ENTREPRENEURSHIP THROUGH ACQUISITION
A Reliable Alternative To Chasing Unicorns
How to Finance a Management Buyout
So you want to sell your business to your management team.....
Or at least, in an ideal world, you'd love to pass along the business to the troops who have helped you along the way, and who are already trained and qualified to take your baby to the next level, over the next decade and beyond, while you move on to fine-tune that backswing.
So, you want to sell your business to your management team.
In an ideal world, you would love to pass along the business to the troops who have helped you along the way. These individuals are already trained and qualified to take your baby to the next level while you move on to fine-tune that backswing.
More often than not, the problem is capital.
Your management team most likely doesn't have cash on hand to finance your retirement goals, -to cash you out.
So what are your options?
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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 should you expect your engagement with a business broker to last?
It's different for every intermediary, but generally speaking, you should expect your relationship with your business broker (i.e. your contract) to last at least 12 months, as it takes a long time to sell a business properly.
It's different for every intermediary, but generally speaking, you should expect your relationship with your business broker (i.e. your contract) to last at least 12 months, as it takes a long time to sell a business properly.
Like any contract, key terms can usually be negotiated depending on the positioning of your company and the current market environment for acquisition.
What constitutes a relationship with a prospective buyer?
How will your intermediary facilitate the transaction and negotiations post-LOI?
These are all questions you should flesh out during open discussions with your intermediary prior to moving forward with a long-term engagement, so both parties can be clear on expectations and responsibilities moving forward.
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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.
What are the best ways to choose your exit options?
You can't reach your goals if you don't have a clear target, and assessing your exit options as soon as possible helps you to start coordinating your operations and business efforts to align with your ideal exit option goals.
The first part of the exit process is knowing your options.
You can't reach your goals if you don't have a clear target, and assessing your exit options as soon as possible helps you to start coordinating your operations and business efforts to align with your ideal exit option goals.
We asked our community members what they thought were the best ways to figure out exit options. Even if you’re fairly early on in the process, it’s important to get clear on this as soon as possible, as it will give you greater clarity and direction as you move forward.
Take a look at our community members’ responses here.
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.
Things to consider when choosing an intermediary
It's crazy how many entrepreneurs out there, after so many years of running their business according to plan, simply don't plan the exit process, or simply wing it when it comes to choosing the right professionals to help manage the exit process for their baby.
A good intermediary can be an invaluable component to a successful transaction, so it's important you know what to look for when choosing this type of advisor to help guide and coach you through a successful exit.
Choose wisely.
It's crazy how many entrepreneurs out there, after so many years of running their business according to plan, simply don't plan the exit process, or simply wing it when it comes to choosing the right professionals to help manage the exit process for their baby.
A good intermediary can be an invaluable component to a successful transaction, so it's important you know what to look for when choosing this type of advisor to help guide and coach you through a successful exit.
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.
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.
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.
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.
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.
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
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 & M&A advisors.
How To Help Ukraine
We could never have built BizNexus without our teammates and friends from across the Ukraine, -mostly based right in Kyiv. For anybody looking to take whatever action you can to help, we’re publishing and will be updating links to the organizations that are popping up at such a rapid pace to offer assistance to Ukrainians in this moment.
We could never have built BizNexus without our teammates and friends from across the Ukraine, -mostly based right in Kyiv.
It’s been an ominously quiet week for our distributed team without our daily meetings, hangouts, Slack chatter….
Our hearts are with all of Ukraine at this time.
For anybody looking to take whatever action you can to help, we’re publishing and will be updating links to the organizations that are popping up at such a rapid pace to offer assistance to Ukrainians in this moment.
Do your own research on the organizations listed as we’re simply aggregating and giving visibility to the trending organizations making an impact as they surface, putting these front-&-center, for you to be able to review, engage and help.
Live News & Event Tracking From Ukraine
A Ukrainian teammate of ours passed this site along and we’ve been relying on this heavily alongside direct communications. The liveuamap.com site provides real-time news updates and tracks events across the country as they happen.
9 Meaningful Ways You Can Help Ukraine
Ukrainians have put together a list of organizations where you can donate to help people affected by the crisis. Those organizations include:
Medical Supplies and Humanitarian Aid
Nova Ukraine, a Ukraine-based nonprofit, provides citizens with everything from baby food and hygiene products, to clothes and household supplies. Donate here.
People in Need is providing humanitarian aid to over 200,000 people on the ground. For those most in need, they provide food packages, emergency shelter, safe access to drinking water, hygiene items, and coal for heating. Donate here.
The Ukrainian Red Cross does loads of humanitarian work, from aiding refugees to training doctors. Donate here.
International Medical Corps is on the front lines and prepared to help citizens with emergency health care services, as well as mental health and psychosocial support. The agency is also keeping the pandemic top of mind throughout the crisis by priotitizing COVID-19 awareness and prevention services, to help keep displaced citizens safe from the pandemic. Donate here.
CARE International is responding to the crisis by providing Ukrainians in need with food, hygeine kits, psychosocial support services, access to water, and access to cash. Donate here.
Helping Children Affected by War
UNICEF Ukraine is repairing schools damaged by the bombings and providing an emergency response to children affected by the conflict. Donate here.
3. Supporting Journalism
The Kyiv Independentdescribes itself as “created by journalists who were fired from the Kyiv Post for defending editorial independence.” You can help keep the curtains up for the independent Ukrainian English-language media outlet by donating to its Patreon or GoFundMe fundraiser.
Ukraine World is an independent English-language multimedia project that emerged from a volunteer initiative helping international journalists during the 2014 “Revolution of Dignity.” Support it by donating to its Patreon.
4. Supporting Refugees
Of course, for many Ukrainians, the threat of full-scale war is driving them to seek safety in neighboring countries.
In a statement, Filippo Grandi, the UN High Commissioner for Refugees, said: “We have already seen reports of casualties and people starting to flee their homes to seek safety.”
Accordingly, the United Nations refugee agency (UNHCR) has stepped up its operations and is working with governments in neighboring countries "calling on them to keep borders open to those seeking safety and protection.” Germany has already offered Poland help with refugees.
You can help support refugees by donating here.
5. Supporting the LGBTQ+ Community in Ukraine
In times like these, LGBTQ+ members are often even more marginalised and exposed to vulnerability than usual. OutRight Action International is stepping up to make sure that they are not left behind and that they are protected in this time of crisis. The organization will be helping to support LGBTQ+ groups and organizations on the ground who are setting up shelters and providing safety for citizens. All donations made to OutRight will go directly to the cause.
You can donate here.
If you are unable to donate, or would like to do more to support LGBTQ+ citizens, the you can also sign up to OutRight's newsletter here to stay up to date on the crisis and how it is affecting LGBTQ+ Ukrainians.
STAY INFORMED
Follow the News Regarding the Ongoing Situation With Trustworthy Sources:
The Kyiv Independent
The Kyiv Independent has been a leading voice on the front lines, covering a timeline of ongoing events since the beginning and highlighting those who have been most affected by the violent attack. The English-language outlet is continuously reporting on how the invasion and conflict are impacting citizens, the economy, as well as Ukrainian foreign politics. Keep up to date on its website here, or on the Twitter page here.
The New Voice of Ukraine
Covering news in three different languages — English, Ukrainian, and Russian — the New Voice of Ukraine has not only covered breaking news, but has released informative analyses on the situation that detail how the situation led to this point, and is continuously publishing op-eds by Ukranian scholars and experts that help to give a view of tone of the situation. Read more on its website here.
Ukraine World
While Ukraine World is not posting breaking news and timeline updates on its website, it is very active on its social media accounts. Its independent journalists on the front lines have gathered first-hand footage, and it is using its account to share other informative sources that its followers can refer to in order to keep up to date. Follow Ukraine World here.
Kyiv Post
The Kyiv Post is the only non-independent media outlet on this list, and it is important that those following state-funded outlets are aware that they are affiliated with the state. Having said that, the outlet has been at the forefront of delivering breaking news directly from government and national offices, releasing statements from ministry officials, military leads, and other dignitaries. You can read more on its website here, or follow it on Twitter here.
Follow Informational Accounts on Social Media:
If your first source for receiving and consuming news is social media, then follow these accounts and turn on your notifications to stay enlightened on breaking stories as well as ways you can help citizens.
Stand With Ukraine
Uploading concise, yet well-informed Instagram posts and stories, Stand With Ukraine is a community page that has been dedicated to sharing knowledge wrap-ups based on the ongoing situation, as well as ways that followers can support citizens from wherever they are. You can follow it here.
Svidomi
Get updates on the ongoing conflict as they happen from this Instagram account — the English version of a Ukrainian social media-based media outlet — which is sharing brief, yet frequent posts about exactly what is happening on the front lines, and who is being most impacted. Stay informed by following the account here.
Ukranians in Solidarity
This is an Instagram account that has posted digestible information on how followers can support Ukrainian citizens, and has used the platform to upload messages of solidarity for citizens in the country. Previously the account has been used to stand in solidarity with the Black Lives Matter movement, and taught Ukrainian citizens how to be an ally to people of color. Give it a follow here.
Want to support the people in Ukraine? Here's how you can help
UNICEF
UNICEF supports health, nutrition, HIV prevention, education, safe drinking water, sanitation and protection for children and families caught in the conflict in Ukraine.
Médecins Sans Frontieres/Doctors Without Borders
MSF runs a range of activities in Ukraine working with local volunteers, organizations, health care professionals and authorities to help people travel to health care facilities and access prescribed medications.
Voices of Children
The Ukrainian organization's Charitable Foundation helps provide psychological and psychosocial support to children affected by the armed conflict, according to its website.
Voices of Children's efforts of support for kids include art therapy, video storytelling, providing mobile psychologists and even individual help for families.
Sunflower of Peace
The nonprofit organization is raising money to prepare first aid medical tactical backpacks for paramedics and doctors on the front lines.
Each backpack is designed for groups of 5 to ten people and includes an array of first aid supplies — such as bandages, anti-hemorrhagic medicine and medical instruments, according to the organization's Facebook page.
International Committee of the Red Cross
This Switzerland-based organization is aiming to help people affected by the conflict and support the work of the Ukrainian Red Cross.
Save the Children
Save the Children, based in London, helps to deliver lifesaving aid to vulnerable children in Ukraine and around the world. According to its website, the organization says it is on the ground in the U.S. and other parts of the world "delivering essential humanitarian aid."
"We are gravely concerned for children in Ukraine, Afghanistan and around the world who might be caught in the middle of armed conflict, forced to flee their homes and exposed to injury, hunger and sub-zero temperatures," the organization writes in a statement online.
UN Refugee Agency (UNHCR)
The international organization aims to provide emergency assistance to families in Ukraine — providing aid such as cash assistance and opportunities for resettlement in the U.S.
"UNHCR is working with the authorities, UN and other partners in Ukraine and is ready to provide humanitarian assistance wherever necessary and possible. To that effect, security and access for humanitarian efforts must be guaranteed," the organization said in a statement.
CARE
CARE is raising money for its Ukraine Crisis Fund, which will provide immediate aid including food, water, hygiene kits, support services and direct cash assistance.
The humanitarian organization aims to raise $20 million and help at least 4 million Ukrainians. It says it will prioritize women and girls, families and the elderly.
International Medical Corps
The global nonprofit has been delivering primary health care and mental health services in eastern Ukraine since 2014, and is raising funds to expand those services for people affected by the latest conflict.
It says cold weather and economic insecurity in the leadup to Thursday's attack have left nearly 3 million Ukrainians relying on humanitarian assistance to meet their basic needs, a number that is certain to rise nationwide.
Its Ukraine team is preparing to deploy mobile medical teams to provide emergency and primary health services, mental health and psychosocial services and COVID-19 awareness and prevention services for people who have been displaced.
Want to go fight for Ukraine? Here’s what to do.
Under siege by its much larger and more powerful neighbor, Ukraine has been so far able to slow down Russia’s attack, a senior U.S. defense official said Sunday morning.
But there is a long fight ahead.
“The Russians have been frustrated. They have been slowed. They have been stymied, and they have been resisted by Ukrainians, and to some degree, they’ve done it to themselves in terms of their fuel and logistics and sustainment problems,” the official said, speaking on the condition of anonymity to brief reporters. “But as I said earlier, we would expect them to learn from these issues and adapt to them and try to overcome them. So I think we all need to be very sober here. in recognizing that this is combat, and combat is ugly, it’s messy, it’s bloody, and it’s not wholly predictable.
And to that end, Ukraine is calling on foreigners who want to help.
Ukraine President Volodymyr Zelenskyy has created “The International Legion of Territorial Defense of Ukraine.”
It is a new effort, a Ukrainian official tells Military Times, to help bolster the fight.
Several veterans have reached out to Military Times interested in helping Ukraine.
Before you go, this is what you need to know, according to the official, who spoke to Military Times Sunday on condition of anonymity in an interview repeatedly interrupted by ongoing airstrikes.
Here’s what veterans, other U.S. citizens or anyone else interested in helping out, need to know.
Apply to the Embassy of Ukraine in your country with the intention of joining the Foreign Legion of Territorial Defense of Ukraine (ask a military diplomat or consul for details). Applicants can visit the Embassy in person, call or send an email to start the process.
Get your documents in order. This includes an ID, a passport to travel abroad, documents confirming military service or work with law enforcement agencies and participation in combat.
Arrive at the embassy with documents for an interview with the defense attaché and the settlement of any visa issues with the consul.
Write an application for enlistment in the Territorial Defense of the Armed Forces of Ukraine for military service under a contract on a voluntary basis. (This is in addition to Step 1.)
Receive instructions on how to arrive in Ukraine and what to bring. Military clothing, equipment, helmet, body armor, combat gloves, tactical glasses, belts and vests are recommended. “It is not obligatory,” the official said, “but a foreign soldier in his national uniform looks good for the International Legion.”
Go to Ukraine in an organized manner. Representatives of Ukrainian embassies, consulates (abroad) and Territorial Defense in Ukraine will provide assistance on the way. Contacts will be provided at the Embassy of Ukraine in your country.
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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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.
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:
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.
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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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.
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
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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.
Tactics For Assessing Whether a Potential Buyer is Qualified
We recently asked our community for some tips on best practices for qualifying potential buyers, and below, you’ll see the preferred tactics our BizNexus Community Advisors and M&A professionals referenced as some of their reliable go-to strategies for managing this successfully at scale, -an art form not easily replicated.
Assessing a potential buyer for your business can be an absolute rabbit hole when it comes to wasting time, -your most valuable commodity as a business owner.
We recently asked our community for some tips on best practices for qualifying potential buyers, and below, you’ll see the preferred tactics our BizNexus Community Advisors and M&A professionals referenced as some of their reliable go-to strategies for managing this successfully at scale, -an artform not easily replicated.
Does the Buyer Provide you Information Upfront?
As part of the vetting process of first-time buyers, three administrative items are requested/required. 1) Up to date resume or curriculum vitae. 2) Personal financial statement, 3) a current credit report - secured by a potential buyer. Next, an in-depth conversation about their motivation to become an entrepreneur.
For first-time buyers who have the right attitude & awareness, additional due diligence on them is done to further evaluate their buyer worthiness.
George Scott @ Business Consulting Solutions, LLC
Show me, upfront, your money. Enough for the deal you intend. Prove, right now, that what you say you can do is true.
Ted Leverette @ Partner On-Call Network, LLC
Can The Buyer Provide You With Their Previous Experience?
Prior experience in deal-making or related business operations.
Vipin Singh @ Murphy Business Sales, LLC
For an individual buyer, they need to have prior experience in deal-making.
Yatin Thakore @ Technology Park
Interview them, assess background experience and get a loan pre-approval.
April Femrite @ True Real Estate Mankato
Does the Buyer Have a Funding Strategy?
As part of my initial conversation, I usually just ask them what their strategy is to fund the acquisition. If an individual investor can’t tell me then that is a red flag. If they are relying on the seller for too much financing, that’s also a red flag. As soon as they ask for tax returns, I ask them to complete a personal balance sheet. If they are PE or VC and say they have committed funds, they I tell them we will need to see the funds or know who the investors are before too long to see their reaction.
Joshua Meltzer @ Sunbelt Business Brokers of Boston & Providence
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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 Reasons Owners Decide to Sell Their Business
Each day we ask our community of M&A experts questions about niche topics related to strategies for getting your business acquired or recapitalized. For today’s poll, we wanted to know “What’s the most common reason you typically see for owners deciding to sell?”
Each day we ask our community of Advisors & M&A professionals in the BizNexus Community questions about niche topics related to strategies for getting your business acquired or recapitalized.
For today’s poll, we wanted to know “What’s the most common reason you typically see for owners deciding to sell?”
Here’s what the Advisors and M&A professionals from the BizNexus Community shared.
Retirement
Retirement #1, but recently, I’ve been running into business owners who opened up shortly before COVID and are running out of energy, capital, and desire to run the business.
Jason Ward @ TruView Business Advisors
Definitely retirement #1, and health #2.
Eric Gall @ Edison Avenue
Retirement then burn out
April Femrite @ True Real Estate Mankato
2. Health Issues
Getting older & less energetic/sick of fighting with family members over the direction of the business, & who gets what when the owner dies/loses or lost interest in the business.
Harrison R T Davis @ New York Business Brokers
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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 5 Factors Driving and Detracting Value From a Business Prepping to Sell
Our M&A experts from the BizNexus Community shared with us some insight into what they’ve routinely observed as the top five factors driving and detracting value from a business prepping to sell and offered up some quick advice. Read below to see what they had to say.
Our M&A experts from the BizNexus Community shared with us some insight into what they’ve routinely observed as the top five factors driving and detracting value from a business prepping to sell and offered up some quick advice. Read below to see what they had to say.
#1 Deferred Maintenance
Many owners will say they will probably exit in 5 years, but these same owners won’t want to prepare until they have decided to sell. This clearly detracts from the overall value.
Bob Fariss @ Murphy Business Sales
#2 Clear Financials
Lately, I have seen too many businesses with sloppy or incorrectly done financials. Businesses that should be doing accrual accounting are not, P&L’s that don’t match the tax returns, incorrect COGs. These all make a buyer suspicious and reduce the amount they are willing to offer. The cost for a good bookkeeper is small compared to the reduction in offering price when the financials are suspect.
Joshua Meltzer @ Sunbelt Business Brokers of Boston & Providence
#3 Seller Mindset
The seller has to have the right attitude about the entire process of selling a business, including the market-tolerate value of the business.
George Scott @ Business Consulting Solutions, LLC
#4 Business Operations
Lack of having an operations management team in place detracts. Take the time to put together a proven team, it takes a while no matter how much money you throw at it but it’s worth it to the buyer and you as a seller.
Bob Latham @ Altapraem M&A Advisors
#5 Unreasonable Expectations
It seems like there is never just one. Customer concentration can seriously detract from value. Sellers unreasonably expecting all cash at closing is a big detractor.
Mark Mroczkowski @ Champman Associates, Inc.
#6 Owner’s with Too Many Responsibilities
The owner having too many responsibilities and not preparing management team to take over some/all of the duties. Messy financials....P&L's don't match tax returns
April Femrite @ True Real Estate Mankato
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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.
Why Business Owners Back Out Of Selling Their Business Last Minute
What are the top reasons business owners change their minds last minute when they’re looking at selling a business?
Why You Might Change Your Mind About Selling Last Minute
Selling your business is typically the biggest decision of an entrepreneur’s life, and there are plenty of reasons an owner will back out of a transaction if it’s not what they need for their personal and professional goals.
Below, Advisors and M&A professionals from the BizNexus community offered their tips for owners hoping to move towards an eventual exit, and avoid the typical pitfalls that can derail a great transaction from taking place.
Family, personal guarantee & life after selling
There are three areas that we focus on with sellers before taking on the listing to avoid them backing out of the deal at closing:
1. Family. We talk about family to make sure that all the key members of the family are on board with the owner selling and that there aren't any family members that would like to take over the business.
2. Personal Guarantee: We review the lease for personal guarantees and determine if the seller will remain personally liable for the new tenant on transfer and if there are any opportunities to remove the guarantee.
3. Plans After Selling: We talk about what their plans are after they sell to ensure they know what they will do with their time.
Working capital adjustments can be deal killers
I have seen sellers simply change their minds because they aren't ready to sell yet. Sometimes it's the working capital adjustment or other factors that affect the price. Lawyers can be problematic when they try to take over the deal and restructure it in ways that the buyer or seller cannot accept.
Reliance on one solo “rainmaker” reduces valuation or kills the deal
My problem has been with owners who are the rainmakers for their business. When they realize buyers really want them more than their business, the deal isn’t attractive.
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.
How to Buy An Existing Business
Ready to buy an existing business? Check out this article to make sure you’re ready.
In 2018, the number of businesses bought and sold hit a record level. A lot of things have changed since 2018, but for business owners, the push to succeed never stops. And as the economy picks back up, there's no better time to buy an existing business.
But before you get started with owning a business, never mind running a business, you have to understand the purchasing process.
Here's a quick and easy guide for entrepreneurs looking to purchase an existing business.
Before You Consider Buying a Business
Before you enter into any negotiations, you need to consider three factors:
The quantity you can invest
Your talents and lifestyle
The full business landscape
Figuring out what you can invest sets the budget. Understanding your talents and lifestyle will help you recognize your strengths, which will help you figure out what type of business is a good match for what you have to offer. From there, you're in good shape to turn a critical eye to the business landscape—i.e. the details that shape your purchase, and whether that purchase is the right fit.
Take a Look at Current Business Ownership
Once you've figured out yourself, you're ready to figure out the existing business. Or rather, the existing business ownership.
You'll start with one mission: figuring out why the business is for sale. Sure, people get sick and retire, but they may also be looking to cut their losses before a major chain puts them out of business. They won't tell you that during negotiation, though, so you have to sniff around on your own.
To do this, look at everyone around the business. We're talking realtors, suppliers, the local chamber of commerce, even other businesses in the area. This will help you suss out information that the business owner may not tell you upfront.
Before Business Acquisition, Figure Out What It's Worth
If you know the real reason for selling and the business is still worth it, take a look under the hood and figure out what you get with the asking price. In other words, it's time to do your due diligence.
For example, take a look at the assets you're actually getting in the purchase price. What are they worth? The business owner's spec sheet will give you a breakdown, but pay careful attention to intangible assets, like customer base or business reputation—business owners tend to inflate this, especially when negotiating a sale.
You should also work with a financial expert to comb through the business's financial statements of the last three years. You should also figure out who prepared the documents, and if it was done by an outside CPA, the financial statements should come with documents like an auditor's report or a review engagement report that explain the depth of the review.
Your Expert Partner in Buying an Existing Business
In short? When you're looking to acquire an existing business, it helps to have experts in your corner.
That's where we come in. At BizNexus, we make it easy to close a deal in three simple steps, and we work with you to ensure it all goes off without a hitch. Plus, we provide the data and analytics you need to make an informed decision. In other words, we make it easy to buy a great business.
Ready to get started? Sign up today to buy a business the smart way.