ENTREPRENEURSHIP THROUGH ACQUISITION
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Valuation Methods Potential Buyers Use
It's important to be on top of the types of valuation methods potential buyers might use to put a number on your business.
If you're not familiar with the different types of approaches used in the current market, check out what the pros had to say about the most common methods acquirers are using to start the discussion and frame their potential offer.
It's important to be on top of the types of valuation methods potential buyers might use to put a number on your business.
If you're not familiar with the different types of approaches used in the current market, check out what the pros had to say about the most common methods acquirers are using to start the discussion and frame their potential offer.
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We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Most Common Motivation for Owners Selling their Businesses in this Market
In a seller's market, there are countless reasons business owners decide to pull the trigger and take their baby to market.
Maybe they've been cold-called by a buyer.
Maybe they just want to get out while the getting is good.
Maybe their risk tolerance has decreased and it's time to diversify.
In a seller's market, there are countless reasons business owners decide to pull the trigger and take their baby to market.
Maybe they've been cold-called by a buyer.
Maybe they just want to get out while the getting is good.
Maybe their risk tolerance has decreased and it's time to diversify.
Check out the answers from our community to get some first-hand stories from the professionals who have their fingers on the pulse of the "why" when it comes to owners taking that first step towards an exit.
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Exit Planning Challenges When Transferring Business to Family & Multi Family Office
When you're ready to pass on your business to your family, it's important to make sure that everyone is on board and understands the challenges that are ahead for successful exit planning. While many owners are worried about losing control, diligent business exit planning is key to ensuring that everything goes smoothly. There are many ways to maintain ownership while still giving family members a stake in the company. You can create a succession plan that allows you to transfer ownership gradually over time to avoid disrupting operations and giving family members time to learn the ropes. You should also consider creating a buy-sell agreement that outlines what will happen if one member dies or becomes incapacitated and cannot work in the business anymore. The deal origination agreement should include…
When you're ready to pass on your business to your family, it's important to make sure that everyone is on board and understands the challenges that are ahead for successful exit planning.
Some of the most common challenges owners face in succession planning when transferring their businesses to their family (or multi family office) include:
- The new owner might not be as dedicated, hardworking, or skilled as the previous owner.
- They may not have the same vision for the business as the original owner did.
- The new owner might not have a deep understanding of how things work in a corporate development or how to run a business from day to day.
- There might be issues related to succession planning, such as choosing who should take over when they leave or which members of their family will inherit their shares in the company.
While many owners are worried about losing control, diligent business exit planning is key to ensuring that everything goes smoothly. There are many ways to maintain ownership while still giving family members a stake in the company. You can create a succession plan that allows you to transfer ownership gradually over time to avoid disrupting operations and giving family members time to learn the ropes.
You should also consider creating a buy-sell agreement that outlines what will happen if one member dies or becomes incapacitated and cannot work in the business anymore. The deal origination agreement should include how much each person has invested in the business, how much they're entitled to receive when someone leaves or dies, and how much each person gets paid for their work in the company (this is called an "incentive").
We asked our BizNexus Community Advisors of M&A advisors and professionals what they see and experience when dealing with family succession planning.
Read below to see the challenges they often see in deal origination with family.
Challenges Owners Often Face when Transitioning Their Business to Family & Multi Family Office Deal Origination
Business owners wait too long to have a serious conversation with family members until it is too late.
Randy Hendershot, Business Intermediary @ Evolution Advisors
Business owners that don't train and prepare the next generation on capital utilization and overall financial management.
Steve Denny, Business Broker @ Innovative Business Advisors
Trouble letting go and allowing the next generation take over.
Frank Byskov, Wealth Manager @ Forty4Financial
Business owners don't prepare for this and don't know there are options besides leaving the business to a family member. You have options and need to learn what they are before this happens.
Curtis Stohr, Trainer @ Family Investor LLC & Owner of Coffee With Curtis
In some cases, the kids simply are not interested. When they are, sometimes they simply are not prepared for the opportunity. Some of the most successful scenarios occur when the business owners encourages the kids to take jobs at other companies (early in their careers) to gain some perspective before coming to work for the family firm.
In the scenario where there are no kids, other family members should be viewed the same as any other potential management / owner candidate. If they are up for the task, then it can be really good. However, it should not just be handed over simply because there is a shared family name or line. It's a recipe for disaster if that happens. That benefits no one.
Dave Sheppard, CMAA @ Medworld Advisors
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We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & M&A advisors.
Deal Team 101 - The Role of The Accountant
Having an accountant on your deal team is a great sanity-check for your company valuation before you go to market.
Be careful, as accountants don't typically have their fingers on the pulse of the actual buyer market.... -what the most likely, most attractive potential buyers of your business will actually pay.
Having an accountant on your deal team is a great sanity-check for your company valuation before you go to market.
Be careful, as accountants don't typically have their fingers on the pulse of the actual buyer market.... -what the most likely, most attractive potential buyers of your business will actually pay.
Accountants will often set valuation expectations with an owner over the course of their preexisting relationship working together throughout the operation of the business leading up to an exit.
When it comes time to exit, and to put a concreate asking price or price range on your business (whether you disclose that or not, you should know it), you'll want to make sure you're not only relying on your accountant for their evaluation of your business as they see it based on multiples and comps, but you'll probably want to check with some front-line intermediaries with relevant experience in your space, -in your geographic area, or industry or deal size, -who can give you their take on what valuation you'll most likely land on to get the deal done.
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We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Things to consider when choosing an attorney
What questions should you ask when choosing a potential attorney to represent you as you move towards selling a business?
What relevant experience should your attorney have to be considered best "qualified" to represent you and your business through to the transaction close and beyond?
What questions should you ask when choosing a potential attorney to represent you as you move towards selling a business? It’s a big decision to make. The right attorney can make the transaction process much smoother and more successful, while the wrong one can create countless problems.
What relevant experience should your attorney have to be considered best qualified to represent you and your business through to the transaction close and beyond?
A few things to consider could be:
Relevant industry experience?
Experience handling transaction sizes similar to yours
Do they have a dedicated M&A focus and team within the practice or are they more of a generalist firm?
We asked the BizNexus community to share some of their own ideas about what to look for in an M&A attorney. See what they said below:
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
Exit Strategies Through SPAC
An increasingly popular and controversial exit option for companies with enough marketable traction is the Special Purpose Acquisition Company (SPAC).
An increasingly popular (and controversial) exit option for companies with enough marketable traction is the Special Purpose Acquisition Company (SPAC).
A SPAC is a essentially a shell company formed with the sole purpose of acquiring a to-be-determined unidentified, operational business using funds raised in an initial public offering (IPO). So in a nutshell:
A public shell company (SPAC) is formed through IPO $$, with the purpose of identifying and acquiring a to-be-determined private, real, live operational company.
The clock starts ticking and the public SPAC needs to make an acquisition, otherwise give the money back to investors.
Shell company (SPAC) finds said real, private, live operational company and acquires it
Acquired private company Abra Ka Dabra becomes publicly traded, without the associated diligence & "under the hood" investigation typically associated with the IPO process (Think WeWork flameout)
Entrepreneurs / founders get liquidity (i.e. $$$), jobs and equity.
So, we asked our BizNexus Community M&A professionals how they felt about the 2022 SPAC exit strategy trend. Here’s what they had to say:
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We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
The Top Issues That Can Make or Break a Successful Transaction
Clean financials?
Dummy-proof, transferable processes that a new business owner can quickly understand, implement and run with?
Clean financials?
Dummy-proof, transferable processes that a new business owner can quickly understand, implement and run with?
What about the management team? Is it any good? Willing to stay on board with a new owner or are they likely to bail? What assurances can a potential buyer have?
Same for customers... Will they stick around? Are you overly reliant on one or a few monster clients, and can you assure they'll stay strong with a new owner?
We've seen it all when it comes to last-minute deal breakers, and so have the experts who make up our community.
Click below to read more and browse through the first-hand tips and war stories from the M&A professionals themselves about what the top issues are that can typically railroad your exit transaction.
The BizNexus Community brings together entrepreneurs, investors and M&A experts to master the process of getting your business acquired or recapitalized, so you can learn how to set up a great deal team, financing and exit plan from a network of industry professionals & advisors.
Sell Your Business With The Perfect Match
Most Common Approaches To Business Valuation
We've gone through the common approaches to valuation, but what should you expect to encounter in the real world when you start conversations with buyers?
Most first phone calls with a private equity professional will zero in on EBITDA and what multiple range to simply slap on top of that, prior to potentially digging deeper and moving towards LOI.
We've gone through the common approaches to valuation, but what should you expect to encounter in the real world when you start conversations with buyers?
Most first phone calls with a private equity professional, will zero in on EBITDA and what multiple range to simply slap on top of that, prior to potentially digging deeper and moving towards LOI.
Conversations with a freshly minted MBA or or corporate finance professional turned business acquirer, might lead towards discounted cash flow and information they'll want for their excel models etc.
It's important to know what to expect, and what type of buyer is likely to lead with what type of valuation methodology, so you can be prepared and not get caught off-guard.
The BizNexus Community is for entrepreneurs, M&A professionals & enthusiasts and exists to network & master best practices for optimizing your business for buyer / investor interest, valuation, and transferability.
Each day we ask questions to help you learn how to best position your company in the eyes of potential investors or acquirers.
Start thinking about your business from the standpoint of a potential investor, lender or buyer, with tips & tricks from colleagues just like you, and learn from the pros who do this on a daily basis.
Join the Conversation
The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
A Rundown of the most popular tools used for business valuation
Leveraging comparable transactions to help you negotiate an acquisition price for your business is a GREAT way to put a $$$ on your baby.
Working with a knowledgeable intermediary in your company niche, one who knows the comparable transactions and buyer valuations intimately, from firsthand experience day-in, day-out is invaluable.
Our community is all about learning how to exit your business the right way, with the right team to guide you.
Every day we ask our community for guidance on a key topic related to exit planning, valuation & sale, and we share the answers with you in our community workshops and blog.
Leveraging comparable transactions to help you negotiate an acquisition price for your business is a GREAT way to put a $$$ on your baby.
Working with a knowledgeable intermediary in your company niche, one who knows the comparable transactions and buyer valuations intimately, from firsthand experience day-in, day-out is invaluable.
We asked our community of M&A advisors and transaction specialists what their favorite valuation and industry comp tools and services are.
Always interesting to get the updated pulse from the experts in the trenches, -if you see an answer the hits home for you we suggest you reach out for a chat.
What tools & services do the experts use for their industry comparables?
Check out all of the submitted answers from our community of M&A experts here:
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The BizNexus Community
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
How long is a business broker listing contract? - Selling a business
The process of selling a business can take upwards of six to twelve months, and you should expect to hire a business broker for that timeframe to coordinate buyers and maximize competitive interest.
The process of selling a business can take upwards of six to twelve months, and you should expect to hire a business broker for that timeframe to coordinate buyers and maximize competitive interest.
Selling or buying a business takes time, and every sell-side engagement contract is unique. We recently asked our community advisors and M&A professionals how long the typical sell-side engagement contract is, and what owners should expect. Read below to see what they had to say.
Most Common Contract Lengths Owners Should Expect
Our standard agreement term is six months. However, we are willing to compromise to a 3-month renewable term if this becomes a sticking point.
David Fairley, Business Intermediary @ Website Properties
12 months. The seller has to have reasonable expectations. It takes time and effort to sell a business.
Angelo Ferrara, Business Intermediary @ Rapt Enterprises, Inc.
12 months, but clients should be able to cancel sooner if the intermediary isn’t performing.
Tyler Evans, Business Intermediary @ SoCal Business Brokers
12 months or more.
Mike Adhikari, M&A Chair @ Illinois Corporate Investments, Inc.
A 12-month term helps set reasonable expectations that a transaction will probably take months.
Bob Fariss, Business Intermediary @ Murphy Business Sales
12 months is the standard.
Eric Gall, Business Intermediary @ Edison Business Advisors
12 months
April Femrite @ True Real Estate Mankato
18 MONTHS
António Mendes, Business Intermediary @ Opção PME Negócios
12 months with a 2 year tail.
Mark Mroczkowski, Business Intermediary @ Chapman Associates Mergers & Acquisitions
JOIN THE CONVERSATION IN OUR COMMUNITY
We bring together entrepreneurs, investors, and M&A experts to master the process of getting your business acquired or recapitalized, so we can learn how to set up a great deal team, financing, and exit plan from a network of industry professionals & advisors.
SELL With Confidence - Exit strategies For Beginners
Selling your business is exciting. Stop worrying and start planning. With the proper preparation, you can seamlessly exit your business with confidence.
Position your business for sale
We go over strategies for beginners. Sell your business with confidence.
5 Tips to start planning your business exit strategy:
Get your paperwork ready
Keep growing your business and increase revenue
Keep the sale confidential
Find a certified business intermediary
Never too late to start positioning your business for sale
SELL With Confidence- How to Take the Worrying out of a Business Exit Strategies For Beginners
The truth is, bidding farewell to an asset of yours is tough. Blood, sweat, and tears have likely laid the grounds for your success. It goes without saying, knowing how to exit makes the world of a difference.
Proper Record Keeping is Crucial
Record keeping is a must. Too many unknowns can trigger significant red flags to a prospective buyer. You’ll want to make sure all business information and records are clear and organized. Going into a deal blind does not lend itself to a done deal. If you haven’t already, begin carefully organizing important documents. Whomever the prospective buyer is, he/she will want to take a closer look. Stay ahead of the sale by making all relevant business information readily available upon request.
General List of Documents to Have and to Hold
Invoices
Confidentiality Agreements
Vendor Agreements
Partnership Agreements
Financial Statements
Discretionary earnings & cash flow
Keep Your Revenue Up
Those planning to sell often make the common mistake of selling when revenue is down. There are critics out there who will say selling when sales are down is the smart thing. One size does not fit all in business. Remember, you will have to disclose financial statements to the prospective buyer. You will need to supply a valid reason why you’re selling, especially when it’s been made clear your margins are down. Most prospective buyers want to see a strong cash flow. So, just as you entered into business for your ROI so too will the prospect. Not to mention, higher numbers could also mean higher business valuation. Two things to always keep in mind
Recurring Revenue
Growth Potential
It’s OK to Go Under the Radar Until the Deal is Finalized
Moreover, don’t leave your business before you actually sell it. If there’s anything that will hurt your bottom line more, it’s the mindset that it’s over before it’s over. It’s much safer and more professional to carry on with your day-to-day operations as you did on day one. Your employees don’t need to stress about their job security and before a deal is finalized, you don’t want to jeopardize the empire you built.
Find The Right Business Broker
For anyone wanting to sell a business, hiring the right broker on your side is the difference between a successful sale and failure. You want an individual who understands your goals and sets the bar on delivering exactly that. Business brokers represent you and your business, so finding the right one is important. BizNexus instantly connects you to a business broker in your area and niche, taking the headaches out of searching; saving time and money.
It’s Never Too Early to Start Planning for a Sale
Undoubtedly, it’s never too early to start organizing the “back office” and putting your business puzzle pieces together. The most seamless deals happen when the seller has their ducks in a row and the buyer is provided all of the details to allow them to feel comfortable giving that final handshake. The best way to ensure a positive experience, when you are ready to sell, is to plan. When you are ready to sell, BizNexus can help. BizNexus instantly connects you to prospects and brokers in your industry. Don’t waste your time and energy. Put Biznexus to work for you. We’ll make sure you get that handshake.
Position your business for sale today to access active business deals.
Featured Posts on Sell a Business
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PREPARING TO EXIT YOUR COMPANY
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
How to Properly Sell Your Business
Want to avoid mistakes when selling your business? Read more to discover how to properly sell your business.
Sell your Business
6 Steps on how to get started!
Sell Your Business - 6 Steps on How to Get it Ready
Get business valuation
Get your financial docs ready
Hire a business broker
Vet qualified buyers
Due-diligence and negotiation
Sort out all your documents
Are you ready to exit your business and move onto the next stage in your life? There are plenty of ways you can go about exiting a business, and one of the most lucrative methods is to sell your business.
To ensure that this is the right decision, however, you will need to sell your business the right way. This article will provide a guide on how to sell your business well. Read on to learn more.
Determine the Value of Your Business
When you want to sell something, the first thing to figure out is how much the item is worth. The same goes when you want to sell your business.
You may have a vague idea of the value of your business, but it's important to get down to it and actually find out by evaluating your current operations.
You will have to go through your cash flow, current revenues, and profit-generating potential to understand just how much your business is worth. You can also enlist the help of a valuation expert, who will be able to accurately undergo business valuation.
Knowing this type of information will allow you to set a price that is not too high or too low. This will help the negotiation process with potential buyers of your business.
Sort Out Your Financial Documents
When you've gone through the business valuation process, make sure to get your financial documents sorted. One of the main factors that affect whether your business sale will be successful is how organized your financial records are.
In the process of selling a business, there will be scrutiny over your financial records. The buying party, as well as their lawyers and accountants, will be going through your statements to see whether everything adds up. If your records contain errors or inconsistencies, this will raise questions about the credibility of your business.
To sort your financial documents well, you will need to have an accountant go through everything and make sure they adhere to accounting regulations. If you don't have an accountant in your company, you will have to outsource one.
Hire a Business Broker
When selling a business, you can hire a business broker to simplify the entire process. A broker will essentially act as the intermediary between the buyer and the seller. They will be able to evaluate who to match you with that will be interested in buying your business.
They can also help you with marketing your sale to the best buyers, as well as provide due diligence services. Even more so, they can actively partake in negotiations.
You can use a matching site to find the best brokers and/or buyers for your business.
Vet Potential Buyers
Not all potential buyers are worth following through with. In reality, it may be that a competitor just wants the opportunity to understand your finances and business operations. Buyers will have access to sensitive information, so it's important to vet potential buyers and evaluate whether they are being genuine.
You also don't want to settle with the first deal that comes onto the table. You will want to evaluate the different types of deals so that you can settle with the best one.
You can undergo this process by asking them about their plans for your business. This will help you understand how they will operate to ensure your business continues to succeed. You would also want to analyze the deals to see which ones are worth the most for you.
It is important to take things slow and to make sure that you've considered everything before settling on a buyer. You can always choose to use the existing deals as a way to negotiate even higher prices for your company.
Be Firm During the Negotiation Process
During the negotiation process, you can allow a bit of room for the business price to change. However, make sure you maintain a minimum standard and be firm about it.
It is also important to write down everything you've agreed on. This will ensure that the buying party won't back out or deny having agreed to something, which will cause further complications.
Sort Out Your Final Documents
What happens once you've settled on a buyer? You go through the final documents and ensure that they are completed. You may need a lawyer at this stage to make sure that everything is filled out correctly, and that the deal will be binding.
The legal documents and contracts you need may include:
The purchase agreement
Listings of assets
Non-compete clause agreements
The bill of sale (which transfers the assets of your business to the buyer)
A security agreement
You may be tempted to draft your own purchase agreements, but it will be highly difficult to do so. There may be inconsistencies that prevent the contracts from being legitimate. Instead, you will need someone who is knowledgeable about legal contracts.
Steps for How to Sell Your Business Well
Have you been looking for a way to sell your business properly? There are some tips that can be helpful for you during this process. You will need to determine the value of your business before anything else so that you can settle with a suitable selling price.
You will then need to sort out financial documents, vet potential buyers, undergo a negotiation process, and sort out your final documents. These steps will allow you to benefit when exiting a business.
Position your business for sale today to access active business deals.
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BizNexus -Learn More From Our YouTube Playlist:
PREPARING TO EXIT YOUR COMPANY
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
What Is a Business Broker? How to Hire the Right One
If you’re asking yourself these questions, you’ve come to the right place. In this article, we tell you all you need to know on how to hire a business broker.
Hire a Business Broker
Here are 7 tips to best choose and hire the right business broker.
7 Tips for hiring a qualified business broker:
Rely on referrals and ads
Dedicated practitioner
Experience
Industry knowledge
Public reputation
Professional connections
Likable
The selling and buying of businesses in the United States are more common than you may have thought, with 10,312 businesses changing hands in 2018 alone.
The reasons people decide to buy or sell businesses are varied. It could be that changes occurred in your life in the last year or that you simply want to take a new direction this year. Whichever the reason, selling or purchasing a decision is among the biggest decisions you’ll ever make.
Whether the outcome of the transaction is a successful one depends on your business broker. But what is a business broker? More importantly, how can you hire the ideal business broker for you?
If you’re asking yourself these questions, you’ve come to the right place. In this article, we tell you all you need to know on how to hire a business broker.
Read on to learn more.
What Is a Business Broker?
A business broker refers to a trained individual or a professional agency whose role is to aid the sale or purchase of a business. Primarily, business brokers help their clients secure the best price for the business. They’re also responsible for submitting the appropriate paperwork and completing the needed permits or licensing.
As you’re going to find out, the whole process of transferring the ownership of a business can be lengthy and complicated. That’s why it helps to use a business broker, especially if you’re the seller.
A business broker can suggest a realistic price value for your business and properly advertise it for sale. They can also screen and interview potential buyers. A seasoned business broker will also help you in properly preparing your business for sale.
If you’re the one considering buying a business, a business broker can help evaluate the businesses you’re considering. They will also get the cash flow statements and financial statements of those businesses so you can make an informed decision.
A good business broker will also help you secure financing, besides holding negotiations with the seller on your behalf.
Tips for Hiring the Best Business Broker for You
Now that you know when to get a business broker and have seen what such a professional can do for you, it’s time to look at how you can get the best one for you. Read on for practical tips on finding a great business broker.
Rely on Referrals and Ads
One of the best ways to find a business broker is through referrals from trusted contacts. Your friends, relatives, or colleagues may be able to recommend a business broker they’ve worked within the past.
You can seek out brokers in the business sections of major newspapers. Narrow down on two or three suitable candidates and interview them.
Choose for a Dedicated Practitioner
During your interview, find out whether the business broker practices full-time or part-time. A dedicated practitioner can add a lot more value to the sales transaction as they’re likely to have a larger network of contacts.
Where you’re selling a company worth millions of dollars, it’s best to work with an acquisition or merger intermediaries.
Ask About Experience
Industry experience is a great asset in any profession. Inquire how many years your prospective business broker has been in the industry. Sure, everyone starts somewhere, but when you’re engaged in a transaction as sensitive as the sale or purchase of a business, you don’t want to work with a newbie.
But it’s not enough that the broker has been in the industry for years if they’ve only executed a handful of deals. Work with someone who has successfully helped a considerable number of business buyers and sellers seal deals.
Consider Industry Knowledge
Top business brokers will usually have worked with a variety of businesses. However, most successful brokers develop a liking for particular types of businesses or industries over time.
Don’t hesitate to ask what particular types of businesses your prospective business broker handles regularly. If you’re looking to buy a SaaS company, working with a broker with industry knowledge on such businesses can lead to a better outcome for you.
Assess Their Public Reputation
If someone recommended the broker to you, it’s a good indicator that you’re going to have a great experience working with the broker. But if you found the broker through an online search or newspaper search, it’s a smart move to learn more about their reputation.
So, how do you evaluate a broker’s reputation? The first place to start is online. Read online reviews to find out what people say about the broker.
You could also ask for a list of previous clients from the broker during your interview. Follow up with two or three of those clients to what they say about the broker. If past clients generally seem happy with a business broker’s services, it’s a good sign that you, too, will love working with them.
Inquire Whether They Have Connections
Besides the business broker, you’ll need other professionals to help you along this journey. These include accountants, attorneys, bankers, and others. Finding a business broker who has connections with such professionals means that you won’t have to spend time and resources finding them on your own.
Of course, not all great brokers network the same way. However, a broker without a professional network tells you a lot about how they do business.
Consider Likeability
You’re not looking for a spouse in your broker, but you’ll be working together for months. The transaction you’re undertaking together is an intense one and involves highly personal matters. That’s why you want to gauge from your initial meeting whether things are going well between the two of you.
If you and your broker do not seem to be getting along well during your interview, it could signal challenges on the road ahead. It’s best to move on to the next potential broker.
Find the Right Business Broker for You
Hopefully, we’ve aptly answered your question, “What is a business broker?” Given how significant this professional will be when you’re buying or selling a business, it’s critical that you hire the right one for you.
Are you interested in the services of a reliable business broker in your area? Get started today.
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BizNexus -Learn More From Our YouTube Playlist:
PREPARING TO EXIT YOUR COMPANY
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
What's a "SPAC" and why are these things so hot right now?
How SPACs Work
Otherwise known as “blank check companies,” these things have become HOT models in 2020 and since the onset of the pandemic.
How it works:
You give me a pile of money
I can go out into the market and spend it on whatever company I like
What’s the catch?
How SPACs Work
Otherwise known as “blank check companies,” these things have become HOT models in 2020 and since the onset of the pandemic.
How it works:
You give me a pile of money
I can go out into the market and spend it on whatever company I like
What’s the catch?
Check the overview video to learn more:
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
CVBBA Webinar: Deal Origination in a Post-COVID World
In this webinar hosted by CVBBA President Neal Isaacs, Adam Ray (Founder and CEO of BizNexus) shares his thoughts on the state of deal origination in a post-COVID-world.
Deal Origination In A Post-COVID World
In this webinar hosted by CVBBA President Neal Isaacs, Adam Ray (Founder and CEO of BizNexus) shares his thoughts on the state of deal origination in a post-COVID world. He covers some key shifts in the deal origination space, including the reactions of central industry players like private equity & strategic acquirers as well as individual buyers and sellers, and changes in the way technology is used to get deals done. He also elaborates on the changing nature of the deal process itself and what business brokers should do to position themselves for success.
See the full interview here:
More content from the BizNexus Business Broker community below…
BizNexus -Learn More From Our YouTube Playlist:
BUSINESS ACQUISITION
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
Bloomberg Interview with Sam Zell on Market Valuations & Post-Virus Economy
Sam Zell’s take on where we are currently in terms of investment & acquisition opportunities as of the beginning of May, 2020. Basically, buyers are looking for discounts and sellers haven’t let go of the pricing expectations that existed just a couple months ago. Until those expectations move closer together, and until the uncertainty clears up, we’re in “wait and see” mode. See the full interview here:
Sam Zell On Market Valuations
Sam Zell’s take on where we are currently in terms of investment & acquisition opportunities as of the beginning of May 2020. Basically, buyers are looking for discounts and sellers haven’t let go of the pricing expectations that existed just a couple of months ago. Until those expectations move closer together, and until the uncertainty clears up, we’re in “wait and see” mode.
See the full interview here:
Hand picket for you - read on…
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BUSINESS ACQUISITION
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
Think Like A Sky Jumper, Merger And Acquisition Advice By John Weber
Those of us in the Mergers & Acquisition industry are trained to stay abreast of breaking news affecting the economy.
A Contributing Blog Post By
John B. Weber, Vice President, Water Street Advisors, LLC. a boutique Merger and Acquisition firm serving businesses in the Midwest.
Those of us in the Mergers & Acquisition industry are trained to stay abreast of breaking news affecting the economy.
Merger and Acquisition Industry
Here is what John has to say about exiting your business: “If you want to sell your business but have been waiting for the perfect time when things rebound it may be a very good time to revisit a sale. Consider that buyers will be more willing to accept explainable poor performance during this time especially if the business bounces back quickly when the economy picks up again.”
John went further and stated in his recent post, Think Like A Sky Jumper, that this is a great time to make sure that your corporate records are correct, that you have a succession plan in place, that you have a funded buy-sell agreement, and that you have talked through your plans with your family.
With permission to re-post, we’re bringing you the full article to read through..
During this time, we start by first extending our hopes that you and your family, employees, associates, and friends have remained healthy, safe, and secure during this most tumultuous time.
We also hope that you have adapted to working from home. Some, like myself and my partners at Water Street Advisors do this every day. Whether you are a veteran at it or just finding your way, the change of pace offers a time of catching up, prioritizing, and contemplation. Those of us in the Mergers & Acquisition industry are trained to stay abreast of breaking news affecting the economy. The last few weeks have been a veritable sea swell of information from well-meaning experts offering amazing opportunities for learning and enrichment to chart a course through this crisis. We have seen the assistance of leaders from all branches of Government, who refreshingly have come together to try to offer solutions.
Economy and the new normal
Whether you believe that this will be a “U” or “V” shaped downturn in the economy, at some point we must start focusing on getting back to normal, whatever the ‘new’ normal will be. I have never snow skied, so I have no idea what it would be like to perform a ski jump. But, I have jumped some things (on either a bike or a sled when I was a much more flexible kid), and there is a point that you can sense when to push downward against gravity just before you are about to become airborne. Thinking positively, perhaps we can successfully launch once we sense we are near being airborne again.
Some things to consider:
• If you are in the process of accessing the funding made available under the CARES Act, or if you are in the process of selling your business, it will be important during this time to keep detailed records of expenses incurred and revenues not realized as a result of the Covid-19 virus actions. This information will be important to have to document the reasons/uses for the loan proceeds, and reasons why this was a complete anomaly in your business.
• While it may not be as robust of a Seller’s market as it was prior to this March, there will still be a large amount of cash looking for investments when things begin to return to normal. Remember, this is not a replay of 2008 – banks are much stronger financially and the US Government has just pumped trillions of dollars into the economy.
• If you want to sell your business but have been waiting for the perfect time, when things rebound it may be a very good time to revisit a sale. Consider that buyers will be more willing to accept explainable poor performance during this time especially if the business bounces back quickly when the economy picks up again.
• Get your house in order. This is a great time to make sure that your corporate records are correct, that you have a succession plan in place, that you have a funded buy-sell agreement, and that you have talked through your plans with your family. Those things that you did not have time for when you were busy - now is a good time to tackle them.
• Need advice or advisors to help you with the items in that last bullet point? We are ready to listen and help. Being ready to go to market when the clouds clear will put you ahead of what could be a big crowd.
More about John B. Weber
John provides turn-key sell-side services for business owners looking to exit their companies. He is located in Naperville, Illinois, and brings many years of expertise to his clients as a former commercial banker, board member, and former Executive Director of a non-profit public/private partnership that assisted minority-owned businesses in accessing capital.
John B. Weber
Brings over 30 years of transaction experience in helping companies obtain debt and acquisition financing.
BizNexus -Learn More From Our YouTube Playlist:
BUSINESS ACQUISITION
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
5 Business Exit Strategies For Startup Founders
Startup founders are always looking for the next business tycoon to be. Check out these business exit strategies for entrepreneurs and founders.
Business Exit Strategies
For Startup Founders
Startup founders are always looking for the next business tycoon to be. Check out these business exit strategies for entrepreneurs and founders.
Exit strategies for a business
So you've created a successful business. Do you know what to do next?
After your startup flourishes, you're going to move on to other innovative ideas. But that means you need to have an exit plan for business.
With these 5 exit strategies for a business, you'll be moving on to the next challenge in no time!
1. Merger and Acquisition
The first exit strategy in business is arguably the most popular one among famous entrepreneurs: merger and acquisition.
In this scenario, you either merge with a similar-sized company to create a larger entity or get bought outright by a larger company. This is a popular move among business owners or entrepreneurs because everyone walks away a winner.
For best results, you should pursue this route at the height of your business valuation calculation.
2. Individual Sale
Despite its popularity, the merger and acquisition route isn't perfect for everyone. You might instead prefer to sell your business to an individual.
More famous entrepreneurs than you think prefer to buy existing businesses instead of creating something from scratch. If they buy your business, you can pay off debts and investors and start making plans for your newest business.
As a bonus, this approach is arguably the best way to retain the branding and feel of your original business instead of watching it change into something else entirely.
3. What is an IPO
Another method is to sell shares of your startup via a new IPO. This method has some real benefits but also some definite drawbacks.
For a successful business startup, this is the first step towards real financial security. You can raise funds for a business that results in additional growth and watch the value of your own shares continue to rise.
At the same time, the number of IPOs by year has declined significantly in the last 20 years. You may not want to take this really big gamble, especially when it means putting up with a gaggle of annoying shareholders.
4. Income Stream
One of the simplest exit strategies for a business is to not exit the business at all. In fact, all you have to do is exit the building!
If the business is really booming, you may not want to sell at this exact moment. Instead, you can leave day-to-day management to someone else and count your money as it comes in.
With that cash, you can pay off debts and start investing in your next business venture. If you can make it work, this is a great way to have your cake and eat it too: easy money now and new challenges later!
5. Total Liquidation
The final exit strategy in business is typically the last option among business owners or entrepreneurs: total liquidation.
Liquidation is relatively straightforward. You simply close the business down and begin selling everything that you can.
No young entrepreneur likes to liquidate, but it may be your only option if the market value dramatically shifts. Just make sure you explore all other possibilities before you choose to liquidate.
Exit Strategies in Business: Make the Call
Now you have options for exit strategies in business. But do you know who can make selling your business easier than ever?
We specialize in helping successful entrepreneurs "go out on top" and move on to the next challenge. Unleash the possibilities by selling your business today!
BizNexus -Learn More From Our YouTube Playlist:
PREPARING TO EXIT YOUR COMPANY
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
How to Exit Your Startup When You're Not Going to Be the Next Billion-Dollar Unicorn
Has your business startup not been doing so well? It can happen to anyone. Click here to learn how to exit your startup and move forward if this is the case.
How to exit your startup?
When you’re not going to be the next billion dollar unicorn
Has your business startup not been doing so well? It can happen to anyone. Read more to learn how to exit your startup and move forward if this is the case.
How to exit your startup
Have you mentally checked out of your startup? Or maybe the business just isn’t working how you imagined it to be?
If you feel ready to exit your startup company, it may be time to bow out gracefully. However, there’s a right way to exit and a wrong way to do it too.
How you exit as a first-time startup business owner can define your career going forward, showing onlookers that you can deliver, or fail. If you’re not sure what the best practice is, we’re here to help. Here’s how to how to exit your startup the right way.
Keep Building Your Business
Even when you’ve decided to exit, it’s important to keep building the business. Why?
It’s a classic startup mishap. With a potential buyer looming, many startups start cutting costs to appear lean and efficient.
They allow money in the bank to dip dangerously low instead of sourcing more funding. They reduce user acquisition to save funds. They stop building the company to make ends meet, allowing revenue growth to diminish.
This doesn’t fool anyone though. While you may be making the bottom line appear well, your growth is suddenly at risk. Of course, this is bad for business and it places you in a vulnerable situation.
Investors may suggest an attractive offer, only to withdraw at the last moment once a startup has run out of money. Avoid such situations by continuing to grow your company, even when you’ve decided to sell. As a startup founder, you’ll have a better selection of offers and options if you can prove growth with plenty of money behind the business.
Seek Support
Many startup founders see themselves as lone wolves, but if you’re ready to exit your startup, the worst thing you can do is try to do it on your own.
You might want to learn more about the best exit strategies for your business.
Don’t retreat to your office and hammer out a contract alone. Seek support from people you trust, such as your angel investors who believed in you and the company from the very beginning. If you know any fellow entrepreneurs who have been through a similar situation, they’re a great option to speak to too.
These are the best people to reach out to who have you and your company’s interests at heart.
How to Exit Your Startup the Right Way
Voila, there’s how to exit your startup the right way. In the end, a successful startup exit comes down to achieving a good company as an entrepreneur. It’s all about connecting with investors that are in tune with your vision and fellow entrepreneurs that you can rely on.
Even then, exits aren’t simple, and success can never be guaranteed. If you’re still in doubt, then seeking professional help is a great way to gain perspective and to help you through the steps.
Here at BizNexus, we’re here to help. We help match business owners with the ideal business intermediaries, helping you sell your business for the best price, on optimal terms. For more information, click here.
BizNexus -Learn More From Our YouTube Playlist:
PREPARING TO EXIT YOUR COMPANY
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
Effect of COVID-19 to Sell Your HVAC Business
Are you considering selling your HVAC Company in the next 12 to 18 months? This post is meant to help you through understanding the current M&A market amid the Coronavirus pandemic.
A Guest Blog Post By
Patrick Lange
Are you considering selling your HVAC Company in the next 12 to 18 months? This post is meant to help you through understanding the current M&A market amid the Coronavirus pandemic.
Here is what Patrick has to say about the effect of COVID-19 to sell your HVAC business.
Efforts to Sell Your HVAC Business
Unless you have been stuck in an attic replacing ductwork for the last two weeks, you have been overrun with speculation on what is in store next for this fast-spreading virus. Since I do not work for the Center For Disease Control (CDC) or have a crystal ball to tell me what to expect from this Virus, I will leave that to the professionals.
What I want to talk about is what it means for those who are considering selling their heating and air companies in the next 12 to 18 months. As I am sure you have already experienced with your business, there is an apprehension from your customers for letting your technicians in their homes. I have had reports out of the Tampa Florida area of gated communities that will not allow service companies to enter. As we all know this is not a good time of year to have things slow down, or fall behind. Many companies are just starting to ramp up to perform their maintenance visits, and if they end up a month or two behind on those it can spell disaster for the start of summer. In addition to the increased workload, we all know a service call is more profitable than maintenance, and having techs catching up on maintenance agreements and not running service is a recipe for a bad year.
Thinking of selling or buying a heating and air company, we can help. We specialize in the sale of heating and air businesses.
The Impact on the economy
The federal government has already cut interest rates in an effort to push off a slowdown, but as you know by now, the good times and growth cannot last forever. Just looking at the school shutdowns, sporting events cancelled, and millions of people told to stay home and not go to work, there is going to be a financial impact of this. We have already seen record declines in the stock market which may not be over yet.
This is all happening after many parts of the country, especially the southeast had a mild summer in 2019 and an almost nonexistent winter. Buyers are paying a price based on cash flow, so it only makes sense if cash flow is down, so will sales prices and it could turn what has been a very strong sellers’ market in a buyers’ market quickly.
The good news
As I have said many times over the years in articles just like this, I own, and help others buy and sell heating and air companies because I STRONGLY believe in the industry. If companies are run properly they typically do well in times of slowdown and even during a recession. As other industries are being crushed, people still want cold air in the summer and warm air in the winter and are willing to pay for it. Companies who have strong maintenance programs and quality employees may get behind for a bit, but they will bounce back fairly quickly. That is exactly what buyers are looking for.
I have talked in the past about the push of private equity buyers trying to get into the industry, and times like this are why. Those who have built their companies on a strong foundation, and have a system to train and retain employees are in the driver’s seat to command a premium if they choose to sell.
These can be great times for those who have put in the work, and a drastic wake up call for those who have not. If you have built your business on the reliance of new construction installs and not repeat income of PMA’s, the next 12 to 18 months may be very challenging, especially if you are looking to sell. Hopefully you have the ability to withstand it, and make corrections so the next time it happens you are better prepared.
I pray that your families and loved ones remain safe and healthy during these uncertain times, and if I can help out in any way please let me know.
More about Patrick Lange
Patrick has been a serial entrepreneur his entire life. He has not only helped others buy and sell businesses with great success, but he has done it himself with his own businesses as well. He specializes in helping those who are looking to buy or sell heating and air and plumbing companies.
Patrick Lange
Certified Business Intermediary who serves business owners in the Florida, Georgia, Alabama, and Texas markets with exit planning, business acquisition & sale.