Business Sellers
Selling Small Business
If you are considering selling your business, then you have come to the right place. We are dedicated to help business owners successfully sell and transfer ownership of their business.
Here we want to explain small business owners, how we create value for your company when you decide to sell; that you shouldn’t try to sell on your own.
(1) Overview of small business
Some scary facts:
- That only 20-33% of business who want to sell actually sell
- Did not prepare for sale
- Tried to sell on their own
- Used 1 professional resource
- Only market to existing relationships
- Small pool of buyers
- Only get ONE chance
(2) Selling a business
Market facts:
- There are a lot of small businesses out there
- At any time a portion of these businesses are for sale
- Percentage of small businesses that sell is discouraging
- Only about 20% of small businesses sell
- Higher percentage of larger businesses sell in the market
- It takes from 4 to 12 months to sell approximately 82% of businesses, with 38% falling into the 7 to 9-month range.
Special about Jan 1, 2006: First baby boomer turned 60, Next decade, 50% of small and medium sized businesses are going to sell, 65% of business owners don’t know what the value of their business is, 85% of business owners don’t have a exit plan
There are many ways to get out of a business:
- Carefully liquidate
- Fire sale
- Give it to your children
- Sell to key employees/ESOP
- Sell to a third party
Maximizing the value – Selling maximizes the value, minimizes the taxes and cash out on your own terms.
Best Way to Accommodate Owner’s Goals:
- Work with M&A Team, Accountant, Attorney & Intermediary
- Owners can set timetable, goals and objectives that work best for them.
Find right buyer by finding all buyers
- High net worth individuals
- Strategic buyers, Financial buyers
- May be hard to search for these attractive candidates – something that an owner might or might not be able to do
- Creating the right buyer candidates is key to maximizing the worth
- Make sure you (owner) know that we (Brokers) can’t sell a portion of your stock – you need to sell 100% of the stock
Realize the full worth of the business
- Price and structure the deal
- Develop a relationship with people who are in wealth planning
- An intermediary may have to work for a year or two to get all your money, so we need to make the transition as smooth as possible
We discussed the ways of exiting your business, here is your (owner) dilemma – how to do these things on your own, while running your business?
(3) What Broker/Intermediary does?
Some of these negatives can be solved by using an intermediary. An Intermediary can:
- Identify the pool of potentially qualified buyers
- Help find an attractive acquisition candidate
- Negotiate based on what the buyer wants and chase after buyers
- Allows you to run your business during the process
- Maintain confidentiality – We can almost guarantee confidentiality- so that your employees and customers don’t find out until the appropriate time. We’re not perfect, but pretty close.
- Sellers almost always get less value when they try to sell it on their own because they don’t know all the value drivers
- We are experts in marketing; we know how to market your company
- Can protect you from your employees, competitors, finding out until the right time, in the right way
- Try to figure out why the buyer is buying your company
- Hard for the seller to not be emotionally attached and thus remain objective
If your goal is to sell your business in coming years, there are things you need to do to make this happen:
Long-Term Planning
Develop Management Depth, Advance Tax Planning, Improve Financial Statements, Formalize Partnership Agreements, Purchase Minority Interests, Negotiate Lease Transferability, Begin to Form your Planning Team.
Intermediate Planning
Clean up your Books, Invest in Taxes, Computerize, Have Equipment/Real Estate Appraised, Obtain a Business Opinion of Value or a Certified Valuation.
Short-Term Planning
Clean up the Premises—Increase your “Curb Appeal”, Sell or Replace Obsolete Equipment, Clean up Receivables and Inventory, Trim/Prune your Payroll, Negotiate any Contractual Agreements, Update the Valuation, Address Environmental Issues
TIMING IS IMPORTANT – Many positives and some of the factors that affect price:
- Things are in your control and positive now, which may not be in a few years as there are more buyers than sellers
- Younger baby boomer generation looking to control their own destiny
- Interest rates are good but going up, Lot of money, Good time to sell.
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If you would like to discuss the sale of your existing business, please click the link below to contact us with your business information
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For Small Business Sellers – Video
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Helpful Articles
- Selling a Business
- Valuing a Business
- Avoiding Business Sale Myths
- Seller Benefits
- Seller FAQs
- Preparing Your Business for Sale
- Adding Value to Your Business
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