“Exit strategies may allow you to get out before the bottom falls out of your industry. Well-planned exits allow you to get a better price for your business.” From: Selling Your Business by Russ Robb, published by Adams Media Corporation Whether you plan to sell out in one year, five years, or never, you need an exit strategy. As the term suggests, an exit strategy is a plan for leaving your business, and every business should have one, if not two. The first is useful as a guide to a smooth exit from your business. The second is for emergencies that could come about due to poor health or partnership problems. You may never plan to sell, but you never know! The first step in creating an exit plan is to develop what is basically an exit policy and procedure manual. It may end up being only on a few sheets of paper, but it should outline your thoughts on how to exit the business when the time comes. There are some important questions to wrestle with in creating a basic plan and … [Read more...]
Prepare Your Business for Sale (NOW!)
You only sell your business once. So it is crucial to get it right the first time. When the perfect buyer emerges with a great offer, it pays to be prepared and “strike while the iron is hot.” No two deals are alike, every transfer of business ownership is unique. However, there are some common requirements that all sellers need to fulfill in order to get the deal done when they have the opportunity. The more you prepare, the more successful you will be…Guaranteed! Unfortunately, there are many great businesses that never get sold simply because they do not have the required financial data or information readily available when a buyer is ready to move and makes an inquiry/offer. The truth is you can have an industry leading business with outsized margins and high scalability. But if the seller can’t “Show the Money” in black and white , the chances of the business getting sold are slim to none. We as professional business brokers see it all the time and it is a shame. If your … [Read more...]
“WHY??” Entrepreneurs Sell Their Businesses
“Pursue one great decisive aim with force and determination” – Carl von Clausewitz I remember selling my first home and having the realtor say to me “Selling your home will be the most important and stressful transaction you will ever undertake”. While this may ring true for most people, selling a house is a “walk in the park” compared to selling your business especially a family business. Selling a company is hands down the most important, complex and stressful financial transaction the majority of entrepreneurs will ever do. The sale of your business is bound to result in many sleepless nights. Your years of blood, sweat and tears all come down to an eventual exit which is inevitable no matter how you do it. I know what you are thinking…. Why would any sane, logical person put themselves through the emotional roller coaster of long hours, stress, and nail biting inherent in selling a company? In our many decades of collective Business Broker experience we have identified many … [Read more...]
The Baby Boomer effect- WHY Right Now is the Time to Sell Your Business
"My advice is to never do tomorrow what you can do today. Procrastination is the thief of time and money"— Charles Dickens So you have thought about selling your business in a couple years? The Baby Boomer retirement trend is something definitely worth considering. Here's WHY. The Baby Boomers are turning 65 at a clip of over 11,000 per day. This trend will continue over the next 18 years. Professionals in the exit planning, business brokerage, and financial services industries have dubbed this "The Ten Trillion Dollar Opportunity", because this will be the largest wealth transfer in the history of the United States. Just a few weeks ago BizBuySell.com said sales of privately owned businesses were up 54% in 2014 compared to the same time in 2013. This increase in business sales is unprecedented!! Retirement was the number one reason for those sales in the fourth quarter of 2014, according to a survey by Pepperdine University and two trade groups. The U.S. isn't getting any … [Read more...]
Selling your business?? Here is why you should never, ever, ever negotiate the sale on your own!
There is a saying in the legal profession “Any lawyer that represents himself has a fool for a client.” So you have made the decision that you want to sell your business. There are many questions to ask yourself and your professional advisors. One of the most important will be, do I need a Broker or Intermediary to help me sell my business? The answer is YES. There are some rare scenarios in which a broker is not needed to find a buyer but, an Intermediary (whether it be a Broker or Lawyer) is ALWAYS recommended when negotiating the terms and sale of a business. A smart seller will NEVER represent themselves in a transaction of this magnitude. Here is why: Picture two different football teams about to play each other on a Sunday. One team is from the NFL. The other team is a group of amateurs. The NFL team consists of professionals whose average height/weight is 6’6” 300lbs. They live, breath, and practice football every day. They watch hours of film and train religiously so … [Read more...]
The truth about M&A firms- A must read for any business owner contemplating a sale!
The current marketplace for buying and selling a business unfortunately can be treacherous terrain. Unlike Real Estate which utilizes an MLS ( Multiple Listing Service), the private business for sale market does not and this makes it much more challenging than selling a home or commercial space. So therefore when the decision has been made to sell, it is crucial to hire a professional brokerage firm with a proven track record that knows how to sell businesses in this inefficient market. If not, it can be a long, expensive and frustrating process. Let me explain! Even the best, most profitable and fundamentally sound businesses never get sold- If you hire the wrong firm. Here are some things to think about when hiring an M&A Firm or Investment Bank to sell your business. The first thing you should know is M&A Firms survive by charging retainers; NOT by selling companies! Here is the cold hard truth about this industry that they do not want you to know. The majority of … [Read more...]
EXIT PLANNING; is it worth my time? ABSOLUTELY!
The exit planning process is a great thing to do especially if you are contemplating leaving your business in the next few years. There are a number of reasons to think long and hard about an exit strategy however, the most important reason of all is to maximize the value of your business. As business brokers we see TONS of Owners leave a lot of wealth on the table when they exit their companies for one simple reason: Lack of Preparation!! Many Owners have spent decades and maybe even a lifetime building your business into what it is today. You Deserve to get Top-‐Dollar. Transitioning from your company will definitely be one of the most important and complex decisions you will EVER make. It is so disheartening when an owner has to pay double the amount of taxes that he would have had to pay had he planned better. Even worse is when there is a profitable business that looks fantastic on paper but carries no value to a buyer and is never sold. ALL of this can be avoided! There are … [Read more...]
Seller Financing: The Basics
Seller financing has always been a mainstay of business brokerage. Buyers don’t have the capital necessary to pay cash, are unable to borrow the money, or are reluctant to use all of their capital. Buyers also feel that a business should pay for itself and are wary of a seller who wants all cash or who wants the carry-back note secured by additional collateral. What sellers seem to be saying, at least as perceived by the buyer, is that they don’t have a lot of confidence in the business or in the buyer or perhaps both. However, if you look at statistics, it’s apparent that sellers usually receive a much higher purchase price if they accept terms. Studies reveal that, on average, a seller who sells for all cash receives only about 80 percent of the asking price. Sellers who are willing to accept terms receive, on average, 86 percent of the asking price. The seller who asks for all cash receives, on average, a purchase price of 36 percent of annual sales while the seller who will … [Read more...]
Rating Today’s Business Buyers
Once the decision to sell has been made, the business owner should be aware of the variety of possible business buyers. Just as small business itself has become more sophisticated, the people interested in buying them have also become more divergent and complex. The following are some of today's most active categories of business buyers: Family Members Members of the seller's own family form a traditional category of business buyer: tried but not always "true." The notion of a family member taking over is amenable to many of the parties involved because they envision continuity, seeing that as a prime advantage. And it can be, given that the family member treats the role as something akin to a hierarchical responsibility. This can mean years of planning and diligent preparation, involving all or many members of the family in deciding who will be the "heir to the throne." If this has been done, the family member may be the best type of buyer. Too often, however, the difficulty with … [Read more...]
Why Sell Your Company?
Selling one's business can be a traumatic and emotional event. In fact, "seller's remorse" is one of the major reasons that deals don't close. The business may have been in the family for generations. The owner may have built it from scratch or bought it and made it very successful. However, there are times when selling is the best course to take. Here are a few of them. Burnout - This is a major reason, according to industry experts, why owners consider selling their business. The long hours and 7-day workweeks can take their toll. In other cases, the business may just become boring - the challenge gone. Losing interest in one's business usually indicates that it is time to sell. No one to take over - Sons and daughters can be disenchanted with the family business by the time it's their turn to take over. Family members often wish to move on to their own lives and careers. Personal problems - Events such as illness, divorce, and partnership issues do occur and many times … [Read more...]
