Business for Sale – Riding the Bucking Bull
Recently during the end days of a business-for-sale transaction, when it was becoming clear we might actually close the deal, the seller said to me “I have to give it to you for riding this bull so well.” We actually did close the transaction but it was not smooth sailing. Often this is the case. In this specific transaction, there were nuances that made, it seemed, everything challenging. An usual [...]
(Just ?) Three Guidelines of Business-for-Sale Transactions
A business-for-sale or buyer broker has many, many guidelines to follow. Knowing which ones to rely and which to relax in a given transaction becomes the art of the profession. Here are three that are should rarely, if ever, be broken. A broker should Be clear with everyone in advance about her role and limits to knowledge & capabilities. Value businesses based on well-defined and known-to-be-valid methodologies. Present an honest [...]
Business-for-Sale by % of Sales – Why it does not work.
Sue is a buyer of a business for sale. She is looking at two businesses making stuffed ponies, and wants to know which one to buy. How does Sue choose? The Case: Sales of both companies are $1MM. The cost of goods (COG) for both companies is 25%, with the same definition of expense items within COG. The age of the equipment is the same. One company is making $100,000 [...]
Back and Forth¬–In a Business for Sale Transaction
Some business-for-sale transactions are quick and simple, closing in a week or two. Others take months, if no years, to close. There are many factors to the speed of the transaction. One of these is the winnowing away the disagreements eased or not by the temperament and flexibility of the parties. Take the home accessories store. The purchaser loves the store. It meets all of the husband and wife purchaser [...]
Business for Sale – Why Must I Keep Signing?
In many business-for-sale transactions there are millions (well not quite) of documents to sign. Some seem to require signing over and over, or amendments substitute, as changes are made. Is it important to sign again and again? Perhaps yes. Perhaps no. You decide. Should the broker or attorney involved require revisions to sign documents be signed again? The professional is trying to avoid conflicts when the final documents are drawn [...]
Business Sale – Non-payment – Buyer’s Perspective
On August 3, 2010, my blog discussed the seller's view in a business-for-sale transaction. But what about the buyer, doesn't she have perspective? Of course. Everything has different perspectives and the buyer is no exception. She should be considering this: 1) Know the business and don't buy it without great comfort that it is as it is presented, where you are comfortable in knowing you can take/expand or enhance it, [...]
Business Sale – Non-payment
Recently a prospective business-for-sale buyer said this to me: "I am worried that this business will not perform and then I will have made a bad investment. I guess I will then just quit paying the owner." Seller's beware: When you are selling a business have these rules: 1) Know the qualifications of any buyer who proposes to have you finance the business for sale. In many transactions, it is [...]
In business-buying transactions, know the laws.
When a business-for-sale owner finds the right buyer, usually they are responsible for training, introducing the new owner to everything about the business in its current state. They are NOT responsible for teaching the owner the laws of the land and the new owner should not assume that any such information that is shared may or may not be true. Laws are changing every day and can be unique to [...]
Business for Sale with Real Estate–Resolutions
In our prior post, "Business for Sale with Real Estate–Implication," I listed six implications of having business or business-owned real estate in a business-sale transaction. You can find that July 18,2010 blog post at https://dakinbusinessgroup.com/sell-a-business-with-real-estate. Generally these implications are market, real estate owner, and prospective-buyer perspective. It is most advantageous if the real estate owner (either the business or business-owner) has either paid off the real estate or has low [...]
Sell a Business with Real Estate–Implications
Businesses for sale that include real estate owned by the business or owners of the business should carefully consider the impact of the real estate in the sale of the business. Consider these implications of the real estate in the business transaction: 1) If the business is put on the market ONLY with a sale of the real estate, the number of qualified buyers for the business is reduced because, [...]
Business Sale, ROI
In some MBA programs they clearly define the ultimate return on investment (ROI.) At the Booth School of Business at the University of Chicago, I was taught: ROI: Income (before distributions to suppliers of capital) for a period. As a rate, this amount divided by average total assets. Interest, net of tax effects, should be added back to net income for the numerator. (source-Managerial Accounting, Maher, Stickney, Weil 1994) Usually [...]
Buy a Business? Start a Business?
Susan, my good friend, started a service business for $10,000. The business has matured and does quite nicely. The first year, she had a ROI of -0- after a wage of $30,000. Now, ten years later, she has an annual ROI of 500% after a fair market wage of $60,000. She never had to invest another dime from funds outside the business. She is a great entrepreneur! Mark, my other [...]