Selling a Business 2 Most Important Elements

 

Selling a Business- 2  Most Important Elements

 Thinking about Selling your Business? 

selling a business

Selling a business very often involves many many moving parts and finding the right Buyer for your business can be a very involved process. Do you use a business broker to sell your business? Do you try to sell the business yourself? These are just a couple of the initial questions a business owner must answer to begin the process of selling ones business.

When selling a business it is easy to think that I will sell my business to “the first person to comes along with enough money to pay my asking price.” The sale of a business involves many terms and conditions by both the buyer and seller that must be met to consummate in a sale. Very often as you go through the process of due diligence by both the buyer and seller, wants and needs are uncovered, and potential roadblocks to completing the sale can occur.

Two important elements have a very strong impact on increasing the likelihood of a successful sale of a business. When trying to sell your business are you working with:

  1. An Interested business buyer
  2. A Qualified business buyer

As a  business broker , with focus as a South Carolina Business Broker and Florida Business Broker one of my more important responsibilities when I represent a business owner selling a business is to qualify or “pre-screen” the various inquiries on the business for sale. There are many people that inquire/ask about a business for sale and probably less than 5% , 4%,  2% of those buyer prospects actually buy a business at all.

A Qualified buyer can mean many things, but having the adequate available cash, equity, financing, special skillset, proper personal family and life situations are important to establish.

An Interested Buyer is one that wants to buy the business. They have seen basic information on the business and based on that, if no significant negatives or unknowns surface, they want to buy the business.

There will always be a lot of due diligence, verification, questions and answers, but this buyers desires to see the process move forward. If my wife and I were looking to buy a new home, and she finds a home that she likes- I am pretty much transformed into an Interested Buyer. I may turn from looking to buy a home to working to buy this certain home. Issues may occur when doing the due diligence on buying the home but I task these as issues to overcome, not reasons to get out of the deal- If I am a truly interested buyer (and or my wife really wants the house.)

When going through proper due diligence many discoveries, questions, and uncertainties can be uncovered. When you have a Seller that is truly interested in selling a business and you are working with an interested and qualified buyer, issues uncovered in due diligence are not “Gotcha” moments but rather are business related issues that both parties seek equitable resolution and or explanation on. Issues that surface become hurdles but not roadblocks.

Buying and selling a business is a process. When Selling your business at some point in the process you ascertain that you are working with an interested qualified buyer. From my perspective, having an interested Seller and recognizing that you are working with a truly interested qualified buyer are two important ingredients towards a successful sale of a business.   Having just one of those elements will likely have bad results.  When Selling a business remember the 2 most important elements to look for – a Qualified and Interested Business Buyer.  Now the question is- How do I find one?   For More information contact Scott Messinger  Business Broker serving South Carolina Florida and Southeast USA.

How to Sell a Business – What Matters

How to Sell a Business – What Matters

How to Sell a Business What Matters

 

Selling a business  can be a difficult process.  Knowing How to Sell a Business and what matters greatly increase your chances of a successful Sale and transition.  Someone may walk in your office one day and offer you 100% cash  at an elevated valuation but that is not very likely at all.  I had owned a business in a very fast growing industry and I was presented with a couple very strong cash offers at fairly lofty valuations but these offers where based on the growth curve of the industry and market conditions overall.  I wasn’t ready to sell my business at that time and several years later when I was ready to sell,  the process of selling  the business and  finding the right buyer and transition for my business  presented a much different challenge.

Ive been involved with the business acquisition  process for over 25 years as a Business Buyer of Multiple businesses, a business Seller, and as a Business Broker assisting others.  I find the following to be important when both Selling a Business and Buying a Business.

  • The quality of the business is important- “We are the highest rated Window Washing business in Jacksonville”
  • The quality of the industry is important – Are you in a growth industry? or a Mature  industry ?    “A rising tide raises all ships”
  • The quality or the overall marketplace we all conduct our business in is important. During our recently experienced recession obtaining money to finance an acquisition was difficult and overall number of business sales were down significantly.
  • The timing of when your business may be best ready to sell and when you as a business owner are ready to sell may not coincide.

 

As you can see some aspects that affect the likelihood of successfully selling your business may reside out of your immediate control.  But knowing more about the process, How to Sell a Business and What Matters, and the current market can only aid in your decision making process.

A Recent survey of fellow business broker professionals involving 100’s of business broker professionals denote  consolidate information regarding Buying a Business in South Carolina, Florida and the entire US as well as Selling a Business in South Carolina, Florida and the US.     Topics in this survey included information regarding who is likely to buy your business,  why will they buy your business and what will they pay for your business.  All businesses have differences yet many businesses share similarities:

Why Will You Sell Your Business?

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Who will Buy your Business?

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Why will they Buy your Business?

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What will they Pay For Your Business?

whats my business worth

 

 

 

 

 

 

 

 

 

 

Business Sold for Multiples

 

 

 

 

 

The amount that Buyers are paying for Businesses ( as a multiple of earnings or cash flow  has remained fairly constant over the last few years.)

SDE- Sellers Discretionary Earnings

EBITDA – Earnings Before Taxes Interest Depreciation and Amortization

So, Timing, knowing who you may best market your business to, what sort of value expectations  you can expect all affect the likelihood of a successful business sale and transition.  There is a lot to knowing How to Sell a Business but getting ready to sell your business and knowing  when you are ready are  are a couple of the very important 1st steps.

Above data  provided by survey of over 300 business brokers throughout the USA coordinated thru International Business Brokers Assn and M&A Source and Graziadio School of Business.

Looking to Sell a Business in South Carolina Florida or SE USA or looking to Buy a Business in South Carolina Florida or SE USA please contact me Scott M Messinger  at Scott@GatewayBusinessAdvisors.com or directly at   for more info see www. SellaBusinessAdvisors.com

Current Market for Selling a Business

Selling a Business

 

 

What is Current Market for  Selling a Business  (or Buying a Business). I’ve been involved with business sales for approximately 25 years.  Fifteen years as a business buyer and Seller during which I acquired 9 businesses and 9 years as a business broker representing business buyers and sellers.

As a business broker working with business Sellers and Buyers in South Carolina and Florida we are afforded access to a lot of market information as it relates to business transactions, what businesses are selling for, and trends.  Sales Data and terms  on these private transactions are not readily available to the general public.

 As a business owner or potential business buyer it is not unusual to “hear about someone that sold his business of $X “.  But often that information is incomplete or erroneous.

Below is some market information showing charts and trends relating to business sales throughout the US.  I believe it can provide some insights to both potential business sellers in South Carolina or Florida as well as Business Buyers.  Also below I’ve highlighted my insights to what I believe some of this information means and what may be worth noting.

A review of over 7000 businesses sold during 2015 show:

 

  • The median asking price grew 12.5 percent from $200,000 in 2014 to $225,000.
  • The median sale price also increased a solid 7.6 percent year-over-year, from $185,000 to $199,000.

 

What is my business worth?

 

 

 

 

 

What Does this graph say about Businesses Sold?

A significant determinant of a business sales price is “Multiple of Cash Flow” or “Multiple of SDE (Sellers Discretionary Earnings).  But this “Multiple” does vary based on business size ( Sales and Cash Flow).  Businesses Sold with Sales of $1M-$5M will generally sell at a different multiple than business sold with Sales of $100k-$1M .  Above graph shows as the cash flow of a business increases the multiple of cash flow also increases .  This graph shows a business with approx. $150k of cash flow sold for 2.5 x that cash flow (CF). Whereas a business with  $1M in cash flow sells for 3.1 times that cash flow (CF).

 

What is Value of my Business

 

 

 

 

 

 

What does above graph say about Business Value  and or Business Selling Price. ?

 

Above Graph depicts that The price of businesses sold ( as a multiple of cash flow ) has remained fairly steady over the last 4 years.  Going forward, I expect this to remain consistent thru 2016.

types of businesses for sale

 

 

 

 

 

 

 

 

 

What type of businesses are being sold?  Above chart shows the types of businesses sold throughout the US in 4th quarter of 2015.

Are you looking to buy a business in South Carolina or Florida?   Are you looking to sell your business.  A business is not bought or sold in a vacuum.  How does your business measure to other like or similar businesses?   No two  businesses are the same, but similarities do exist.  Understanding value or potential value may be one of the more important steps that goes into the process of buying or selling a business.

Thinking about buying or selling a business?  Please feel free to contact me Scott Messinger Business Broker to discuss any questions you may have on the process.  And it is a process.  Also, feel free to search on businesses for sale on my site  at:

www. SellaBusinesssAdvisors.com.  or contact me at Scott@GatewayBusinessAdvisors.com

or call direct at (864) 210-8226 or (239) 770-2421.

 

Buying a Business Selling a Business Using the Internet

I just sold a business last month and the buyer saw the business advertised on Craigslist and on one of the large “Businesses For Sale” websites.  I am a business broker that works with business owners with the process of buying and selling a businesses.  My profession of being a business broker is my own business. 

I have also owned another business of 20 years.  I am a business broker that has been trying to figure out this “Internet thing” for quite some time.  I think I am figuring out that I will never figure it out.

It seems that there are a lot of Internet marketing experts and this industry appears to still be somewhat at the early stages of a rapidly growing industry.  As a business broker and business owner, I recognize that utilizing the internet is integral in business success going forward. Maybe I know more about trying to maximize the Internet than some, but the question of asking a business owner (that is not in the Internet marketing business) if they understand Internet marketing is akin to asking someone if they are a golfer. The average golfer may have a handicap of 20-25, Some golfers shoot at professional levels- 0 handicap, some people have never golfed, some have golfed once or a few times, some golf a lot but are still a 30 handicap (the higher the handicap the worse the score).  In golf,  I am about a 12 handicap.  For Internet marketing maybe I am about a 12-20 handicap , I dont know.

What Does Selling A Business Online Involve?

I may know  more than some, but know there are a lot more that know a lot more than me.   My job involves many discussions with business owners regarding the state of their business as it relates to a potential sale of their business or a possibly buying another business. The  questions  I have about utilizing the internet as a business broker are also questions shared by the plumbing contractor, the print shop owner, the restaurant owner, the card shop owner and the small business owners scattered throughout the world.

10 Interent marketing observations from a Business Owner / Business Broker:

  1. The Internet today is so different than it was 10 years ago.  Ten years ago, so many businesses didn’t have websites.  Those that did had these fancy Home pages with lots of “neat stuff”. And the site just sat there.  Now-a-days it is known that a lot of that neat stuff gets in the way of search engines.    A few years ago it seemed if you didn’t show up on Google – you didn’t show up, and then came, Myspace (and went), Facebook, Craigslist, LinkedIn, Twitter,  Google+, Pinterest, etc. .  I am convinced the Internet 10 years from now will greatly different than it is now.  Trying to figure out where it is going is the challenge.
  2. To me , I see the value in Social Media marketing is that it decreases my reliance on Google.  With Social Media customer have another way to find you.  You don’t need to show up on page one of google to be found.  I may be wrong with this line of thinking but this is my perspective.
  3. It feels like everything I learned yesterday, is almost outdated tomorrow
  4. I see the question asked so often online- Is anybody making any money on Twitter.  Twitter is growing at 1,000,000 new users per minute 🙂 doesn’t it just make business sense that some are making profit on Twitter- I am not yet,  are you? Does Twitter work for your product or service?  Does it help to sell/buy a business?
  5. Is Internet marketing another strong way to reach customers, market and advertise, or is it so much more?  As a business owner we know we need to advertise and market.  In the past and present we use the Yellow pages, direct mail, radio, maybe TV, trade shows, telemarket, direct sales, networking and other methods.  Is it proper to view internet marketing as a very strong means of marketing and advertising or view it as so much more.  I tend to think to view it as so much more.
  6. Is it true that if you can drive “mad traffic” to your website that is so effective that  you could sell ice cubes to an Eskimo?.
  7. Is blogging better than tweeting, is Facebook better than Twitter.  Do I need to post videos to Youtube?  How important is SEO, incoming links, adding more friends, social media buttons/widgets?
  8. Is email marketing dieing, improving, necessary, changing, or being somewhat replaced by social media?
  9. How do I do all that I should be doing on the Internet, without having to bear the cost of “sub contracting” that task out and still run my business.
  10. How will we be accessing the Internet down the road and how does that affect my approach today?  It seems a few short years ago accessing the Internet with ones cell phone was a novelty at best.

How Do You Find A Business Owner Who Is Selling A Business?

I am just a business owner who’s profession as a business broker requires significant marketing efforts.  How do you find a business owner that is looking to sell a business? This is a very confidential event. How do you find a business buyer that is looking to buy a   Jacksonville Towing company or a Florida HVAC Contractor,  Tampa Retail Business, or  Computer Repair shop?

My approach is  to try different things.  I Tweet the businesses I have for sale- I get some follow up questions, I blog about my business experiences- it has driven”some traffic” to my site, I am on Facebook- but pretty weak, I am on Linked-In and a few other social/business sites.  I personally feel value in writing a blog as it allows me control to provide SEO optimized current content to my site.  I do email marketing.  I certainly am not in a position to provide well grounded advise on this subject but my major point is- Are you a business owner confused about what you should be doing on the internet? – You are not alone.

 

Selling South Carolina Business

Selling  South Carolina Business

….When Your Product is You.  Doing business in today’s web based world is changing almost daily.  You work on your website,  get on Facebook,  you try to learn all about social media to either try to just keep up, or maybe to move your marketing efforts forward.How does this affect Selling South Carolina Business.

Your competitors may have the ability to learn more than you to stay a step ahead of you.  They may have discovered the next best Facebook app to get them more Likes, Fans, and or interest.  Others may have more money than you and can outspend you, they can Out-Tweet you, out post you, out pagerank you, out comment you, out link you….

Be The Best You Can Be

Small Business Marketing- Selling a Business

But no one can Out-You You.  Or stated in the first person- “You Cant Out-Me Me”  .We all are busy trying to move our businesses forward but do we really know if Twitter will be in ours or others marketing plans 5 years from now.  So how or where does one focus.  Is your product or service you sell- you?  

I am a business broker based in  South Carolina and I help/work with people with the process of buying and  selling South Carolina Business.  One aspect of the business that makes a business more saleable is the ability for the business to not be dependent upon the owner so that if/when the owner is “replaced” a transition can be seamless.  So building a business based on the brand or product being “You” can appear counter-intuitive.

My view based on my experiences is that a customer does business as much with “the way a company does business”, “company philosophies”, “company approach”, as much as they do business with a certain individual.  When you think about it we do like the person that we do business with but what is it that we really like?  I tend to think it’s the way that person deals with me,  and it’s easy to assume that approach starts” at the top”.

 

How Important is Business Owner when Selling a Business?

So I think it’s easy to assume if a customer/client likes the approach or way you do business as an owner and your “brand” is based on how you approach service and ethics and business practices- that this is who the company is and the company is NOT you.   If you as the business owner demand honest ethical reliable hard work from yourself and customers see that, they know what your expectations as a business owner are.

So if you as a business owner are not truthful, don’t return phone calls, think it’s ok to quote one price and then demand another price after the work is done why would the customer expect anymore from anyone else in your organization.

Submit Your Business To Your Philosophy

But the product/brand that you are building on the web content that you post to build your brand may not need to be about you by name- it may be your philosophies, your ways and approaches toward running your business.  I have been posting business articles about my experiences, views, and ideas for several years.  When someone engages me as a business broker -they are engaging me, and they can understand me through my writings if they choose to do that as a starting point- or they can choose not to engage me as a business broker because of my writings.

Maybe you don’t have the most experience, maybe you are not the smartest, maybe some of what you offer has some shortcomings- most everything does.  We all have areas of what we do that can use improvements, but you know you do bring something to the table that is unique to you.

So as the internet changes and strategies change on what new  site/app/blog/tweet/hashtag/social bookmark you should be using- you can retain certainty that you and your story will forever remain unique.  There is only one You.  But as the old song goes from The Who – Who Are You? – You are your feelings, your beliefs, your experiences, ideals, likes, dislikes,  the good and the not-so-good of you, and your way of going thru life (and business).

Nobody can do you better than you.  So when you are creating or building a brand,  and the brand is you- no competitor no matter how much money or how smart or how experienced is going to out you- you.

Scott Messinger is a Business Broker that is currently based in South Carolina and also works in Florida and Southeast USA.  I have personally purchased multiple business and currently own and operate businesses and business interest in multiple states.  If you are looking to sell your business in the Upstate ( Greenville, Spartanburg, Anderson, Clemson included)  Please feel free to contact me.

Scott Messinger  Business Broker South Carolina (864) 210-8226   Scott@GatewayBusinessAdvisors.com