General Business and Finance Blog

The conventional wisdom is that selling your business when in a recession is very difficult.  The uncertainty associated with recessions make it very difficult for buyers to accurately value what a business is going to be worth.  The worst thing for any type of business transaction or even the markets in general, is uncertainty.   However, if buyers can come to terms what they do know, as well as feel comfortable with what they don’t know, there is still a good chance for success.  Its only when buyers don’t know what they don’t know that things really become difficult.  The key to selling your business when no one really knows where the economy is going to be headed is making sure that as many variables as possible are removed.  It is really no different from what should be considered normal practice for anyone involved in the purchase or sale of a business, but buyers are significantly more cautious overall and they should be.

That being said, deals are still being done and businesses are still being bought and sold.  The key is to recognize that the business climate has changed and that if someone really wants to sell their business, it’s definitely a buyers’ market.  Flexibility and compromise are the words of the day, and the following 3 areas will likely involve the most discussion. 

Price.  This one is quite obvious.  There are more sellers than there are buyers.  With the baby boomers all getting close to retiring age, and potential business buyers all being a bit skittish, let alone that there are just less of them, the result is purely an increase in supply and a decrease in demand.  A business that was valued at 4 times cash flow 3 years ago is probably closer to 3 times discretionary cash flow.  That works out to a 25% decrease in the value of the business. 

Vendor Take Back.  In normal times, business sellers can expect to leave about 10% of the purchase on the table, to be paid over the next couple of years.  Sellers should expect vendor financing closer to 20%, or maybe even 25%.  There are obviously lots of factors that drive that number, but buyers are going to push hard for an increased VTB.  The key reason being that it’s a reasonable bet that most businesses have just come through their best couple of years, and the next couple of years are going to be significantly worse. So a buyer makes their decision on the business that they’ll own, not the business that the seller owned.  So, if things are going to be worse next year, they’ll push hard for increased vendor financing.

Security.  Sellers can expect buyers to tie the vendor take back to the future performance of the company.  That may not be particularly fair, but a common point that is often raised by sellers is that the business is very stable and basically runs itself.  The counter by buyers then, is that they’ll tie the vendor take back to the performance of the company.  In other words, the seller only receives the VTB if projections are met. If they aren’t met, the VTB is waived.

All three of these points are negotiating tools that buyers, and business sellers, can use to make sure that they are comfortable with the transaction.  The key for sellers is marketing and ensuring that they cast their net wide to ensure that they attract the best possible deal for themselves.  Sellers should consider posting the business at www.businesstradeboard.com.

Scott Larson has been involved in mergers and acquisitions for over 6 years.  He runs a business listing site called Business Trade Board, located at www.businesstradeboard.com

 

What are the Options? The decision to sell your business is a milestone.  Selling a business that you have worked so hard at and so long for is difficult for many people.  However, when you do decide that the time is right to sell then you must do everything you can to ensure that you get the best value for your hard work.  There are different routes you can take to selling a business.  You can use the services of a professional business broker, try to sell it privately or try some different avenues.  This article will quickly explore the different ways to go about selling a business and hopefully it gives you some insight into the process. Business Broker Using a business broker to help you sell your business is an excellent step to make.  Business brokers are professionals that specialize in the business sale transaction.  Brokers are licensed in the Province of Ontario and must undergo educational qualifications in order to be able to buy or sell businesses.  Brokers help business sellers in many different ways: -    Helps determine the selling price of a business -    Maintains confidentiality throughout the process -    Screens potential buyers for you -    Finds a buyer -    Helps facilitate with buyers -    Is a go-between for the buyers and the sellers -    Provides professional input A business broker is the professional that specializes in business sales.  If you are looking at selling a business, consulting with a broker would be a great first step. Suppliers or Employees If you are not overly concerned with maintain confidentiality when you are selling a business then you may consider talking to your employees or suppliers to see if there is any interest in purchasing the business.  There are some great advantages to selling to suppliers or your staff – they know the business, they are familiar with the customers, there would be minimal training involved, due diligence might be a lot quicker and you already have an existing relationship with them.   Word of Mouth If you have a large enough network you might find that someone you know is in the market to buy a good business.  Obviously you must not be concerned with confidentiality if you go down this route.  Many times friends, neighbours or church members are in the market to do something entrepreneurial and just need the impetus to take the plunge.  Spreading the word that your are  selling a business might be the nudge that is required to get an offer on your business. Trade Magazines or Groups If you are a part of an industry that has a trade group or publication that comes out that might be a good option for you to advertise that you are selling a business.  Many time your competitors might be looking to expand their operations or get some synergies by buying a similar company so this might be a good resource for you to explore. When you think it’s time to sell your business please think through all the options carefully and choose what makes the best sense for you. Contact us if you think you’re ready to sell.  We serve the Golden Horeshoe area including Toronto (GTA), Mississauga, Oakville, Burlington, Hamilton, St. Catharines and Niagara Falls.

Many people think they are going to get rich selling online but ad words, affiliate deals etc pay cents and to make money requires a huge investment in time and money. Here we are going to outline one of the best online businesses which anyone can master and make big profits with.

The advantages of this business are:

- No selling.

- Never a recession.

- You only need an internet and a computer.

- You don’t need staff stock or premises.

- You can learn it in about two weeks.

- You can then work just 30 minutes a day.

- You can take holidays when you want.

- You can get 100 times the capital you commit lent to you – on just a few hundred dollars.

So what business gives you all the above advantages?

It’s trading currency markets from your computer

HANG ON!

I couldn’t do that – it’s too complicated and to expensive.

Well you would be dead wrong today, anyone can open an account with just a few hundred dollars, trade for a living and many people who have never traded before have go rich doing so.

There is nothing to stop you learning this online business and nothing to stop you making money.

All you need is a desire to succeed and a willingness to learn.

The best way to learn this business is to study charts, you will then spot currency trends. These trends last for months or years and you can lock into them for profit.

When you open an account with a broker they will let you leverage your money.

Put down $500 and you will get 100 x leverage, you can therefore trade $50,000 – no credit checks required, this leverage is granted as soon as you open your account.

The real key to success is how you deal with leverage you need to be able to have the discipline to cut losses and run profits.

The fact that anyone can learn to trade and anyone can acquire discipline – was graphically proved by legendary trader Richard Dennis back in 1983.

He took a group of people from all walks of, of all ages, both sexes, varying degrees of educational learning and taught them to trade in just 14 days.

The result?

They went on to make $100 million for Dennis and become some of the most famous traders of all time.

Could you do the same?

The answer is the potential is there, sure you may not become as rich as this group – life is not like that but the opportunity exists for anyone, to make a great income from this home business.

The real question is do you have the desire to succeed, a willingness to learn and the mindset to be disciplined?

If you a life changing income could await you in the world’s most lucrative business – trading global forex online.

If you are up for the challenge and can see the potential then:

Welcome to the exciting world of currency trading, a fantastic opportunity awaits you – should you decide to look at this best online business further.

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Starting a business and making it successful encompasses a great deal of work, but sometimes it gets overwhelming and you feel that selling it is the best option for you. While the current business market is shaky with the global recession affecting everything, you still have a good opportunity to sell your business. Even if you decide to wait until the economy is in a better state, you can be preparing your business for sale. Here are some things to consider while preparing to sell your business.1.    If you have any problems within your business whatsoever try to get them resolved as soon as you can. Talk to any business partners about major decisions concerning the business and its sale, and make sure that a buy and sell agreement is in place before any sale is finalised to ensure a smooth transition.2.    Work on getting all of your financial documents up to date and as accurate as possible. This is a great way to impress the buyer of the businesses acumen, and it will help convince them that the business is worth the price you are asking for it. It’s best to be up front and honest about all aspects of your business as well. Even if there is something negative in the businesses history, not revealing it could lose the sale.3.    Be prepared to help finance the sale of your business, because the current economic conditions could keep the buyer from getting funding put into place. You can also start looking for a reliable business broker to help you in your search for buyers. They will be able to qualify the buyers for you based on their financial credibility and their ability to successfully run a business.4.    Discuss with the business broker the price you should be asking for your business. They have all of the expertise needed to help you determine a price for your business that is based on the current economic conditions, how the marketplace is moving, and how a realistic price will help you sell your business instead of leaving you out in the cold because your price is simply too high.5.    Stay in constant communication with your business broker throughout the preparation of the business for the sale all the way through to the finalisation of the sale itself. They know where to list your business for sale, who to contact and speak to during inquiries about the sale and ways to get the transaction completed in a reasonable amount of time.  They will act as your representative for the buyer and they can assess the offers that come into their office. They can also help you structure the final sales transaction, and by working with them consistently you can build a trusting relationship that will benefit your business.While waiting for the business to sell it is advisable to keep the business running as efficiently and profitably as possible, letting the business broker hand the sale for you. They are working on your behalf and by allowing them to handle all of the sales aspects for you; you can concentrate on making sure the business remains running at peak efficiency.

My neighbor asked me, “Why would anyone sell a successful company?”. He could not understand why anyone would leave a business that was doing well. Of course successful companies get sold all the time.

So why do these business owners sell? The short answer is that most closely held businesses sell for human reasons, such as burn out, retirement, illness, partnership disputes, family issues or other personal reasons. Usually the business is fine but the human being running the business needs a change. To understand this better it is key to understand the other options for exiting a business.

Close the Business/Liquidation

Closing a business that is profitable never makes sense. Even if the assets are liquidated the price is likely to be pennies on the dollar versus selling the business as a going concern with employees, customers and a reputation that is intact. Not only does the business owner get the lowest value but the employees, vendors and customers are hurt by this type of exit.

Accident, Illness or Death

No one wants to exit their business this way, but many do. The loss of an owner not only creates tremendous issues for the family but also creates a leadership void in the business. Even the most competent management can struggle when a key business leader is lost to a serious accident, illness or death. No one plans for this type of exit but many end up exiting the business this way because they failed to create an alternate plan.

Succession

Succession by a family member or key employee has its benefits. They know the business, its product or service, employees, customers and vendors. Succession can be operationally successful for the exiting owner if they make sure the successor is carefully selected, qualified and groomed for the position. The owner must be careful not to make an emotional choice of a relative or favorite employee but instead choose the successor with the right skills to lead the company into the future. You are not seeking an “Employee” mentality but an “Owner” mentality. If that rare person can be found in the business who can make the transition to Owner, they often do not have the cash needed to purchase the business. They are also likely to want to pay less for the business as familiarity will blind them to many of the value drivers of the company. So although succession can be operationally successful it is rarely a financial success for the outgoing owner.

Sell

Closing or liquidating the business minimizes the value to the owner. Accident, illness or death forces the issue on the owner. Succession provided a very limited pool of options with limited financial reward.

Selling on the other hand allows the business owner to decide their ideal timing, maximize the value of the business they worked so hard to build, coordinate the use of the sale proceeds for financial planning and align their personal goals with the sale of a business. Selling the business allows the business owner to create a wealth event and often significant on-going passive income without having to run their business.

Whatever they are, human reasons are always pushing and pulling on a business owner. Burn out, stress, divorce, illness, partner disputes and limited growth capital are some of the human reasons that push owners out of the business. Retirement, enjoying life, relocating, a new business opportunity and passive income are some of the reasons that pull a business owner out. Whatever the motivation, the fundamental reason a business owner chooses a sale as their ideal exit plan is control. The business owner chooses to understand the value of their business and to proactively pursue the right buyer and the right price. By selling a business you choose to exit your business by choice, not by force.

The professional team at Sunbelt Midwest can help you confidentially sell or buy a business in Minneapolis, Milwaukee, Chicago, and surrounding areas. For more information check out our site at http://www.sunbeltmidwest.com.