Exit Strategy for your Business

By Scott | October 23, 2018 - 7:31 am |November 13, 2019 exit strategy

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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:

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

Selling a Business -Its about Time

By Scott | November 22, 2017 - 8:22 am |November 22, 2017 Selling a South Carolina Business

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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,

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?

Is it the right time for the business owner to sell his or her business? Are they ready financially and emotionally?
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?
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
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.
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)
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?
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

By Scott | October 4, 2017 - 3:07 pm |March 10, 2018 Main, Selling a South Carolina Business

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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?

selling a south carolina business

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? –

Selling a business

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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?

buying a South Carolina Business

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?

Buying a South Carolina Business

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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

By Scott | June 16, 2017 - 4:03 pm |June 16, 2017 South Carolina Business Broker

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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:

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 https://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

By Scott | November 8, 2016 - 8:57 am |November 8, 2016 Main, South Carolina Business Broker

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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.