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When Your Best Acquirer Is Already On The Payroll

Would you consider selling your business to an employee?

They’d probably fit the bill – good understanding of the business, passionate about your mission, and more likely to continue your legacy – but, they likely won’t have the cash to front such a large transaction either.

When Lori Moen decided to step back from her business, Viking Trophies, she sought out large, strategic acquirers — but nobody showed interest.  That’s when she looked internally and found her General Manager was interested in taking over.

In this episode, you’ll learn:

  • The pros (and cons) of selling to an internal employee
  • What to look for when structuring the financing (hint: you may need to lend some of the money)
  • 3 different selling options – including the benefits of each
  • The sneaky terms and conditions to look out for when selling your business to an employee
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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 One Consulting Company Used The ‘Netflix Model’ To Transform

Boyd Davis – and his three co-founders – created Kogentix with a mission to provide the same behavior data that recommends the ‘next show to watch’ on Netflix… in industries like banking and groceries.

They started as a consultancy and soon realized in order to grow they would need to transform their services offering business into a product-based model.

Find out how this change helped them grow from zero to 240 employees in just three years, and ultimately sell Kogentix to the biggest digital marketing agency in the world: Accenture.

In this episode, you’ll learn:

  • What value awaits you in a product-based company
  • How to finance your growth using an unusual debt Instrument
  • The buzzwords you should be using to describe your business (and when they don’t matter)

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.

When To Hire A President To Run Things

Jim Brown had been running TerrAlign, a software company that helps clients optimize their sales territories,  for more than two decades when he decided to promote Ken Kramer to run things as the company’s President.

Kramer was so good at leading the business that Brown ultimately asked him to manage the process of selling it. TerrAlign was subsequently acquired by MapAnything in December 2018. Then in April 2019, MapAnything was itself acquired by Salesforce.com.

In this episode, you’ll learn:

  • Where to find your second-in-command (Hint: they might already work for you)
  • How to structure a compensation plan that aligns your President to your goals
  • How to protect yourself when your acquirer gets acquired
  • Ways to ensure your business will run successfully without you
  • How to build a company that acquirers want to buy
  • How Kramer was compensated to get to the finish line of the acquisition

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 Employees Factor into the Success of Your Business

Quality employees are essential for the long-term success and growth of any business.  Many entrepreneurs learn this simple fact far too late.  Regardless of what kind of business you own, a handful of key employees can either make or break you.  Sadly, businesses have been destroyed by employees that don’t care, or even worse, are actually working to undermine the business that employs them.  In short, the more you evaluate your employees, the better off you and your business will be.

Forbes’ article “Identifying Key Employees When Buying a Business”, from Richard Parker does a fine job in encouraging entrepreneurs to think more about how their employees impact their businesses and the importance of factoring in employees when considering the purchase of a business. 

As Parker states, “One of the most important components when evaluating a business for sale is investigating its employees.”  This statement does not only apply to buyers.  Of course, with this fact in mind, sellers should take every step possible to build a great team long before a business is placed on the market.

There are many variables to consider when evaluating employees.  It is critical, as Parker points out, to determine exactly how much of the work burden the owner of the business is shouldering.  If an owner is trying to “do it all, all the time” then buyers must determine who can help shoulder some of the responsibility, as this is key for growth.

In Parker’s view, one of the first steps in the buyer’s due diligence process is to identify key employees.  Parker strongly encourages buyers to determine how the business will fair if these employees were to leave or cross over to a competitor.  Assessing if an employee is valuable involves more than simply evaluating an employee’s current benefit.  Their future value and potential damage they could cause upon leaving are all factors that must be weighed.  Wisely, Parker recommends having a test period where you can evaluate employees and the business before entering into a formal agreement.

It is key to never forget that your employees help you build your business.  The importance of specific employees to any given business varies widely.  But sellers should understand what employees are key and why.  Additionally, sellers should be able to articulate how key employees can be replaced and even have a plan for doing so.  Since, savvy buyers will understand the importance of key employees and evaluate them, it is essential that sellers are prepared to have their employees placed under the microscope along with the rest of their business.

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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.

fizkes/BigStock.com

What to Do When Something New Attracts your Attention

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

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.

dolgachov/BigStock.com

The Other Half Of The Equation

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

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.

f9photos/BigStock.com

Buying a Business to Sell It

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

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.