Optimism in the M&A market is at an all-time high according to findings from the Q2 2018 Market Pulse Report published by the International Business Brokers Association (IBBA), M&A Source and the Pepperdine Private Capital Market Project. 21% of business advisors surveyed say 2018 is the best year they’ve ever seen for business owners to sell their businesses. Another 37% say it’s the best time in five years, and 17% say it’s the best in the last 10 years.

Consistent with general market optimism advisors believe seller advantage is growing, with year-over- year seller-market sentiment increases in all market sectors. In the Main Street market, for businesses valued at less than $500,000, seller market sentiment is at the highest it’s been since the survey started in 2013.

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It is human nature for business owners who are putting their companies up for sale would want to go to market with a higher price than what the valuation suggested, hoping buyers will still look at the opportunity.

Unfortunately, though, the right buyers are savvy, knowledgeable, and serious about their acquisition targets. These buyers know the marketplace and won't even look at a company if they think the price is out of line with economic realities.

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When you sell your business, it's common practice to provide training for the new owner.  But what does new owner training involve? What are your responsibilities? And how long will you will be "on the hook" after the deal has closed?

The whole idea of training the new owner may seem alien to the Seller.  After all, why would someone purchase a business they aren't capable of operating?  But in reality, people with relevant backgrounds, can and do, with limited training and experience regularly purchase small businesses. They probably have experience in either the industry or business management aspects, but maybe not both. Seller training gives them a crash course in their area of weakness and prepares them for the real world challenges of running the company on their own.

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You could waste your time seeking out the next Facebook or Uber. But the more successful path often involves taking over an existing successful business. Now is one of the best times to consider this potentially lucrative option. Why it’s a Great Time to Buy Aging Baby Boomers have created a tsunami of businesses about to be put up for sale. Over the next two decades, retiring owners will bequeath or sell at least $10 trillion worth of assets and more than 10 million businesses. Seventy percent of these businesses will be sold, presenting a major opportunity to entrepreneurs. It might not be as exciting as buying the next start-up, but buying a decades-old well-run business is a sound investment that often requires much less effort. Here are eight tips for those considering taking over an existing business: Do Your Research What sort of business do you hope to own? If you already own a business, is there room for synergies with a business you hope to take over? Do you have a pr ...

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Selling a company is no small feat. It can be time-consuming and stressful. It demands meticulous planning, competent advice, and a keen understanding of the dynamics of negotiation and deal-making. CEOs and companies inexperienced in the M&A process commonly make mistakes that can undermine a deal, resulting in a less favorable price—or even kill the deal outright.   These are the most common mistakes. Avoid them at all costs if you want to get the most out of your deal:  Having unrealistic expectations about the time and effort the deal will demand of you. Deal-making takes time and expertise.  Not creating a competitive bidding process. You must make your business appealing to multiple buyers to drive up the price.  Poorly-crafted or nonexistent NDAs. Confidentiality is money when it comes to deal-making.  An incomplete or nonexistent online data room. Buyers need ready access to key information to review for due diligence. If they can& ...

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Research shows optimism among small and medium business owners in Houston reaching an all-time high. This optimism can translate into results. Year 2018 might be the ideal time to sell your business in Houston.

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Years 2018 and 2019 may be ideal times to sell your Houston business. Values have never been higher, particularly for well-run companies. We’re also beginning an upswing in economic cycles.

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There are many factors that determine best timing for selling a small business -- the financial condition of the company, valuation, growth cycle, profit history, and the current market. 

Usually the best time to obtain the highest price occurs when sales and earnings are good and trending upward. A solid earnings trend will enable a buyer to pay a higher price and still meet his return of investment criteria. A history of good performance also gives the buyer confidence in projected future earnings. 

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Circumstances that give a business an advantage over its competitors, strengthen its strategic position, or can be leveraged for future gain boosts business value. Why? Because it increases the probability of the continued future profitability of the business and decreases perceived risk by prospective buyers.

As with all value drivers, it’s about risk. Lower risk achieves higher value. Buyers will pay a premium price for a business that has barriers to competitive entry.

One way to describe this Barrier Value Driver is to use Warren Buffet's term, "Business Moat."  Buffet compares a castle's moat to the protection that a business needs to ward off encroaching competitors. The wider the moat, the more easily a company can be defended and the longer it can protect its profits. A company with a narrow moat does not offer these protections.

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As an avid wine fan and wannabe aficionado, I can’t help but notice the parallels between winemaking and the principals involved in effectively building a successful transferrable business.  Frank and I often visit Napa Valley touring our favorite vineyards......and marveling at the amount of care and knowledge required to grow the perfect grape.

Each Grapevine Grows Differently

In business, there are a few universal truths that are required for long-term stability. For starters, you must have an excellent product or service targeted to a specific market at the right price point. The infrastructure necessary to build and deliver your product must have a solid, well-structured foundation on which to build your business and the right people in the right environment. Finally, sustainable success requires flexibility in meeting constantly changing business needs.

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