BayState Business Brokers Blog

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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Year-End Checkup: Is Your Business Ready to Sell?

Posted by Marc Gudema on Wed, Dec 14, 2016 @ 03:15 PM

Year-end is a perfect time for business owners preparing to sell their business to review the main factors that could increase the attractiveness of the business or discourage potential investors. 

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Tags: Preparing a Business for Sale

How to Sell a Customer Base or Customer List

Posted by Marc Gudema on Wed, Jul 20, 2016 @ 09:59 AM

Most business sales are of businesses that will continue to operate as a separate entity after the sale, but with a new owner.  However, in some cases, particularly when the business is not doing well, the best sale may be one in which the business is merged into another company in the industry.  In this situation, the primary asset being sold is the customer base.  The customer base is the group of customers that buy from the business on a regular basis.  The business is, by definition, one that does business with other businesses.

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Tags: sell a business

Don't Forget About Working Capital When You Buy or Sell a Business

Posted by Marc Gudema on Tue, May 17, 2016 @ 01:31 PM

When you buy a business, don’t just think about buying the goodwill and the equipment and hiring the key people, consider where your working capital is coming from. If you don’t plan on where it is coming from, you may have to provide it out of your cash after the sale closes. The typical sources of working capital are the seller, a lender, or you.  Which of these sources is used depends, to some extent, on the size of the business being sold.

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Tags: business sale, working capital, net working capital

How Much is a Book of Business Worth?

Posted by Marc Gudema on Wed, Sep 16, 2015 @ 09:57 AM

The typical business sale is one in which a buyer continues to operate the business as a standalone business.  But, there can be other situations where a business sale will generate more value to the seller and the buyer when it is sold as a book of business.  A book of business is the customer base of a business that sells to other businesses.  These are the customers who buy from the business on an ongoing basis.  In the sale of a book of business, it is typical for the buyer to merge the purchased business into their business.  They are likely to keep key employees, particularly those with the customer relationships.  On the other hand, they are not likely to want to buy most of the equipment because it would duplicate equipment the buyer already owns.

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Top Ten Reasons Not to Sell Your Own Business

Posted by Marc Gudema on Thu, Jun 11, 2015 @ 12:14 PM

Business owners are a pretty self sufficient bunch. We learn to do things to save money, we learn to do things because there is no one else to do them. You are probably the most capable person at your business.  You’ve probably also developed a lot of self-confidence. You feel you can do almost anything.

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Tags: business broker, how to sell a business

Who is Representing You When You Buy or Sell a Business?

Posted by Marc Gudema on Thu, May 21, 2015 @ 10:00 AM

Whether buying or selling a business, it is important to understand the role of the business broker you are working with, who they represent, what their obligations are, and where their duties lie.

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Tags: business broker, business brokers, agency

Selling a Business: 5 Reasons to Offer Seller Financing

Posted by Marc Gudema on Wed, May 13, 2015 @ 02:47 PM

The decision has been made.  You’ve decided to sell your business, and your business broker has managed to attract several potential buyers; none of whom can get the financing to close the deal.

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How to Sell a Business with Too Much Inventory

Posted by Marc Gudema on Tue, May 05, 2015 @ 02:40 PM

It is not unusual for businesses that have been in business for a long time and have been doing well financially, to have much more inventory than is necessary for their type of business.  Since most businesses have some inventory, I’m primarily referring to distributors or retailers whose primary asset is their inventory.  This isn’t a problem for the business owner until they want to sell their business. 

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How to Get Paid More for Your Business By Selling to a Strategic Buyer

Posted by Marc Gudema on Thu, Jan 15, 2015 @ 04:14 PM

In my last blog, I explained what the strategic value of a business is.  The strategic value of a business is the extra value of a business – beyond its financial value – to a particular buyer.  The problem is knowing who those buyers are and getting them to pay you, the seller, for the strategic value.  A buyer recognizes that they are bringing the strategic value to your business so they don’t want to pay you for it unless they have to do so to buy the business.  We use the M&A Process to get you, the seller, paid for the strategic value of your business.  Here is how it works.

The first step in the process is developing a professional presentation for the buyer which will explain the features, benefits, and potential strategic value of your business to them.  When we contact the buyer, we want to be sure they recognize the financial and strategic value of your business so they are willing to pay for them.  You know your business very well, but the buyer does not.  Some of the best buyers, such as Private Equity Groups, may look at many potential businesses to buy.  They need to quickly be shown the benefits of your business so they take the time to look at it further.  In most sales, we will not set a price for the business.  We are dealing with buyers who will make their own determination of what the business is worth to them.  Setting a price will put a cap on potential offers.

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Tags: m&a, strategic value,