12 Ways to Increase the Value of Your Company

Keep in mind that the best time to consider selling is when business is good, the business is running profitably, and many of the above “value-adders” are in place.

A Buyer's Quandary

Statistics reveal that out of about 15 would-be business buyers, only one will actually buy a business. It is important that potential sellers be knowledgeable on what buyers go through to actually become business owners. This is especially true for those who have started their own business or have forgotten what they went thorough prior to buying their business.

Buying (or Selling) a Business

The following is some basic information for anyone considering purchasing a business. Is may also be of interest to anyone thinking of selling their business. The more information and knowledge both sides have about buying and selling a business, the easier the process will become.

Buying a Franchise: What It's Worth to You

If you are considering entering the world of franchising, an important consideration is assessing the value of the business. All of the following factors either affect or help determine valuations of typical franchise operations.

Creating Value in Privately Held Companies

Creating value in the privately held company makes sense whether the owner is considering selling the business, plans on continuing to operate the business, or hopes to have the company remain in the family. 

Dispelling a Buyer Myth

Most prospective business buyers really don't know from the outset the exact type of business they want to buy. Experienced business brokers and intermediaries know that many business buyers end up with what is sometimes a far cry from what first captured their imagination.

Rating Today's Business Buyers

Once the decision to sell has been made, the business owner should be aware of the variety of possible business buyers. Just as small business itself has become more sophisticated, the people interested in buying them have also become more divergent and complex.

Selling a Business: How Long Does It Take?

Why does it take so long to sell a business?  Price and terms are the biggest reasons.

The Value of a Business: Get to the Heart of the Matter

To find the real value of a business, we must go to its very heart: the attitude, work habits, managerial style, customer/marketplace savvy, and community reputation of the person in charge.

Today's Business Buyer

For a business to sell, there has to be a seller - and a buyer. The buyer of today is a bit different than the one of yesterday. Today's buyer is not a risk-taker, is concerned about the financials, and seems to be overly concerned about price. Unfortunately, buyers have to understand that they cannot buy someone else's financial statements.

Today's Business Buyer: A Profile

Today's independent business marketplace attracts a wide variety of buyers eager for a piece of ownership action. Buyers of small businesses are most likely replacing lost jobs or searching for a happier alternative to corporate life. Buyers of mid-sized and large operations are, typically, private investment companies seeking businesses to build and eventually sell for a profit.

What Do Buyers Really Want to Know?

Before answering the question, it makes sense to first ask why people want to be in business for themselves. What are their motives? There have been many surveys addressing this question. The words may be different, but the idea behind them and the order in which they are listed are almost always the same.

What Is a Company Worth?

This question can only be answered by addressing other related questions, specifically: Who’s asking and for what purpose?

Who Is the Buyer?

Buyers buy a business for many of the same reasons that sellers sell businesses. It is important that the buyer is as serious as the seller when it comes time to purchase a business.  Here are just a few of the reasons that buyers buy businesses:

Why Do Deals Fall Apart?

In many cases, the buyer and seller reach a tentative agreement on the sale of the business, only to have it fall apart. There are reasons this happens, and, once understood, many of the worst deal-smashers can be avoided.

Why Do People Go Into Business?

41% joined the family business;36% wanted more control over their future...

Why Sell Your Company?

Selling one's business can be a traumatic and emotional event. In fact, "seller's remorse" is one of the major reasons that deals don't close.

A Board of Advisors

In most jurisdictions, a board of directors is not required for privately held companies.  However, many of these companies have appointed what might be termed advisory boards.

"Loose Lips Sink Ships"

Leaks of confidential data are a serious issue at any time, but are especially serious if they involve the sale of a company.  Sellers are very concerned because of the impact a leak can have on their company and their employees.

"Red Flags" in the Sunset

Sellers have to learn to recognize situations indicating there might be a problem in their attempt to sell their business. Very, very seldom does a white knight in shining armor riding a white horse gallop up, write a large check and take over the business - no questions asked.

10 Questions A Seller Should Ask A Broker

Are you a Certified and Registered Broker/Intermediary?  Are you affiliated with any business brokerage associations or trade groups?...

10 Tips for a Successful Sale

Sellers should find out the loan value of the fixtures, equipment and machinery prior to a sale. Many buyers will count on using it for

10 Ways to Increase Sales During Slow Economic Times

Your personal passion and leadership are the key to success. If you have a "Brand" that is well known, hype it at every occasion and show that you believe in the business and the consumer of your products.

A Business Owner's Report Card

How does someone else, for example, a potential buyer, rate your business on the issues listed below?  

A Different Look at Valuing Your Company

By training and education, many business appraisers emphasize the numbers. They will look at the past, current and future numbers. They will consider all the basic financial figures such as:

A Few Things to Consider

The first thing to keep in mind is that the vast majority of buyers want to buy cash flow. Sit down with your accountant or bookkeeper and begin to

A Lease Primer

The following is provided as a simple explanation of common leasing arrangements within a small business transaction. It is not intended to provide legal advice.

A Lease Primer

A Private Equity Glossary

Deep-pocketed investors often set aside money to buy into private equity funds.  Such investments tend to be riskier but can generate higher returns than stocks or bonds.  Here are some of the key players and terms in the world of private equity investments.

A Seller's Checklist of Do's and Don'ts

Do have all of your business documentation ready. Everything starts with it.

A Seller's Dilemma

When one sells their house, the best deal is usually the highest price.  When one decides to sell their business, there may be other factors to consider. 

A Seller's Major Concerns

When the decision to sell is made, there will inevitably be accompanying concerns. However, when faced head-on, these concerns can usually be addressed and resolved. Here are some of the major concerns and ideas on how to deal with them.
 

A Selling Memorandum

A proposed sale of a middle-market company almost always begins with a selling memorandum. This document is called many things.  Regardless of what you choose to call it, its purpose is to encourage prospective buyers to take a further look at the company.

Adding Value to Your Business

Here are some of the "high value" indicators as well as some of the "low value" indicators to consider when evaluating your business.

Adding Value to Your Business

When selling your business, here are a few things that will add value to the business and even increase the selling price.

An Update on Earnouts

New accounting rules may require that acquirers and acquiring companies report earnout agreements as liabilities. 

And a Letter of Intent Is...

The Letter of Intent (LOI) is a pre-contractual written instrument prepared by the buyer for the seller, which is usually the preliminary understanding of both parties. The Letter of Intent can also be called Agreement in Principle or Memorandum of Understanding. They all have the same general meaning and lay out the following: What is being purchased and what is not, how much will be paid, and the general terms. It is also meant to be non-binding (more on this a bit later) on either the sell side or buy side.

In any event, most transactions are started with an LOI. The LOI precedes the Acquisition Agreement, better known as the Purchase and Sale Agreement. It is a non-binding agreement subject to the buyer obtaining satisfactory due diligence by both parties.

Are You Charging Enough?

As the seller was explaining his pricing strategies, he happened to mention that a price increase of 1.5 percent would not really impact sales. He failed to see that the price increase of 1.5 percent on $70 million in sales would bring $1 million in profit.

Are You Ready to Exit?

This section should answer a lot of your questions and help you through the maze of the process of selling a business.

Are You Ready To Sell?

…….What a "loaded" question you may think, but the reality is that almost no business owner and their business reach the qualifications of "Ready to Sell" without professional assistance from a qualified individual.

Are You Serious?

There are three good questions to consider before selling your business. 

First, "Do you really want to sell this business?" If you're really serious about selling and have a solid reason (or reasons) why you want to sell, it will most likely happen.

Are You Serious?

Basics of the Business Buying Process

 If you are considering buying a business, it is helpful to know the various steps in the business transaction process. Below you will find just a brief summary of the steps involved. 

1. Finding a Business

When looking for a business to purchase, it is helpful to be clear about your reasons for wanting to buy a business. You will want to evaluate any potential business based on how well it meets your financial needs and how well it fits your reasons for wanting to buy.

Be a Winning Seller: Good Negotiation is the Key

You've made the big decision to put your business on the market. Your reasons for selling are valid, carefully-considered, and "good" - the kind that won't make a prospective buyer shy away. Now, you may tell yourself, comes the fun part.

Before You Sell Your Family-Owned Business

There once was a family-owned bakery that had sales in the millions. The bakery sold bread to restaurants, supermarkets and some retail outlets. The founder gave each of his 5 children...

Benchmarks: How Your Business Measures Up

Benchmarks can help a business owner look at the vital signs of his or her business and compare them to similar businesses.

Buyer Introduction

Going into business for yourself is a big step, one that can be full of apprehension and even fear. Almost 90 percent of all those who purchase a small business have never owned a business.

Can I Afford to Buy a Business?

Most likely, the answer is yes.  There are several avenues we can recommend to assist the buyer with financing the purchase.

Checklist for Valuation

Find a list of value drivers and value detractors as well as indications of high value.

Closing the Price Gap

The deal is getting down to the wire, the price differential is close, but the parties are not yet in agreement. Following are some ideas that might get the ball rolling and help bring the parties together.

Common Mistakes in Business Valuation

Are all of the trademarks, copyrights, patents or other intangibles included in the sale price? For example, in the sale of a fast food chain, are the proverbial "secret recipes" included in the transaction price?

Common Seller Questions

How long does it take to sell my business?...What Happens When There is a Buyer for My Business?...

Confidentiality Agreement - What Is It ?

These agreements, most likely, were originally used so that a prospective buyer wouldn't tell the world that the business was for sale. Their purpose now covers a multitude of items to protect the seller.

Confidentiality Agreements

It is common practice for the seller, or his or her intermediary, to require a prospective buyer to sign a confidentiality agreement, sometimes referred to as a non-disclosure agreement. This is almost always done prior to

Consider the Lease; It's Important to Know the Terms.

Considerations When Selling...Or Buying

Important questions to ask when looking at a business...or preparing to have your business looked at by prospective buyers.

Consumers Voice Complaints: And Business Owners Should Listen

The following steps can help any business convert problems into solutions . . . and into good PR as well.

Dealing with Inexperience Can Ruin the Deal

The 65-year old owner of a multi-location retail operation doing $30 million in annual sales decided to retire. He interviewed a highly recommended intermediary and was impressed. However, he had a nephew who had just received his MBA and

Difficulties in Pricing Businesses

One of the major problems in pricing businesses, especially small ones, is the record-keeping of the owner.  Most owners are “chief cook and bottle-washer.” Maintaining the financial records is not necessarily high on his or her list. 

Dispelling Buyer Myths: What Do They Really Want and Why?

It's a faulty assumption that prospective business buyers know from the outset the exact kind of business they want to buy. Experienced business brokers and intermediaries have learned that most business buyers end up with what is sometimes a far cry from what first captured their imagination.

Do the Financials Tell the Whole Story?

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats – the primary factors that make up the subjective, or non-financial, analysis. Below you will find a more detailed look at the areas that help us evaluate a company’s SWOT.

Do You Have an Exit Plan?

Whether you plan to sell out in one year, five years, or never, you need an exit strategy. As the term suggests, an exit strategy is a plan for leaving your business, and every business should have one, if not two.

Do You Know Your Customers?

Small businesses are usually built around personal customer service.  When is the last time you “worked the floor” or handled the phone, or had lunch with a good customer? 

Do You Really Want to Sell Your Company?

Sellers have to ask this question and give it serious thought prior to making the decision to sell. In too many instances, sellers get to the proverbial altar and then back down the aisle. In most cases, this happens because the seller’s decision to sell has not been considered carefully enough.

Does the Deal Fit?

Mergers and acquisitions are supposed to produce synergies that bring results.  If they don't, the culture is too often the reason.

Does Your Company Have Pricing Power?

If Starbucks raised the price of a cappuccino, sales most likely would not be affected. If your attorney raised his or her hourly rate, would you switch law firms?  If a company or service firm does not have pricing power, then its value is less than it should be. Here are a few ways to develop or increase pricing power:

Don't Let Sleeping Dogs Lie

If you're considering selling your business, and you are employing a professional business broker or intermediary, it's imperative to be absolutely open with him or her. This is not the time for secrecy -- or even for subtlety, especially when it comes to problems.

Don't Sell Before You're Ready

As the day of closing approaches, the seller seems less cooperative and more apprehensive about selling the business. Ultimately, the sale falls apart. Who's to blame?

Don't Take the Lease for Granted

If you own a business in which the location is an important reason for the success of the business, and you are considering selling, then the lease is a very critical issue in the sale. The time to deal with this is not in the middle of a sale, but before you even place the business on the market.

Due Diligence -- Do It Now!

It might be wise to take a look at the business from a buyer’s perspective in performing due diligence as part of an annual review of the business. 

Early Possession

There are times when the buyer and seller think it would be a great idea if the buyer began operation of the business prior to the closing of the sale. Why? Here are some typical reasons:

Entrepreneurship Is Alive and Well!

A recent article in the Boston Globe reported that although more attention is on the large, primarily publicly held companies, more and more people are making their living by operating their own businesses.

Expanding Your Business

The term “growing the business” seems to be the term of choice for business people who discuss expansion.  Unfortunately, in too many cases, this growing never goes beyond the seedling stage. 

Expediting Change Post-Closing

The deal is done and you have completed the closing.  Now what do you do?  Read some of the reasons why it may be in your best interest that the new owner is successful.

Fairness Opinions

Since one often hears the term “fair value” or “fair market value,” it would be easy to assume that “fairness opinion” means the same thing.  A fairness opinion may be based to some degree on fair market value, but there the similarities end.