Selling Your Answering Service? Start Here (part 1 of 3)

Recently, we received a call from a potential buyer within our industry, inquiring about our assistance acquiring several answering services. After careful deliberation, we made a strategic decision that will more closely align us with the interests of owners in the answering service industry. We chose not to offer buy-side services, and here's why:

Our core values are deeply rooted in the well-being of business owners. Our mission is to ensure they receive the maximum value when they decide to exit their business. This commitment to sellers is unwavering, and it's the guiding principle that defines our approach.

Engaging in buy-side agreements would require us to negotiate on behalf of buyers, with buyer-friendly terms (read lowest possible price). While we are wholeheartedly dedicated to all our clients and to their success, we also hold an equally strong commitment to those TAS owners who have poured their life's work into building a business, often from scratch.

Looking around the room at the most recent ATSI Annual Conference in Atlanta, we were struck by how close knit the members are. The companies represented were often on the second or even third generation of family ownership. Sadly, this group is sorely underrepresented in transactions. There are many buyers and buyer advisors, but very few high quality sell-side advisors. We aim to change that.

Preserving Your Legacy

Many TAS (Telephone Answering Service) owners have dedicated much of their career to building and preserving the business, often passing their answering services from one generation to the next and creating a legacy. Finding the right successor for your family legacy can be the most critical aspect of a business sale.

Businesses frequently play a vital role within their local communities. Selling to a buyer who comprehends and values this community engagement can ensure that your legacy extends far beyond financial success. The buyer can continue to support community initiatives and uphold your business's positive impact on the local area.

Likely, you have built long-term and often personal relationships with your clients. Your services play a vital role in the communications between your clients and their customers. Many owners want to ensure continued service and excellence is provided long after they are gone.

Selecting the right buyer, one who is dedicated to maintaining the brand and reputation you've diligently built over the years, can help preserve your business's legacy. A buyer with a solid track record and a shared vision for the business can ensure its ongoing success.

Crafting an Effective Exit Strategy: Aligning with Your Goals

Creating an exit strategy is a pivotal step for business owners, but its effectiveness hinges on one fundamental principle—it must be centered around the owner's goals. From determining the owner's level of involvement during the transition to considering the future treatment of key employees, these plans must be developed well in advance of marketing the company. Much of this planning process involves identifying the ideal buyer for your company. If you were given the opportunity to select a buyer for your firm today, who would it be, and why? This question is a crucial element of the exit process. In today's market, several types of buyers exist, but we will focus on four key players.

Strategic buyers are already operating TAS entities and actively seek growth by acquisition. Their primary goal is to find synergies through seamless integration, combining client rosters, service offerings, technology, and a talented team. Financial terms and structure often involve a majority in cash and a minority in earn-out. You already know several key players in the market who have done dozens of transactions.

Financial buyers, like Private Equity firms, are investment-focused, seeking opportunities promising strong returns. They conduct thorough due diligence, often preferring takeovers utilizing key employees. Terms will often be similar to strategics but may contain longer earn-out periods or occasionally roll forward equity. They are suited for owners who plan to stay actively involved post-sale and those who seek a second bite of the apple.

Management team buyers represent a unique approach, focusing on internal takeovers, often with long-term key employees. This buyer often requires owners provide substantial assistance post-transition and to often finance the sale.

Your exit strategy should reflect your unique goals, considering factors such as buyer type and your intended level of involvement post-sale. Thorough planning can lead to a successful exit, preserving your legacy and achieving your desired outcomes.

Selling your business is often the second-most challenging endeavor in your career, following the initial journey of launching and growing your enterprise. The process of selling your business and ultimately achieving a successful transaction is akin to a complex tapestry, weaving together elements of storytelling, meticulous financial and accounting stewardship, and the art of persuasive psychology to create a win-win outcome for all involved parties. For business owners, the mere thought of undergoing due diligence can be enough to test the patience of even the most resilient individuals. To navigate this intricate process successfully, dedicate yourself to understanding the exit process, construct a well-thought-out strategy, and then assemble a team of experts to execute the plan. Sellers who use an intermediary (or M&A advisor) are at an advantage, as statistics show, as those who go it alone often leave money on the table.

Looking out for Employees: A Post-Transaction Perspective

The first question we ask all owners considering and exit is why. Why are you selling and why now? Next, we want to understand how they want to hand the business off – which stakeholders are they concerned about. This includes, of course, the employees who do everything from payroll to accounting to technology to management and ultimately the agents.

Selling a business to an experienced buyer brings tangible benefits for employees. They gain opportunities for career advancement, potentially reaching management positions that might have been challenging in a family-owned setting. Access to cutting-edge industry technology becomes readily available, enhancing their skills and enabling innovative work-from-home solutions.

New owners often introduce improved compensation packages, enhanced benefits, and incentives to attract and retain top talent. With a stronger financial foundation, employee welfare takes center stage. Moreover, the infusion of capital by a well-funded buyer rejuvenates the business, improving job security and offering brighter career prospects.

The change in ownership can serve as a catalyst for employee growth and development, whether through expanded operations, entry into new markets, or investments in comprehensive training programs. Importantly, employees can find comfort in greater job security, as many buyers prioritize retaining the existing team for their invaluable experience and expertise.

In essence, the transition of ownership is not just about the past; it's a gateway to a brighter future for employees. It's an opportunity for them to embrace innovation, aspire to higher career goals, and thrive in a revitalized work environment. While the decision to sell a business is profound, it can also be a conduit for empowering the individuals who have contributed to its success. The legacy of care that began with the business owner can extend beyond the sale, ensuring that employees continue to flourish in their professional journeys.

Role of Sell Side Advisors

Let's take a deeper dive into the role of sell-side advisors. Our close collaboration with business owners often occurs at a critical juncture—retirement. For many, their business represents their primary retirement savings, nest egg, or college fund for their children. Ensuring they get the best value and the most favorable terms during their exit is our top priority.

Here are several key strategies we employ to benefit our clients:

  1. Marketing the Firm: Sell-side advisors excel at identifying a business's strengths and weaving them into compelling marketing materials to generate maximum interest.
  2. Creating Competition: We actively promote multiple buyers, fostering a competitive environment that ultimately maximizes the value of the business by finding the RIGHT buyer for your firm (who you may not currently know). Studies show that using a sell-advisor can add 26% to the selling price. A competitive bidding situation is the only way to prevent leaving money on the table.
  3. Highlighting Company Metrics: Our advisors meticulously present a company's financial metrics in the best possible light, emphasizing strengths and future potential synergies to prospective buyers. This step is paramount to receiving full price upon exit.
  4. Negotiation: We are skilled at candid negotiations with buyers, often resulting in improved deal terms while maintaining positive post-transaction relationships. Whether you want to stay on or leave at closing, having an experienced and highly skilled negotiator will ensure you enjoy a positive selling experience.
  5. Building Synergies: A critical aspect of the transaction process involves identifying and capitalizing on synergies between the organizations involved. This strategic alignment can significantly enhance outcomes for all parties.

In summary, our primary focus within the answering service industry is to ensure that business owners have the information and representation they need, whether it's before, during, or after any transaction. Our exclusive work with sellers allows us to wholeheartedly look after their best interests.

Whether potential suitors have been identified or not, subjecting your answering service to a competitive bidding environment is an absolute necessity. The market is brimming with numerous strategic and financial buyers actively seeking answering service acquisitions. One common mistake we encounter regularly is when a seller exclusively engages with a single buyer. This approach often falls short of delivering the full value potential because it lacks the competitive dynamics that can drive up the price or incorporate payout structures aligned with the owner's objectives. Furthermore, without multiple interested parties in the mix, the owner has limited leverage to enhance the exit value or negotiate improvements that could lead to a smoother transaction and transition.

Venturing into the market without a well-designed strategy, meticulously prepared financials, operational efficiency, and meticulously crafted offering documents is a recipe for leaving money on the table during your exit. It's crucial to create an environment that encourages competition among potential buyers, ultimately maximizing the value and terms of the transaction.

Business transitions are pivotal moments, and we're here to support owners in making well-informed decisions. Our dedication to their welfare remains unwavering, and we'll continue to uphold our commitment to securing top-dollar returns for those who've dedicated their lives to building prosperous enterprises.


Selling your TAS business is a complex endeavor, akin to weaving a tapestry of storytelling, financial stewardship, and persuasive psychology. To navigate this process successfully, dedicate yourself to understanding the exit process, create a well-thought-out strategy, and assemble a team of experts. Engaging the services of an advisor is the best way to maximize exit value and ensure a transaction that realizes all of your exit goals.