BayState Business Brokers Blog
Every so often a business owner will ask me whether they should rent the business to a potential buyer rather than sell the business to them. These business owners also own the real estate so it makes sense to them to get rent for a long time rather than sell the business for a one-time payment. Renting a business to a potential buyer is not the same as renting real estate, and not a good idea.Read More
Tags: sell a business
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.Read More
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.
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.Read More
Tags: sell a business
If you are thinking about selling your business, you may have heard that you can get more for it if you can sell it to a strategic buyer. That is probably right, but it raises some questions: What is the strategic value of your business? How do you get paid for the strategic value of your business? How do you find the best strategic buyers?Read More
An auction process is frequently used to sell middle market businesses (those with sales of $5,000,000 to $1,000,000,000). The primary reason for using an auction is to raise the selling price of the business. An auction is rarely used in the sale of smaller businesses. Would it be a good practice to use the auction process to auction a smaller business for sale?
When I meet with business owners who are preparing to sell their businesses, it is not uncommon to find that their marketing hasn’t changed much for several years. They still pay for the yellow pages. They may not have a website – or, if they do, they don’t know how to use it. They don’t use Google Adwords. They are probably not using social media.
You may have a great business to sell, but if your selling terms are not reasonable, it may not sell. Or, it may take a lot longer to sell the business and result in you getting a lower price. Keep in mind that no matter how good your business is, a buyer doesn’t have to buy it. A buyer is comparing your business to others on the market, and if any of these terms are not realistic, it may kill a buyer’s interest.
When I think of a cowboy, I think of a tough individual who doesn’t need anything or anybody to do his job. That may work on the range, but it doesn’t work well when you are buying or selling a business.