SELLING THE BUSINESS
The Challenge of Selling a Business
We Listen to You
Goals & Objectives
Selling a business to an outsider is probably the method that will result in the most cash for you.
Is selling your business the right option? Maybe, but you must prepare.
Most Businesses Never Sell
“Historically only one-quarter to one-third of all private companies ever manage to find a buyer.” ~ Inc. Magazine.
Why the high failure rate?
Business is priced incorrectly
Business is not properly prepared for sale
Insufficient market exposure to potential buyers
There are just more sellers (companies for sale) than buyers who could realistically buy and operate a business
Who are the Buyers?
Strategic same or related industry acquirers
High net worth individuals
Professional investment firms such as Private equity firms
What Buyers Want?
Experienced, loyal, and motivated employees
Diverse customer base
Sustainable growth potential
Strategically well-structured business – asset / compensation / tax planning
What’s My Business Worth?
Unlike in real estate, comparables can be unreliable because almost every business is unique in costs, expenses, profits, and management
Unlike public companies, market share equity prices are unknown in a privately held business
A common mistake is to use simple multiples or “rules of thumb”. This is what Business Brokers often do.
Key Factors to Successfully Sell a Business
A business that does not have too many “issues” or eccentric features that can scare away a buyer. A business ready for sale is one that is prepared well in advance
Realistic Pricing in line with the market
Provide the buyer with a fair market salary
Availability of Capital, both debt and equity
Service acquisition debt in 3 -5 years
Fund capital expenditures required to maintain historic revenues
Provide a reasonable return on investment
When to Sell Your Business
Many would agree that the hardest part of going into business is starting it.
But there is one other decision about businesses that is just as challenging and difficult to make: deciding when to sell the business.
Deciding to sell a business is never an easy decision, but once the decision has been made to sell, strategic planning is essential.
In short, the benefits of selling far outweigh the cost of keeping it going. This requires comparing the offer (how much your prospective buyer is willing to pay) and the returns that you are currently receiving and will likely receive in the future, should you continue running the business.
The Baby Boomer “Tidal Wave”
7 out of 10 businesses will be for sale in the next 10 years
Largest transfer of privately owned businesses in U.S. History
Inc Magazine – “An estimated 65 -75% of small businesses will go up for sale in the next 5 to 10 years! Why? Retiring Baby Boomers. Boomers who have been putting off selling their businesses because of the recession.
We are business transition specialists. We help owners, family members, and advisors evaluate exit and succession options and implement plans to successfully transition businesses.
38 North Holly Avenue
Fox lake, IL, 60020
Main Line: 888.938.2975
Tim Foster's Direct Line: 724.518.0604
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