Selling Your Business- What You Dont Know

Selling your Business is a complex process.   If someone says its easy, I would suggest either it’s a very very small business (which can also be complex) or that someone has not gone through the process.  I am a business broker with primary focus on South Carolina and Florida.  I have personally sold my business that I started and built, bought and built multiple other businesses, and assisted other business buyers and business Sellers as an advisor and broker.  As with all of my articles, these thoughts, ideas, suggestion are based on my personal experiences.

Selling Your Business
Selling Your Business

Business Owner know their business.  Much of this knowledge is based on familiarity.  The longer one owns and runs a business, the less you experience situations that are new. But selling your business is a new experience even to the  business owner that’s been operating for 20, 30 ,40 plus years.  When trying to sell your business, You don’t know what you don’t know.

Selling your business you need to:

  1. Know how to get your business ready to sell
  2. Speak to trusted advisors significant others including spouse, lawyer, CPA, business broker and others. While maintaining circle of confidentiality.
  3. Plan on the process taking X amount of time. ( So often its longer than anticipated)
  4. Plan on the process to produce some unknowns and situations to address
  5. Plan on running your business while business selling process is undergoing.  One of the biggest reasons a business owner hires a business broker it that the owners schedule is already full and selling your business is almost like adding another fulltime job to an already full day.
  6. Plan on what you will be doing after selling your business.. Plan on the financial changes, lifestyle changes, and most often the least understood emotional changes.  You will feel different after selling your business.  Its hard to imagine that feeling until they occur, but foremost the responsibility that follows you as a business owner for multiple decades slip away.  That should be a very good feeling.

Every business sale has unique problems and situations.  The ability to work through those situations often are the difference between deals that consummate and those that don’t. You as a business owner may not know what you don’t know when selling your business, but you can surround yourself with people that have been through the process.

Scott Messinger is a Professional Business Broker working with business sellers and Business Buyers in Anderson South Carolina, Greenville, the Upstate South Carolina, Florida, the USA, and internationally. For further infomation email at Scott@GatewayBusinessAdvisors.com

A Word on Buying or Selling a Business

Considering Buying or Selling a Business?

 Taxes Transition Risk Future Asset List Owner Benefit  Working Capital License transfer CHANGE Liabilities  Seller Financing SBA,  Trucks, Intellectual Property EBITDA Cash Flow Inventory Debt Depreciation Goodwill  Money  Customer Base When to Tell Employees    Balance Sheet             Business Broker  Attorney  How?    Accountant    Marketing  Adjusted Net  Non Compete     Negotiation  Training  Management  Offer to Purchase  Confidentiality Lease  Accounts Receivable    Franchise Valuation Multiples   NDA      Revenues             Net Income  Depreciation   Earnout  Closing Agreement  Job  Deposits  Employees Trademarks       Fear       Trade Name Retire  Security     Promissory Note  CPA     Personal Guarantee Timing Work UCC  Family Business  Exit Plan   Website   When?  Partner      S-Corp  Clients    Relationships  Price    Payment     real estate  Assignment  Plan    Help!   

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Exit Strategy for your Business

Exit Strategy for your Business

There are several ways one may exit their business. Business Owner NEED an exit strategy.   Business Owners may want to exit a business they have owned for decades just because they just no longer have an interest.  Or a small business owner may “get out of their business” after a short period of time of just owning it a year or 2.  I am a Business Broker based in Anderson South Carolina and and assist business owners with this very important decision. Most business owners lack an exit strategy

Most all entrepreneurs and small business owners  think long and hard before they decided to buy a business or start a business.  So often so little thought goes into an exit strategy.

A small business can also be and usually is one of the largest asset a small business owner may own.  It can be a passion but it also is an investment. A significant investment.  Most investments one enters into an exit strategy should exist before the investment is made.

You buy a commercial property to rent out with the intention to rent it for 10 years, hope for market appreciation and  plan to sell in 10 years. You have an exit strategy

You buy a stock.  You buy at $10 a share and plan to sell if stock goes to $15  (unless the company fundamentals change). You have an exit strategy.

You decide to start or buy a business, it gets going and does well- is your plan just to run it forever? Well you cant, because none of us are here forever.Greenville Business Broker

 

These are a few methods a small business owner may utilize to exit a business.  Some are good, some not so good.

The Good, the Bad and Ugly Ways to Exit Your Business:

  1. Sell at a Gain/ profit- can include “merger with other companies
  2. Sell at Loss
  3. Close your doors-bankruptcy, long term negative cash flow.
  4. Poor Health, Significant Injury, Death
  5. LBO (Leveraged Buy Out)
  6. Successfully grow it to such a size and take it public
  7. leave to children

Or some combination of the above- one could die and leave the business to the children

But when you look at the above list you recognize that some of the exit strategies you choose on your schedule and others are “chosen for you” and you have less control over the time frame.

Business Exit Strategy

Emphasize On Making Plans For Your Business

If your plan is to start a business grow and run the business until you are 65 and then sell it- you have a plan, a start towards an exit strategy, and are ahead of most.  It is so easy to start and buy a business and spend a lot of time preparing for that acquisition or start up, then get wrapped up in the transition or start-up, then get wrapped up in the day to day, and then one day you get real sick, and you have no one in your business that knows how to run your business, and laying in bed decide that you may need a plan- it may be to late then.

I am currently a business broker  based in Anderson South Carolina and find my role of meeting with small business owners brings awareness to the need for an exit strategy.  I had owned my own small business for 20 years and realized how ensconced with the day to day one can get with their small business.  There are several ways to exit ones business- I primarily work with small business owners looking to sell their South Carolina or Florida businesses, but observe some of the other exit mechanism and have been personally involved with several of these methods.

 

 

 Your plans can change and often do, but I suggest you plan to have a plan.

For assistance on exit strategy planning and for Free no obligation consultation:

Scott Messinger

Scott@GatewayBusinessAdvisors.com

Businesses Selling at Record High Rate

Businesses Selling at a Record High

Number of Businesses Selling at 10 Year High

Businesses are selling at Highest Rate in Years . The below information and charts are based upon  Market Information gathered by a survey of over 275 Professional Business Brokers and reveal the current information of the market defining what businesses are selling for AND why. This information is based on the sales of hundreds of business during Q1 2018 and some behind the scenes info of the hows and whys-

As a Professional Business Broker working with business buyers and sellers in South Carolina and Florida knowledge of the current market is essential.  Understanding what businesses are selling for in Anderson South Carolina, Greenville South Carolina and throughout Florida and nationally is essential. Below is current information on the market along with a brief clarification. Possibly the most important note is that How and Why businesses sell vary greatly based on the size of the business.  So it always best to view a business that is similar to your size to best use as a comparison and or basis.

SDE equals Sellers Discretionary Earnings which is what a seller earns through wages and  benefits along with any Interest, Depreciation and Ammortization that is expense on the company Profit/Loss Statement.

Businesses Selling at record high

 

 

 

 

 

 

 

 

 

 

Businesses Selling at Record High

The reason a Seller sells or looks to sell varies greatly and again very often dependent on the business size. BUT also take note of how often a business sells because of “Unsolicited Offers”.  Which essentially is someone randomly approaching you to buy your business.  Most recent data shows it happens between 0%-3% of the time -NOT OFTEN.

 

Businesses selling at record high

 

Over 50% of businesses that try to sell and are valued under $500k DO NOT SELL. Businesses valued over $1M sell at a much greater success rate.  Planning and preparing helps sell a business.  If you own a small printing company in Greenville South Carolina planning for a sale greatly increase the likelihood of a successful sale.  If you own a larger business in Anderson South Carolina it is more likely you will plan for a sale and be successful in finding the right buyer.  How do you plan to try to sell your business next year ?  Start by having a discussion with an experienced trusted advisor this year. 

 

 

Businesses selling at record high

 

The “Business Selling Market” is doing better than it has in years.  Maybe now is the time to consider the sale of your South Carolina business or the sale of your Florida business. The sale of your business is very dependent on business size.  Finally, planning for the sale of your business greatly increases the likelihood of a successful sale. For more information on selling a business in Anderson South Carolina, selling a business in Greenville South Carolina, or selling a business in Florida contact me- Scott Messinger at Scott@GatewayBusinessAdvisors.com

 

Above information Source is a survey I personally have been participating in for several years.  Results are compiled and provided by International Business Brokers Association, M&A Source, and Pepperdine University

 

 

 

 

 

You Want to Sell Your Business Someday How to Prepare Today

Every Business Needs an Exit Strategy.  Do you want to Run Your Business Forever?  Do you Want to Sell your business?  Do you want to leave your business to your children?  Do you want to sell your business to Your Employees?  Do you Just want to close your doors and Move on?  How do you want to exit your business ?- And when?

I had a good friend of mine that is a successful business owner contact me about the prospect of selling his business in a few years. He asked me to contact him regarding what he may want to be doing now to prepare his business for sale.  He has a successful growing business, he has grown his number of employees from 10 to 50+ over a 2 year period.  He is effective at gaining new contracts and growing revenue, but like so many  businessmen, he has never attempted to sell his business.  How do you plan to sell your business.

Devising An Exit Strategy For Selling Your Business

Normally during the startup of a new business the thought of an exit strategy is not even a consideration.  Then small business owners get so involved with the day-to day operation of their businesses that again an exit strategy is either not even thought of or possibly just put on the back burner.  Taking some time to put some thought into your exit strategy can go a long way to increasing your odds of exiting your business the way you desire to.

Planning, gaining knowledge, and preparing  may be the 3 most important measures you can take when considering an effective exit strategy.

If your exit strategy involves an interest in trying to successfully sell your business in several years, what sort of measures or actions should a business owner take today make this effort successful:

  1. Make sure your financials are in order. Clean understandable Income Statements and Balance  Sheets will add value to your business.  Unexplained/old accounts, entries, or line items ,  should be addressed and handled.
  2. Systematize and document your operations and procedures.  Well documented policies, procedures and practices are a sign of a well run company and  probably would help your company run better, and add value. If you got hit by a truck tomorrow could someone use your documented practices to help continue run your business?
  3. Move your business towards a business that does not rely on you.  Do your customers do business with your company or do customers do business with you.  When you go to sell your business are you selling a business that is dependent on you the owner or a self-sustaining business based on a solid philosophy, solid customer service and reliable employees and practices. Or when you go away, does your business go away?
  4. Speak to your trusted advisers- let them know your intentions see if  they have any input suggestions that could help move you towards this goal.  Trusted advisers may include your attorney, CPA, financial advisor, business brokers.
  5. Learn by speaking to your trusted advisers what are the most important aspects that affect your business value.  How does one value your business? What is most important to business buyers?-  Your Assets, your cash flow, your sales, your number of customers, your patents, trademarks, your competitive advantage.  Learn what the real driving factors are behind raising the value of your business and work on them. Understand that not all businesses that attempt to sell actually do find a business buyer and sell.
  6. Running your business and concurrently, preparing your business for sale is a viable  approach towards business transition. It is not a” one or the other approach”.  Preparing your business for sale does not need to get in the way of running your business, and most measures improve your business. If you make needed improvements to your business and or operations and decide not to sell your business or exit your business, you still most likely will have a better business on your hands.
Planning to sell your business

For planning purposes try to learn what the potential value of your business may be. Also educate yourself on the business buying or selling marketplace.  It is not always the same.  Selling a business during the 90’s was different than selling a business in 2018 and will be different when selling a business in 2020.

If you think you want to sell your business in 5 years for $1M, attempt to understand what realistically your approximate value may be today.  If your business may realistically only be worth $500,000-  change your expectations,  change your time frame, or maybe more importantly get to work on making necessary changes to your business.

Scott Messinger is a Professional Business Broker working with Business Buyers and Sellers in South Carolina and Florida.  For more information contact Scott at Scott@GatewayBusinessAdvisors.com