Avoiding Deal Breakers During a Sale

Selling a business or buying a business can be an extremely stressful, tension filled journey. The last thing anyone wants is to have the deal end up falling through. Fortunately, arming yourself with a competent team of professionals and the right mindset can go a long way to ensuring a deal goes through. The right set of professionals includes a professional business broker/M&A specialist, the right attorney, and an accountant. Both the attorney and accountant should have previous experience in M&A sales and should be deal oriented. All parities should have the end goal of making a deal in mind and should not be constantly looking for reasons why the deal won’t work. No one likes surprises, so it’s essential for buyers and sellers to be up front from the start. Surprises are all but inevitable in a deal so being patient and staying at the table to work things out is key. Novice buyers and sellers often panic when unknown information comes to light, but a professional … [Read more...]

Maintaining Confidentiality During a Sale

One of every seller’s biggest concerns during the sale of a company is maintaining confidentiality. Understandably, sellers do not want the word to get out that the company is for sale until the business is sold. Potential leaks could affect employee status, customer loyalty, and revenue. When handled properly by a qualified business broker, leaks are rarely a concern. Nevertheless, a seller should take certain precautions to avoid any potential leaks and subsequent problems. Here are a few precautions that can be taken to reduce risks during the selling process: Enlist the help of a business broker to ensure each potential buyer signs a confidentiality agreement. Business brokers will also make sure potential buyers are qualified to avoid unnecessary questions from unqualified buyers. Keep in mind that more buyer inquiries can lead to more potential confidentiality breaches. Reduce the timeline between going to market and closing by gathering all necessary information for … [Read more...]

Reasons Why Now Is the Time to Sell Your Company

Selling a business represents a major financial and emotional decision that most business owners will face some day. Often, it can be hard to discern when it’s the right time to sell. Sometimes business owners move to sell too quickly and are left with remorse and no idea what they will do next. Other times, waiting for the perfect time to sell can result in selling a company too late. Although every business owner has their own timeline, here are a few indicators that now is the right time to sell: Emergency circumstances such as a divorce, illness, disability, or loss of partnership may necessitate a quick sale. Unfortunately, a forced sale can reduce the sale price of a company if proper planning wasn’t in place before the emergency. There is no one to inherit the company. If daughters or sons show no interest in running the business and have moved on, business owners need to consider selling when it’s time to retire. If an owner receives a purchase offer out of the … [Read more...]

Understanding Buying and Selling a Business from the Other Side of the Table

When it comes to the process of buying and selling a business, there’s the sellers side and the buyers side of the deal. Because selling a business can be a lengthy process, it’s helpful for buyers and sellers to be knowledgeable about each other’s perspectives. Many sellers are too removed from the risk they took when first starting or buying their own business. Many buyers fail to recognize that there are legitimate reasons an owner might be selling that don’t always include a struggling or failing business. Statistics show that only about one out of 15 would-be business buyers will actually buy a business. This is probably for good reason. Buying a business can be a large financial risk for potential buyers and can often include leaving a stable job for the more uncertain waters of business ownership. From the buyer’s perspective, there are many factors that go into the decision to purchase a business. There is the need to research the company for sale. This includes reviewing … [Read more...]

Don’t Save Due Diligence Until It’s Time To Sell

When it comes to the process of buying and selling a business, there’s the sellers side and the buyers side of the deal. Because selling a business can be a lengthy process, it’s helpful for buyers and sellers to be knowledgeable about each other’s perspectives. Due diligence is typically performed by the buyer during the process of selling a business. Due diligence is the thorough process of examining a business to see if what you see is what you get with the purchase. Because of the critical nature of due diligence, current business owners and future business sellers may be wise to consider incorporating their own due diligence as part of their annual business review. Why would a business owner want to go to the trouble of performing due diligence on their own company? There are a couple reasons for this. The first is that business owners may find themselves in a situation where they need to sell the business quickly due to unexpected circumstances or an offer from a buyer. If … [Read more...]

Want to Sell Your Business Quickly? Make Sure You Price It Right

Recent studies indicate that the average business takes 8-12 months to sell. While this may seem like a long time to a business owner, this is the best-case scenario. Unfortunately, businesses that are overpriced in the beginning often take longer than average to sell. Even if your business is appropriately priced, having unreasonable or undesirable terms can also ward off potential buyers. There are a variety of factors that go into pricing a business correctly. Seller’s discretionary earnings are often used to price a small business. Seller’s discretionary earnings are the earning of a business before the following items: Income taxes Nonrecurring income and expenses Non-operating income and expenses Depreciation and amortization Interest expense or income Owner’s total compensation for one owner/operator, after adjusting the total compensation of all other owners to market value Once a seller’s discretionary earnings are calculated, a multiplier is added to … [Read more...]

Is Seller Financing Right For Your Business Sale?

In BizBuySell’s 2014 nationwide survey of business brokers, nearly half said that over 60 percent of their closed sales included seller financing. Business owners are often reluctant to offer seller financing when it comes time to sell their business. But in our many years of business brokerage, we have seen positive results for both the seller and buyer when seller financing is offered. Often potential buyers don’t have the cash on hand, are reluctant to use all of their capital, or are unable to borrow the money. In these cases, it’s obvious why seller financing would benefit the buyer. But what’s in it for the seller? Sellers often have concerns that buyers will be unsuccessful at running the business. In our experience, a carefully crafted deal with the help of an experienced business broker can offer protection for the seller and other advantages as well. Following are 5 key reasons to consider seller financing. Seller financing shows potential buyers that the seller is … [Read more...]

Choosing the Right Business Broker to Sell Your Business

For many business owners, selling their business represents the culmination of many years of hard work and dedication. Whether the reason for the sale is to fund a retirement or simply to move on to the next venture, sellers need a team of professionals ensuring the most successful outcome. Because selling a business typically represents a significant investment of time (the average business takes 6 months-3 years to sell), it’s crucial to select a business broker who can successfully represent your best interests. When it’s time to sell, it’s important to look at the following qualifications when choosing a business broker. 1. Marketing Strategy The best business broker will emphasize finding the right buyer and pre-qualifying buyers over selling a business to anyone with the financing. The best match for selling your business in NJ and the Tri-State Area, will also be a broker with experience selling businesses of the same scope or industry as yours. Understanding your … [Read more...]

5 Tips for Buyers of International Businesses

The decision to buy an international business is no doubt quite serious. There are numerous factors that must be taken into consideration when deciding whether or not an international business purchase is the right move. Let's take a closer look. Tip #1 – Relocating Vs. Hiring a Manager Buying an international business can also mean a substantial life change. Before jumping into the process, it is critical that you know whether you will be relocating or hiring a manager to run your newly acquired business. Obviously, owning a business is a substantial responsibility and you'll want to ensure that you know exactly what is going on with your new acquisition. Sometimes that means actually being there. The bottom line is that you will either have to relocate or hire a manager. Tip #2 – Regulations Understanding regulations, taxes and customs are another must for buyers of international businesses. A failure to factor in these elements can literally undo one's business or at the very … [Read more...]

How to Keep Employees Engaged During an Ownership Transition

Ensuring that your employees stay on course during your ownership transition should be one of your key areas of focus. There are many key steps that you should take during this delicate time. Let's explore the best tips for keeping your employees engaged throughout the entire ownership transition process. Step 1 – Establish and Implement a Training Program Early On If you are selling your business, then be certain that you train replacements early on in the process. Failure to do so can result in significant disruptions. Additionally, if you are buying a business it is of paramount importance that you are 100% confident that there are competent people staying on board after the sale. Step 2 – Address Employee Concerns No matter what your employees say or how they act, you must assume that they are worried about the future. After all, if you were them wouldn't you be concerned at the prospect of a sale? The best way to address these concerns is to meet with employees in small … [Read more...]