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My partner, Chris, got a phone call recently from one of our clients who wanted to take his business off the market. "Why?" I asked, more than a little surprised. "He said it was just too stressful," Chris replied.
A new survey suggests baby boomers have one more career move in them before they retire - they want to run their own business first. The TD Canada Trust survey released Tuesday found 54 per cent of boomers polled have or are considering starting a firm, whether it's consulting, buying into a franchise or operating a specialty firm.
A wave of retirements among business owners over the next few years could pose a significant risk for the Canadian economy as the country undergoes the biggest transfer of economic control in its history, according to CIBC World Markets. CIBC says half of all small-and medium-sized businesses in Canada are set to retire over the next decade, including 310,000 that plan to transfer control of their companies within the next five years.
I give many speeches every year, and in each one I always include time for questions. By far, the most frequently asked question is what attributes are needed to be successful as an entrepreneur.
Most buyers wrongfully believe that relationships don't count in business purchase and sale transactions. They think that getting the best possible price and terms is the most important.
As the baby-boomer population increases, so does the numbers of business owners looking to retire and sell their businesses. This is where Bridgepoint Business Brokers comes in. Founded in 2009 by Travis Kellett, Bridgepoint helps business owners formulate exit strategies that are good for themselves, their businesses and their employees.
Can you see around corners? Of course not! Not a month goes by where we don't hear: "Bob wasted months negotiating with a buyer who couldn't come up with the cash to buy his company. All his employees found out and some quit. Worse, a customer found out and switched providers."
It's hard to sell your own business. It's relatively easy to receive an unsolicited offer though, and that's part of the challenge...
Lots of people do not think about selling their business until a life event or someone comes up to you and says: "Hey do you want to sell your business?"
When considering selling your business, it is useful to view your business not in the way you do as the current owner, but as a potential buyer: how will they perceive the value of your business?
When a good business - one with good financials and priced reasonably - goes on the market, we get many inquiries from buyers on it. Part of our job is to screen buyers so the seller and us work with the ones that are the most likely to buy the business.
One of the biggest differences between business owners and non-owners is their willingness to accept business risk. But, the acceptance of business risk is also the reason for the high return on investment that business ownership produces. If you want a safe investment, buy a government bond.
The other day I was speaking with a successful chief executive officer in his fifties who runs a heating and air conditioning company generating $8-million in revenue and more than $1-million in profit before tax.
This month's newsletter focuses in on the role of your employees in a business sale. A lot of owners I know realize the importance of good people, choosing to be slightly overstaffed in the last few years to be ready when the boom hits.
In early January 2012, we participated in a mission to Beijing, China, sponsored by the Mercan Group of Companies. The goal of the mission was to meet with Chinese entrepreneurs who meet the requirements for immigration under the SINP program and wanted to know more about living and doing business in Saskatchewan, primarily Saskatoon.
Typical high-level concerns for business owners considering the sale of their business include maintaining confidentiality, understanding and obtaining a realistic company valuation, formulating a favorable deal structure, and choosing the right professionals to represent them in the process.
Starting with a written agreement to buy a business is an obvious statement to many, but in some deals, buyers want to start another way. Sometimes, after agreeing on the basic price and terms, the buyer presents a non-binding letter of intent or suggests going directly to a purchase and sale agreement while bypassing the offer to purchase. Both of these methods are mistakes that can create risk for the buyer and seller.
February 9, 2012 (Source: Jeff Young, Business Intermediary, Confidential Business Sale Inc.)
Advice for First Time Future Business Owners
The first time is the most challenging, whether you are buying a car, home or ready to buy a business. A business for sale listing may catch your eye, but what do you do first? Pick up the phone and start asking the Business Broker questions about the business for sale? A professional Business Broker has the answers, even if you don't have all the questions about the business for sale.
A large number of business sellers experience a period of indecision right after receiving an excellent offer for their businesses. When the dream of selling the business is so close to come through, sellers struggle with their emotions. Their businesses are their babies. Separation is very painful.
I heard this week that John's Prime Rib restaurant in downtown Saskatoon is closing next month after over 35 years in business. Hearing this story and others just like it makes me want to work hard for our clients who are working to sell their business and avoid the same fate.
You are thinking about buying a business. Let's face it, you probably won't. Neither will 990 out of the 1000 "potential buyers" that will contact my office this year. Being a business broker in the Philadelphia area, I can tell you from experience that the majority of buyers are not serious and are just "kicking tires."
October 7, 2011 (Source: Omar Kettani, Broker, Case Realty Inc. Brokerage)
Why Sell a Business?
Business owners consider selling their businesses for many possible reasons: Boredom or need for change, Succession planning/Retiring, The business needs capital for a new strategic direction, Partnership disputes, The business is unprofitable and the owner is not able to turn it around.
Buying an established business is generally a wise business decision. Businesses with a proven track record of success present a low and manageable risk for the buyer and a high potential to make decent profits right after the purchase. Nevertheless, many business buyers make huge mistakes that cost them a lot of money and sometimes cause them to fail.
Many business owners think that selling a business is like selling a house, when in fact there is very little comparison.
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We will end this series by discussing Value Drivers 9 through 11 which are:
Value Driver #9: Review Your Assets
Value Driver #10: Curb Appeal
Value Driver #11: Get Good Help
We are pleased to announce that Randy Woytowich - CMA, CAIB, has joined the Bridgepoint team. Randy brings a broad base of experience to our team, having been a successful business owner over the last 15 years. Randy successfully sold his business to an external buyer.
Business buyers generally take a very long period of time to make a decision about making an offer on a business. Most buyers go through an unproductive period of hesitation that makes the decision process even more difficult.
Last month we talked about Value Driver's #1 through #4. These value drivers were:
Value Driver #1: Improve Financial Statement Quality
Value Driver #2: Demonstrate Stable & Predictable Cash Flow
Value Driver #3: Delegate Personal Goodwill
Value Driver #4: Show Future Growth Potential
Why is self assessment important? Buying a business is likely one of the most important financial decisions you will ever make, combined with a major lifestyle change for most people. It isn't mandatory that your personal interests conform to your business purchase, however, it is prudent to conduct a thorough and realistic assessment of your personal interests prior to buying a business. It can help to minimize the risk of acquiring a business.
Acquiring a business is a team effort and finding the right business broker 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.
When considering selling your business, it is not about determining what a company is worth in the current owner's hands; it is about evaluating the company's transferable value. The purpose of this article is to help you evaluate your company through the eyes of a buyer.
Septic Tank & Porta-Potty Rental Business, North West SK: This transaction closed in March 2011 and was handled by Travis Kellett, Broker of Bridgepoint Business Brokers. The new owner is actively involved in the business, working with the previous owner to complete a well orchestrated transition plan.
Travis Kellett, Founder, Bridgepoint Business Brokers and Randy Woytowich, Former Owner, Insurance World will be talking about how to increase the value of your business and things you should know when selling a business.
We are pleased to announce that Mike Grace has joined the Bridgepoint team. Mike brings a broad base of talent and industry experience to the team.
When structuring a business sale, a common problem that arises is a difference in opinion on the value of a business. It's important to recognize that the two parties are motivated by different information. Buyers are focused on past earnings and being comfortable with the level of risk. Sellers focus on the company's recent performance, hoping to maximize their profit from the sale.
Farm, Auto & Industrial Parts Supplier, Saskatoon SK: This transaction closed in February 2011 and was handled by Travis Kellett, Broker of Bridgepoint Business Brokers. The new owner is currently working with the previous owners to ensure a smooth transition of the business. The previous owners are looking forward to the spare time that lies ahead once the transition is complete.
A common struggle among buyers looking for acquisitions is the decision of whether to buy or lease the real estate for their business operations.
There are two cash requirements to think about when you start thinking about buying a business. 1. How much cash do you have to use as a down payment on a business. 2. How much cash is required to close the sale and start out on a sound financial footing.
We recently helped sell a Saskatoon business. In our work as business brokers, we typically work 6 months to a year to successfully sell a client's business.
Have you ever asked yourself this important question, only to move onto another important task because you were unsure of the answer? This is common, we all tend to put off things that are the least comfortable for us to deal with. That's human nature.
Price, Structure & Terms - Buyer Financing Depends on It.
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.
People usually ask me, "Travis, why did you start your business brokerage business, when you had a great commercial banking career?" The answer is always the same: "Because I believed I could help people at a critical time in their life."
Have you found a business to buy but don't know what to pay for it?
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, of which a Business Broker can provide you with.
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.
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.
With every new deal comes the possibility that something unexpected will interrupt the transaction. Most barriers are easily surmountable, requiring only conversation, compromise, or a bit of legwork to put things back on track. When more serious problems arise, a third party advisor can be your greatest asset.
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? For that reason, purchasing an existing business provides excellent benefits. Read on to find out why.
July 15, 2010: by Travis Kellett
A Glance at the Selling Process
Does the thought of
selling your business seem overwhelming?
Does the thought of selling your business seem overwhelming? At Bridgepoint we take care of the details. Here is a high level summary that provides insight into what takes place throughout a typical business sale. Not only will you become better informed on the process, but also on the benefits of having a Broker work for you.
June 18, 2010: by
Ways to Increase the Value of Your Business
You've worked hard to build your business... so now what?
As a business owner you WILL sell your business someday, and it will be as either an internal or external sale, depending on your situation. To prepare for when this time is right for you, here is some information on ways to increase the value of your business.
Deal structure is very important. The structure of an acquisition can take many forms
and it does impact the final price.
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.
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.
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.
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.
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.
Due diligence is the most important part of any acquisition. It helps buyers determine the value of the business they're purchasing, evaluates the current management, and brings risk and opportunities to light. Successful due diligence is a matter of proper preparation, managing expectations, and adhering to best-practice processes.
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.
You've made the decision to sell your business. Now what should you do? Your number one priority should be discretion. Without complete confidentiality during the sale of your business, unwanted complications may start to pile up.
Every business is unique, but buyers tend to focus on the same aspects
of a business when they are interested in acquiring it. The major factors
that influence a buyer's view of your company include: