Family and private businesses are sold in an environment that is unlike the selling environment of anything else you can imagine! Sound surprising? After you review the following ten reasons that make selling a business different than selling anything else, perhaps you will agree. When the decision is made to sell and the sale is […]
This is a common question from business owners who are thinking about selling. While there are many ways to increase business value without incurring costs, the following quote sums it up in a nutshell. It is relevant to any business and will spark the thought process for a DIY project. “Every business has something that […]
What Is the Average Time It Takes to Sell a Business? The average time on the market for around 82% of businesses is four to 12 months. Fewer than 10% of businesses sell more quickly, and a little over 8% are on the market for more than 12 months. Why does it take so long […]
While all transactions are as unique as the parties involved, in most small business sale transactions the seller keeps the cash and outstanding receivables. They pay off the bills and any other outstanding payables and deliver the business free and clear of debt to the buyer. In somewhat larger business sale transactions, there are many reasons why buyers consider […]
How much money down do I need to buy a business? This is one of the most frequent questions we get from those who want to buy a business. Not all ask that question, however, but should. Since most people only buy a business once in their lifetime, they do not know how much money […]
It has traditionally been a common practice for the sale of a privately-held small business to include some seller financing as part of the deal structure as a key to getting a deal done. In the U.S., about 60% to 90% of business sales involve seller financing when bank financing is not an option. Seller financing can […]
What Information Is Required to Determine a Business’s Value? The answer to the first question is ultimately answered by the market itself. What we do is approximate the range of the most probable selling price a business might achieve in the current market. In order to determine the most probable selling price range, we ask for the following information. […]
Take This Test to See if the Shoe Fits. According to Fortune Magazine, nearly 80% of the 400 richest Americans have earned their wealth through business ownership. This may help to explain the tremendous interest in entrepreneurial pursuits today. Another explanation may lie in the way corporate America works. When corporate America downsizes, a key […]
Some people are just born with it! These are traits that successful business owners commonly share. Above all, however, business owners need to have strategic thinking skills, time management skills, and know the job. No one can embody all these traits if they are part of the human species, but varying degrees of these characteristics […]
The following information explains the tax consequences of buying or selling a business. Be sure to see the Seller/Buyer Comparison Table at the bottom of this article. Key Points You are only taxed if there is a gain on the sale or if income is earned Capital Gains tax rate is almost always lower than […]
The decision to finally sell the business is just the beginning of the sale process. While it is common for business owners to feel emotionally fatigued and ready to move on by the time the business is up for sale, it is important that they stay engaged during the entire sale process and not turn […]
Statistics indicate that only about one out of 15 buyers looking for a business to purchase actually ever buys one (Business Brokerage Press, August 2009). Therefore, it is standard practice for business owners and brokers to separate the real buyers from the rest. These indicators will help you determine in which buyer type you may […]
The boomer generation spans many years creating a unique situation in the business world. Aging boomers are looking toward retirement, while many younger boomers find they’re ready to be their own boss. For those younger boomers, and others looking to be a business owner, buying an existing business is a great option. But be aware […]
A few years ago I was a guest on KSEV Radio AM 700 with host Aubrey Thoede and had the opportunity to discuss a subject that many call-in listeners wanted to learn more about….starting their own franchise. But buying a new franchise is not the best way to go about achieving the “American Dream.” Once […]
Know why you want to sell your businesss. Having a solid reason and a committed resolve to a sale is essential in achieving a successful transaction. In addition, one of the first questions buyers ask is, “Why is the owner selling?” They want to know that it is for a good reason and not because […]
You can use funds from qualified retirement accounts such as 401(k), 403(b), pension, profit sharing, and IRA rollovers to start or buy a business with no taxes, no penalties, no loan repayment and no hassle. Will I pay tax or penalties if I use retirement funds to buy a business? Not if you use qualified […]
When buying a business, both emotion and due diligence are elemental and essential. When you find that magical business for which you’ve been searching, the following are ten key issues to consider. They cover important points that are sometimes overlooked when your head is in the clouds during the emotional excitement of a deal. 1) Know […]
Since the biggest part of the purchase price of a profitable small business is goodwill, it is important for a buyer to have knowledge and understanding of just what goodwill is and why there is value in it. Much of the value of a business is not to be found in its hard assets such as […]
Takeaway: Building barriers to entry is critical to increasing business value. Understand how to widen the business moat so that you can keep competitors at bay. 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 […]
Takeaway: Understand the importance of documented systems that allow owners to remove themselves from the business. A business valuation is not about what a company is worth in the current owner’s hands, it’s about the company’s transferable value. It’s about the probability that the business will sustain its profitability and continue to grow with a […]
Takeaway: Purchase price is predicated on current and historical cash flows, but a well thought out growth plan will increase the attractiveness and price of a business. Potential buyers who are considering the purchase of a business are interested in knowing how it can be grown once they bought it. The growth potential of a business […]
Takeaway: A stable, skilled, quality workforce is one of the top value drivers that contributes to the purchase price of a business. When a business for sale is being evaluated by a prospective buyer as a possible candidate for purchase, the quality of the human element will be considered. The staff is a major component and […]
When selling your business, it is important to know that your customer base has a major impact on its value in the marketplace. A diverse customer base means your revenue comes from a number of clients or customers, not just two or three, and preferably comes from multiple sources other than your primary service. Simply put, […]
Takeaway: Recurring revenue is the holy grail for business owners looking to have a valuable and sellable company. Learn how to secure stable and predictable cash flow in your business. Recurring revenue is the holy grail for business owners looking to have a valuable and sellable company. A customer base with a subset of recurring revenue […]
Non-compete agreements are typically included as part of the terms of a business sale transaction to protect the buyer from direct or indirect competition from the seller. A buyer would not want to purchase a business if the seller could relocate down the street. For this reason, buyers usually require that this threat be eliminated. […]
Takeaway: Identifying and articulating the goodwill in your business can have a significant impact on business value. According to a 2010 study by KPMG entitled, “Intangible Assets and Goodwill,” over 50% of the purchase price of a business is typically allocated to goodwill. Since the largest part of the purchase price of a profitable small business […]
Certified Business Brokers (CBB) completes the sale of four well-known sports bars and clubs in Houston’s after-hours party hubs within a short six-week period. With the rush of new bars opening in areas of Houston like Midtown, Kirby and the Heights, some bar and club goers have already forgotten about the Austin 6th-Street-like party that […]
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. This stage of buying a business begins once you have made your offer and the seller has accepted. A contractual agreement has been entered […]
Most potential buyers would be averse to purchasing a business if the owner’s shoes are too big to fill or if the owner’s hand would be too difficult to unravel from the operation. When preparing to sell or build value in a business, the owner should not be so involved in the business that it would […]
Inventory (stock held for resale) is a significant part of the tangible assets of most businesses. It is customary to include a normal inventory level in the purchase price of a business for sale that can sustain current revenues being generated by the business. Just as tangible assets like machinery and equipment are included in the purchase […]
An articulated, working marketing plan is a sign of an organized business and provides a roadmap for a new owner to follow. A marketing plan that is tailored to reach a defined target audience instills confidence that growth can be achieved in an effective, predictable manner under new ownership. In other words, by increasing the […]
A decline in the number of small businesses means an increase in unemployment and an uncertain economic outlook for the next generation. Everyone loses when small business fails. When a business is sold, the former owner pays Uncle Sam a capital gains tax based on the profit gained in the sale. Unless Congress acts to […]
Taking the time to research the financing and tax implications of a sale can provide you with a strong advantage come negotiation time. Before you can understand the importance of negotiating a final small business sale agreement, it pays to brush up on facts about how sales are financed and how proceeds are taxed. Why? […]
Selling a business is usually a very intimidating and time-consuming process. There may be legal, tax, accounting, and regulatory issues to address. Business brokers and agents deal with these issues and negotiate business deals on a daily basis. They are professionals with a fiduciary duty to you, and they are authorized to act on your […]