BayState Business Brokers Blog

7 Rules When Selling a Business to an Industry Buyer

Posted by Marc Gudema on Wed, Mar 14, 2018 @ 02:00 PM

For many business owners, selling the business to an industry buyer is attractive.  They avoid the work involved in preparing to put the business on the market.  They maintain the confidentiality of the sale by dealing with only one buyer.  They save on the broker’s commission.  But, as with most things in life, there is a cost  -- usually a lower selling price.  Here are some rules to remember when dealing with an industry buyer.

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Tags: selling your business, selling a business to an industry buyer

Buying a business? What a business broker would like to tell you.

Posted by Marc Gudema on Mon, Feb 12, 2018 @ 10:30 AM

Buying a business is different from buying anything else. Understanding how business brokers think and operate can help you to be a better buyer. Here are some truths that we operate from:

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Tags: buy a business, business broker, business brokers, how to buy a business

How Long Does it Take to Sell a Business?

Posted by Marc Gudema on Thu, Feb 01, 2018 @ 08:31 PM

One of the questions we frequently get from business owners is “How will it take to sell my business?”  This is the time from when a business owner signs our listing agreement to the closing on the sale of the business.  The quick answer is that it usually takes about 6 to 9 months to sell a business.  This can vary; this blog is about what the steps are that take time and how long they take.  I’ll go through them, chronologically.

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Tags: sell a business, how to sell a business, how long does it take to sell a business

Owners Cash Flow - What it is and why it is the most important number if you are buying or selling a business.

Posted by Marc Gudema on Wed, Jan 24, 2018 @ 02:33 PM

If you are going to sell a business or buy a business, it is important to understand Owners Cash Flow and how it is used to value a business.  In most small business sales, the seller is operating the business and the buyer plans to do likewise. Because of this, the best measure of the earning power of the business is the total income and benefits available to the owner, not the reported net profit of the business. In many small businesses, the owner is not trying to maximize net profit. The owner is trying to take out as much as possible in tax deductible salary and benefits. When buying or selling an owner-operated business, it is important to understand, and know, the Owners Cash Flow of the business. This is the best measure of the earning power of a small business.

Owners Cash Flow Defined
Owners Cash Flow is defined as the income before deducting the primary owner's compensation and benefits, other discretionary, non-operating, or non-recurring income or expense, depreciation, interest, and taxes. This is also referred to as Sellers Discretionary Earnings. This is the amount of money available to pay the buyer an income, pay off debt, and provide for capital to operate the business. In order to accurately calculate Owners Cash Flow, we use tax returns, income statements, and other financial records.

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Tags: buy a business, sell a business, owners cash flow

Buying or selling a business?  Be sure the owners cash flow is accurate.

Posted by Marc Gudema on Wed, Jan 17, 2018 @ 10:00 AM

When an individual is buying a business, the owners cash flow (also called sellers discretionary earnings) is usually the most important number in terms of valuing the business.  In an owner-operated business, the owners cash flow is all of the income and benefits available to a working owner.  These are the salary and discretionary benefits (not needed for the operation of the business), and net income.  In addition, depreciation is added back because it is not a cash expense and interest is added back because it is assumed the business is sold free and clear of debt.  In other words, owners cash flow is the EBITDA plus owner’s salary and benefits.

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Tags: owners cash flow

5 Reasons Why Franchise Businesses are Great Businesses to Buy

Posted by Sarah Grossman on Tue, Dec 05, 2017 @ 10:19 AM

Franchise businesses can be a great business to buy, especially for first time business owners. At BayState Business Brokers, we have sold many types of franchises, and Principal Sarah Grossman pinpoints the top reasons to purchase a franchise.

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Tags: buy a franchise, buy a franchise business, franchises

How to Sell an Auto Repair Shop for the Best Price

Posted by Marc Gudema on Mon, Dec 04, 2017 @ 12:30 PM

Make Sure Your Auto Repair Shop is Ready to Sell When You Are

Auto repair is a big business.  According to IBISWorld, the total revenues of auto repair shops is $63 billion dollars.  It is also a steady, growing, business and there are many buyers interested in buying an auto repair shop.  If you are thinking of selling your auto repair business, now or in the next few years, here is some information you should know to sell your auto repair shop for the best price.

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Tags: how to sell a business, how to sell an auto repair shop, how to increase the value of a business, how to sell a business for the best price

How to Increase the Selling Price of Your Day Care Center

Posted by Molly Hanson, CFP® on Mon, Oct 30, 2017 @ 10:21 AM

Whether or not you are ready to sell your day care center, you are reading this because either the idea has crossed your mind or because you want to know the selling price of your greatest asset – and maximize it.  Owners often ask me: “What will my business sell for?”  I thought it would be helpful to give you a few insights.  Here goes.

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Tags: sell a daycare center, how to sell a day care center, sell a day care center, sell a childcare center, sell a child care center

The Early Bird Buys the Business

Posted by Marc Gudema on Tue, Oct 03, 2017 @ 07:20 AM

I once was selling a small landscaping business.  The business had about $500,000 in revenues and a small amount of equipment.  They did landscape maintenance in several high-income suburbs.  We had an interested buyer who owned a landscaping business with about $2,000,000 in revenues.  Over the course of two months, the potential buyer asked about everything you could about the business he planned to buy.  What he didn’t do was present an offer.  One day, another buyer, who owned a landscape supply company, and his son, who was experienced and educated in the business, presented an offer, negotiated the details, and signed an agreement to buy the business.  They closed on the business sale a few months later.

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Tags: buy a business, business buyer

How do you sell a smaller business that few individual buyers are looking for?

Posted by Marc Gudema on Wed, Mar 08, 2017 @ 03:40 PM

There is a well-organized system for selling businesses.  Smaller businesses, generally with revenues under $10,000,000, that are primarily owned and operated by individuals, are sold by business brokers.  Much larger businesses, such as ones with revenues of $1 Billion or more, are marketed by Investment Bankers to a select group of potential organizational buyers.  These are other companies in the industry or a related industry, Private Equity Groups, Family Offices, and other business organizations.  Businesses with about $15,000,000 to $200,000,000 in revenues are sold by M & A intermediaries.  Since the potential buyers for these businesses are primarily other businesses, these M & A intermediaries use the same process – identifying and pursuing business organizations that are potential buyers -- as Investment Bankers to market the businesses.

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