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Planning to Sell Your Business? Here’s How to Get Maximum Value

by Mary Ellen Biery

Called by at least one group of authors “The $10 Trillion Opportunity,” a lot has been made of the deal activity expected to arise from baby boomers retiring or otherwise exiting from their businesses.

Estimates of how many privately held businesses could change hands, and of what kind of value they represent, vary. Data from the U.S. Small Business Administration shows that nearly 52 percent of business owners are over age 50 — a larger share of people nearing retirement age than in the employment population at large.

One market researcher estimates as many as 3.8 million firms could hit the market over the next 20 years. A recent survey by Pepperdine University found that 64 percent of business owners planned to transfer their ownership interests within the next decade.

Whatever the estimate, it’s safe to say that many business owners will fail to capture the full value of their hard work through an ownership transfer. Business broker and website author Jim Stauder estimates some $3 trillion in value – or most of the opportunity for owners of small businesses (those with 49 or fewer employees) — will be left on the table due to owners’ failure to plan their business exits. […]

Finding the Right Business Broker For Your Business

By Curtis Kroeker

When it comes time to sell a small or medium-sized business, most owners will benefit from working with an experienced business broker. Although it’s possible to sell your business on your own, few business owners have the necessary experience and time to execute a successful business sale while simultaneously operating and growing their business–a critical focus as a performance downturn is the last thing an owner wants when selling his/her business.

To maximize their business sale outcome and ensure they sell for a fair market price, most owners will find it helpful to assemble and utilize a sales team consisting of an experienced business broker, a trusted attorney, their CPA and other professionals. By leveraging the expertise of business transfer experts, sellers can concentrate on keeping their companies strong–which ultimately results in a higher sale price. […]

3 Overlooked Ways To Make Selling Your Business Easier

When my husband, Chris, and I sold our retail espresso business in 2006 we had the wind at our backs. It was pre-recession. Valuations were high and the business-for-sale marketplace was hot.

Regardless, it was a tough year of our lives. We had to continue running the business while keeping a sale quiet, find the right advisors, endure lengthy negotiations, respond to a mountain of due diligence requests. By the time we finally made it to the closing table we were too exhausted to even think about celebrating.

Looking back on it, the only thing harder than starting our business was selling it.

Ask anyone who has sold their business and they will tell you that the process is enlightening, to say the least.

Statistically speaking, the odds of starting a successful business appear better than the odds of selling one. New business ventures have about a 50/50 chance of being around after five years. While it’s notoriously difficult to get data about private business sales, according to Tom West — author of The Business Reference Guide — only 25% of businesses will ever sell. That number goes down to 20% for businesses with annual sales less than $500,000 and up to 33% for business with sales between $2.5 million to $10 million.

After selling my own business and helping dozens of other business owners sell, I’ve noticed a number of hurdles that get in the way of getting out.

Let’s start with three ways to make selling your business easier that many owners ignore: […]

10 Things That Can Kill Your Business

By John Warrillow – Founder, The Value Builder System

Your revenue, profits and the industry you’re in drive the value of your company but there are a number of lesser-known factors that can secretly drag down the value of your business.

They say heart disease is the “silent killer” because there are no outward symptoms of clogged arteries. You walk around oblivious to the growing risk inside your body until, one day, you wake up in a hospital bed–or worse.

Similarly, there are a number of business attributes that can be secretly dragging down the value of your company. We see this all the time with the business owners who use The Value Builder System. We ask each owner who starts with us to do an assessment of what his or her business is worth. Inevitably, we find things that are silently dragging down the value of their company. In most cases, fixing the problems is relatively easy as long as they know what the problems are.

Here’s a list of some of the most common “silent killers” that are decreasing the value of the businesses we evaluate: […]

The M&A Market Explained

Following is a good overview of the M&A market, which can be a broad term and require some definition so that people outside of the industry understand the concept.  In business brokerage – the buying and selling of small businesses – we can generally be working within the M&A market when working with businesses with annual cash flow of $1M and more.  The premise is that companies of that size will likely be viewed as a viable strategic acquisition for and by a larger company.  Read on to learn more about Tony Brown’s view on the market in general:

By Tony Brown

M&A means Mergers and Acquisitions. It also covers business sales/divestments, as most strategic businesses sold are ‘merged’ into larger businesses as strategic bolt-ons, hence the ‘M&A market’.  The M&A market is an early indicator of business confidence, as there are virtually no lags before buyers either come or go. Buyer volatility is the key variable in the M&A market. The good news is that business confidence is relatively high, which has been driving the market for business sales and acquisitions over the past year.

Our own stats show M&A activity has been progressively growing stronger since the last federal election. We don’t think it’s a coincidence, as conservative federal governments generally engender greater confidence by creating greater stability (or at least the perception of it). M&A activity is stronger despite the continuing fragility of many industries and the economy generally. […]

New Technology-Driven Competition May Affect Small Business Value; Owners Still View Customer Satisfaction As Critical Influencer of Value

BizBuySell released a new study of small business owners and prospective small business buyers which summarizes their thoughts on how disruptive technologies, new business models and online customer reviews affect business value. The study surveyed more than 1,400 small business owners and potential buyers to see how each would value a business in today’s increasingly competitive market, specifically in regards to emerging competition from companies leveraging disruptive technology or direct to consumer business models.

The findings revealed that while most small business owners feel there is still great value in what they provide, new competition, specifically disruptive technology platforms like Uber, Airbrb and even Amazon, is affecting small business values. In fact, nearly 40 percent of surveyed small business owners believe these new technologies are affecting the value of their business. New web-based software and mobile app offerings are able to aggregate supply of a product or service and bring it directly to the consumer.

“People go in to brick and mortar stores, research the product by talking with salespeople, then go online and order it cheaper from someone else,” said one small business owner. […]

The Most Popular Businesses Being Bought in the U.S. – And How Much They Cost

Each quarter, BizBuySell, the Internet’s largest business-for-sale marketplace, analyzes sales and listing prices of small businesses across the United States. Business transactions reached record levels in 2014, the highest number of businesses changing hands since BizBuySell started tracking data in 2007. The full results are included in BizBuySell’s 2014 Insight Report, which aggregates statistics from business-for-sale transactions reported by participating business brokers nationwide.

The 8 Instinctive Habits of Remarkable Leaders

Once in a while you meet a leader who stands out -- even in a room filled with skilled, experienced, successful people. She hasn't just learned to be remarkably charismatic. He hasn't just learned to be remarkably likeable. You can tell, in an instant, they simply think and act and lead differently than most people. But those rare individuals don't become remarkable leaders overnight. While some are born with an aptitude for leadership, truly outstanding leaders are made. Through training, experience, and a healthy dose of introspection they learn how to make quick decisions. They learn to work with different personalities. They learn to nurture, motivate, and inspire. They learn to truly lead.  

10 Questions to Ask Before Selling Your Business

If you’re thinking about selling your business, think twice. Selling a business should never be a spur-of-the-moment decision, says Curtis Kroeker, group general manager for San Francisco-based BizBuySell.com and BizQuest.com, business-for-sale marketplaces that have an inventory of about 40,000 businesses. “You need to figure out things like if you should sell, when is the best time to sell, and what you need to consider before selling, among many other considerations.”

So, should you sell your business? Here are 10 key questions to help you figure it out. […]

10 Questions You Must Ask Before Buying a Business

Andrew Cagnetta bought his first business — a pasta shop in Wethersfield, Conn. — at age 25 and quickly realized he hadn’t done his homework thoroughly enough. Although he stuck to the shop’s original recipes and products, customers began complaining that the recipes had changed. Sales declined, and in less than two years, Cagnetta and his cousin, the co-owner, ended up selling the store.

They had bought the shop from two elderly women who had run it for years, not realizing how integral the previous owners had been to its success. “One question I should have asked [the previous owners] was what do they think drove people to the store?” Cagnetta says.

He would never make that mistake again. 22 years later, he now owns Transworld Business Advisors in Fort Lauderdale, Fla., which helps buyers ask the right questions before buying a business. “There are no stupid questions,” Cagnetta says. “The more questions you ask, the less risk there will be.”

Where to begin? Here are 10 key questions to ask sellers before agreeing to buy their business. […]