Putting off starting the process for selling your business?

Much like other things that are " unknown" we tend to put them on the back-burner because we're not sure how much effort, time and preparation will be necessary. Business owners are busy people.

it's a very manageable process when you look at it from a step-by-step perspective. Enlisting good help along the way can make it even easier.

Businesses with a long tenure in the marketplace commonly have surplus inventory over and above what is required to run the business.  This can be especially true for distributors or retailers whose inventory is their number one asset.  Surplus inventory really only becomes a problem when a business owner wants to sell the business.

If you’re looking to sell a business, it’s critical to look at the value of the business.  But, a typical business really has two values.  The academic value is the one determined by a professional business valuation.  The other is the true market value.  The academic value is arrived at with a formula based on the firms’ hard assets, cash flow, industry averages and multiples.  Fair market value also takes those items into consideration, but then considers what buyers are really willing to pay. 

Marketing Saves... what does it mean?   It means that by having a team focused on marketing your business to a targeted group of capable buyers that you as the client have more salable options. 

Often when people think of owning a business, they think of starting a business, from the ground up. Did you know that starting a business has a 50% chance of failing within the first 5 years, it will likely take twice as long, and cost twice as much as buying an existing business?

You've spent years, perhaps decades, growing your business into a successful operation. It may be that your business has been in the family for generations. In both cases, the notion of selling one's business can be highly emotional. It's no wonder that seller's remorse is a common reason for cancelling deals.

Buying a business can be a complicated and daunting experience. For many people, it is typically a once-in-a-lifetime event, making it even more important that it is a favourable experience. To ensure success, Travis Kellett, Broker from Bridgepoint Business Brokers has compiled this important information for you to consider.

Buying a business, and selling a business, are both highly emotional events. Consider that, during negotiations, both sides are experiencing some form of anxiety. This tension can have a significant effect on the likelihood of a successful deal.

We often see clients that are unsure about what their business is worth when they decide to sell. They approach this task similar to what one may do when pricing a home, by looking at market comparables. For example they may look at what other competitors or other businesses for sale are priced at online, or perhaps look at factors such as their own revenue growth or assets, trying to judge what the price would be for their business. Unfortunately, it's not quite this simple if you want to get the maximum fair value for your company.

Have you found a business to buy but don't know what to pay for it?

This is common with business purchases and often leads to a standstill in a successful deal closure. Neither party, buyer or seller, is aware of the fair market price but both are positioned to motivate the price in different directions, for obvious reasons.

For many, buying a business is a major decision and one that you may only do once in a lifetime. It is exciting and daunting all at the same time, and requires some peace of mind . This peace of mind can come from a structured and proven process to buying a business.

By working through a Business Broker, you will get complete information on every listed business. This includes details about the marketing, operations and human resource components of the business and a thorough financial depiction of the business.

At Bridgepoint we take care of the details; however, we have compiled a high level summary below titled, "A Glance at the Selling Process", which provides insight into what takes place throughout a typical business sale.

Statistics show that sellers who ask for all cash receive, on average, only 70% of the list price, while sellers who accept terms typically receive 86% of the list price.

In many other cases, businesses that are listed for all cash just don't sell.

So, it's clear that by offering some financing in the sale of a business, that an owner can increase the selling price they will receive. Here's a breakdown of how these concepts interplay:

You've made the decision to sell. Now what should you do?

It is imperative that you understand why confidentiality is important to the successful sale of a business and what can happen if a sale is prematurely announced.

Confidentiality throughout the sales process is important for many reasons, some include: staff might start considering the stability of their employment and look elsewhere, customers may lose confidence in the business, competitors might capitalize on the news and do something detrimental to your business or creditors may push for earlier payment due to the unknown future.

Selling a business requires dedicated professional attention. It demands a high level of expertise that only those involved in it on a regular basis can truly make it come together. The intricate details of a sale can cause a deal to fall through the cracks if you're not experienced in all phases, even if you're a savvy business owner.

Deal structure is very important. The structure of an acquisition can take many forms and it does impact the final price. Some things that need to be considered are whether it is an asset or share purchase and what assets are included or excluded from the purchase. There are implications for all of these decisions and they need to assessed on how they impact your deal.

Securing financing can often be the "hold up" for most deals, whether it be for acquiring a business or financing for another type of project such as expansion, construction, equipment, etc.

Below is an article I have written titled "How to Get Financing that Fits", its focus is on what lenders typically look at when making financing decisions. You may find the information most helpful as it can help you to better prepare your financial "resume" for the time when you may need to seek financing.

Letters of intent (LOI) are an initial agreement between a business buyer and seller. An LOI summarizes transaction terms and conditions that have been negotiated and agreed upon by both parties.

Most LOIs are non-binding and merely serve as an outline of business terms, key business agreement points, and contingencies, before a Definitive Purchase Agreement and other ancillary documents exist.

Selling a company means being prepared to answer tough questions from potential buyers. It's important to be confident, be prepared, and have all of your company's relevant information available to disclose. Assume that the truth would be uncovered during due diligence, and offer it freely. This will build trust and contribute to a speedier transaction.

Selling your business will likely be one of the largest financial events in your life, so it's vitally important that you are properly prepared when selling your business. For many business owners, the thought of selling the business they have grown and operated can be emotional and challenging.