– A Portion of the Purchase Price for a Business, Paid in the Future, Based Upon Milestones Achieved – I recently read a very informative article, written by Doug Robbins, president of Robbinex, Inc., about Earn-outs. Doug, whose company specializes in the sale of mid-sized privately held businesses, addressed these four important topics related to Earn-outs: (i) What is a milestone [when used to determine an Earn-out]?, (ii) What part of the purchase price [is […]
– An Explanation of Excess Inventory – Many business owners who are interested in selling their company often ask how the amount of their inventory impacts the value of their business. Must business valuations for companies under $50M use market multiples of earnings [i.e. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) or ODCF (Owners Discretionary Cash Flow)] to determine value. Both these valuation methods assume a “normal inventory” level is provided at closing. […]
– Do You Have the Skills, Knowledge…and the Time? – Some business owners, when they’re ready to exit their business, try to sell their company themselves. After all, who knows their company better than they do, and could talk about it endlessly? And, how tough can it be to sell a business? They’ve successfully run their business for many years, and what can be tougher than that – plus, they can save the fee of […]
– Do You Want to Get the Best Deal or Just Save the Fee? – The ability to have multiple buyers compete for the acquisition of a business is in every business owner’s best interest. If you receive an unsolicited offer for your business, you may save a fee, but you have no idea if the offer is a good deal for you. A competitive bidding process (*) is the only way to ensure that […]
– 8 Tips to Improve the Marketability of Your Company – There is a well-known business adage that says “every company is for sale at the right price.” Whether you’re actively selling your business or just mildly interested, preparing your business for sale will help improve current efficiency and bottom-line profit by exposing ineffective processes and operational deficits. To enhance the value of your business, it’s important to work every day to upgrade its […]
– Mistakes Business Owners Should Avoid – Two businesses can look identical, but have very different valuations. We look at 400 different qualitative aspects of the business, and provide a prioritized list of issues to make a better business. Here’s our own top 11 list of the most common mistakes business owners make: 1. They don’t have a business plan. Or, if they do, they waste time doing one, and then sticking it in […]
– Types of Listing Agreements for Business Brokers – Selling your business is a big decision and the process can be overwhelming to those who are unfamiliar with the market. Your first step, after deciding to sell your business, is to hire a business broker to assist you throughout the selling process. Do a simple google search and you will discover that there are many brokers out there and they offer various types of agreements, […]
What Business Brokers Do for Sellers Some of the duties that professional business brokers perform to facilitate a business transition transaction include: Price the business with a professional valuation. Draft an offering summary, sometimes called a Confidential Business Review. This piece becomes one of the most important marketing tools for the offering, and is provided to prospects only after they have signed a confidentiality agreement and been qualified by the broker. Market the business to […]
Selling a Business in 35 Steps Whether you are trying to sell your business by yourself, or you hire a professional to guide you through the process, there are 35 separate steps required to sell a business. I’ve broken down these 35 steps into four major stages: Planning, Searching, Deal Making, and Closing. To see a brief description of each step in these four stages, click: Planning – the first 9 Steps Searching […]
Whether you are trying to sell your business by yourself, or you hire a professional to guide you through the process, there are four major stages of selling a business: Planning, Searching, Deal Making, and Closing. I will provide some explanation for each of the detailed steps in these four stages in a series of four discussions. Here are the steps in the 1st stage – Planning: Seller Interview: This is one of only […]
