal to meet my financial and tax requirements (i.e. cash, cash and stock, stock, pooling of interests)?

7.Will you continue to service the local accounts with the same or better service?

8.What is your operational structure? May I see the organizational flow chart for the entire company and for an individual operating location?

9.How is your marketing handled? Can I have a copy of the marketing plans for an operating location and/or the company?

10.What are my future opportunities with your company? What are the opportunities for my employees?