Tag Archives: Upstate Business Broker

What Business Would a Business Broker Buy?

By | |
Comments Off on What Business Would a Business Broker Buy?

Many Business Owners will utilize a professional business broker to help sell their business.  Many prospective business buyers may hire a business broker to help them in their quest to find and buy the right business.  The perspective of a business broker will be different from the perspectives of both the buyer and seller.

The business broker has the perspective of being involved with reviewing many businesses and speaking with many prospective buyers and sellers.  A “normal” business buyer or business seller may only buy or sell a business one time in their business life.  But what sort of business would a business broker buy if he/she were buying a business?

  • What Business would a business broker buy?
  • Would  a business broker buy a franchise
  • Would  a business broker choose to start a business
  • Would a business broker  decide due to current market conditions to wait and defer the decision to buy a business until the economy improves

Just as every business buyer will have their own set of criteria for evaluating and making a business acquisition, every business broker will have their own criteria they deem as important.  As a business broker based in Florida,  and former business owner ,I always look at businesses for sale from the perspective as a prospective business buyer and ask myself “Would I buy this business at this price if I was buying it?”.   And if I ran across a terrific business opportunity that is a great value,  that met my lifestyle and financial requirements, I may be a business buyer again.

Business Broker`s Criteria For Buying A Business

What are the few basic conditions I would most look for in today`s business environment.

  1. Motivated Seller– I recognize the Seller really needs to want to sell.  Not that the Seller needs to sell, but rather WANTS to sell for what ever reason it may be.  Selling ones business is a process.  Many business owners have  been doing a certain thing for a long time, and continuing to run a business vs selling may be “ the path of least resistance’’,  Attempting to sell a business on a whim or buying a business from someone “kind of interested” in selling can be arduous .   For me, there needs to be a strong “want” when selling a business.
  2. Seller Financing– I want to buy a business that offers Seller Financing.   When Seller Owner holds a note on the business  he has a vested interest in your success.  To avoid not going thru a bank or other lender holds a high value to me and would be my first choice.
  3. A Good value relative to asking  price as a multiple of adjusted cash flow. A higher multiple may be ok but must be quantifiable.
  4. I  would be willing to buy a business that has poor financial  records yet feel numbers can be substantiated. I recognize different small businesses handle their “accounting” in so many different ways, and if I can find good value does exist within a  a company with poor records ,  I would have further interest. Some business buyers may be less comfortable  when records on the surface dont make sense.
  5. Recurring Income- Strong recurring revenue would be important to me.     Am I walking into ongoing sales or am I going to have to go out and get new sales each and every month.  And what is the cost to get that new business.
Acquiring A Business

Photo (c) tampabusinessbroker.com

“A Rising Tide Raises all Ships. ” Now is a good time to buy a business. As the economy improves, I feel  value will be realized.   The process of buying and selling a small business requires certain individual criteria to be met.  My criteria will be different than the next persons.   What is important to others may be similar to the above criteria.  But if you are looking to buy a business you need to outline what is important to you.

 

 

What Can I Sell My Business For?

By | |
Comments Off on What Can I Sell My Business For?

As a Business Broker Based in Florida,   I talk with small business owners daily about their businesses.  Reliable and usable information on the small business owner that is selling their business , buying a business, or contemplating a potential sale or acquisition is usually hard to acquire.  What does the market for those selling a business in Florida and those looking to Buy a Business in Florida really look like?

Pricing Your Business

One or the benefits  of owning a privately held corporation is that you are private.  So information regarding small privately held small businesses that are sold and bought   is both minimal and hard to obtain, because of the private nature of the transactions.  I am a member of the Business Brokers of Florida (BBF) , which is the 2nd Largest Association of Business Brokers in the World.  I have for my own purposes reviewed and evaluated  Business Sales Activity in Florida, (figures obtained via BBF websites) along with trends of businesses sold in Florida, Cash flows, and business values of those sold by members of the Business Brokers of Florida These numbers involves thousands of businesses over several years.

As I plan going forward,  for my business broker activities, understanding these trends and activities is one of my 1st steps in my planning process.  Here are some figures and observations:

The number of  businesses sold in Florida in 2010 were 5% less than  2009.  The Price for a business was sold for in Florida in 2010 was lower than 2009.  Both 2009 and 2010 were down years in the business acquisition and sales market in Florida. Most business brokers I speak to  believe  business acquisition activity will increase in 2011.

2010- 860 Florida Businesses Sold

Sales Sold Price Adjusted Net Days on Market
592,931 232,120 107,427 222
2009 – 910 Florida Businesses Sold
Sales Sold Price Adjusted Net Days on Market
594,449 270,327 106,251 233

More Restaurants are Sold in Florida  than any other type of Business. Accounting for over 20% of all Florida Businesses Sold by Members of the Business Brokers of Florida.  Do you wonder why so many restaurants sold?  Currently, As of today- 693 Restaurants are for Sale in Florida thru BBF Members. !!

Restaurants 2010  Averages   (187 Total Sold)
Sales Sold Price Adjusted Net Days on Market
360,242 131,343 73,258 210

 

Restaurants 2009  Averages
Sales Sold Price Adjusted Net Days on Market
361,493 162,087 72,703 211

It could just be me, but I do speak to a lot of business owners that “feel “their business is worth $1,000,000.  Only 4% of all business sold in Florida thru members of the Business Brokers of Florida were greater than $1M.  Florida  business climate, while having some diversity, is very strongly service based with a lot of small businesses with 10 employee or less.

Businesses Sold in Florida for $1,000,000 or More (38 Total or approximately 4% of all sales)

2010 Averages  (38 Total or approximately 4% of all sales)
Sales Sold Price Adjusted Net Days on Market

2,739,402 1,894,700 576,038 378

 

2009 Averages
Sales Sold Price Adjusted Net Days on Market
2,748,466 2,132,351 574,604 391

Please Note- and this is an important fact- the Days on Market does not included businesses not sold and ultimately taken off the market.

2010 was a difficult year in the business acquisition and sales market in Florida.  Last Wednesday I attended an educational seminar that was attended by 70 plus professionals in the Florida business acquisition and business sales market.  Generally most all I spoke to were both guarded yet optimistic  about the industry prospects for 2011.

The above numbers speak to averages.  All businesses and industries have their own uniqueness.  Businesses generally are sold as a multiple of their adjusted cash Flow.  ( adjusted cash flow attempts to determine actual cash the business generates for discretionary expenses, owner wages, debt service etc.)  Each business and industry will demand a different valuation.  Determining your business value may be dependent upon what similar businesses in your same industry are selling for as a multiple of adjusted cash flow.  If you would like to know what businesses similar to yours are selling for, review a website such as mine, or contact a trusted business broker or other trusted advisor.


Sell or Buy Business with goal of Hybrid Retirement

By | |
Comments Off on Sell or Buy Business with goal of Hybrid Retirement

Owning a business can be a very rewarding experience.  Many will buy an existing business or start a new business with the thought of building the business to the point that it is a successful viable entity that they can sell and live comfortably on the proceeds.  There currently are millions of small business owners in various stages of planning the exit of their business.

I want to sell my business so I can retire comfortably.  There are also millions of aspiring entrepreneurs that are considering buying or starting a business with the goal of building it and growing it to the point they can sell it and retire comfortably. It seems so often when discussing what one does it is described as working or retired.( In today’s economy unemployed, looking for work is another status).

I beleive there is a  status between working and retired, and I refer to it as Hybrid Retirement. I certainly don’t see myself as any retirement expert or financial planner, but I have been thru the process of selling my business that I had for 20 years  and have developed my own views on retirement that possibly one going thru the daily work day does not have the time to consider.

My current profession is as a business broker in Florida. Within my community I am surrounded by retired people, and also after the sale of my business I did take “some time off”.  As a business broker I speak to many business owners considering the sale of their business. One of their top considerations is “If I sold would I have enough to retire?” .

 Why not aspire to Hybrid Retire?

I personally think the majority of those currently working full days either employed or as small business owners look forward to the day they can retire, stop working, and spend the rest of their days fishing, golfing, or hobbies. Of course your age at the time of cashing in can greatly affect your decision process. If you are 75 years old, maybe you say enough is enough and just head to the golf course.  But if you are fortunate to be successful and exit in your 40’s, 50’s or maybe even your 60’s your perspective, and needs could be greatly different.

The thought process for someone thinking of selling a business goes something like this:

I think I need to sell my business, walk away with $500,000 and that will be enough for me to retire.  But what if you had someone that would buy your business and allow you to walk away with $400,000?  Maybe this is a good time to entertain such an offer and consider Hybrid retirement.

Hybrid Retirement

Photo (c) yahoo.com

If you believe you need $50,000 per year to live off of, and the sale of your business may give you $35,000 to live off of, should you walk away or consider.?  Many small business owners get overburdened with the responsibility of owning a business, and really want to sell those responsibilities away to others.   Maybe making the $25,000 monthly payroll or covering the $100,000 per month fixed overhead cost month after month just gets to be too much.

Perhaps you can consider upon the sale of your business,  you can find another business to buy, possibly one that you have aspired to do for years, or possibly work for someone, under terms conditions that fit your lifestyle.  But this second business you don’t need to make that high monthly expense, and now you are supplementing the proceeds you have from your sale, and what you need to draw from the business is a lesser amount.  “Needing” to make $15,000 per year instead of $50,000 can be somewhat liberating!

Why Hybrid Retirement?

  • Do you really know that you can “do nothing” after working for 20, 30, 40 + years
  • You have someone looking to buy your business near the price you think you need.  maybe consider the offer and plan to supplement the difference with a second career, part time job etc.
  • This is an opportunity to build a profession around your lifestyle, whereas before you may have had to try to build a lifestyle around your business.
  • Are you really prepared to try to live off a “fixed income”- supplement that with something you aspire to do.

I think currently due to economic condition there are many small business owners delaying the exit / sale of their business because the recent performance of their company may not allow them to achieve the “walk away” money they believe they need to retire comfortably on.  There also are eager entrepreneurs ready to start a new venture with hopes of one day selling and retiring off the proceeds.  Maybe planning for both of the above scenarios can best be addressed by allowing yourself to consider Hybrid retirement.