Many buyers view a publicly-held company as virtually being an open book with at least a modest level of transparency, whereas privately-held companies reveal much less about their inner workings, financial, and otherwise. Of course, this means that buyers of privately-held companies are left with no choice but to dig through whatever information is available in an effort to determine if a valuation or price indeed reflects reality.
Comparing Publicly and Privately Held Companies
Determining the price on a privately-held company is typically more time-consuming since privately-held companies don’t have to deal with audited financial statements. But why do most privately-held companies typically forgo the process? Audited financial statements are expensive, and it is this expense that often prevents companies from going public. A publicly-held company is expected to reveal significantly more information, including often sensitive financial information.
What Sellers Can Do
If you’re a seller, you can take steps to make the process a bit easier for buyers. One step is to work closely with your accountant in an effort to ensure that the numbers are not just accurate, but are also presented in a concise and easy to understand fashion. This move serves to boost trust between buyers and sellers and, in turn, can increase the chances of selling your business.
Determining value is another area where sellers of privately-held companies can take steps to assist buyers in determining price or value. Sellers should consider opting for an outside appraiser or expert when it comes to determining the value of their business. The opinion of an outside expert clearly carries more weight, and using an outside expert is yet another step that sellers can take to boost overall trust with buyers.
Establish Your Bottom Line
Another key step is for sellers to establish their wish price. The wish price can be thought of as what price the seller would ultimately like to receive. It is also helpful for sellers to know well in advance what their lowest possible price for their business would be.
When establishing a price, there are several areas of the business where sellers can expect buyers to pay special attention. Here are a few areas that buyers are likely to explore:
- Size and scope of customer base
- Needs for capital expenditures
- Overall stability of the market
- Stability of earnings
- The general landscape of competitors
- Businesses relationships with suppliers
As with all transactions, the marketplace will have the final word regarding the sale of any business. Sellers should expect to receive a price somewhere between their asking price and their lowest price. But taking the right steps throughout the process can definitely make the process go more smoothly and boost the chances of success.
The post How Sellers Can Boost Their Levels of Success appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
Just as every person is different, the same invariably holds true for buyers. No two buyers are the same. Further, no two buyers have the same mindset, emotional makeup, or approach to business. The simple fact is that buyers opt to buy businesses for a very wide range of reasons. The bottom line is that it is up to business brokers and M&A advisors to find serious buyers so as not to waste everyone’s time. In this article, we will examine how we zero in on serious buyers.
A serious buyer, one that wants to achieve success and isn’t just window shopping, will want to understand both the business they are considering buying and the industry as a whole. Consider this rough analogy for a moment. Someone serious about winning a game will work to understand the rules before jumping in and playing. You’ll want to look for a buyer who wants to understand the strengths and weaknesses of a business. He or she will also want to comprehend the strengths and weaknesses of competitors as well as potential industry wide problems both now and in the future.
Savvy business people realize that wages and salaries make up a huge percentage of the typical business’s operating cost. A serious buyer will endeavor to understand not just the wages and salaries of employees, but also additional related costs. These can include retirement related costs, the cost of training new employees, the rate of employee turnover and more. Smart buyers are looking for stability throughout the business, and that includes its employees.
The kind of buyers you want to attract are the ones that are not just “thinking about buying” a business. You’ll want to only deal with buyers who have carefully thought through what it means to buy a business. A key aspect of buying a business, as simple as it sounds, is to fully understand what is being sold. For example, serious buyers will dive in and understand capital expenditures. They will also examine and evaluate machinery and equipment so that they understand what kinds of equipment might need to be repaired or replaced. Replacing and repairing equipment can mean substantial costs. That’s why quality buyers can be expected to evaluate all equipment extremely carefully.
Buyers who understand what it means to buy a business will even go beyond evaluating the stability of employees and the state of machinery and equipment. You can expect a serious buyer to want to know if there are any environmental concerns, they will check and evaluate the lease, and they will want to inspect the state of all buildings. They will want to know who the key clients and key suppliers are and determine if those relationships are stable or if they put the business at long term risk.
At the end of the day, the kind of buyer that you’ll want to work with is a buyer who is proactive. Quality buyers will be accessing every aspect of a business to determine its long-term viability. A buyer who goes far beyond “kicking the tires” is exactly the kind of buyer you want.
Owning and operating a business can be rather demanding and that means from time-to-time details can slip through the cracks. All too often, businessowners don’t fully comprehend their leases and this can lead to a variety of problems. For example, if your business location is a key part of your success, it is incredibly important that you are well aware of all the essential points in your lease. Many businesses, ranging from restaurants and service businesses to retail stores, can be very location sensitive.
Don’t Let Key Details Slip by You
Regardless what kind of business you own, it is vital that you understand every aspect of your lease. You may even have to get an attorney involved to help you understand the implications of the minor points. A failure to do so could translate to the failure of your business.
The Length of Your Lease
The length of your lease tops our list of lease related factors you need to understand. While there are many variables that will affect you, in general, the longer your lease the better. It should come as no surprise that a longer lease gives your business an increased level of stability.
Exit and Exclusivity Clauses
If you are negotiating a lease, it is prudent to include an option for getting out of the lease. Just as having a longer lease provides you with greater flexibility, the same holds true for being able to exit your lease if the need arises.
A lease is not a one-dimensional document, just as your location is not one-dimensional either. The location in which your business is located matters. If you are signing a lease to locate your business in a strip mall or shopping mall, you should try to have written into your lease agreement that you are the only business of your type that will be located in the mall. After all, the last thing you want is to see a similar business opening up nearby.
Transferring Your Lease
Negotiating a long lease and having a way out of your lease are critically important, but so is being able to transfer your lease. At some point in the future, you may need to sell your business. For this reason, it is in your interest to have a clear understanding of how, and under what circumstances, you can transfer your lease to a new owner.
It is important to discuss the possibility of selling your business with the landlord before going to market to understand if the lease will be able to convey. While the landlord cannot restrict the sale of your business, you could get left holding a personal guarantee in order for the lease to remain in place for the remainder of the existing lease term. Then the new owner would be left to negotiate the lease renewal on their own.
Assignment of Responsibilities
Rounding out our list of key factors to consider for your lease are what you are responsible for and what the landlord is responsible for handling. If you as the business owner are to shoulder responsibilities related to the property, then those responsibilities should also be clearly outlined in the lease.
There is no doubt there are many variables involved in owning and operating any business. The physical location of your business should be among your top concerns. You should do everything possible to understand your lease. When signing a new lease, try to negotiate a lease that will be as helpful to you as possible.
The post Important Factors to Consider in Your Lease appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
Are you looking to sell your business in St Charles County? Whether you’re retiring, moving on to something new, or just ready for a change, selling your business is a big decision.
With over 8,647 businesses sold in the U.S. in 2021, there’s a lot of competition out there. But where do you start? How can you make sure your business stands out and sells quickly?
How do you get the best price for your hard work? And how can you be sure the transition goes smoothly? Here are a few tips to help you sell your business quickly in St Charles County:
Prepare Your Business for Sale
If you’re thinking about selling your business, there are several important things you’ll need to do to prepare. First, you’ll need to get your financials in order. This means gathering all the necessary documentation, such as income tax returns and balance sheets.
You also need to put together a sales deck or presentation that outlines your business’s key statistics, such as revenue and profitability.
You’ll also want to start thinking about what you want from the sale. What’s your ideal outcome? What are you willing to compromise on? By getting clear on your goals, you can start to formulate your negotiation strategy.
Getting all your ducks in a row will help you sell your business quickly and at a higher price.
Calculate the Value of Your Business
When you’re ready to sell your business, one of the first questions you’ll need to answer is, “how much is it worth?” Though there’s no single formula for calculating the value of a business, there are a few key factors that buyers will take into account.
One important consideration is the size of the business — larger businesses tend to sell for more than smaller ones. Another is profitability — businesses that are profitable, or have the potential for high growth, will usually command a higher price.
Finally, buyers will also look at the type of business and the industry in which it operates. Businesses in high-demand industries, such as technology or healthcare, will typically be valued higher than those in more traditional sectors.
By taking all these factors into account, you can get a better sense of what your business is worth. This helps you price it well for potential buyers.
Hire a Business Broker
Once you’ve prepared your business for sale, it’s time to start advertising it around. The best way to do this is to hire a business broker.
A business broker is a professional who will help you navigate the process of selling your business. They will help you find buyers, negotiate deals, and close the sale.
Working with St Charles business brokers is the best way to ensure that you get the best possible price for your business. They will also help you avoid common mistakes sellers make when selling their businesses in your industry.
Find the Right Buyer
When you’re ready to sell your business, it’s important to find the right buyer. The right buyer will be someone who is interested in your specific industry. They should also have the resources to make a fair offer for your business.
The right buyer should be willing to sign a non-compete agreement to protect your interests after the sale.
To find the right buyer, you can start by asking people you know in your industry if they know of anyone who might be interested in buying your business. You can also contact a business broker or an investment bank specializing in assisting with business sales.
Once you have a few potential buyers in mind, you can then begin negotiating the terms of the sale. With careful planning and preparation, you can ensure that you find the right buyer for your business and get the best possible price for your sale.
Be Honest With Potential Buyers
Honesty is always the best policy when selling your St Charles county business. It’s often tempting to try and make your business look more appealing than it really is, but this will only come back to bite you later on.
Be upfront about any potential problems or issues with the business and be prepared to answer any questions that a potential buyer may have.
If you’re not honest about the state of your business, the sale will likely fall through, and you’ll end up losing out in the end.
So, be honest with potential buyers from the start, and you’ll stand a much better chance of making a successful sale.
Know the Right Moment to Sell
Many business owners dream of the day when they can sell their company for a handsome profit. However, timing is everything.
Picking the right moment to sell can mean the difference between getting a good price and having your business languish on the market for months. If you wait too long, your company may lose value as it becomes outdated or less competitive.
On the other hand, if you sell too soon, you may miss out on important growth opportunities.
The best time to sell your business is usually when it is performing well and has potential for continued growth. If your business is struggling, you may be able to turn things around with a strategic plan and some hard work.
It is important to pre-qualify buyers before putting your business on the market. You don’t want to waste time dealing with tire kickers or people who can’t afford to buy your business.
The best way to pre-qualify buyers is to work with a reputable business broker in St Charles County. A good broker will have a database of qualified buyers and will know how to market your business to them.
Sell Your Business in St Charles County Today
Are you ready to sell your business in St Charles County? Whether you’re looking to retire, move on to a new venture, or simply want to cash out, ensure you follow our guide above.
Contact us today if you need any help or advice when selling your business. Our team of experts would be happy to help you through the process and get you the best price for your business. Give us a call today, and let’s get started.Read More
It takes between 30 and 90 days to sell a business in St. Louis. How long your business takes to sell will depend on factors like the business type, the business structure, and the location.
If you want to sell your business in St. Louis, it’s vital to know the steps to follow to ensure you find a buyer quickly. You need to keep in mind that selling your business is a process that might take some time.
Are you looking to learn more about what it will take to sell your business in St. Louis? Keep reading to learn the six steps you need to follow.
1. Determine Why You Want to Sell
The first step in selling your business is understanding why you want to sell. This knowledge will help you determine the future of your business and set a timeline for its sale.
Some business owners sell their businesses because they’re preparing to retire. Others might need to sell due to personal or health reasons. Some sell because they want to move on to something else.
Whatever your reason for selling, understanding your motivation will help you move forward with the sale. It will also make it easier to communicate your reasons to potential buyers.
2. Get Your Business Valued
The next step is to get your business valued. This will give you an idea of how much your business is worth and help you set a realistic selling price.
There are a few ways to value your business. One is to calculate the business’s net worth, which is the value of its assets minus its liabilities. Another way is to look at the business’s revenue and profit.
You can also hire a business broker to value your business. This is a good option if you’re not sure how to value your business or if you want a professional opinion.
The broker will determine the most accurate value for your business because they can access huge databases and use them for reference.
3. Prepare Your Financial Records
One of the things potential buyers will want to see is your business’s financial records. They’ll want to know things like your revenue, expenses, and profit margins.
So, before you put your business on the market, make sure you have your financial records in order. The records will give buyers confidence in your business and make the sale process smoother.
You should also have a business plan ready to show buyers. The plan will give them an idea of your business’s future and how they can grow it. If you don’t have all your financial records in order, now is the time to get them in order.
4. Find a Business Broker
You’ll sell your business faster if you rely on the expertise of business brokers. If you decide to handle the heavy lifting and ignore these professionals, there’s a high risk that your business won’t sell, or it won’t fetch a good profit.
A business broker will understand how to manage the sale process and ensure you get a higher profit. They’ll handle everything from determining your business’s value to preparing presentations for potential buyers. A broker will also bring a subjective perspective to the sale process because they’ve no emotional attachment to your business.
When choosing a broker, it’s crucial to pick someone who has experience selling businesses in your industry. This will ensure they have the knowledge and connections to help you sell your business. It’s also essential to choose a broker you’re comfortable working with.
5. Market Your Business to Find a Buyer
Once you’ve chosen a broker, it’s time to start marketing your business for sale. There are a few ways to do this.
Your broker will likely list your business on their website and other business-for-sale websites. They might also run ads in business publications and reach out to their network of buyers.
You can also market your business yourself. You can start by telling the people you know that you’re selling and running ads on your social media pages.
The key is to get the word out that your business is for sale. The more people know, the better your chances of finding a buyer.
6. Negotiate and Close the Deal
After finding a buyer, you should be prepared to negotiate a sale price. This can be a complex process, so it’s vital to have your business broker help you with the process.
Your broker will likely present the buyer’s offer to you and help you negotiate a counteroffer. They’ll also help you reach an agreement on terms such as the purchase price, payment schedule, and closing date.
Remember that you’re in control of the negotiation process. Don’t be afraid to ask for what you want and hold out for a fair price.
Once you’ve reached an agreement with the buyer, it’s time to close the deal. This is the time you’ll make a sale, and the ownership of the business will change hands.
The closing process can be complex, so it’s crucial to have an attorney help you with this. They can ensure the deal is structured correctly and that all the necessary paperwork is in order. After the deal is closed, you’ll receive the purchase price, and the buyer will officially own the business.
Sell Your Business in St. Louis Faster
Are you planning to sell your business in St. Louis? You’ll find the right buyer faster and increase your chances of success by following the above six steps.
If you’re serious about selling your business, you’ve probably searched the web for how to “sell my business” or “sell your business in St. Louis.” Look no further than Fusion Advantage. Our business brokers will help your small or medium-sized business find the best buyers in the St. Louis Area.
Contact us today to learn more about how we can help you with the selling process.Read More