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What to Do When Something New Attracts your Attention

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™.

Jessica Tindel and her partner started Dream Enrichment Classes, a business offering after school programs in math and art 13 years ago. Tindel built the business to 60 part time instructors and 5 full time office staff when a new business caught her attention. Stretched thin and drawn to the potential of her new idea, she decided to sell. In this episode, you’ll discover:

In this episode, you’ll learn:

  • How “add backs” can significantly boost the value of your company
  • The two things Tindel recommends every partnership agreement should include
  • How many years a buyer will consider when evaluating the performance of your business
  • The definition of “good will” and how to make sure you get paid for yours
  • Who owns the cash in your company when you go to sell it (you may be surprised by the answer)
  • The two things Tindel wished she had done differently if she could sell her business all over again.

Listen Now

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

7 Big Questions to Ask Yourself Before Moving Forward

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™.

The first step towards successfully selling a business is finding a qualified business broker to work with.  Sellers should also ask themselves an array of important questions.  A recent article, “7 Questions to Answer Before Selling Your Business,” published by Good Men Project, has a great overview of questions sellers should answer before moving forward.

Author Troy Lambert believes that at the top of the list is one very simple and powerful question, “Are you ready?”  For example, your financial reports should be ready to show.

The second question is, “What’s it worth?”  Determining what a business is worth means you’ll need a professional business valuation.  A great deal can go into evaluating your business and you need an expert to help you determine that value.

Third, Lambert believes that prospective sellers should ask themselves, “How’s the health of my industry?”  He emphasizes that honesty is key here for a variety of reasons.  If your industry is in a transition period, for example, then it might be better to wait until a better time to sell.

The fourth question on Lambert’s list is, “How long will it take?”  In short, you need to remember that selling a business can take a long time.  Successfully selling your business may even mean that you have to stay on and work with the new owner during a transition period.

The fifth key question is, “Who is my buyer?”  You don’t want to waste a lot of time with potential buyers who are simply not a good fit.  Finding the right buyer for your business helps to ensure that a deal will be finalized.

Sixth, Lambert wants sellers to think about how they will get paid.  Are you willing to finance part of the deal?  What about balloon payments over time?  Understanding, before you put your business on the market how you want to be paid and how flexible you can be in terms of payment is essential.

For most sellers, selling a business will stand as the largest financial decision of their lives.  With this realization comes more than a little pressure.

Considering the enormity of the decision, having good advice is simply a must.  A seasoned and experienced business broker understands what it takes to buy and sell a business.  Working with a business broker is an easy and efficient way to begin the process of selling your business.  Brokers know what it takes to successfully sell a business and can help you answer these questions and many more.

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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.

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The Other Half Of The Equation

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™.

To have a happy and lucrative exit, you need two things:

1.  A business that is ready to sell

2. An owner that is personally ready to sell

…Yet so many owners fail to consider the latter and wind up crippled with depression because of their regret to exit – which is exactly what happened to one owner after he accepted a $26 million offer.

How can that be possible?

In this week’s special episode, host John Warrillow shares insight into the 4 key drivers of a satisfying exit, including the tragic lessons learned from other owners and the steps you can take as a business owner today to ensure the next chapter of your life will not be riddled with regret.

Listen now

In this episode, you’ll learn:

  • The 4 factors that lead to a happy and lucrative business exit
  • The “Happy, Rich or Famous?” paradox
  • The single most important trick to a satisfying exit
  • 5 ways to maximize the value of your business now
  • The single biggest regret most owners have when they exit (and how to avoid it).

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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 Historic Levels of Small Businesses Being Sold Drops Slightly

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

The number of small business transitions continues to be strong for the first quarter of 2019.  In fact, despite a small decline, small business transitions remain at historically high levels.

 

Looking at the Statistics

According to a recent BizBuySell article entitled, “Number of Small Businesses Changing Hands Dips Slightly, But Market Remains Ripe for Buyers and Sellers,” now is still very much the time for both buying and selling a business.  It is true that the number of businesses sold in the first three months of 2019 dropped by 6.5% when compared to 2018.  Yet, it is important to keep in mind that the number of completed transactions remains very strong.  Likewise, inventory is increasing, with a 6.1% increase in listings in Q1 of 2019 when compared to the same period in 2018.

While the market is indeed strong, the BizBuySell article did note that some experts feel that there are signs that the market could become more challenging moving forward.  In part, this is due to the prospect that interest rates and financing could become increasingly challenging and more expensive.  These factors indicate that now is a smart time to both buy and sell a business.

Likewise, the financials of sold businesses in Q1 remains strong.  In fact, the median revenue of sold businesses jumped 6.5% when compared to Q1 2018.  Now, the median revenue stands at $540,000.  However, cash flow continues to hover around the $100,000 for five years in a row.

What are the Top Regions?

Currently, the top markets by closed small business transition are Miami-Fort Lauderdale-Miami Beach, Los Angeles-Long Beach-Santa Ana, New York-Northern New Jersey-Long Island, Tampa-St. Petersburg-Clearwater and Dallas-Fort Worth-Arlington.  The top markets by median sale price are Charlotte-Gastonia-Concord, San Francisco-Oakland-Fremont, Denver-Aurora and Dallas-Fort Worth-Arlington.

A Consistently Strong Market

Overall, the experts at BizBuySell believe that the market remains very strong and active.  They believe that the wave of retiring baby boomers looking to exit their businesses, historically low interest rates and the rise of the next generation of entrepreneurs are helping to fuel a great deal of activity.

According to Matt Coletta, Co-Founder and Managing Partner, M&A Business Advisors, “We are seeing more quality businesses coming on the market with good, clean books than I have seen in my 25+ years in the business.”

If you are considering buying or selling a business, then now is an excellent time to jump in.  Working with a business broker is a great way to ensure that you find the right business for you at the right price.

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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.

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Buying a Business to Sell It

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™.

Connie Fenyo started out as an employee at Dye & Durham, a company that makes software for lawyers. She rose to Executive Vice President when she learned her boss was looking to sell the 200-employee firm.

Fenyo decided to make a bid.

She scraped together all the money she could find, borrowed (in return for a personal guarantee) everything her bank would lend her and got the former owner to finance some of the acquisition price.

That’s when she found herself deeply in debt as the proud new owner of Dye & Durham. Fenyo had gambled her entire life savings and committed that if she could ever work her way out from under the mountain of debt, she would sell Dye & Durham. And that’s exactly what she did.

In this episode, you’ll learn:

  • How Fenyo financed her purchase at tremendous personal risk
  • Fenyo’s strategy for prioritizing debt payments while growing her company
  • Why selling a business can be its own full-time job
  • Fenyo’s single most important piece of advice when selling your business

Listen Now

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

How To Avoid The Hodgepodge Discount

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™.

Nobody likes paying for a hundred TV channels when all you want is a few, which is why so many people are dropping cable in favor of a subscription to only the select channels they’ll watch.

Similarly, no investor wants to buy a business with a hodgepodge of product lines if they can’t figure out how to value and monetize all of what you’ve created.

…Which is how Ryan Deiss got himself into a sticky situation.

Deiss is the co-founder of Digital Marketer, a growing e-learning platform for marketers with – up until recently – a thriving annual conference that draws 7,000 marketers and speakers like Sir Richard Branson.

When Deiss went to raise money for Digital Marketer, would-be investors didn’t know how to categorize them.  Some investors liked Deiss’ e-learning company but didn’t want to be in the events business. Others liked events and didn’t value e-learning as much. That’s when Deiss made a drastic decision that would end up paying off handsomely.

In this episode, you’ll learn:

  • How more product and service lines could reduce your market value
  • How to identify if you have a division worth selling off
  • What it takes to get Richardson Branson to keynote your event
  • How to negotiate your Non-Compete
  • The one thing you should never do when agreeing to an earn out
  • The importance of knowing your number before you start negotiating with an acquirer
  • How to fly business class on your acquirer’s dime
  • How to avoid the biggest regret Deiss wishes he had avoided

Listen Now

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

Why You Should Exit Your Business While You’re Ahead – A Cautionary Tale

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™.

The very best time to sell your business is when someone wants to buy it.  While it can be tempting to continue to grow your business forever – particularly when things are going well — that decision comes with a significant downside.

Take a look at the story of Rand Fishkin who started his entrepreneurial journey when he joined his mother’s marketing agency as a partner.

When Fishkin realized how much his Mom’s customers were struggling to get Google to display their company in a search, he immersed himself in the emerging field of Search Engine Optimization (SEO).

He began writing a blog called SEO Moz, which led to an SEO consulting and software company. By 2007, Moz was generating revenue of $850,000 a year when Fishkin decided to drop consulting to become solely a software business.

The company began to grow 100% per year and by 2010, Moz was generating around $650,000 in revenue each month, attracting the attention of Brian Halligan, co-founder of marketing software giant HubSpot.

HubSpot wanted to buy Moz and was offering $25 million of cash and HubSpot stock – an offer almost five times Moz’s $5.7 million of revenue in its last complete financial year.

But Fishkin wasn’t satisfied. He believed a fast growth Software-as-a-Service (SaaS) company was worth four times future revenue and was confident Moz would hit $10 million by the end of that year.

Fishkin counter offered, saying he would be willing to accept $40 million. HubSpot declined.

New Plans Ahead

Instead of selling Moz, Fishkin raised a round of venture capital and started to diversify away from SEO tools into a broader set of marketing offerings. The further Moz veered away from its core in SEO, the more money his business began to lose.

By 2014, Moz was in full crisis mode, and Fishkin had begun suffering from a bout of depression. He decided to step down as CEO, describing his resignation as a “lot of sadness, a heap of regrets and a smattering of resentment.”

Fishkin became a minority shareholder in a company he no longer controlled where the venture capitalists had preferred rights in a liquidity event.

A Lesson Learned

In the ensuing years since turning down Halligan’s offer, HubSpot went public on the New York Stock Exchange and had been worth nearly 20 times as much.

Fishkin revealed that today, his liquid net worth is $800,000 – much of which he was about to spend on elder care for his grandparents. The Moz stock he holds may or may not have value after the venture capitalist get their preferred return. At the same time, Fishkin estimated HubSpot’s offer of $25 million in cash and HubSpot stock would now be worth more than $100 million (based on the increased value of HubSpot’s stock).

Fishkin’s tale is a cautionary reminder why the best time to sell your company is when someone wants to buy it – a story that is shared in his book Lost and Founder: A Painfully Honest Field Guide to the Startup World.

What if an offer was made for your business today? Would you be ready to sell? Would you regret if you said no?

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Do you want to improve the value of your business?

Start by taking our Value Builder Questionnaire, click here for access.

IBBA and M&A Source Market Pulse Survey Report Predicts Major Changes

Posted by & filed under Business Owner, Exit Planning, Seller Articles, Seller FAQ, Selling a Business.

The IBBA and M&A Source Market Pulse Survey Report for the fourth quarter of 2018 has a range of interesting insights.  The survey’s purpose is to provide an “accurate understanding of market conditions for businesses being sold in Main Street (values $0-$2MM) and the Lower Middle Market (values $2MM-$50MM).  This national survey was designed as a tool for business owners and their advisors and has the support of both the Pepperdine Private Capital Markets Projects and the Pepperdine Graziadio Business School.

One of the most striking facts to leap out of the report is the fact that a full one-third of advisors fully expect the strong market to end this year.  Overall, advisors are not optimistic that the current climate will continue through 2020.  In fact, advisors are encouraging sellers to consider placing their businesses on the market now, while the market is still strong.  This is according to Craig Everett, PhD and Assistant Professor of Finance and Director of the Pepperdine Private Capital Markets Project.

One fact from the report that could be overlooked is that only a mere 8% of advisors expect the current climate to last for 48 months or more.  Additionally, only 9% believe that the current climate will last between 24 to 48 months.  Perhaps most striking of all is the fact that 60% of advisors feel that the current climate will end within the next two years.

Business owners who are considering selling should be advised that almost two-thirds of advisors now feel that there will be a significant shift in the next two years.  Considering that it can take a year or more to sell a business, business owners would be wise to consider this important fact.

The report sites Neal Isaacs, Owner of VR Business Brokers of the Triangle who states, “Deals are taking longer in due diligence as buyers work hard to validate their investment and make sure that what they’re buying is worth the premium price today’s sellers are commanding.”

So, is now the time to sell?  Many experts feel that it is possible to lose a sizable amount of value if one waits too long to sell.  Even just a few months can make a huge difference in terms of perceived value and the ultimate sales price.  Working with a proven business broker is a key way to ensure that you are selling at the right time and secure the best possible price.

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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.

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5 M&A Myths and How to Deal with Them

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Buyer Articles, Buyer FAQ, Buying a Business.

Where your money is concerned, myths can do damage.  A recent Divestopedia article from Tammie Miller entitled, Crazy M&A Myths You Need to Stop Believing Now, Miller explores 5 big M&A myths that can get you in trouble.  Miller points out that many of these myths are believed by CEO’s, but that they have zero basis in reality.

Myth 1

The first major myth Miller explores is the idea that the “negotiating is over once you sign the LOI.”  The letter of intention is, of course, important. However, this is by no means the end of the negotiations and it is potentially dangerous to think otherwise.  The negotiations are not concluded until there is a purchasing agreement in place. As Miller points out, there is a great deal that can go wrong during the due diligence process.  For this reason, it is important to not see the LOI as the “end of the road.”

Myth 2

Another myth that Miller wants you to be aware of is that you don’t have to take a company’s debt as part of the purchase price.  Many business brokers, such as Miller, recommend that buyers don’t take seller paper.

Myth 3

A third myth that Miller explorers is a particularly dangerous one.  The idea that everyone who makes an offer has the money to follow through is, unfortunately, simply not true.  Oftentimes, people will make offers without securing the money to actually buy the business.  No doubt, this wastes everyone’s time.  As the business owner, it can derail your progress.  If you are not careful, it could actually prevent you from finding a qualified buyer.

Myth 4

Another myth is built around the notion that sellers don’t need a deal team in order to sell their business.  Again, this is another myth that has no real foundation in reality.  While it may be possible to sell your business without the assistance of an experienced M&A attorney or business broker, the odds are excellent that doing so will come at a price.  According to Miller, those working with an investment banker or business broker can expect, on average, 20% more transaction value!

Additionally, there are other dangers in not having a deal team in place.  A business broker can handle many of the time-consuming aspects of selling a business, so that you can keep running your business.  It is not uncommon for business owners to get stretched too thin while trying to both run and sell a business and this can ultimately harm its value.

Myth 5

Miller’s final myth to consider is that you must sell your entire business.  It is true that most buyers will want to buy 100% of a business, but a minority ownership position is still an option.  There are many reasons to consider selling a minority stake, so don’t assume that selling your business is an “all or nothing” affair.

Ultimately, Miller lays out an exceptional case for the importance of working with business brokers when selling or buying a business.  Business brokers can help you avoid myths.  In the end, they know the lay of the land.

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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.

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8 Things That Drive the Value of Your Company

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Value Builder System™.

If you’re like a lot of entrepreneurs, you use your Profit & Loss statement as your report card at the end of the year.  You may even use your P&L to figure out what your company is worth by applying a multiple to your profit.  But having worked with and surveyed more than 40,000 entrepreneurs, we have seen examples of companies that fetch up to three times more than the average price for companies in their industry.  Likewise, we’ve seen cases where company’s business value is worth less than half the average multiple of their peer group.

Why would one company be worth two or three times more than a similar company in the same industry?

We have discovered that there are eight factors that actually impact your company’s value more than the industry you’re in.

Schedule a free strategy session where you’ll learn how to:

– Optimize the eight drivers of company value;

– Maximize your company’s overall value;

– Find strategic buyers for your business;

– Structure your business to maximize its value;

– Accelerate the pace of positive word-of-mouth for your business using the same technique as companies like Eventbrite, Intuit, Google and Apple;

– Boost your company’s cash flow in the same way Harley Davidson finances its business;

– Differentiate your business using the same methodology Warren Buffet looks for in the companies he invests in;

– Minimize your company’s reliance on your personal involvement using some of the strategies Tim Ferriss used to reduce the time he spent in this business to just four hours a week.

Do you want to improve the value of your business?  Call us today at (443) 982-7332 or schedule your free strategy session here.