Selling a Business -Its about Time

Selling a Business- It’s about Time

Selling a Business is a process.  Many factors go into a successful business sale.  I am an experienced Business Broker working with business sellers and business buyers in both South Carolina and Florida.

Below is a description of the role time plays when selling a business. And how one should take the time to plan a business sale and understand if the timing is right when selling a business,

Selling a Business Its about Time

When selling a business, setting the right selling price is important, finding a qualified interested buyer is important, finding the right deal structure is important and in the background of all of this is TIME.

The money involved with selling a business is the engine that that drives the deal forward but inevitably time is the steering wheel that affects where and when the deal goes through.

What affect does time have on the selling a business process?

  1. Is it the right time for the business owner to sell his or her business? Are they ready financially and emotionally?
  2. Is it the right time to try to sell the business according to the economy. A few years back during the recession (or whatever you call it) was it the right time to sell a business when business lending was significantly down and sales and business performance were down?
  3. Is it the right time for a business buyer? Is it the right time in the business buyer’s life?  In all my experiences most business buyers mostly, but not always, seem to fall in a certain age demographic of say 30-55 years old. So often someone under 30 may have the interest in buying a business yet may not have the financial means.  A business buyer over 55 may have the financial means yet may not have the energy or perceived time horizon to engage in the long term decision. Or family situation can also affect timing. (That being said I did personally buy a business when over 55 years old).  But the time needs to be right for the business buyer
  4. When selling a business, how much time is needed to sell a business. How much time will pass between the decision to sell, to signing documents at a business sale closing? I’ve sold a business that took 3 days to sell and sold another business that took 3 years.  An often misunderstood part of selling a business is how much time is involved in selling a business.  Yes it does happen sometimes when someone knocks on your door , offers to buy your business, and soon after a business sale occurs.  But that scenario is definitely not the norm.  Using a business broker is a decision that should strongly consider time.
  5. Most business owners I know have a full day handling their business. For many, this is an understatement.  But generally most business owners are busy running and growing a business.  How does a business owner find the time to add on the added responsibility of trying to sell their business.  Selling a business involves putting together a marketing package, marketing, vetting prospective prospects, trying to maintain confidentiality, securing NDA’s, etc..  All this occurs before meeting with prospective buyer.  Offers, Due Diligence handling, contracts, etc. are all elements that may occur after finding a buyer, and all of this requires time. (and a certain level of expertise)
  6. If the Buyer needs bank financing to buy a business- how long does it take to secure financing? If the Seller is offering to stay on during transition how much time is he/she willing to stay on for?
  7. More than likely the Seller will agree to a Non-Compete upon a successful business sale. How much time is the non-compete in effect for?

 

Is the time right for selling your business?  Is the time right for you?  Are you ready mentally and financially?  As a business owner selling a business- do you have the time?,   As a starting point take the time to seek some answers to these questions.  You may not have the time but must make the time to properly analyze this very important decision.

Scott Messinger is a Professional Business Broker working with business owners looking to sell their South Carolina Business or Florida Business.  Also working with business buyers throughout the South east USA, throughout the nation, and international business buyers as well.

Currently represent businesses for sale in Anderson South Carolina, Greenville South Carolina, Pendleton South Carolina, Pickens County, Jacksonville Florida as well as other areas of South Carolina and Florida.

For More information email  Scott@GatewayBusinessAdvisors.com or call (864) 210-8226

Selling a Business Current Market Information South Carolina Florida

Thinking about Selling a Business Or Buying a Business?   September 2017 Market Information

As a Business Broker Professional, I participate in Quarterly National Surveys along with over 300 other Business Broker professionals. The below are highlights of the most recent results and represents 293 Business Brokers and Advisors in 38 states and over 250 businesses sold in last 3 months. I focus working with Business Sellers in South Carolina and Florida, and work with buyer prospects througout the USA and international. Below are some highlights of these survey results.

What did these 250 + business sell for from April-June 2017?

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Businesses sell for a “Multiple” of SDE (Seller Discretionary Earnings)- which is similar to Adjusted Cash Flow- essentially what does the business make for an owner and what could it make for a new owner.
Again, the Multiple Paid for a Business is dependent on size (with some variation- some industries do get paid a higher multiple than other industries). The Multiples paid for businesses sold over the last several years have been somewhat consistent with the average multiple paid for a business that is valued under $1M is approximately 2 X SDE.
How Much Cash at Closing? –

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Some Seller financing is typical in business sales of all sizes.Furthermore business buyer rarely walk in with 100% of the Funds needed out of their own pocket. Very often for a business buyer to come up with the 75-86% cash at closing, financing from a bank (often SBA financing) or other financing is secured by buyer to complete the acquisition. For smaller businesses having the business meet the qualifications for an SBA loan can be a challenge and can make a sale difficult or worse.
Where Do Business Buyers Come From?

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As you can see above, the smaller businesses may find a buyer “down the street”. But the search for a buyer almost ALWAYS requires a search and marketing that includes local, regional, statewide, nationally and often international.

Who Are the Business Buyers?

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Again, searching for a Business Buyer includes marketing for 1sttime buyers, and experienced business owners for “smaller businesses”. But depending on business size contacting competitors, other strategic buyers, and larger investors are all active applicable business buying prospects.
Thanks to the survey information and IBBA, M&A Sources, Pepperdine Capital Markets Project, and the Graziadio School of Business and Management at Pepperdine University.
For more information please feel free to contact me- Scott Messinger
working with Business Sellers in Greenville South Carolina, Anderson, the entire Upstate and Florida and business buyers throughout the USA and internationally.

 

I am currently working for business buyers looking for:
:: Salon Greenville SC area
:: Aviation Parts Business S.Carolina
::Business earning $100k+ cash flow in Upstate
::HVAC Business
::Mfg Business w/$400k+ cash flow in Upstate
::Home Service Business
::Pest Control Business
::Multiple Buyers looking for businesses earning $1M+ cash flow
:: Janitorial Business in Florida
Pack and Ship ANderson SC

Businesses that Want to Sell

Business Owners Have recently Expressed Interest in Selling their business: ….
*Window Cleaning
*Auto Parts online and brick/mortar
*Computer Service
*Hair Salon/Spa –
*Metal Refinishing-
*Commercial Contractor
*Electric Contractor
*Sports Bar – SC
*Carpet Cleaning –
*Ethnic Rest.
*Printing Business

Contact me for any
further info on these or more information on selling a business in South Carolina.

September-2017-  “Whats Important When Buying or Selling a South Carolina  Business
How long does it take to Sell a Business??
I have sold a business in 3 days and one took 3 Years.
I would advise the “average time” to sell a business could be 9-14 months.
If wanting to sell your business next year…. start the process yesterday.

For More info on Selling a Business or Buying a business in SOuth Carolina – Anderson, Greenville, Spartanburg, Clemson, Easly, Greer, Pickens The Upstate and all of South Carolina Florida as well please contact Scott Messinger at:
Scott@Gatewaybusinessadvisors.com

SC- (864) 210-8226
FL (239) 770-2421

 

 

 

Selling My Business – How Much is my Business Worth

Selling My Business How Much is my Business Worth.  Almost all businesses are for sale to some degree. Lets say your business is not For Sale. Assume  Your business is worth $500,000.  You love what you are doing, someone contacts you with an offer to buy your business for $900,000.  Is your business now For Sale? The preceding is not a likely scenario for most business owners.  To successfully sell your business planning and preparation is needed.  But if you are now or at some point considering the sale of your business you may want to consider the following 3 points:Planning on Selling my Business

1.     Identify your honest interest level  when selling your business. Early in the decision process of selling your business consider what approach you may take towards selling your business.  As a Business Broker working in both South Carolina and  Florida I interact with the various interest levels by small business owners.

  • My business is not for sale but if someone walks in and offers me way more than what I think it is worth- I would consider selling my business
  • My business is not for sale but if you run across someone that would want to buy it please let me know.
  • I want to pursue selling my business but I won’t sell it for less than…( A somewhat inflated price) .  I am willing to accept that it may take 1-2 years to sell my business, and if priced too high I can accept the fact that my  business may not even be sold.
  • I want to pursue selling my business and after significant due diligence I feel the price I am seeking is consistent to what other like businesses have recently sold for.
  • I want to sell my business and I want out now.  I will set my price aggressively and set a lower price than price currently sought for businesses similar to mine.  I will expect this aggressive pricing to both help me sell my  business and decrease the amount of time it will take to sell my business.

If you do have a true interest in selling your business as suggested in above  last 2 points you do need to  exercise due diligence to gain understanding of what the value of your business may be.

2.    You can expect that the  perceived value of your business to you and the value of the business to a potential buyer will probably be 2 different values.

  • Ultimately the price of your business is what a willing and able buyer is prepared to pay to buy your business.
  • Seek “reasonableness” to your price that you will seek to sell your business for. If similar businesses to yours are sold at 1 1/2 times adjusted cash flow, why is yours worth 3 times adjusted cash flow?
  • Ask yourself what you honestly would pay to buy your business.
  • Do a free Search on my website http://sellabusinessadvisors.com  0r similar sites to research what similar businesses to yours is asking to sell their business for.  Remember – all businesses are different, but use such a search as part of your due diligence.  A business for sale asking price and the price a business sold for can be greatly different, but asking prices can provide some basis-while current  Businesses Sold information is more pertinent
  • Speak to your trusted advisers.  A business broker may be able to help with non-public info on sold businesses in your area.  Your accountant or attorney also  may or may not be aware of such sales as well.  A Professional Business Valuation specialist may benefit you.

3.    Whether it  is part of your exit strategy to sell your business or not, you should have an exit strategy.

  • Most small business owners do not have an exit strategy. “I haven’t thought about Selling my Business”
  • We all desire to exit our business on our own terms rather than an exit forced by health, business downfall, or other life changing situations.
  • If you own a business you should have an exit strategy.  Do some planning, perform some due diligence. Know what you have or may have.
  • Even if you are not planning to sell your business there is value in knowing  approximate value of this potentially large asset.  You know what your house is worth, you car, your other assets. Understanding the value of your business can be a significant piece of information when planning ahead.

Selling my business  in South Carolina or Florida can be a rewarding experience when done properly.  Understanding  a proper value for your business can set the stage to a successful sale of your business..

For more information or interest in a confidential meeting please contact me Scott Messinger  at Scott@GatewayBusinessAdvisors.com.  Business Broker Licensed in both South Carolina and Florida

What is My Business Worth

What is my business Worth?

Getting accurate information on Private businesses sold can be difficult.  Below I am sharing information on businesses sold during the 2nd Quarter of 2016.  This information comes from a survey that includes over 375 Business Broker and Business Professionals involved with buying and selling businesses.  I am a 10 year Business Broker working with Business Sellers and Business Buyers in South Carolina Florida and Southeast USA.

If you are considering the sale of your business, planning or preparing an exit strategy from your business or considering buying a business the below information provides valuable insight.

There are many valuable points to be gleaned from the below but a very important underlying point is that businesses are different. You can see the information surrounding what a business sells for, why a business owner sells, who the business buyers are, where a buyer comes from , and why a business buyer buys a business. The size of the business affects all these aspects  are very dependent on the size of a business.

A $1M business may sell for a multiple of cash flow of 3,4,5 x- but this doesn’t necessarily mean that a $400k business would sell for a similar multiple.

What is My business Worth?  Below chart shows  what businesses recently sold for.  Please note Buyers Paid a higher multiple of EBITDA (Earning before Interest Taxes Depreciation Amortization )   for larger businesses.  A business of say $200K of Ebitda may get 2.5 x that Ebitda, whereas a business with $500k of ebitda may get 4 x ebitda.  Cash flow, adjusted cash flow, ebitda, owner benefit, seller discretionary earnings or other related measurement of earnings are a significant factor when determining business value.  

South Carolina Business Broker

South Carolina Business Broker

 

 

 

 

 

 

Why did Business Owners Sell their Business.  Are you a South Carolina or Florida Business Owner considering the sale of your business?

Upstate South Carolina Business Broker

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Who were the Business Buyers during the 2nd Quarter of 2016?

South Carolina Business Broker

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Why did Business Buyers Buy a Business in South Carolina Florida  and the rest of the  US?

South Carolina Business Broker

South Carolina Business Broker

 

 

 

Where did the Business Buyers come from?   Usually they come from somewhere else.  For me as a South Carolina Business Broker and Florida Business Broker the last 10 business I sold the buyers on all of them came from distances of 200-1000 miles away.

South Carolina Business Broker

South Carolina Business Broker

 

 

 

Scott Messinger is a Business Broker Based in the Upstate South Carolina with main offices in Florida and working with South Carolina Business Sellers, Florida Business Sellers, and business buyers and Sellers throughout USA.

For more information Please contact me at  (864) 210-8226  or (239) 770-2421 or Scott@GatewayBusinessAdvisors.com

 

 

Selling Your Business Not to Donald Trump

Selling Your Business Not to Donald Trump

selling a business or buying a business

selling a business or buying a business not thru a rearview mirror

Donald Trump has bought many businesses in his career. He has sold many as well.  Most business Owners looking to Sell a Business have not sold a business before.   Likewise the majority of those that buy a business have not bought a business as well.

Like with most statements there are exceptions to the rule.

There are many Strategic Business Buyers that make multiple Business purchases within a year.  Sometimes a business owner had sold a previous business as well.   But from all my experiences involved with business buying and business selling over the last 25 plus years the majority of business sellers are selling a business only once maybe twice in a lifetime.

As a prior business owner and a current business owner and a buyer of multiple businesses, and a Business Broker in South Carolina and Florida I recognize the benefit of hindsight.  We all know in running or growing a business, we make mistakes.  We dont know it all.  But we know more than we did 10, 20 or 30 years ago.   How good can one be when doing things for the first time?  Very often you just don’t know what you don’t know.

Buying or selling a business is not a perfect process.  Things can and will go wrong during the process of buying a business and selling a business.  Things can and will go wrong while running a business.

I have never witness a Perfect Business being sold by a Perfect business Seller to a Perfect Business Buyer.

The goal to buying or selling a business for the 1st or 2nd time in ones life should be to mitigate your situations of “I didnt know that”.   Surround yourself with people that you can trust that have been through the process before.   Ask questions. Seek answers .

Below are some common misconceptions I have come across from both business buyers and Sellers.

  1. Business Seller- ” I want 100% of my Selling price to be paid at closing. I do not want to offer any financing”- To that I say- We All Do.  We all want to be paid completely at closing-” How do I know Buyer will pay me”.   Buyer will say, “what assurances do I get that this business is what I think it is.  “Without looking at sales of businesses over last 5-10 years I would venture to say that 80-90% or more of all business sales involve financing from SBA Lender, Seller, or other 3rd party financing.  -As a business broker  I seek to secure “SBA Lender Prequalification” for a business I am representing to sell.  The quantity of Buyers willing to pay 100% cash for a business is minimal.  The amount of prospective buyers that are willing or in the position to pay a down payment and finance the balance is significantly greater.
  2. Business Buyer- “I’m buying a business, so either the Seller meets all my demands or I walk.”  Normally a business Sale involves some “give and take”.
  3. Business Seller- “Let the Buyer make an offer then I will provide that information.” – Certain information is needed in order to make an offer. Not all request are reasonable- the responsibility of an advisor is to “advise” on what may or may not be a reasonable request.
  4. Business Buyer- I found the right business, but I am going to wait to see if they reduce the price.- Finding the right business is not an easy task. If I find the business I am looking for, I am going to pull the trigger or else deal with the remorse of missing out on this opportunity.  I’ve done that before, and wont again.

So what are some key take-aways when looking at buying or selling a business for the 1st time?

Know what is important to you.  Know your timing.  Seek advice of trusted advisors.  Ask questions. Measure twice, cut once.  Mistakes can and will be made.  Not Doing your best to mitigate those mistakes could be your biggest mistake.

For More information on buying or selling a business, business value points or transition/exit strategy please feel free to contact me Scott Messinger at (864) 210-8226  or (239)770-2421 – Scott@GatewayBusinessAdvisors.com