Seller Articles

Many experts agree that the best time to prepare to sell your business is when you start your business.  That may sound extreme. However, few business owners reach that level of preparedness.  A simple fact of life and owning a business is that most sales are event-driven.  Factors such as problems with a partnership, health issues, burnout or even divorce can drive a business owner to sell. Once you’ve made the decision to sell, it is essential that you realize one key fact.  Unexpected events and factors will always rise to the surface. In this article, we’ll explore four key questions that you’ll need to address before selling your business. What is the Value of Your Time? Meeting with prospective buyers can be a serious time sponge.  One of the key benefits of working with a professional Business Broker is that he/she can take some of the pressure off of you. They can interact with buyers on your behalf. A large percentage of business owners are also deeply involved … [Read more...]

Owners often neglect understanding their leases and this can be problematic. If your business is location-sensitive, then the status of your lease could be of paramount importance. Restaurants and retail businesses, for example, are usually location-dependent and need to pay special attention to their leases. But with that stated, every business should understand in detail the terms of its leases. There are many key factors involving leases that should not be ignored or overlooked. If you adhere to these guidelines, you'll be much more likely to control your outcomes. At the top of the list is the factor of length. Usually, the longer your lease the better. Secondly, if the property does become available, then it is often in an owner's best interest to try and buy the property or he or she may be forced to move. When negotiating a lease, it is best to negotiate a way out of the lease if possible; this is particularly important for new businesses where the fate of your … [Read more...]

Having a letter of intent signed by both the buyer and the seller can be a very good feeling, when selling a business. Everything can seem as though it is moving along just fine, but the due diligence process must still be completed. It is during due diligence that a seller decides whether he or she is going to finalize the deal. Much depends on what is discovered during this important process, so remember the deal isn't done until it is truly finalized. In his book, The Art of M&A, Stanley Forster Reed noted that the purpose of due diligence is to “Assess the benefits and liabilities of a proposed acquisition by inquiring into all relevant aspects of the past, present and predictable future of the business to be purchased.” Summed up another way, due diligence is quite comprehensive. It probably comes as no surprise that this is when deals often fall apart. Before diving in, it is critically important that you meet with such key people as appraisers, accountants, lawyers, a … [Read more...]

The simple fact is that family businesses are different. After all, a family business means working with family and all the good and bad that comes with it. While an estimated 80% to 90% of all businesses are family owned, relatively few are properly planning for what happens when it comes time to sell a business. According to one study, a whopping 72% of family businesses lack a developed succession plan which is, of course, a recipe for confusion and potentially disaster. Additionally, there are many complicating factors, for example, studies indicate that 40% to 60% of owners of family businesses want the business to remain in the family, but only 40% of businesses are passed to a second generation and a mere 10% are passed down to a third generation. Let’s turn our attention to a few of the key points that family business owners should consider when selling a business to other parties. Confidentiality should be placed at the top of your “to do” list. When it comes to … [Read more...]

The old saying that “there is no replacement for experience” is a truism that has stood the test of time. The simple fact is that a lack of experience or expertise can dismantle the deal when you sell a business. Consider the following scenario – a business owner nearing retirement owns a multi-location operation that is doing several million in annual sales. He interviews a well-respected and experienced Business Broker and is impressed. However, the business owner's niece has recently received her MBA and has told her uncle that she can handle the sale of his business and in the process, save him a bundle. On paper, everything sounds fine, but as it turns out the lack of experience or expertise gives this business owner less than optimal results. Let's take a look at a few problems that recently arose with our nameless, but successful, business owner and his well-meaning and smart, but inexperienced niece. Error #1 No Confidentiality Agreements One problem is that the … [Read more...]

Not everyone wants to sell when they feel as though they have to sell. Life changes, such as divorce or illness, can trigger selling your company. Everything from declining business revenue to partnership problems and more can send business owners scrambling for the exit sign. However, selling your company isn't always an option, especially for small businesses. In this article, we will take a closer look at just such a situation. The business under consideration is a successful distribution business, which is also a classic example of a value-enhanced business. The two owners each draw several hundred thousand from the business each year to go along with a range of other benefits. If hypothetically, the business was to sell for $2 million dollars, each of the owners would receive approximately $1 million. Of course, this sounds like a sizable amount. So, what is the problem? When one stops to factor in such variables as taxes, closing expenses and debt, that $1 million-dollar … [Read more...]

If you own a business, then ownership transition should definitely be a central topic in your planning. A few years ago, MassMutual Life Insurance Company conducted a very interesting and thought-provoking survey of family-owned businesses. Obviously, family-owned businesses have their own unique needs and challenges. The MassMutual Life Insurance Company survey certainly underscored this fact. While the survey was conducted a few years ago, the information it contained is more relevant and actionable than ever. Let's take a closer look at some of the key conclusions and discoveries. Founder Control One of the most important findings of the survey was that a full 80% of family-owned businesses are still controlled by the founders. The survey also discovered that 90% of family-run businesses intend to stay family-owned in the future. Lack of Leadership Plans Leadership is another area of great interest. Strikingly, approximately 30% of family-owned businesses will in fact … [Read more...]

The reasons for selling a business can be divided into two main categories. The first is a sale that is planned almost from the beginning or by an owner who knows that selling is or should be a planned event. The second is exactly the opposite – unplanned; the sale is motivated by a specific event such as health, divorce, partnership disputes, business crises, etc. However, in between the two major reasons, are a host of unpredictable reasons. A seller may not even be thinking of selling when he or she is approached by an individual, group or another company, and an attractive offer is made. The owner of a business may die, and the heirs have no interest in operating it. A company may bring in new management who decides to sell off a division or two; or maybe even decides that selling the entire business is in the best interests of everyone. A major competitor may enter the market, forcing an owner to elect to sell a business. And the competition may not just be another company. … [Read more...]

The first key is to have your accountant take a look at your accounting procedures and make recommendations on how to improve them. He or she may also help in preparing financial projections for the coming year(s). Getting your company's financial house in order is very important in establishing the value of your firm (business valuation).The second key is to review the reputation, image, and marketing materials of your company. Certainly, the quality of your product or service is paramount, but how your firm presents itself to customers, clients, suppliers, etc. – and the outside world – is also very important. The appearance of your facilities and customer services – beginning with how people are treated on the telephone or in the waiting/reception area – are the kind of first impressions that are critical in dealing with your customers or clients. Don't forget about the company's Web site; in many cases, it is the initial introduction or "first impression" of your company. Now may … [Read more...]

Not every prospective buyer actually buys a business. In fact, out of 15 prospective buyers, only 1 actually makes a purchase. Sellers should remember that being a buyer can be stressful. The bottom line is that buying a business is usually one of the single largest financial decisions that a person can make. In this article, we are going to explore a few of the reasons why being a buyer can be both stressful and taxing. Keeping a buyer's perspective in mind will help you on the road to successfully selling your company. A prospective buyer has many decisions to make before he or she decides to buy a business. Many prospective buyers are employed, and that means they will have to leave their existing job in order to buy a business. Simply stated, a buyer will have to leave the safety and security of their job and “strike out on their own.” There are also other substantial financial concerns for buyers as well. The majority of buyers will, in fact, have to take out loans in order … [Read more...]