Tag Archives: how to sell a business

What is My Business Worth

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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

South Carolina Business Broker

 

 

 

 

 

 

 

 

 

 

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

South Carolina Business Broker

South Carolina Business Broker

 

 

 

 

 

 

 

 

 

 

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 a Business 2 Most Important Elements

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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.

Selling Your Business Not to Donald Trump

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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

 

How to Sell a Business – What Matters

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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

How to Prepare a Business For Sale

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How to prepare Business For Sale

 

How to Prepare a Business For Sale – 5 Steps

I  am a business broker based in South Carolina.  I work with business buyer and business sellers in both South Carolina and  Florida. I also owned my own business of 20 years and sold it.  A business owner interested in selling a business needs to know how to prepare a business for sale.

FACT-  Many businesses that try to sell  do not actually sell.

Looking at the reasons that a business does not sell can be guidance towards measures a current business owner can make to prepare a business for sale. Selling a business has a lot of moving parts.  How can one  increase the likelihood of a successful sale?   The answer can be in preparing  for your business sale.

What are some of the top reasons businesses Don’t Sell?

  • Price
  • Business Performance
  • Business has poor records
  • Business completely dependent on Business Owner
  • other liabilities encumbrances

 

The value of a business is ultimately defined by what a willing capable buyer (s)  is willing to pay for that business.

What could possibly be the best approach to preparing to sell your business is to look at your business as a Business Buyer rather than a Business Seller.   Would you buy your business?  If so how much would you pay for your business?

What steps can a business owner do today to prepare  a business for sale?

How to Prepare a Business For Sale

  1. Have realistic expectations. Stories circulate about “Google buying this business for 10-20x cash flow”.

Sales like this are not the norm.  Businesses with Sales of $5M + sell for a higher multiple of cash flow than businesses with $800k of Sales- Generally.  Try to research what other similar businesses my be selling for or have sold for.  A qualified Business Broker may assist with this step.

  1. Ensure your financials are concise and clean.  Are there any outdated entries on any of your financials. Can you readily reconcile any differences between tax records and Income Statements?    Furthermore a business that is doing better is more likely to sell than a business with declining sales or margins.
  2. Have documented business operational procedures or business practices and procedures. If you already have them, review and update them. Consider if it is time to archive or throw out records from 5- 10-15 years back.
  3. Make big and small steps to have less reliance on you as a business owner. Ask the question- “Does your business rely on you ? Delegate if possible.  Sometimes it’s hard to let go of the idea that “only I can do that”.   I’ve personally experienced a long stretch of illness while owning a business and quickly learned of the many activities that I was doing that could be done by other members of my staff.
  4. Clean up your business. Your office, your trucks, grounds, facilities, equipment, tools and employees appearance can all add value.  Equipment involved with the sale that is well maintained and in order provides to the “Peace of Mind” a business buyer is seeking.  Again envision yourself as  business buyer  and looking at your trucks and most of the tires are bald, and smoke is coming out of the exhaust and they look like hell.  It may only take a few thousand dollars to improve this conditions, but a prospective buyer may mentally devaluate business value by tens of thousands or more.  It may create more doubt and uncertainty about other components of business.

 

Again- not every business that tries to sell actually find a buyer that is a fit.   There are steps you as a business owner can make to increase the likelihood of a successful business sale and transition.

Preparing your business for sale is a very important step in the process of selling your business.  Working with a trusted advisor,  finding prospective business buyer candidates is highly important as well.  Finding the “right” buyer candidate  to transition your business to is the end goal that begins with preparing your business for sale.

For More information on Selling a Business or Buying a  Business contact   Scott Messinger- Business Acquisition and Sales-   Gateway Business Advisors      www. SellaBusinessAdvisors.com