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Letting go of a business isn't a process that one should jump into lightly, and that fact holds true even when it comes to your loved ones. Let's take a look at five of the most important factors to consider when selling or transferring a business to a family member. #1 The All-Important Buy-Sell Agreement One of the single most valuable tools available when it comes to selling your business is a buy-sell agreement. Simply stated, this essential document puts everything in writing. In situations such as a family owned business, people may be tempted to skip a contract, but that doesn't mean they should. When transferring your business, you should have an expert created document in place that outlines the following: The business valuation Who is to be kept on the payroll and the amount he or she will receive The amount being paid What level of involvement you will have in the business once the transfer has taken place #2 The Benefits of Gifting Consider the option of gifting. … [Read more...]

Selling a business is a process that depends upon Professionalism and Confidentiality. Selecting a Business Broker who understands the critical role that confidentiality plays is simply a must. Unfortunately, countless sellers have in fact dealt with a situation where a breach in confidentiality has caused a deal to fall apart and it has affected their business. A failure to maintain confidentiality can lead to a slew of negative reactions from a range of parties. Everyone from supplies and vendors to creditors could react in a way that could harm your business, for example, vendors could change their terms and this could in turn negatively impact your cash flow. A breach of confidentiality could also lead to negative reactions amongst both employees and customers. The reason is that employees may begin to worry about the security of their jobs and may also become nervous about the change in management. These fears could prompt employees to find a new job and leave you with a … [Read more...]

Negotiations can be tricky affairs. One wrong move can undo a tremendous amount of work. In negotiations, it is best to take a moment and think about where the other party is coming from. What are their needs and how best can you meet them? Understanding your buyer’s motivation increases the chances of a successful negotiation. What Appeals to Most Buyers? When it comes to selling a business, you likely will not know your buyer personally. This means that you will not know what they value most, how exacting their standards will be, and how easy or challenging they will be during negotiations. That’s why it is imperative to err on the side of caution and act in such a way that would appeal to most buyers. Ensuring that your business is in strong financial health means that your business will be appealing to both a corporate executive as well as an individual buyer with a leadership/managerial background. Keep in mind that individuals who buy businesses will want a strong … [Read more...]

It is important to understand how a buyer finances the purchase of a business. The majority of business sales include some form of seller financing. Typically, seller financing is when the seller provides a loan to cover part of the purchase price. The rest of the purchase price is covered by the buyer’s down payment, typically 50%+/- or SBA finance, if the business qualifies for a SBA loan. Summed up another way, the seller is essentially acting as a bank for the buyer in some form. When sellers offer financing, it often helps them achieve a higher final sale price. Sellers who are not open to some form of seller financing will likely limit their possibilities of selling their business or need to discount the price to attract an all cash buyer, which are difficult to find. Performing Due Diligence When a seller opts for seller financing, it is necessary to do much of the work that a bank would usually perform, for example, checking a potential buyer’s resume, credit … [Read more...]

Buyers and sellers alike love recurring revenue. But what is it exactly that makes it so attractive? Recurring revenue is generally viewed as a very good factor as it indicates positive cash flow, the potential for growth, business success and business stability. Let's take a closer look at how it can benefit you. Show You're in Demand Businesses, including IT companies, are valued higher if they can show recurring revenue, such as monthly subscriptions, SaaS subscriptions, or a transaction that consistently occurs. If your business is centered on a subscription based platform and you have high subscription levels, then you can expect keen interest from prospective buyers. If you want to show a prospective buyer that your business is a good bet, then recurring revenue is a great place to start. Recurring revenue indicates that you have ongoing consumers and that means ongoing revenue. But recurring revenue indicates something else as well, namely, it indicates that your business … [Read more...]

It has long been a well-known fact that Business Brokers can help improve closing rates and create a smoother transaction. In this article, we will take a closer look at the five top reasons why having a Business Broker on your side can make all the difference in the world. #1 – Business Brokers Reach the Most Buyers and a Wider Audience What seller isn’t looking to reach more buyers? When more candidates are reviewing your business, the odds of selling your business for your desired price goes up tremendously. The simple fact is that Business Brokers are able to reach more buyers through their marketing efforts. In fact, they usually have a long list of prospective buyers looking to purchase quality businesses. #2 – Business Brokers Know How to Navigate Negotiation Hurdles As the old saying states, “there is no replacement for experience,” and this definitely holds true for Business Brokers. Business Brokers know what it takes to circumvent negotiation hurdles and how to … [Read more...]

Ensuring that your employees stay on course during your ownership transition should be one of your key areas of focus. There are many key steps that you should take during this delicate time. Let's explore the best tips for keeping your employees engaged throughout the entire ownership transition process. Step 1 – Establish and Implement a Training Program Early On If you are selling your business, then be certain that you train replacements early on in the process. Failure to do so can result in significant disruptions. Additionally, if you are buying a business it is of paramount importance that you are 100% confident that there are competent people staying on board after the sale. Step 2 – Address Employee Concerns No matter what your employees say or how they act, you must assume that they are worried about the future. After all, if you were them wouldn't you be concerned at the prospect of a sale? The best way to address these concerns is to meet with employees in small … [Read more...]

A common question in the realm of buying and selling businesses is, “Is it possible to sell to a business competitor?” The short answer is yes, it is quite possible and rather common. That stated, selling to a business competitor is different than selling to a buyer who is completely new to the industry. The two types of buyers should not be treated the same way, as there are various differing variables. A Competitor Can Be a Great Buyer One reason is that a competitor may indeed be the right party to buy your business, is that they usually have an excellent understanding of how your business and your industry works. They may also enter the negotiation process already understanding the value of your business, and this can serve to speed up the process. Always Proceed with Caution Competitors, however, must be approached carefully. Unfortunately, there have been many cases where competitors acted as though they wanted to buy in order to acquire access to inside information. That's … [Read more...]