Category Archives: selling my business

Selling Your Business How to Find a Buyer

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Selling your Business How to Find a  Buyer

Looking For a Business Buyer

You have decided you want to sell your business.  How do you find a buyer for your business?

When a business has been in existence for many years, 10-20-30-40+ years it is not uncommon for the business owner to be approached about selling his/hers business. Or it is not uncommon to “hear about someone interested in buying the business” or have someone express “interest in buying the business”.    I have seen and experienced this as a business owner and as a business broker. So one may think  “if these  people are interested in buying the business and I’m not even trying to sell it, I think it may be very doable to find a buyer when I am ready to sell my business.” But like a lot of other complex processes, “the devil is in the detail.”  Often  , when ready to sell your  business,  it turns out the person  or competitor, or strategic buyer prospect that was interested in the business 1,2, 3 years ago, is no longer interested- their situation has changed.  Or the guy that said he knew someone  that was interested in the business, doesn’t have the resources to consummate a deal. So how does a business owner find a buyer for the business. 1. Try to find a buyer on his/her own. 2. Hire a Business Broker to find a buyer.   Neither options are guaranteed. What is generally not known by one trying to sell a business is that MANY  businesses that actively try to sell their business DO NOT SELL.  Industry statistics show that well over 1/2 of all businesses that actively try to sell actually do NOT  transition the business to a new buyer. But it is with little doubt that hiring a qualified business broker greatly increases ones odds of finding a buyer.  It is my opinion that a significant reason why utilizing a business broker is the simple fact that most business owners already have their hands full running their business.  And then to add  the components of selling a business to their day is barely doable at best. Marketing the business, vetting out buyer prospects, tire kickers, not disclosing the confidential component of the sale are just a few responsibilities that are easy to do  while continuing to run their business.   Often there is not enough hours in the day to get all that done and run the business. A business broker is able to have “generic dialogue” with competitors and strategic buyers without disclosing the name of the business.  If  Mike from Mikes Towing approaches ABC towing about buying their business, then ABC business knows Mikes Towing is for Sale. If Scott from XYZ  Business Brokerage approaches ABC Towing about a Towing business in the Jacksonville Florida area- confidentiality is maintained. But as a Business Broker we market  looking for business buyers across many different platforms, often searching locally, regionally, nationally and internationally.    So often business buyers are from “Somewhere else”.   Also a business buyer is someone that buys a business.  About 9 out of 10 people that approach about an interest in buying a business don’t buy a business.  They may one day, but that may not be this year or next year.  They are prospective business buyers.- As a business Seller you are looking for a Business Buyer. I personally have bought  several business over the last 25 years. I have made the decision to buy a business- found a business that met my goals and then concern myself greatly if I cannot effectively acquire the business   Many “Business Buyers” looking for a business do not ever make an offer on a business , or buy a business.  They may be a perpetual business buyer prospect, or they may truly be ready to take the next step and be a business buyer. Knowing the difference between a prospective business buyer and actual business buyer can be the difference between an effective sale or a frustrating  time demanding process . For More information on Selling a Business or Buying a Business  Scott M Messinger (239) 770-2421

A Word on Buying or Selling a Business

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Considering Buying or Selling a Business?

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Is EVERY Business For Sale at “Right Price”

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As a Business Broker based in Florida I spend ample amount of time prospecting/marketing for prospective business sellers and prospective business buyers.  I use various marketing methods to market to both buyers and sellers.  While in the process of  prospecting for business owners considering the exit or sale of their business it is not uncommon to hear “I would be interested in selling my business  if I can get the right price”.

Business For Sale – The Right Price

Recently I engaged in such a discussion- the owner told me he would very much like to sell his business and start a new somewhat unrelated business if the could get the right price for his business.  I then asked what he felt may be the right price and he followed up with “I don’t know”.

The “right price”  may not equal to the business value, or the price a qualified interested buyer is willing to pay.

For an actual transaction to be consummated,  the right price needs to resemble actual business value.  If the “right price”  is actually 2-3 times what estimated value of the business is, it is probably best for all parties involved to spend their time elsewhere.

But is every business for sale?  What if a “sweetheart deal” is presented to  a small business owner in Florida?  If you had a business that is not “For Sale” , and you know it to have an approximate value of $500k  and someone walked in and made you a cash offer of $800k cash is your business now for sale to that party?

Is now the time to Sell My Business?

From my personal experience of business ownership, I think yes most businesses are for sale if the “price is right”.  But not all businesses.  While owning my previous business in the 10th year  I had gotten a significant offer for the business, but I had long terms plans and  aspirations for the business.  At that point in time I had made several acquisitions and made several other offers on other related businesses and was comfortable with valuations, synergy calculations,  and felt I knew what the value of  my business was.

There was a lot of merger and acquisition activity that was occurring in my industry at that point in time and I was presented with a cash offer from a  very strong company, and was at about a 25% premium to what I and my CPA viewed as current value.  So I had a very strong cash offer from a well qualified business- do you take the money and move on.?

Business For Sale – The Value

In my opinion business values are affected by both  macro and micro economics.  What is the state of the economy, what is the state of the merger acqusition economy and what is the state of your industry/your business?  These elements effect what sort of multiple of cash flow your business may be worth.  If the economy is such that valuations were/are  running high do you look to exit your business because valuations, and or those high multiples may not come around again?

In my situation I consulted with my “trusted advisers” around me my CPA, my attorney, my wife.  Yet ultimately the decision was mine.    My CPA did tell me something that strongly influenced that decision.  He had told me “You,ll know when you are ready”.  It was a great price great offer, but I wasn’t ready and ultimately sold my business 10 years later and got fair value for the business. So is every business for sale if the “right price” comes along.  I think that most businesses are for sale if the right price comes along, but not all businesses.

 

 

 

8 Biggest Reasons I want to Sell My Business or Buy a Business

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8 Biggest Reasons I really want to Own My Own Business Can  look very much like the 8 Biggest Reasons I really want to Sell My Business.

Reasons to buy sell a business

Why does someone buy a business, and what does drive a business owner to the decision to sell their either long term ownership of a business or short term ownership of a business?  As  Former and current  business Owner I have owned a couple  businesses,  I have started businesses, I have bought multiple businesses, and I did sell my business.  As a  Florida Business broker I have both represented Buyers and Sellers of businesses.

So much goes into the decision  of buying a business or into the thought process of selling a business, but often it can be similar criteria that just sits on the opposite side of the ledger….

Owning your own business can be one of the most satisfying processes in ones life.   Why does someone want to own a business.  Very often it becomes the same reasons one wants to sell his or her own  business.

Reasons For Owning Your Own Business: “I want to Buy a Business because” –

1)MONEY– want to make lots

2)PASSION– I love making widgets- I love helping people with my products/ services
3)ACCOMPLISHMENT– It just feels good and a feeling of success
4)OBLIGATION– It is my best means to support myself and or family.
5)EXCITEMENT– I love working 24/7
6)CONTROL– I control my own destiny. I am the boss, I wont have to report to anybody. I can do whatever I want!
7)OPPORTUNITY– I’m young-limitless full of health, energy, optimism
8) TIMING – “I’m Ready” to buy own my own business

Reasons For Selling A Business: “I want to sell my Business because “-

 

1)MONEY-Not making enough, money is less important.  Or Ive done well and ready to cash in on my efforts.
2)PASSION– I used to love making widgets, now I’d rather collect shells, golf, work for someone else or do anything but make another widget. of ” If I have to deal with another customer I’ ll scream”.
3)ACCOMPLISHMENT– The feeling of accomplishment is gone and or less significant, or Ive accomplished all Ive wanted in this business.
4)OBLIGATION– My family is no longer around, Im not going to pass business on to my kids
5)EXCITEMENT– after working 24/7 I am now burned out and I get excited about the idea of not having to deal with it anymore
6)CONTROL-Insurance Companies,employees,IRS,State, Federal policy control my destiny, and run my business more than I do!
7)OPPORTUNITY– I feel old,  have health issues, tired- lack the energy this company needs- exceeded my limit
8) TIMING– “I’m Ready” to sell my business and move on…

While the list could go on and on, Contrary to common belief—– Its not always just about the money

When do I think it is a  good time to buy a business?  When YOU are “ready”

When  is a good time to sell my business –  When YOU are “ready”

 

 

 

Selling My Business Next Year

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Getting a business ready for sale is both advisable and prudent.  Waking up one day and deciding you want to sell your business tomorrow may not be a good idea.  Deciding that you would like to sell your business as an exit strategy and putting together a plan is likely to maximize your gain from the sale of your business.

You could easily Google Preparing your business for sale and find many many articles/list and sources of information.   I had written a related article in the past as well.  But beyond the list- what of these methods are most important?  Are all of these measures necessary or are they just guidelines?

I had sold my own business of 20 years, I had entertained several offers over the years, I went thru various stages of decisions as to how I would exit my business.  At some point I realized that my exit strategy would be to sell my business if I could find the right situation.  But from my perspective the most important part of my approach was to commit to running my business as if I would own it  perpetually.

Sell A Business

Photo (c) smallbiztrends.com/

So many businesses that try to sell- don’t sell.  A business owner needs to realize this and allow this fact to influence their thought process.  Currently I am a business broker in Florida and work with Florida small business owners with the process of buying and selling a business.

Be Realistic When Deciding On Selling Your Business

Many components and aspects of your business should be looked at from a realistic standpoint, critiqued,  and adjusted as needed when preparing your business for an eventual sale.  Some important areas to address when looking to sell your business include:

  • Either develop, establish, or refine your business operational procedures, practices, and methodologies and have them documented
  • Does your business rely on you the business owner?  If so, make changes to reduce that reliance.
  • Clean financials-  Does your Income statement and Balance Sheet make sense ?

But the question to pose is what of these measures is most important or essential as it relates to preparing for the sale of my business?

In my opinion it is accurate , sensible, reliable Financial records.

The Importance Of Reliable Financial Records

Financial Records

Photo (c) bristoltn.org

Typical financials involved with the sale of you business can include Profit/Loss or Income Statements, Balance Sheets and   Tax Records.  Further into the due diligence process of your business good  Sales Journals, Customer Information, Inventory Info,   all can go a long way to maximizing the value of your business.

Clean financial records are so essential to all parties involved with the acquisition of a business. And all involved includes the Seller, the buyer, and possibly a bank, lender or third party investor.

So when looking to Sell your business-

If you have a great business that is producing great margins, produces a great bottom line, and a very high owner benefit- but the financial records do not support this – what do you have?

If you have a business that you own and run it semi-absentee, great systems, increasing sales, good industry but poor financial records- what do you have?

If you have the nicest looking, shiniest looking store, website, equipment, office or vehicles, but your financial records don’t make sense- what do you have?

Looking to sell your business next year?  Start working on your financial records today.