Who Wants to Buy My Business?
How Much is it Worth?
And more . . .
There comes a time in the lifecycle of every business when a change in ownership is inevitable. The reasons are many and usually highly personal. Sometimes owners are justifiably tired and burned-out. The passion to take the business to the next level just isn’t there. For others, health issues have begun to rear their ugly head. The children don’t want to take over the business or realistically, they don’t possess the wherewithal to assume management/leadership roles.
We understand owner’s concerns and are well-versed in guiding entrepreneurs through a thoughtfully conceived exit strategy. We welcome the opportunity to talk and explore the possibilities. We realize you may not be ready to sell your business, but we also know being prepared is the first step to a successful outcome. For now, here are some key thoughts to consider when contemplating selling your business:
- How Do I Know When the Timing is Right to Sell? One of the biggest mistakes owners make is waiting too late to sell their business. Ideally, one wants to sell when the business is performing at its best. Unfortunately, owners are prone to think, “Why should I sell when things are going so well?” The answer is, buyers will pay a premium for companies in ascension. Once the business begins trending downward, values diminish. Another consideration is the length of time it takes to sell a business. The process is tedious and can take from 6 months to a year, or even longer. Current economic conditions are very favorable for acquisitions. Money is plentiful and interest rates are low. Of course, we all know the economy can change on a dime.
- How Much is My Company Worth? There are a number of different formulas professionals use to determine value. We will be glad to consult with you and provide an approximate valuation. As a cautionary tale, asking a price that is unrealistic is the number 1 reason businesses don’t sell. Similarly, we find owners often under-value their business, causing them to leave well-earned money on the table. Price must be logical and justifiable to potential buyers. Equally important to determining price, a professional broker knows that artfully structuring the deal, negotiating advantageous exit terms, and managing the tax ramifications can be just as beneficial as price towards maximizing outcome.
- Who Wants to Buy My Business? Sometimes the buyer may be part of a private- equity firm halfway across the country. Sometimes the buyer is located just a few counties away, hoping to gain a strategic foothold in your backyard. Many investors and entrepreneurs make their interest known to us and engage us to scout good business opportunities. Having long-standing relationships in place, maintaining a proprietary database of investors, and custom-creating strategic lists of synergistic buyers reflects the muscle that Capital Business Brokers exerts to introduce your business to qualified buyers.
- How Do I Attract Serious Buyers and Vet Out the Curious? Identifying and targeting likely buyers on a confidential basis requires a high level of expertise. Employing our well-culled data base of potential candidates is a huge asset Capital Business Brokers brings to bear on behalf of our clients. Our marketing team produces a “Client Book,” showcasing strengths and skillfully articulating value to interested buyers. We then professionally and discretely market your business on local, regional, and national levels. Buyers must submit to a confidentiality agreement before progressing and a vetting process takes place to identify the premiere suitors.
- What and When Do I Tell My Employees? Many owners don’t want to unnecessarily alarm employees. Confidentiality is a key component between seller and broker. Meetings between buyer and seller can be held in one of our conference rooms and site visits can be arranged before or after working hours. Employees are typically an integral asset of the purchase. Buyers appreciate talent and experience and usually view their continued employment as vital to the succession of the company.
- How Can I Minimize the Tax Ramifications of a Sudden Windfall? You have worked long and hard to build your business. Now it is time to enjoy the fruits of your labor. Working with your trusted advisors, we will help structure the transaction with the goal to minimize your tax requirement and fortify your potential for future earnings. Our financial team is well-versed in finance, accounting, and strategic planning, and goal oriented to maximize the outcome for our clients.
- Will A Professional Business Broker Cost or Make Me Money? The skill set required to build a successful business is not the same as those employed to successfully sell the business. Selling your life’s work should never be considered a do-it-yourself project.There will be a fee to engage a business broker, typically a percentage of the sale. As with a real estate broker, if the sale is not consummated, no commission is paid. But a broker’s fee will be well-earned. From determining a valuation, to marketing the business, to finding and qualifying the right buyer, to structuring, negotiating, and closing the transaction, the business broker earns a fantastic return on your investment.
By Steven Moore
About the Author: Steven Moore is a senior-level sales and marketing professional located here in Richmond. He is Vice President of Capital Business Brokers, a full-service business brokerage firm specializing in the confidential sales of privately-owned, small and mid-tier businesses located throughout the United States. Capital Business Brokers is a wholly owned subsidiary of Transact Capital Partners, LLC.