New Year’s Resolutions & Selling Your Business

Most people fail to keep their New Year's Resolutions. But where buying and selling a business is concerned, failing to keep those resolutions could mean an abundance of lost opportunity. Todd Ganos at Forbes recently penned a thought-provoking article entitled The 8 New Year's Resolutions for the Sale of Your Business. In this article, he compares selling a business to getting in shape in the months preceding your visit to the beach. It is necessary to do a great deal of planning and hard work if you want to be in good shape for the big “beach body reveal.” When it comes to selling a company, Ganos believes that there are eight factors that must be taken into consideration. Listed below are those factors he feels are a must for business owners looking to get their business ready for “the beach.” These are the eight factors that Ganos believes are most essential and should be on your New Years' Resolution list for your … [Read more...]

Confidentiality Agreements: What are the Most Important Elements?

Each business must be worried about looking after privacy. Actually, usually for business owners to turn out to be to keep too much thinking about confidentiality when they are preparing to sell their business. Of course, business owners want nobody to know that they are selling their business and keep as a secret from public, workers or assuredly their rivals. However, there is something of confliction between the natural instinct to protect the privacy and the longing to sell a business for the most sellable chances. By the day's end, any entrepreneur hoping to sell a business should give future buyers “peek behind the curtain.” Let's investigate some key focuses that any great confidentiality agreement should cover. At the highest point of your confidentiality list ought to be the type of negotiations. This part of the confidential agreement is, actually, very significant as it specifies whether the negotiations are closed or disclosed. Critically, this part of the … [Read more...]

Goodwill and Its Importance to Your Business

What exactly does the term “goodwill” mean when it comes to buying or selling a business? Usually, the term “goodwill” is a reference to all the effort that a seller puts into a business over the years that he or she operates that business. In a sense, goodwill is the difference between an array of intangible, but important, assets and the total purchase price of the business. It is important not to underestimate the value of goodwill as it relates to both the long-term and short-term success of any given business. According to the M&A Dictionary, an intangible asset can be thought of as asset that is carried on the balance sheet, and it may include a company's reputation or a recognized name in the market. If a company is purchased for more than its book value, then the odds are excellent that goodwill has played a role. Goodwill most definitely contrasts and should not be confused with “going concern value.” Going concern value is usually defined as the fact that a business … [Read more...]

The Sale of a Business May Actually Excite Employees

Many sellers worry that employees might “hit the panic button” when they learn that a business is up for sale. Yet, in a recent article from mergers and acquisitions specialist Barbara Taylor entitled, “Selling Your Business? 3 Reasons Why Your Employees Will Be Thrilled,” Taylor brings up some thought-provoking points on why employees might actually be glad to hear this news. Let's take a closer look at the three reasons that Taylor believes employees might actually be pretty excited by the prospect of a sale. Taylor is 100% correct in her assertion that employees may indeed get nervous when they hear that a business is up for sale. She recounts her own experience selling a business in which she was concerned that her employees might “pack up their bags and leave once we (the owners) had permanently left the building.” As it turns out, this wasn't the case, as the employees did in fact stay on after the sale. Interestingly, Taylor points to something of a paradox. While … [Read more...]

Around the Web: A Month in Summary

A recent article from Divestopedia entitled “7 Fundamentals to Due Diligence You Need to Know” explains the due diligence process and what it means regarding sellers and buyers and their roles in the process. Whether a company is being sold or it is merging with another company, it is standard practice to go through the due diligence process. Therefore, they should be aware of all the factors involved with the due diligence process. The fundamentals of due diligence can be broken into 7 categories: Historic and Projected Financial Information Technology Developments and Intellectual Property Customers and Revenue Streams Contract Agreements and Insurance Key Staff and Management Legal and Compliance Tax Issues In each of these 7 critical areas, the buyer and the seller each have to do their part in order to see the deal make it to the finish line. The seller has to be open and honest with the attorneys, their advisory team and the potential buyer; and the buyer has to be thorough in … [Read more...]

A Look at Divestopedia’s Article, “The Myth of Fair Business Valuation”

In Divestopedia's article, “The Myth of Fair Business Valuation: What Professional Valuations Don't Tell You,” author Chak Reddy is quick to point out that the “type of buyer and method of sale are two important (yet often overlooked) value determinants when finding a starting price for your business.” Reddy brings up some excellent points. One notion in particular that every business owner should be aware of is that there is “NO fair value for illiquid assets.” He points to the fact that between January 2007 and March 2008, the historic Bear Stearns went from a value of $20 billion dollars to just $238 million. In a mere 14 months, Bear Stearns lost most of its value. Additionally, the article points to the fact that business owners often suffer enormously from “dramatic valuation compression.” In Reddy's view, this compression is the direct result of poor planning and a failure on the part of business owners to select the right advisory teams. Reddy believes that professional … [Read more...]

5 Big Questions to Consider when Financing a Business Sale

In what capacity should the process of buying a business be organized? This is a point that you'll need to address right off the bat in the deal procedure. For a great many people, buying or selling a business is among the most, if not the most, critical business choice that they will ever make. Hence, it is essential not to hold up until the last moment to structure the deal selling the business. We should direct our concentration toward the most important inquiries from the business broker that you have to answer when entering the business procedure.   What is My Lowest Price? The principal question you ought to ask yourself is, "What is the least cost I'm willing to take?" If an offer is made to sell the business, the exact opposite thing you need is to lounge around in choosing a given offer at a given price. You should be prepared to grab the opportunity if the correct offer is made.   What are the Tax Implications? Secondly, you'll need to … [Read more...]

Obtaining a Fair Market Value for Your Business

Divestopedia reported a quite perceptive article, “Letting the Market Bridge the Valuation Gap.” In this October 2018 article, Dave Kauppi runs in and investigates how fair market value can be utilized as a tool for owners of the business to “Bridge the gap between the valuation they feel they deserve and that which they’re likely to receive.” Without a doubt, it stimulates a deal to be happened. Let’s explore some of the key facts you need to keep in mind in Kauppi’s instructive article. Understanding the Reality of Selling a Business In fact, it is hard to sell a business on the first attempt in reality. The article calls attention to that only 10% of businesses that are available to be purchased are really sold three years; this is deniable fact. Hardly any certainties, assuming any, help underscore the estimation of working with business brokers more than this point. Selling a business can be troublesome under even the best of conditions. The procedure is perplexing, and … [Read more...]

Determining Your Company’s Undocumented Value

Business appraisals are not one-dimensional. In fact, a good business appraisal is one that factors in a wide range of variables in order to achieve an accurate result. Indisputable records ranging from comparables and projections to EBITDA multiples, discount rates and a good deal more are all factored in. It is important to remember that while an appraiser may feel that he or she has all the information necessary, it is still possible they have overlooked key information. Business appraisers must understand the purpose of their appraisal before beginning the process. All too often appraisers are unaware of important additional factors and considerations that could enhance or even devalue a business's worth. There Can Be Unwritten Value Value isn't always “black and white.” Instead, many factors can determine value. Prospective buyers may be looking at variables, such as profitability, depth of management and market share, but there can be more that determines value. Here are … [Read more...]

Considering All of Your Business Real Estate Options

In a recent December 2018 article in Divestopedia entitled, “Options for Business Real Estate When Selling a Company,” the topic of business real estate was explored at length. One of the key points of the article was that understanding one's business real estate options would ultimately help in achieving “the goals desired in a transaction.” The article is correct to point out that many, or even arguably most, business owners simply don't know what real estate options are available to them when it comes time to sell the company. In particular, there are two big options: Sell everything including the real estate. Hold onto the real estate for the rental income. In the Divestopedia article, the authors correctly point out that if you, as the business owner, personally own the real estate in a separate entity, then you are good to go. You should have a “clear path to valuation.” However, if your company owns the real estate, then things get a little more complicated. If this is … [Read more...]