Selling a Business
The decision to sell a business is often a difficult one because of the profound personal and financial impact on the business owner. Many different influences bring business owners to this decision, including:
- Worrisome exposure to business risks often aggravated by personal guarantee loans.
- Tired of or bored with the business.
- Possible failure of the business if one or more owners become seriously ill or disabled.
- Personal preference of the owners to retire or simply change their lifestyle.
- Divorce or dissolution of partnership.
- Owner’s desire to pursue other business interests which may be more challenging or less stressful.
- Lack of sufficient working capital.
- A need within the company for new skills, new resources, or a new philosophy to cope with ever changing economic forces, government regulations and competition.
So how much is the business worth?
A business enterprise, like any asset, is worth what a buyer is willing to pay. Buyers ask countless questions, but they are primarily concerned with a fair return on their total investment. In addition, prospective buyers make many judgments about market position, proprietary know-how, competitive strengths, quality of the assets, growth potential, and risks of the business.
A professional business intermediary helps the business owner determine the true value of the business and, more importantly, can help prospective buyers understand the reasons for such value and structure a sale for the maximum financial benefit for the buyer and seller.
Contact EMPIRE now for and we can provide you with an expert OPINION OF MARKET VALUE OF YOUR BUSINESS. Dr. Lerner reviews all market valuations. He has an MBA in Finance, is a certified business intermediary (CBB), and has taught market valuation.
Is Confidentiality important?
Sound working relations with employees, customers, suppliers and bankers are important factors to a company. Any premature indication of a possible change in ownership could disrupt these relations and weaken the company’s competitive position. For these reasons, and many others, confidentiality is critically important at all stages. With the proper procedures, it is possible to minimize the risk of an untimely disclosure.
In every transaction, there is an appropriate time to reveal that a sale may be imminent. Proper timing of these sensitive announcements can contribute to a smooth transaction and reinforce the buyer’s willingness to proceed to a closing.
A professional business intermediary helps to ensure that all information about the business is kept confidential throughout the entire selling process until it is appropriate to reveal that a sale is forthcoming.
When is it the best time to Sell?
Usually the best time to obtain the highest price occurs when the sales and earnings are good and trending upward. A solid earnings trend will enable a buyer to pay a higher price and still meet his or her return on investment criteria. A history of good performance also gives the buyer confidence in projected future earnings.
The seller’s bargaining position is also strengthened by a profitable record because the buyer realizes that the owner has the option of keeping the company.
When the decision to sell is made, preparing the business for sale should begin by obtaining current financial statements, performing needed repairs, and obtaining current market valuations before any efforts begin to market the business.
Who would buy it?
For most companies, there are several categories of prospective buyers. The most obvious are other companies in the same business for whom the acquisition would be a logical expansion with potential economies of scale.
Depending on the type of business, gross revenues, profitability, and unique or special characteristics, the prospective buyer may be an individual, another company in your industry, a company looking to diversify, a venture capital group, or an international buyer looking to buy a business as a avenue to get a visa to live in the USA.
Discover why you should choose EMPIRE as your intermediary.