Expert Buying Tip #5 (of 7)
» Choose carefully your financier. It is very common for a number financial sources to be put together to facilitate the transaction. For your own contribution, don’t deplete your resources beyond reasonable. Leave yourself with a nest egg and a sum of money you might tap for the unforeseen. The current owner is usually a wise selection for financing. Having their vested interest in the future performance ensures they properly [...]
Expert Buying Tip #4 (of 7)
» Don’t do a deal without professionals around you. Business brokers, attorneys, financial advisors all have a critical role in protecting you from a mistake. Expert valuation, legal documents, financial recommendations for the structure of the sale and general advice are all important to having a transaction that benefits you. To assume you know may cost you in a deal gone bad, limit your financial potential, land you in court. [...]
Expert Buying Tip #3 (of 7)
» Know yourself and your interest and capabilities to be first an entrepreneur and specifically with this business. Not everyone is cut out to run his or her own business. While the risk may be equally difficult in other income earning environments, often people who are successful as employees doing the same kind of work may not be successful or happy as a business owner, particularly if they have put [...]
Expert Buying Tip #2 (of 7)
» Do due diligence after you sign a buy-sell agreement. Due diligence is the process of evaluating whether the business for sale in Santa FE or Northern New Mexico is what it is presented as. Do the clients exist and how faithful have they been in paying. Is the net income, owner take, what is presented. Are the expenses claimed reality and can you maintain them? What has the track [...]
Expert Buying tip # 1 (of 7)
» Know what is critical to your process of buying a business before you begin looking. It is easy to be enchanted with a business for sale in Santa Fe so knowing your criteria for making a selection is critical. Here are a few examples I used for a recent business purchase: Is the business financially viable, now and looking forward? Can I see the next generation of the business, [...]
The business as a portion of the owner’s full financial plan
As a business broker I want people to buy businesses BUT the buyer should be reasonable. It is not merely a question of whether they can pay for the business but whether the purchase of the business is a piece of a fully diversified financial plan. The younger the owner, the more risk can be taken, perhaps risking more in the single investment of a business they will operate. But, [...]
Why most small businesses sell to individuals, not other businesses.
Emily wants to sell her business. She has a business that could be integrated into another business. However, Emily wants to maximize her sale price. She is not likely to sell to another business. Many businesses-for-sale are priced, at least in part, based on cash flow to owner. In most cases the owner actually works in the business, at least part time. So, the cash flow to the owner includes [...]
Where DO they come from – Buyers?
My guess is that each region has their own unique market, at lease where the buyers come from. Here in Santa Fe and Northern New Mexico, our profile has trends: Approximately 50 percent of the buyers come from out of state. It is kind of appealing to move into a less stressful environment. Some just plain like the environment – high desert, mountains, clear sunny skies, art of all sorts, [...]
The Elusive Business Solution
On a trip to Africa, in the Serengeti, we were on a photo safari. It was incredibly entertaining and educational. Our group of nine, plus two guides were committed to both sighting the wonderful wildlife and our philosophical discussions. The most difficult of the animals to sight was the leopard. Everyone’s perspective for that search and the philosophical was important. First, the leopard is nocturnal. He does not typically hang [...]
Selling a business at a too-high price
At first blush, selling a business for a lot more than a proper valuation sounds like a really good thing for a seller, perhaps bad for the buyer, and neutral for the broker. But is this all true? In the last two entries we discussed the possible impacts on the seller and buyer. The broker has as many if not more considerations in the too-high price. Perhaps more so than [...]
Selling a business at a too high price
At first blush, selling a business for a lot more than a proper valuation sounds like a really good thing for a seller, perhaps bad for the buyer, and neutral for the broker. But is this all true? In the last blog entry there was discussion of the impact of a higher-than-value for sellers. For buyers it seems much clearer that the higher price can be detrimental. Making higher payments [...]
Selling a business at a high price
At first blush, selling a business for a lot more than a proper valuation sounds like a really great thing for the seller, perhaps bad for the buyer, and neutral for the broker. But is this all true? Lets look at the seller first. The seller may very well earn more than market and have great pride in the sale and continuing success of the business he nurtured through years [...]
