blog

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 the seller who [...]

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 countries, states, counties, [...]

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 payments and other [...]

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, likely, more cash [...]

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 this is applied, [...]

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 friend, just could [...]

As in any big purchase, buyer’s remorse is not so unusual in business-for-sale transactions. Buyer’s remorse should, however, dissipate after a month or so and the new business owner gets into the rhythm of the business. For purposes of this discussion, lets assume that the price paid was fair for all. When exploring a business for sale, one of the first questions a prospective buyer should ask is “can I be happy doing [...]

Some months ago, I asked a prospective buyer of a business for sale transaction "What liquid cash do you have to invest in a business."  The answer was, $200,000.  The business for sale was priced well and likely eligible for financing with the right buyer.  $200,000 would have been 1/3 down plus enough working capital. As time went on, the buyer spent his time and the time of the seller, gathering facts and [...]

Prospective business-for-sale buyers should be able to picture themselves as the owner.  This can be different pictures for different buyers.  Lets say the business is an engineering firm and the current owner is an engineer.  The firm is large with plenty of engineers.  One new owner could replace the owner as the lead engineer.  Because of the size of the firm and the depth of engineering strength, another new owner might take an [...]

Your business is for sale and you are planning your next adventure.  What is reasonable for a buyer to expect you to not do? In a boilerplate offer I have, the text reads "COVENANT NOT TO COMPETE. Seller hereby agrees not to engage in any business or activity anywhere in the United States, directly or indirectly, as an owner, employee, consultant, or otherwise, which competes with Purchaser’s operation of the Business for a [...]