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From the category archives: Certified Business Brokers News

Tips, tricks and long term strategies you should consider when buying a business in a Texas town near you.

Training New Owners After Selling a Business

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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Why You Should Consider Buying From a Retiring Entrepreneur

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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The Difficult Issues Often Attached To Valuing A Business

There is little doubt that valuing a business is often complex.  In part, this complexity is due to the fact that business evaluation is subjective.  The simple fact is that the value of a business is often left to the mercy of the person conducting the evaluation.  Adding yet another level of complexity is the fact that the person conducting the valuation has no choice but to assume that all the information provided is, in fact, correct and accurate.

In this article, we will explore the six key issues that must be considered when determining the value of a business.  As you will see, determining the value of a business involves taking in several factors.

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All Signs Say that 2018 May Be an Ideal Time to Sell Your Business

A number of factors, including record-high 2017 M&A activity and the passage of tax reform legislation, indicate that 2018 will be an excellent year for business owners to move forward with transitioning out of their businesses. If you’re a business owner who is thinking about selling or transferring your business to someone else within the next few years, the time to start preparing is now!


Increased 2017 Q3 M&A Activity

2017 is on track to set a record for the highest number of businesses changing hands since 2007, according to BizBuySell.com's Third Quarter 2017 Insight Report. And, there was an increase in M&A activity by private equity and strategic corporate buyers in Q3 of 2017 compared to Q2, according to the Q3 2017 Market Pulse Report published by the International Business Brokers Association (IBBA), M&A Source, and the Pepperdine Private Capital Market Project. The report attributes the increased activity largely to the strong demand for add-on acquisitions.

Approximately 55% of business brokers and advisors who were surveyed as part of the Q3 2017 Market Pulse Report expect the shrinking labor market will cause more business owners to expand through acquisition. In Q3, around 90% of deals in the $5MM-$50MM range were acquisition or add-on growth opportunities, compared to 60% in Q2 2017.

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Why Businesses Do Not Sell

It would be nice to live in a world where every business-for-sale was sold at top dollar. While there is no such thing as a perfect business free from all defects, there are a number of problems that can hinder a sale that could be remedied, if given enough time. This article lists ten of the reasons which are often cited as contributing factors in an unsuccessful sale or a completed deal for less than potential value. Business intermediaries need to be up-front with their seller clients, educating them on the challenges faced, and the likely impact that one or more of these issues will have on completing a successful transaction.

 

 1.    UNREALISTIC EXPECTATIONS

 

 a.    Valuation/Listing Price

 

Arguably, the price a business is listed at is one of the critical elements to a successful sale.  An owner’s emotional attachment to their business, coupled with an inexperienced business intermediary’s desire to obtain the listing and please the seller, can be a recipe for disaster.  Overpricing a business will deter knowledgeable buyers from establishing communications.  Additionally, it will be extremely difficult to defend the valuation when a business has been priced unrealistically. The typical outcome is that the listing will languish in the marketplace and recovery becomes more difficult.  Once on the market for months on end at the wrong price, the process in re-pricing and re-listing creates a whole new set of challenges, the least of which is maintaining credibility.

 

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Performing Successful Due Diligence In A Business Sale

Performing due diligence on a business being considered for purchase should be conducted much like a surgical procedure. The operation should be an organized examination of the vitals of the company. It should also be approached knowing that this is an invasive phase of the sale process for the owner.

 

This stage of buying a business begins once you have made your offer and the seller has accepted. A contractual agreement has been entered into between the buyer and seller outlining the price and terms of the sale. The contract is contingent upon the business passing "inspection," which is the due diligence period allotted to the buyer.

 

Since it is the buyer's responsibility to uncover any potential problem areas of the business, it is important to be prepared. Depending on the size of the business, a buyer will typically have about two to four weeks to complete the process.  Having a checklist in hand to present to the seller at the beginning of the process will enable the seller to gather all the information in a timely fashion.  This will give you enough time to confirm all material facts of the business and validate what the seller has represented. The buyer, being the leader of the procedure, may call in specialists, such as an attorney to examine the legal aspects of the business and an accountant to scope the numbers.

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It's A Competitive Market For Buying A Business

If you are looking for a profitable, well-run business to acquire, you are not alone.  Right now, there are not enough businesses for sale to meet buyer demand, as reported by a Market Pulse Survey in early 2017 sponsored by the IBBA (International Business Brokers Association) and M&A Source. The survey was conducted with support from the Graziado School of Business at Pepperdine University.

 

Not only are there not enough businesses on the market to satisfy the number of buyers looking for an acquisition, there's much more capital available than there are companies to buy, as indicated in Deloitte's Perspectives Report. 

 

As soon as a solid business goes on the market we see well-prepared ready-and-able buyers competing to put themselves in front of the Seller.  Buyers must be prepared and ready for the competition and be able to move quickly.

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Navigating Today's Business-For-Sale Environment

A record number of small businesses were bought and sold in America in 2016, topping 2015's totals by 8.6 percent and 2014's previous high by 4.6 percent. Will this momentum be sustained? According to Deloitte's year-end report "activity is poised to accelerate, perhaps significantly." Primary factors for the bullish outlook are stock prices at historic levels, interest rates... despite the forecast for an increase...remain near or at historic lows, an improving business environment, more qualified buyers on the market, and much improved financing options.

 

The following data shows a snapshot of 2016 market statistics for the Greater Houston Metro Area. A total of 66 U.S. metro areas were represented in a report by BizBuySell from data provided by Business Brokers. Most businesses are valued based on a multiple of adjusted earnings.

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Should You Become A Business Owner?

While being a business owner may in the end not be for everyone, there is no denying the great rewards that come to business owners. So should you buy a business of your own? Let’s take a moment and outline the diverse benefits of owning a business and help you decide whether or not this path is right for you.

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Initial Common Questions Buyers Ask Sellers When Looking For A Business To Acquire

When looking for a business to purchase, most prospective buyers have an initial list of qualifying questions they ask an owner of a business they are interested in. In addition to this baseline information, buyers may use the first couple of meetings or calls to get a clearer understanding of the business and to assess its risks and upside aspects.

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