BayState Business Brokers Blog

Buying a Business?  Don’t Put the Cart in Front of the Horse.

Posted by Marc Gudema on Thu, Aug 02, 2018 @ 02:55 PM

When you buy a business, there are usually two agreements that are signed.  The initial agreement has the important terms of the deal – such as price, terms, training, what assets are included, and contingencies.  The usual contingencies are for due diligence, financing, obtaining a lease if the location is important, and agreeing on the final purchase and sale agreement.  Some buyers make the mistake of wanting to deal with the contingencies(the cart) before an agreement is signed(the horse).  This is a mistake.

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Tags: buy a business

Get the Best Price for your Business by Selling the Business Without a Price

Posted by Marc Gudema on Thu, Jun 07, 2018 @ 02:58 PM

We are all familiar with the typical process to make a large item purchase.  Someone puts a price on it and we make an offer lower than the asking price.  Then, we negotiate to reach a deal, typically in the middle somewhere.  This is not the way the sale of large businesses is done if a merger and acquisition advisor is handling the sale.  They are usually marketed without a price.  Here’s why, how this sale is done, and if selling your business without an asking price is best.

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Tags: strategic value,, how to sell a business for the best price, selling a business to an industry buyer

An Industry Veteran May Not Be the Best Business Broker

Posted by Marc Gudema on Tue, May 15, 2018 @ 01:04 PM

It’s not unusual for someone to become a business broker after selling their business.  Business owners who want to sell their business are attracted to them.  They know the industry and the business owner may know, and trust, them.  Those are good attributes; but they are not enough to make someone the best choice to sell a business.  Here are some other questions you should ask.

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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 on their own to an industry buyer is attractive  -- particularly when they've been approached by an industry buyer.  They may avoid some of the work involved in preparing to put the business on the market.  They may 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 and other terms of the deal.  In many of the sales I've done to industry buyers, many of the industry buyers who didn't buy the business made very low offers.  Here are some rules to remember when dealing with an industry buyer on your own.

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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

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