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Confidentiality Agreements: What are the Most Important Elements?

Every business has to be concerned about maintaining confidentiality. In fact, it is common for business owners to become somewhat obsessed with confidentiality when they are getting ready to sell their business.

It goes without saying that owners don’t want the word that they are selling to spread to the public, employees or most certainly their competitors. Yet, there is something of a tug of war between the natural desire for confidentiality and the desire to sell a business for the highest amount possible. At the end of the day, any business owner looking to sell his or her business will have to let prospective buyers “peek behind the curtain.” Let’s explore some key points that any good confidentiality agreement should cover.

At the top of your confidentiality list should be the type of negotiations. This aspect of the confidentiality agreement is, in fact, quite important as it stipulates whether the negotiations are secret or open. Importantly, this part of the confidentiality agreement will outline what information can be revealed and what cannot be revealed.

Also, consider the duration of the agreement. Your agreement must be 100% clear as to how long the agreement is in effect. If possible, your confidentiality agreement should be permanently binding.

You will undoubtedly want to outline what steps will be taken in the event that a breach does occur. Having a confidentiality agreement that spells out what steps you can, and may, take if a breach does occur will help to enhance the effectiveness of your contract. You want your prospective buyers to take the document very seriously, and this step will help make that a reality.

When it comes to “special considerations” category, this should be elements that apply to the business in question. Patents are a good example. A buyer could learn about inventions while “kicking the tires,” and you’ll want to be quite certain that any prospective buyer realizes that he or she must maintain confidentiality regarding any patent-related information.

Of course, do not forget to include any applicable state laws. If the prospective buyer is located outside of your state, then that is an issue that must be adequately addressed.

A confidentiality agreement is a legally binding agreement. And it is important that all parties involved understand this critical fact. Investing the money and time to create a professional confidentiality agreement is time and money very well spent. An experienced business broker can prove invaluable in helping you navigate not just the confidentiality process, but also the process of buying and selling in general.

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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.

Call Colonial Business Brokerage today at (443) 982-7332.

Copyright: Business Brokerage Press, Inc.

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Transitioning Business Owners Need a Realistic Financial Plan

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from Jane Johnson of BTA on Mon, Oct 01, 2018 @ 09:01 PM 

As a business owner, no matter what you want your legacy to be after your business transition, you want to ensure that you have enough retirement income. In a recent article, we discuss why it is so important for you to:

  1. Take stock of the assets you have saved outside your business (your Net Worth),
  2. Determine how much income you’ll need post-transition, and
  3. Calculate how much money you’ll need to net from your transition (your Wealth Gap) to fund the rest of your life.

This process is crucial for owners because their businesses are usually their largest assets. In fact, it’s not unusual for some owners to have as much as 80% or 90% of their net worth tied up in this illiquid investment! And, prior to any sale or ownership transfer, you need to determine just how financially reliant you will be on the transition proceeds. Taking the time to create a financial plan as part of your overall Business Ownership Transition Plan (BOTP) will help to set you up for the retirement you deserve.

Let’s look at what you’ll need to consider as you develop your personal financial plan.

Developing a Realistic Financial Plan Is Essential for Transitioning Business Owners

When we start our planning process with transitioning owners, they are often surprised to learn that their existing financial plans are not adequate for their post-transition needs.

During the typical financial planning process, an assumed value for the business is often plugged in along with various other assumptions such as weddings and college expenses, how long an owner’s spouse will work, social security income, tax rates, etc. This is dangerous if the business value is not based on real market data and the owner doesn’t know how or when they may extract the value of the business.

The most significant figure owners need to determine is the ESTIMATED NET PROCEEDS of the business transfer, after taxes and fees. Owners should work with a financial advisor who is trained to assist business owners with developing a financial plan that determines just how much net proceeds they will need from the business transfer in an ideal timeframe. This should then be compared back to the owner’s Wealth Gap and if the net proceeds are not enough, an owner will need to take steps to close the gap such as saving more money outside the business and/or increasing business value.

Most financial advisors have access to powerful planning software that can be used to determine how much is needed from the business transition. Most of these software packages use the owner’s current net worth and projected income, expenses, and savings along with some assumptions for annual rates of return, tax rates, and inflation in order to calculate the probability of achieving their retirement goals. If the business value is left out of the plan, your advisor may be able to tell you how much you need to net from your business sale. But let’s not forget about taxes and fees!

It will be very important for owners to work with their CPA in order to determine an estimated tax and fee rate that can then be used to “back into” the gross selling price needed. It sounds complicated, but it’s not that difficult to do and it will inform owners about just how much their business needs to be worth in order to achieve their financial goals post-transition.

Owners should also consider working with a knowledgeable business intermediary (broker or investment banker depending upon the size of the business) in order to determine the market value of their businesses today and what buyers are looking for. It’s not just about growing the numbers but also about improving the overall quality of their businesses. This is powerful information as owners plan for business growth.

Diversification is Always a Good Idea

It’s helpful to think of your net worth, including your business, as you would any other financial portfolio – you don’t want all your eggs in one basket! Diversification is the key to minimizing risk and generating the best possible returns. This means developing a plan to consistently save money OUTSIDE the business, including finding tax-efficient ways to save beyond the traditional retirement plan. Work with your financial advisor to set a course for regular savings and good returns with your transition timeline in mind.

Start Now

Your personal financial plan should be developed as part of your overall Business Ownership Transition Plan, and it should be reviewed and updated regularly as your lifestyle changes. Your business transition and financial advisors can help you analyze your current situation, take into account all of the nuances associated with the sale of your business, determine your financial needs for the future, and develop a comprehensive plan to achieve a successful post-transition retirement.

Start now even if you don’t plan to transition for years so you can reduce your Wealth Gap, increase the value of your business, and minimize taxes. It takes time to develop a BOTP, but it will help ensure that you achieve ALL of your goals!

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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.

Call Colonial Business Brokerage today at (443) 982-7332.

How Do You Compare As A Business Owner?

Have you ever wondered how you compare as an owner with your peers?

The most recent data from The Value Builder System™ presents an interesting look into the current value of privately held businesses. In the study, How an Owner’s Age Impacts Their Attitudes Towards Exit, business owners were profiled in four generational groups, including:

  • Millennials (owner born between 1981 and 1996)
  • Generation X (owner born between 1965 and 1980)
  • Baby Boomers (owner born between 1946 and 1964)
  • Silent Generation (owner born between 1928 and 1945)

Below are some of the highlights:

Millennials running younger companies but staying in the race longer

Millennial business owners were 3 times more likely to have started their business after 2014. Of the business owners surveyed, nearly one-third (29.7%) say they don’t expect to exit their company for at least 10 years.

“Wealthy” defined differently across the generations

When asked for a definition of “wealthy,” 21% of Millennials said that $10 million makes you rich, compared to just 14.8% of all owners, who were more inclined to say that “having enough money to cover your lifestyle expenses” or being able to do “whatever, whenever you want to” was their definition of wealth.

Boomers focused on maximizing profits

When it comes to their goals for the year ahead, respondents were given a choice between growing their top line, growing their bottom line, or mastering their craft. Boomers were more likely (45.2% vs. 41.7%) to say their main goal was maximizing their bottom-line profits.

Silent Generation less likely to be owner dependent

Of the 35,000 business owners analyzed, 28.6% of the Silent Generation were more likely to say their business “would hardly suffer at all, and would survive a 3-month absence of the owner.” In comparison, only 17.9% of the other generations agreed with this. Silent generation is also twice as likely (18% vs. 9%) to be planning to exit their businesses within the next two years.

Overall, the data indicates that the one common denominator among all business owners – regardless of their age – is that they are thinking about their exit, whether in two years or over the next 10. Read the white paper to learn more.

Are you thinking about your next steps?

Whether you’re planning to transition out of your business in the next year or decade, it’s recommended you do everything possible to maximize the sale by focusing on the eight key drivers of business value.

Do you want to improve the value of your business?

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

Goodwill and Its Importance to Your Business

What exactly does the term “goodwill” mean when it comes to buying or selling a business? Usually, the term “goodwill” is a reference to all the effort that a seller puts into a business over the years that he or she operates that business. In a sense, goodwill is the difference between an array of intangible, but important, assets and the total purchase price of the business. It is important not to underestimate the value of goodwill as it relates to both the long-term and short-term success of any given business.

According to the M&A Dictionary, an intangible asset can be thought of as asset that is carried on the balance sheet, and it may include a company’s reputation or a recognized name in the market. If a company is purchased for more than its book value, then the odds are excellent that goodwill has played a role.

Goodwill most definitely contrasts and should not be confused with “going concern value.” Going concern value is usually defined as the fact that a business will continue to operate in a fashion that is consistent with its original intended purpose instead of failing and closing down.

Examples of goodwill can be quite varied. Listed below are some of the more common and interesting examples:

  • A strong reputation
  • Name recognition
  • A good location
  • Proprietary designs
  • Trademarks
  • Copyrights
  • Trade secrets
  • Specialized know-how
  • Existing contracts
  • Skilled employees
  • Customized advertising materials
  • Technologically advanced equipment
  • Custom-built factory
  • Specialized tooling
  • A loyal customer base
  • Mailing list
  • Supplier list
  • Royalty agreements

In short, goodwill in the business realm isn’t exactly easy to define. The simple fact, is that goodwill can, and usually does, encompass a wide and diverse array of factors. There are, however, many other important elements to consider when evaluating and considering goodwill. For example, standards require that companies which have intangible assets, including goodwill, be valued by an outside expert on an annual basis. Essentially, a business owner simply can’t claim anything under the sun as an intangible asset.

Whether you are buying or selling a business, you should leverage the know how of seasoned experts. An experienced business broker will be able to help guide you through the buying and selling process. Understanding what is a real and valuable intangible asset or example of goodwill can be a key factor in the buying and selling process. A business broker can act as your guide in both understanding and presenting goodwill variables.

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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.

Call Colonial Business Brokerage today at (443) 982-7332.

Copyright: Business Brokerage Press, Inc.

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How to Break Up With Your Business Partner

How do you place a fair valuation on your company when only one partner wants out, and the other is ready to continue? The answer – for Judith Nowlin and her partner Amanda – wasn’t a matter of calculating how far they’ve come, but rather how far they would go.

Nowlin, co-founder of iBirth™, a daily pregnancy, postpartum and baby tracker app, found herself in a complex situation when her co-founder and good friend was ready to step down from the business.

While most would be left perturbed, for Nowlin, it pushed her to evaluate the company’s potential valuation and helped lay the foundation of transforming iBirth™ toward a B2B model with a stream of recurring revenue — and ultimately finding a strategic buyer to acquire the business.

In this episode, you’ll learn:

  • How to handle a business partner who wants out – and ways you can keep them as an investor and advisor
  • The difference between a financial buyer and strategic buyer, and how to approach the latter
  • How a recurring revenue stream can transform your business
  • One easy way to determine if your B2C business can evolve into a B2B model

Listen now

Do you want to improve the value of your business?

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

 

 

 

Selling a Business in 2019: Three Important Things to Keep in Mind

from Inc.com, credit: Getty Images

With profitable businesses fueling the market and an election year on the horizon, 2019 could be a pivotal year.

Luckily, rising sale prices for healthy businesses have presented sellers with a good time to take the leap. In fact, 60 percent of owners are confident that they would receive a favorable sale price if they sold their business today.

With such optimism, it can be tempting for antsy owners to jump into a sale. However, it’s important to have a clear and well-thought-out exit strategy to guarantee the best sale price and a smooth sales process. While some of these strategies are evergreen, others require more insight.
To find out more, we consulted with a panel of small business experts on what they believed sellers should consider when developing their exit plans:

Take action now. While the 2019 market is promising, the sunny weather won’t last forever. The GDP is expected to slow its pace approaching 2020, which also falls on an election year — known historically to soften sales. For owners waiting for the right time to sell, it might be wise to accelerate the process and make 2019 your selling year.

At the same time, baby boomers business owners are fueling the market with a steady supply of inventory. In fact, it’s estimated that retiring baby boomers will sell or transfer nearly $10 trillion of assets in the coming decades.

“Baby boomers are entering the marketplace at a faster rate than in the past, and pricing may start to have some downward pressure,” said Andrew Cagnetta, CEO of Transworld Business Advisors. For now, reports still indicate that small business sale prices are rising, but the impending effects of a retiring generation are important to keep in mind.

Invest in your business. Deciding to sell doesn’t mean ownership duties take a backseat. It’s critical that owners don’t fall into the “last day of school” mindset and neglect their responsibilities. In fact, once deciding to sell, it’s more important than ever for owners to invest in the business.

“Be proactive in preparing your business for sale,” said Matt Coletta, co-founder and managing partner at M&A Business Advisors. “Understand the key items that motivate a buyer in choosing your business over other businesses on the market.” Upgrading equipment, increasing marketing efforts and removing excess or obsolete inventory will not only increase the value of the business but prove to buyers that the business has not been neglected.

Prepare your financials. In addition to interest rate hikes, rising labor costs and other overhead expenses have the potential to cause declines in revenue. Small businesses across the board are struggling to compete with the salaries and benefits offered by larger corporations; in the third quarter of 2018, labor costs increased nearly one percent.

With such a large number of healthy businesses on the market, buyers are doing their due diligence and evaluating the long-term profitability of each opportunity. While revenue declines may not be significant, it’s important to have a good explanation for these variances and how they relate to fluctuations in the economy.

“Clean up your financials and have consistent reports,” said Ron Johnson, chairman of ABI Business Sales, Mergers and Acquisitions. “Have profit and loss statements and balance sheets for at least three years — five years is better.”

A strong, favorable market is motivation enough for owners to sell. Yet, it’s difficult to predict the future. With profitable businesses fueling the market and an election year on the horizon, 2019 could be a pivotal year. While these are only predictions, sellers should consider taking advantage of this high point rather than risk having to wait longer to sell. Following the advice from our experts, owners who take action now, invest in their businesses and prepare their financials can be confident they’re securing the best possible sale.

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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.

Call Colonial Business Brokerage today at (443) 982-7332.

 

The Sale of a Business May Actually Excite Employees

Many sellers worry that employees might “hit the panic button” when they learn that a business is up for sale. Yet, in a recent article from mergers and acquisitions specialist Barbara Taylor entitled, “Selling Your Business? 3 Reasons Why Your Employees Will Be Thrilled,” Taylor brings up some thought-provoking points on why employees might actually be glad to hear this news. Let’s take a closer look at the three reasons that Taylor believes employees might actually be pretty excited by the prospect of a sale.

Taylor is 100% correct in her assertion that employees may indeed get nervous when they hear that a business is up for sale. She recounts her own experience selling a business in which she was concerned that her employees might “pack up their bags and leave once we (the owners) had permanently left the building.” As it turns out, this wasn’t the case, as the employees did in fact stay on after the sale.

Interestingly, Taylor points to something of a paradox. While employees may sometimes worry that a new owner will “come in and fire everyone” the opposite is usually the case. Usually, the new owner is worried that everyone will quit and tries to ensure the opposite outcome.

Here Taylor brings up an excellent point for business owners to relay to their employees. A new owner will likely mean enhanced job security, as the new owner is truly dependent on the expertise, know-how and experience that the current employees bring to the table.

A second reason that employees may be excited with the prospect of a new owner is their potential career advancement. The size of your business will, to an extent, dictate the opportunities for advancement. However, if a larger entity buys your business then it is suddenly possible for your employees to have a range of new career advancement opportunities. As Taylor points out, if your business goes from a “mom and pop operation” to a mid-sized company overnight, then your employees will suddenly have new opportunities before them.

Finally, selling a business could mean “new growth, energy and ideas.” Taylor discusses how she had worked with a 72-year-old business owner that was exhausted and simply didn’t have the energy to run the business. This business owner felt that a new owner would bring new ideas and new energy and, as a result, the option for new growth.

There is no way around it, Taylor’s article definitely provides ample food for thought. It underscores the fact that how information is presented is critical. It is not prudent to assume that your employees may panic if you sell your business. The simple fact is that if you provide them with the right information, your employees may see a wealth of opportunity in the sale of your 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.

Call Colonial Business Brokerage today at (443) 982-7332.

Copyright: Business Brokerage Press, Inc.

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A Look at Divestopedia’s Article, “The Myth of Fair Business Valuation”

In Divestopedia’s article, “The Myth of Fair Business Valuation: What Professional Valuations Don’t Tell You,” author Chak Reddy is quick to point out that the “type of buyer and method of sale are two important (yet often overlooked) value determinants when finding a starting price for your business.”

Reddy brings up some excellent points. One notion in particular that every business owner should be aware of is that there is “NO fair value for illiquid assets.” He points to the fact that between January 2007 and March 2008, the historic Bear Stearns went from a value of $20 billion dollars to just $238 million. In a mere 14 months, Bear Stearns lost most of its value.

Additionally, the article points to the fact that business owners often suffer enormously from “dramatic valuation compression.” In Reddy’s view, this compression is the direct result of poor planning and a failure on the part of business owners to select the right advisory teams.

Reddy believes that professional valuations can be quite lacking. He feels that they are “contingent on multiple assumptions,” and that the valuations are only as good as the assumptions upon which they are based. In other words, professional valuations can be limited and flawed. In particular, he points to the fact that two of the most important factors in valuations, future growth rate and operational synergies are “highly subjective and no two views on these topics are likely to be identical.” Summed up another way, valuations are inherently a matter of opinion and perspective. Reddy feels that a seller will be “lucky” if the real sales price comes within 10% to 20% of the professional valuation.

In the end, as always, it is the market that determines value. It is the acquirer who will determine the value more than any other factor. The perception of the buyer will play a key role in the process and, further to the point, no two buyers will perceive the business exactly the same way. In other words, valuations can be tricky and certainly do involve a personal element of the individual who is appraising the business’ value. Adding to this point, Reddy states, “From our experience, the type of buyer and the type of sale skew the valuation to such an extent that it is unwise for a business owner to not be familiar with these variables and their impact before the beginning of the sales process.”

Ultimately, finding the right buyer is essential and this is where a business broker can prove simply invaluable. And finding that right buyer may take time.

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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.

Call Colonial Business Brokerage today at (443) 982-7332.

Copyright: Business Brokerage Press, Inc.

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7 Advantages of Buying an Existing Business

With 28 million small businesses open today, now may be the perfect time to invest in your own. As you begin taking the first steps to business ownership, it’s wise to think about the benefits of buying an existing company. Continue reading to discover the advantages of buying an existing business compared to starting your own.

Benefits of Buying an Existing Business

Before becoming a business owner, explore the benefits of buying an existing business to ensure you make a well-informed decision.

1. Low-Risk Investmentanalyzing the advantages of buying a business

Buying an existing business is considered a low-risk investment compared to starting your own business from scratch. With a new company comes costs from real estate, hiring new employees, education and training, equipment, furnishings, marketing, and more. Unlike a new business, an existing business may include most of these in the asking price, depending on the transaction. Plus, banks see buying an established business as low-risk because the company is a proven success, unlike new businesses that can be experimental.

2. Current Staff

When buying an existing business, the employees that are loyal to the company will most likely want to see it succeed. You won’t need to train them, and they can help you along the way if you are new to the industry. In addition to a well-trained staff, existing employees can also provide key intel into the overall business operations. Their experience working with the previous owner can shed light on the positives and the negatives of the company.

3. Expertise

If you’re not already an expert in the company’s industry, buying an existing business is a great way to learn the ropes. Both the staff and previous owner are excellent sources of information and insight, so it’s best to keep an open line of communication when going through the process.

4. Established Clientele

Along with the employees, loyal clients and customers will want to see the business succeed as well. These customers will have the insight to help you improve the company, so be sure to research their experiences to see how you can enhance their future ones.

5. Furnishings and Equipment

In most business deals, the transaction includes the real estate as well as furnishings and equipment. If a deal doesn’t include these items or if you’re starting a new business, expenses can add up quickly. The best way to ensure you’re making a wise investment is to consult with a business broker or another professional to help explain the listing details.

6. Thriving Business

For new business owners, the first 18 months of ownership is the most critical. By purchasing an existing business, you are investing in one that has likely already made it past this point. Your company’s success depends on multiple different factors, but knowing you’re investing in a business that beat these odds is a tremendous advantage to any new business owner.

7. Entrepreneurial Freedom

Buying a business may not sound as thrilling as starting your own from the ground up, but you can still implement all of the creative ideas you have. Once you invest in a business and the deal is done, you can make it into your own.

Buying an existing business can be just as challenging and rewarding as starting your own. Be sure to do your research when thinking about investing in a business to discover your best options.

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.

Call Colonial Business Brokerage today at (443) 982-7332.

Around the Web: A Month in Summary

A recent article from Divestopedia entitled “7 Fundamentals to Due Diligence You Need to Know” explains the due diligence process and what it means regarding sellers and buyers and their roles in the process.

Whether a company is being sold or it is merging with another company, it is standard practice to go through the due diligence process. Therefore, they should be aware of all the factors involved with the due diligence process. The fundamentals of due diligence can be broken into 7 categories:

  1. Historic and Projected Financial Information
  2. Technology Developments and Intellectual Property
  3. Customers and Revenue Streams
  4. Contract Agreements and Insurance
  5. Key Staff and Management
  6. Legal and Compliance
  7. Tax Issues

In each of these 7 critical areas, the buyer and the seller each have to do their part in order to see the deal make it to the finish line. The seller has to be open and honest with the attorneys, their advisory team and the potential buyer; and the buyer has to be thorough in examining and combing through all of the information provided.

Click here to read the full article.

A recent article from NuWire Investor entitled “How to Find the Right Broker to Sell your Business” explains the most important characteristics a seller should be looking for in a business broker when deciding who to hire.

When it comes to hiring a business broker to sell your business, you want to ask the following questions to ensure that you’re choosing a broker who will improve your experience and increase the chances of selling your business:

  • What do they know about major players, important trends, insider terminology or future industry projections? It’s important that a business broker is well acquainted with and well connected in your specific industry.
  • What have they sold before, and what is their success ratio? Beware of a business broker who isn’t transparent with you on these things.
  • How do they charge for their services and when are they expecting to be paid? A good business broker will set these expectations up front, very clearly in the agreement between the seller and broker. Typical commissions are between 8 and 12%, paid after the business is sold.
  • How is the business broker planning to market your business? As a buyer, you want to make sure that the broker you choose to work with has plans to engage their network and actively seek out connections who would be interested in your business.

When it comes to choosing a business broker to work with, who you choose to handle the sale of your business matters tremendously. It is better to take your time and find someone who makes you feel comfortable and has the proper knowledge and connections than it is to miss out on a favorable deal.

Click here to read the full article.

A recent article from Inc.com entitled “Selling a Business in 2019: Three Important Things to Keep in Mind” discusses the factors that sellers should consider when developing their exit plan, according to small business experts.

While sales prices are rising and 60 percent of owners are confident that they would receive a favorable sales price if they sold their business today, it’s understandable that some owners would be tempted to jump into a sale. With the baby boomer generation fueling the market at a rate that is faster than ever, and GDP expecting to slow its pace as we approach 2020, entering the market now becomes even more enticing. However, experts warn sellers not to prematurely jump into a deal and to have a clear and well-thought-out exit strategy to guarantee an optimal sales price and a smooth sale.

Two critical parts of a well-thought-out exit strategy are investing in your business and preparing your financials. Once you’ve made the decision to sell your business, experts suggest determining any key items that will either motivate or deter a buyer from choosing your business over the other businesses on the market. Use these key items to invest in your business and make it more appealing on the market. 2019 is expected to bring multiple increases in the overhead expenses associated with running a business. When preparing your business for sale, make sure you address these concerns and clean up your financials. Be prepared to have a good explanation for any revenue declines.

Click here to read the full article.

A recent article from Entrepreneur.com entitled “3 Reasons Buying a Franchise Might Be Better Than Starting Your Own Business” explains how purchasing a franchise provides exceptional support and guidance when it comes to getting your business up and running. There are 3 key advantages to purchasing a franchise:

  1. Carrying the name of an already established business makes it easier to gain new business from startup.
  2. Cost Benefits: When purchasing a franchise you have to pay a franchise fee, which may increase your initial costs, but it gives you access to many resources that can help your business turn a profit faster than if you were to start up a business from scratch.
  3. The ability to sell at a higher price when it comes time to exit: A well-known brand and business operations consistency combined with a detailed transition manual provided by the franchisor allows for a smoother transition and a higher chance of profitability for the buyer.

Click here to read the full article.

A recent article from Divestopedia entitled “How Do I Attract a High Multiple for My Business? – The Sales Process” explains how the sales process impacts a company valuation.

While you cannot transform an average business into a high multiple business, there are a few guidelines you can follow to encourage a higher enterprise value at the closing date. The first of these guidelines is that the ideal time to sell is when there are positive trends in revenue and earnings. A positive trend means that there has been consistent growth over the past two years (keyword: consistent) and that there are future prospects on the horizon.

The second important factor in the sales process is who you’re selling to. It’s crucial to not only thoroughly screen your buyers, but to keep as many options open as long as possible. When there are multiple buyers interested, you have leverage as the seller.

The third and final piece affecting the end value of your business in the sales process is why you’re selling it. Who you choose to sell the business to and how long you remain after the sale is highly dependent upon this answer.

Click here to read the full article.

Copyright: Business Brokerage Press, Inc.

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