Blog

Business Owners Can’t Always Sell When They Wish

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

A recent and insightful Forbes article, “Study Shows Why Many Business Owners Can’t Sell When They Want To” penned by Mary Ellen Biery, generates some thought-provoking ideas.  The article discusses an Exit Planning Institute (EPI) study that outlined the reality that many business owners can’t control when they are able to sell.  Many business owners expect to be able to sell whenever they like.  However, the reality, as outlined by the EPI study, revealed that the truth is that for business owners, selling is often easier said than done.

In the article, Christopher Snider, President and CEO of EPI, noted that a large percentage of business owners have no exit planning in place.  This fact is made all the more striking by the revelation that most owners have up to 90% of their assets tied up in their businesses.  Snider’s view is that most business owners will have to sell within the next 10 to 15 years, and yet, are unprepared to do so.  According to the EPI only 20% to 30% of businesses that go on the market will actually sell.  Snider believes that at the heart of the problem is there are not enough good businesses available for sell.  In short, the problem is one of quality.

As of 2016, Baby Boomer business owners, who were expected to begin selling in record numbers, are waiting to sell.  As Snider stated in Biery’s Fortune article, “Baby Boomers don’t really want to leave their businesses, and they’re not going to move the business until they have to, which is probably when they are in their early 70s.”

The EPI survey of 200+ San Diego business owners found that 53% had given little or no attention to their transition plan, 88% had no written transition to transition to the next owner, and a whopping 80% had never even sought professional advice regarding their transition.  Further, a mere 58% currently had handled any form of estate planning. 

Adding to the concern was the fact that most surveyed business owners don’t know the value of their business.  Summed up another way, a large percentage of the business owners who will be selling their businesses are Baby Boomers who plan on holding onto their businesses until they are older.  They have not charted out an exit strategy or transition plan and have no tangible idea as to the true worth of their respective businesses. 

In Snider’s view, the survey indicates that many business owners are not “maximizing the transferable value of their business,” and additionally that they are not “in a position to transfer successfully so that they can harvest the wealth locked in their business.”

All business owners should be thinking about the day when they will have to sell their business.  Now is the time to begin working with a broker to formulate your strategy so as to maximize your business’s value.

________________________________________

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

Goodluz/BigStock.com

A $471 Million Exit From The Online Travel Industry

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Buyer Articles, Buyer FAQ, Buying a Business, Exit Planning, Seller Articles, Seller FAQ, Selling a Business.

From a standing start, Dinesh Dhamija grew European online travel agency eBookers to more than one billion in sales in just five years.

After two successful financing rounds, Dhamija still owned 40% of eBookers stock which represented virtually his entire net worth. Dhamija decided it was time to sell. He quickly got six acquirers interested, and sold eBookers to Cendant (owners of brands like Orbitz and Avis among others) for $471 million.

In this episode, you’ll learn:

  • Where to find the most natural strategic acquirers for your business
  • One guaranteed technique for knowing whether an acquirer is serious about buying your business or just kicking tires
  • How to accelerate the pace of your deal to sell your company
  • About a “Greenshoe” option and how it can impact you as a founder
  • The biggest mistake Dhamija made after selling his company which cost him “a few million dollars”

Listen Now

____________________________________________________

If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

Great Tips for Helping You Find a Buyer for Your Business

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

No one keeps a business forever.  At some point, you’ll either want to sell your business or have to retire.  When the time comes to sell, it is important to streamline the process, experience as little stress as possible and also receive top dollar.  In Alejandro Cremades’s recent Forbes magazine article, “How to Find a Buyer for Your Business,” Cremades explores the most important steps business owners should take when looking to sell. 

Like so many things in life, finding a buyer for your business is about preparation.  As Cremades notes, you should think about selling your business on the day you found your company.  Creating a business but having no exit strategy is simply not a good idea, and it’s certainly not a safe strategy either.  Instead you should “build and plan to be acquired.” 

For Cremades, it is vital to decide in the beginning if your preferred exit strategy is to be acquired.  If you know from the beginning that you wish to be acquired, then you should build your business accordingly from day one.  That means it’s essential to understand your market and know what prospective buyers would be looking for.  

According to the Leadership Development Program, Kauffman Fellows, acquirers buy businesses for a range of reasons including: 

  • Driving their own growth
  • Expanding their market
  • Accelerating time to market 
  • Consolidating the market

Some of the more potentially interesting reasons that acquirers buy a business include to reinvent their own business and even to respond to a disruption.  At the end of the day, there is no one monolithic reason why a given party decides to buy a business.  But there are indeed some general factors that acquirers are known to commonly seek out.

Additionally, Cremades believes that for those serious about finding a buyer, it is critical to make connections.  Or as Cremades states, “strategic acquisitions are about who you know, and who knows you.  Start making those connections early.”  He also points out that buyers are not always who one expects in the beginning of the process.  Keeping this fact in mind, it is important to stay open and always look to build solid relationships and keep those relationships up to date regarding your status.  Getting your company acquired won’t happen overnight.  Instead, it is a process that can take years.  Therefore, networking years in advance is a must.

Like many seasoned business professionals, Cremades realizes how important it is to work with a business broker.  If you have failed to network properly over the years, then a broker is an amazingly valuable ally.  They are about more than offering sage advice, as business brokers can also make potentially invaluable introductions and help you navigate every stage of the acquisition process.

_______________________________

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

4 PM production/BigStock.com

Multiple Of Earnings Vs. Revenue

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

Glenn Grant started G2 Technology Group which was in the business of helping website developers host their sites with Amazon Web Services (AWS).

By 2018, Grant had built his company to 30 employees and was planning to grow further by acquisition. That was around the same time he began fielding calls from Private Equity Groups (PEGs) interested in buying G2. The PEGs were throwing around valuation multiples of revenue instead of EBITDA. Grant decided to switch strategies and instead of being an acquirer, agreed to be acquired.

In this episode, you’ll learn:

  • The difference between a financial and strategic private equity group
  • How stock appreciation rights are different than options
  • Why your company’s culture impacts its value
  • How reputational equity as a channel partner can boost your value
  • How the sales process differs from an auction (and why in many cases its better)

Listen Now

_____________________________________

If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

Q2 Small Business Transactions Take a Dip but Strong Market Remains

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Buyer Articles, Buyer FAQ, Buying a Business, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

Small business transactions have been enjoying record numbers.  But as of the second quarter of 2019, the numbers have begun to take a small dip.  Experts feel that the trade war with China is playing a role, according to a recent article, “Q2 Small Business Transactions Down as Trade War Questions Remain.”

The numbers don’t lie, as the number of transactions stood at 2,444 for Q2, which is a drop of 9.6%.  But the simple fact remains that businesses are still selling at record levels.  As BizBuySell points out, there were 4,948 transactions reported in just the first half of 2019.  That means that 2019 could be the second most active business-for-sale market since BizBuySell began tracking data back in 2007.  In other words, the Q2 9.6% drop certainly doesn’t mean that the sky is falling. 

Deals per broker are declining, and many are looking to the current trade war between the U.S. and China for answers.  Increased tariffs and associated worries are, according to many experts, behind the Q2 dip. 

A recent BizBuySell poll of business owners noted that 43% are experiencing rising costs as a result of tariffs on Chinese goods.  Summed up another way, the trade war with China is impacting small businesses across the board. 

Ultimately, consumers will also feel the pinch as well with a whopping 64% of businesses noting that they will raise prices in order to address rising supplier costs.  Another attention-grabbing statistic is that 65% of small business owners are considering switching to suppliers not based in China, and 54% are looking for U.S. based supplies.  If this trend continues it could mark a dramatic shift.

There is, however, ample good news.  According to BizBuySell, buyers looking for a business will discover that the supply of quality listings on the market is increasing.  In short, now is a good time to buy a business, as the number of businesses listed as “for sale” grew by a healthy 5.2% in Q2 when compared to the same time last year. 

The “business for sale” inventory is growing.  According to Bob House, President of BizBuySell, “Businesses are performing better than ever.”

Some of the top performing markets by sales included Baltimore, Portland, Seattle, Austin and Dallas.  Those interested in buying a business will find that now is truly a historically good time to do so.  Working with a seasoned business broker can help you find a business that is right for you.  While the trade war has injected some uncertainty into the overall climate, there is no doubt that now is a historically unique time to buy a business.

_________________________________

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

utah778/BigStock.com

Deciding When To Sell

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

Used cars from leasing and rental companies were being sold at physical auctions. Kelly realized the wholesale side of selling used cars was ripe for transformation and started OPENLANE, a digital auction for fleet owners to sell their old cars.

Kelly raised money from some Silicon Valley venture capitalists and went on to grow the company to more than $100 million in sales. Despite having to give up the majority of the business to investors, Kelly and his partners still had a sizable chunk of the company.

Having started his business while still in school, a big chunk of Kelly’s wealth was tied up in OPENLANE and he wanted some liquidity. That’s when he decided to accept an acquisition offer of almost $250 million for OPENLANE.

In this episode, you’ll learn:

  • How to raise venture capital
  • The difference between a “seed” vs. “A” round
  • A controlled auction and when to use one to sell
  • How acquirers use the build vs. buy calculation
  • The secret to deciding when to sell

Listen Now

_________________________________________

If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

The Variety of Variables Involved in Selling Your Business

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

 

Selling a business is more than a big decision, as it is also quite complex.  Finding the right buyer for a business is at the heart of the matter.  In the recent Forbes article, “Ready to Sell Your Business? Follow These 3 Tips to Find the Best Buyer,” author Serenity Gibbons outlines that selling a business is a multifaceted process with a lot of moving parts.

A central variable for those looking to sell a business is to have a coherent and well thought out exit strategy in place.  She points out that at the top of your to-do list should be selling your business the right way, and that means having a great exit strategy in place.  In fact, many experts feel that you should have an exit strategy in place even when you first open your business.

Another key variable to keep in mind is that, according to Gibbons, only an estimated 20% to 30% of businesses on the market actually find buyers.  This important fact means that business owners, who usually have a large percentage of their wealth tied up in their businesses, are vulnerable if they can’t sell.  It is vital for business owners to make their businesses as attractive as possible to buyers for when the time comes to sell.

This article points to author Michael Lefkowitz’s book “Where’s the Exit.”  This book outlines what business owners need to do to get their business ready for their exit.  Updating your books, ensuring that a good team is in place and ready to go and taking steps to “polish the appeal of your brand” are some of the important topics covered. 

Gibbons notes that “not every buyer with cash in hand is the right buyer for your company.”  Mentioned are three key variables that must be addressed when looking to find the right buyer: consider your successor, explore your broker options and find a pre-qualified buyer.

In the end, working with a business broker is the fastest and easiest way to check off all three boxes.  An experienced professional knows the importance of working exclusively with serious, pre-qualified buyers.  Since a good business broker only works with serious buyers, that means business brokers can greatly expedite the process of selling your business. 

In her article, Gibbons supports the fact that working with a business broker is a smart move.  Those looking to get their business sold and reduce an array of potential headaches along the way, will find that there is no replacement for a good business broker.

___________________________________________________

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

FreedomTumZ/BigStock.com

How To Place A Value On Your Sales Team

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

Mark Deutschmann started Village Real Estate in 1996 and grew his residential real estate brokerage to 350 agents and $30 million in revenue – then, he heard some disturbing news. One of his agents and five former colleagues had been secretly planning to launch their own agency to compete with Deutschmann.

Rather than steeling for a fight, Deutschmann suggested the six agents simply buy Village Real Estate instead. So they did – and only for a few weeks later for $9.75 million.

In this episode, you’ll learn:

  • How to value a sales agency
  • How to get an extra 21% for your company (Deutschmann’s original offer was only $8 million, but he received $9.75 million)
  • The perfect time to sell your company (hint: it’s when someone is ready to buy it)
  • The surprising benefit to your marriage of cashing out

Listen Now

______________________________________

If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.

A Closer Look at 3 Major Factors to Consider When You Buy a Business

Posted by & filed under Business Owner, Buyer Articles, Buyer FAQ, Buying a Business, Valuation, Value Builder System™.

 

The simple but undeniable fact is buying a business is one of the single greatest financial decisions a person can make.  Buying a business can lead to great financial success or great financial failure.  This fact helps to underscore why it is so important to work with an experienced broker who can help guide you through the often labyrinthian process of buying a business.

In a July 2019 article from Smallbusiness.co.uk, author Kyle Carins explores three key factors that everyone should consider before they buy a business.  The first factor covered in Carins’ article, “3 Things to Consider When Buying a Business,” is appeal vs. viability. 

Appeal Vs. Viability

Not surprising, the most important variable for most prospective owners is that the business is indeed viable.  Not being able to differentiate between an appealing business and one that is viable can lead to financial disaster. 

As Carins points out, “Do you want to make money or do you want to fulfill a dream?”  Sometimes those two variables can intersect, but not always and not often.  In the end, it is vital to know whether a given business is, in fact, potentially lucrative. 

However, as Carins points out, it is also important that you choose a business that you will enjoy.  Nothing can be more spirit crushing than running a business that you truly hate, even if it is lucrative.  Selecting the right business for you is something of a balancing act that must take in a variety of often competing variables.

Considering Hidden Costs

The second factor that Carins looks at is the issue of “hidden costs.”  One of the key reasons that it is so important to work with a business broker is that a business broker understands these kinds of factors that you might otherwise overlook.  Due diligence is amazingly important.  For those who have never bought a business before, working with a business broker offers substantial protection against making a potentially serious mistake.

Second Opinions

The third factor examined in Carins article is “Getting a second opinion.”  For Carins, getting a second opinion is actually linked to due diligence.  He feels that additional opinions regarding a given business should go beyond working with professionals and should also include talking to friends and family who know you well.  Additional opinions can help one see angles that might otherwise be missed. 

Again, buying a business is complicated and will take up a good deal of one’s time and mental energy.  Your friends and relatives, understand your personality and your wants and desires.  Their input can be particularly beneficial.

Finding an experienced business broker can help you do more than simply establish whether or not a given business is a “good deal.”  Brokers with years of proven experience can also help you determine whether or not a specific business is a good fit for you and your lifestyle.

__________________________________

Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

Yacobchuk/BigStock.com

How Re-Modeling A Swimming Pool Business Led To A 7-Figure Exit

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Business Valuation, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Valuation, Value Builder System™.

Tommy Berretz co-founded Texas Aquatic Enterprise (TAE) in 2005 to maintain commercial swimming pools for condominium groups, apartment buildings and schools.

The business grew to more than 200 employees on the back of Berretz’s sales skills. That’s when he hired an accountant to value TAE. Berretz waited patiently as the accountant ran the numbers but was ultimately disappointed by the result.

The account had chosen to value Berretz’s business based on his assets alone reasoning that without Berretz himself, TAE was worthless.

At first he was disappointed and a little angry. Then Berretz set about re-modeling TAE to be less dependent on him which ultimately culminated in a seven-figure exit.

In this episode, you’ll learn:

  • The secret to hiring sales people for replacing you as a rain maker
  • The number one hire Berretz made (it may not be who you think)
  • Why you should never sign a “standard agreement”
  • Why Berretz ultimately sold to his second highest bidder

Listen Now

________________________________

If you’re interested in improving the value of your business, take our questionnaire or contact Colonial Business Brokerage today at 443-982-7332.