E-Folder - Business

Not Recommended for Companies with Sales Greater than $1 Million

PURPOSE: To provide a quick guide to business owners that desire to sell their business but do not want a significant portion of the transaction value to go to

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

a business broker or M&A intermediary.

1. Have an idea what your company is worth. The most common rule of thumb is that buyers usually pay a multiple of EBITDA. The normal range is a selling price between 3 and 5 times EBITD

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

A. There are exceptions to this rule, but if you have a main street business, you generally fall in that range. If you are a member of an industry association, they may be helpful to you in identifying industry multiples or re

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

sources that can help you determine a selling price range.

2. Create a blind profile. It is a brief summary of your company and is designed to communicate the key points about your acquisition opportunity without giving away

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

your company's identity.

3. Have a Confidentiality Agreement or a Non Disclosure Agreement executed if a potential buyer shows interest in your company.

4. Create a database of Target Acquisition Prospects. You may already k

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

now the most likely buyers, but those most likely buyers may also do damage to your business if they determine you are for sale. Your industry or trade associations and trade publications will be helpful. If you want to expand

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

to those potential buyers to a greater universe, I recommend creating a database using one of the database service. You can do a search by location, company size, SIC Code and other criteria to arrive at your selection crite

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ria. There is a charge for this service or a charge for each company you select, and you have to subscribe and do the search yourself.

5. I personally like to call the prospects because sending a mailing is very ineffective t

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

hese days. Once I get the CEO on the phone, I try to get their interest with a 30 second elevator speech. If he/she is interested, I ask for the email address and email a copy of the Blind Profile and the Confidentiality Agree

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

ment and request its execution and return via fax before any more information is exchanged.

6. Post your business on some business for sale web sites.

7. Have the last three years tax returns that reflect the company's perfo

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

mance available. Create an Executive Summary for potential buyers. A sample Table of Contents is below:
§ OVERVIEW
§ STOCKHOLDERS' MOTIVATIONS
§ GROWTH HIGHLIGHTS
§ BUSINESS SUMMARY
§ MANAGEMENT O

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

RGANIZATION
§ KEY EMPLOYEES
§ CRITICAL COMPANY MILESTONES
§ FAQ's AND ADDITIONAL DETAILS
§ EBITDA ANALYSIS (000's)
§ MARKET BALANCE SHEET

8. After Confidentiality Agreements are executed and you

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

have provided the Executive Summary or whatever information the buyer has requested, you should arrange a buyer visit to further explore the acquisition potential.

9. If they are interested push for a Qualified Letter of Inte

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

nt (LOI) or Term Sheet. This basically lays out the transaction economics prior to due diligence. The basic concept is that if I (the buyer) can validate what you have told me about your business and find no negative surprises

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

, these are the terms of my purchase offer. It is a non-binding letter and is used to move the process forward. The buyer will normally ask you to stop talking with other buyers if you accept his LOI. He wants to know that if

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

he is going to invest his resources in due diligence, you are not going to shop his number to other buyers.

10. Try to limit the period of due diligence to no more than 45 days. If the buyer finds unexpected issues, they will

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

usually try to adjust their offer downward. It is just part of the process. Just make sure you reveal any warts before he finds them in due diligence.

11. Once that is completed, the buyer's attorney will draw up Definitive

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

Purchase Agreements and submit them to you. Do not attempt to complete this process without an attorney. You need their help to make sure you understand the contracts and to make sure you are reasonably protected. Do not, I re

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

peat, do not attempt to renegotiate the economics of the deal at this point. It will blow up. You are only dealing with legal issues at this point.

12. Cash Your Check (do not be surprised if you are asked to carry some porti

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

on of the purchase price as a seller note). Over half of all business sales involve some form of seller financing. The smaller the company, the higher the percentage. Go to your island and drink your umbrella drinks. Good Luck

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

HTTP = HTML link (for blogs, profiles,phorums):
<a href="http://www.e-folder.org.ua/article/42331/e-folder-How-to-Sell-Your-Own-Business.html">How to Sell Your Own Business</a>

BB link (for phorums):
[url=http://www.e-folder.org.ua/article/42331/e-folder-How-to-Sell-Your-Own-Business.html]How to Sell Your Own Business[/url]

If number crunching, math skills and organization are your strong points, the profession of accounting may be for you. Here is a primer on how.

The world of self employment can be very scary and exciting at the same time. There are many benefits to being your own boss, but many people don't think about the problems. It can be done, but only if the person knows the risk involved.

How many of us actually wake up excited to go to work on Monday morning? Believe it or not, a small group of people have accomplished this amazing feat, and they did it by spending some serious time thinking about what they love doing and how to get paid for it. The process is simple, and anyone can do it. Stop trading your life for a paycheck today, here's how...

Tags

Links

E-Folder - How to Sell Your Own Business

Related Articles: