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Sell a Business Insights
Normalizing Income Statements for Business Sale Transactions
February 1, 2014 / in Sell a Business / by Don Ross
One of the fundamental roles of a business broker is to properly adjust, “normalize”, or “recast” the income statements and tax returns of a business to determine its true earnings power. Where the business has a track record of profitability and the promise of future earnings, market- and income-based methods of valuation are then applied to determine a reasonable price that a buyer should be willing to pay and the seller is likely to receive. Normalizing involves …
Sales of Small Businesses on the Upswing
January 21, 2014 / in News, Sell a Business / by Roy Martinez
According to a recent Inc. Magazine article, “Let’s Make a Deal”, sales of small businesses in Q3-2013 jumped 42% from the same quarter in 2012. Inc. quotes Curtis Krocker, group manager of BizBuySell.com, “After four years of depressed selling and buying activity, the markets are coming back.” Why? Motivated sellers and available financing. Many older baby boomer business owners are ready to sell their business and retire. Having held off selling during and immediately after …
What Sells Businesses? Quality Information.
January 8, 2014 / in Acquire a Business, Sell a Business / by Bob Altieri
I recently took on an acquisition client to help them locate and purchase a business here in Northern California. Over several months we looked at a dozen or so businesses offered by business brokers. What an eye-opener it was seeing how other brokers present information to prospective buyers! I certainly knew that prior to signing a non-disclosure agreement (NDA); one should only expect to see a 1-2 page blind executive summary with general information about …
Importance of a Proper Valuation before Offering a Business for Sale
November 9, 2013 / in Business Valuation, Exit Planning, Sell a Business / by Bob Altieri
Lately I’ve been spending a lot of time working on an acquisition search for a client, and in this process I found many business offerings that were priced far too high and several that were under-priced. From a buyer and seller perspective, overpricing is a massive waste of time. At the other extreme, when price is set too low, seller’s leave hard-earned money on the table. Both situations can easily be avoided by obtaining a proper business …
Want a successful merger or acquisitions? Put an M&A advisor on your board.
November 1, 2013 / in Business Strategy, Sell a Business / by Al Statz
Companies planning a merger or acquisition would do well to have an investment banker (M&A advisor) on their board of directors. A new study from the University of Iowa found that firms with an investment banker on their boards of directors pursue mergers and acquisitions more often. Moreover, those firms perform better after the acquisition has been completed than firms that don’t have investment bankers on their boards. Read the full article.
Thinking of Selling Your Business? Don’t Let Built-In Gains Tax Surprise You.
September 10, 2013 / in Exit Planning, Sell a Business / by Al Statz
I was recently asked by “Chester” to help him sell the $10 million service company he founded 24 years ago. Chester, who is 65 years old, has had some health concerns and wants to travel the world with his wife Margie. Two of his competitors have been acquired in the past 3 years by strategic buyers. His business is doing well and he thinks the time is right to sell. In Chester’s industry, almost all …
Do Strategic Buyers Share Synergies with Sellers?
August 1, 2013 / in Acquire a Business, Exit Planning, Sell a Business / by Al Statz
In successful M&A deals involving substantial synergies, the deal price usually falls in the range between the standalone fair market value of the target business and that value plus the full value of potential synergies. Value of potential synergies? Increased value (over and above fair market value) to a strategic buyer, involves synergies between the acquired and acquiring firm and the additional financial returns and therefore value created by those synergies . There is a “1+1=3” …
Exit Fundamentals: Two ways to Sell a Business
June 7, 2013 / in Sell a Business / by Al Statz
This article introduces the two fundamental methods of transferring a 100% interest in a private business, a) an “Asset Sale” and b) a “Stock Sale”. Asset Sales account for more than 90% of small business transactions. By small I am thinking of businesses with up to $10 million in revenue. Asset Sales In an Asset Sale the seller sells all of the tangible and intangible assets of the business, and ends up retaining the legal …
“If you don’t know where you are going, any road will get you there.”
May 20, 2013 / in Exit Planning, Sell a Business / by Bob Altieri
I’m amazed at how many business owners think about exiting all the time but never do any real exit planning. The most successful business owners I know have an exit plan on the day they open their doors. Their business decisions are synonymous with the plan. To navigate without a destination is like “trying to hold the wind up with the sail,” as Willie Nelson once sang. As you go through the years in your business, …
Transaction brokers create competition. Why is this so important?
April 22, 2013 / in Business Strategy, Sell a Business / by Bob Altieri
The critical first step in selling a business is to properly analyze and value it to establish a price. In the case of an undervaluation, when the business is sold the result is obvious; the owner receives less. Conversely, businesses that are overvalued and overpriced usually do not sell. The reason for this is because of the principle of alternative investments, which states that rational buyers will act on some alternative business investment where they expect …
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