Due Diligence is when the buyer reviews all aspects of the company to uncover any warts, wrinkles, and….skeletons in the closet. No bones about it, this step is necessary in evaluating what risk is involved for the buyer in making the acquisition. Skeletons found in due diligence, however, should not normally break a deal but […]
Your customer base is the foundation of your company. Knowing who they are is crucial to your business, which is why potential buyers will want to know as much as possible about your customers. Therefore, if your are thinking about selling your business, be ready to provide a basic profile of your customer base. However, […]
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 […]
Potential buyers who read about a business for sale are interested in knowing how it can be grown once they bought it. The growth potential of a business plays a major role in its value. While buyers will purchase a business at a price predicated on current and historical cash flows, their main motivation is […]
Lost Interest or Drive in Your Business? Consider Selling Now. Many business owners have operated their companies for too long and have lost their interest or drive. As a result, the business may flounder or stop growing. Not only will revenues and profits suffer, the value of the company will as well. And it only […]
The lease terms of the business space can be a major consideration for a buyer. For example, a distribution company with a long-term lease on a good location can be attractive. But a long-term lease on a business needing more space to grow could be a detriment. Or, there can be concerns about an expiring […]
What Is Recurring Revenue & Why Is It So Valuable? 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 that is contractual and repeating in nature increases the probability that the business will have stable, predictable revenues and […]
The lack of financial integrity is one of the most common hurdles encountered during the process of selling a small business. What is being bought or sold is primarily a future stream of income. Not the assets or property of the business, but the income these assets will generate in the future. Since future income […]
Burying excessive personal expenses in the business financials can lower business value! The most popular method of valuing a business uses a multiple of earnings over a period of years. Business owners should be aware of that while attempting to reduce the bottom line with personal expenses to minimize taxes. Though there are a number […]
Not all businesses need to have cutting edge technology, but a company can’t fall too far behind. Buyers will be concerned if they must make a large investment in the latest technology to get the company to a competitive level. A business owner should do the research and purchase the necessary technology to keep the […]
When a business for sale is being evaluated by a prospective buyer as a possible candidate for purchase, the quality of the human resources element will be considered. The staff is a major component and the backbone of any successful business operation. Any aspect that reduces risk in the continuity of the business under new […]
Most small business owners are not familiar with the dynamics of selling a business because they have never sold one before. Most people only buy or sell a business once in a lifetime. While there are lots of potential deal breakers, avoiding the following ten mistakes will mitigate the possibility of an aborted transaction. […]
Acquiring a business is a team effort and finding the right business broker (intermediary) is just the start of building your squad. Oftentimes, buyers do not know how to go about tackling the whole process of investigating the business they like or how to evaluate the financial data. This question represents a common real-buyer inquiry: […]
Think of the bottom line cash flow of your business as the first introduction to a prospective buyer. If that bottom line is not attractive, buyers will look elsewhere. The right strategy towards achieving a successful sale is to pin your bets on improving cash flow to stand out in the marketplace when it comes time to […]
When selling a business, it is important to know who the buyers are for privately-held businesses and why they buy. Most owners of small and medium-sized businesses do not think about exiting their business nor do they plan for that inevitable day. They enjoy their work and their lifestyle. Many of them do not even […]
How can you nail that inevitable meeting with your employees when the time comes? The issue of what you tell your employees when you’re trying to sell your business is a tricky one that requires careful thought. Maintaining confidentiality surrounding the sale typically takes precedence over other concerns, yet it may be impractical — or […]
What does it mean when we say that we need to “Recast” your financial statements as one of the initial steps in preparing to sell your business? Financial statements and tax returns for most privately-held businesses are prepared for tax purposes, not for business sale purposes. The objective of business owners and their financial advisors […]
Diversify Your Customer Base Before You Sell Your Business Many companies have a few large customers that dominate their overall sales. After all, nobody wants to turn down business! But when it comes time to sell the company, this becomes a huge problem. Most buyers won’t look at a business whose revenues could drop dramatically […]
In today’s business climate a strong online presence is vital. Prospective buyers of your business are googling you and your competitors to determine your standing. Today’s buyers of businesses are much more sophisticated than they used to be. One of the very first places a potential buyer will go to be introduced to and learn […]
When selling a business, maintaining proper inventory levels is essential to maximizing value. Don’t let poor inventory management drag down the value of your business. How Do Inventory Levels Impact Business Value? Inventory is an ever-renewing, moving, and perishing thing. The longer it hangs around, the less valuable it gets, and eventually dies as a viable product. […]
“A major competitor made an unsolicited offer to acquire my small business. The amount seems significant, what should my next step be?” While the offer may sound great, the real question is whether or not it is an offer that truly reflects the value of the business you have built. So, in order to make […]
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 […]
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. […]
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 […]
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 […]
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, […]