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. A Buyer Profile Here is a look at the make-up of the average individual buyer looking to replace a lost job or wanting to get out of an uncomfortable job situation. The chances are he is a male (however, more women are going into business for themselves, so this is rapidly changing). Almost 50 percent will have less than $100,000 in which to invest in the purchase of a business. More than 70 percent will have less than $250,000 to invest. In many cases the funds, or part of them, will come from personal savings followed by financial assistance from family members. He, or she, will never have owned a business before. Despite what he thinks he wants in the way of a business, he will most likely buy a … [Read more...]

The Deal Is Almost Done — Or Is It?

The Letter of Intent has been signed by both buyer and seller and everything seems to be moving along just fine. It would seem that the deal is almost done. However, the due diligence process must now be completed. Due diligence is the process in which the buyer really decides to go forward with the deal, or, depending on what is discovered, to renegotiate the price - or even to withdraw from the deal. So, the deal may seem to be almost done, but it really isn't - yet! It is important that both sides to the transaction understand just what is going to take place in the due diligence process. The importance of the due diligence process cannot be underestimated. Stanley Foster Reed in his book, The Art of M&A, wrote, "The basic function of due diligence is to assess the benefits and liabilities of a proposed acquisition by inquiring into all relevant aspects of the past, present, and predictable future of the business to be purchased." Prior to the due diligence process, buyers … [Read more...]

Selling Your Business? Expect the Unexpected!

According to the experts, a business owner should lay the groundwork for selling at about the same time as he or she first opens the door for business.  Great advice, but it rarely happens.  Most sales of businesses are event-driven; i.e., an event or circumstance such as partnership problems, divorce, health, or just plain burn-out pushes the business owner into selling.  The business owner now becomes a seller without considering the unexpected issues that almost always occur.  Here are some questions that need answering before selling: How much is your time worth? Business owners have a business to run, and they are generally the mainstay of the operation.  If they are too busy trying to meet with prospective buyers, answering their questions and getting necessary data to them, the business may play second fiddle.  Buyers can be very demanding and ignoring them may not only kill a possible sale, but will also reduce the purchase price.  Using the services of a business broker is a … [Read more...]

Selling a Business: How Long Does It Take?

A recent survey revealed that the average time between listing and sale was 9 months. Why does it take so long to sell a business?  Price and terms are the biggest reasons.  Not over-pricing the business at the beginning of the sales process is a big plus, as well as structuring the transaction to include a reasonable down payment with the seller carrying the balance. Having all of the necessary information right from the beginning can also greatly reduce the time period from listing to closing.  Being prepared for the information a buyer may want to review or having the answers available for the questions a buyer may want answered is also key. Here is the basic information that a prospective acquirer will want to review: Copies of the financials for the past three years. A copy of the lease and any assignments of the lease from previous sales. A list of the fixtures and equipment that will be included in the sale. Note: If something is not included, it is best to remove it prior … [Read more...]

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