Selling Your Business at the Right Time
In a perfect world, business owners sell their companies when banks are anxious to lend, the economy is strong, their industry is booming and the business is enjoying record profitability, with the future looking even brighter. Naturally, a perfect convergence of all of these variables would enable you to maximize the value of your business - allowing you to sell it at the highest price and on the best terms.
But most business owners don't sell when market conditions are perfect. Instead, they make the decision for more personal reasons, such as to retire or to free up cash to pursue other investment opportunities. Unfortunately, many businesses are sold when the owner dies unexpectedly or is otherwise unable to run the business. These unplanned events increase the chance that the business will realize a lower selling price than it would in better circumstances.
Questions to Ask
Before you make the decision to sell, you need to ask yourself several questions. First, how motivated are you to sell? Selling a business is an arduous process that can take a year or more from the initial valuation to finding a buyer to finalizing the deal.
Second, have you adequately prepared your business to be sold? Most experts agree that owners should plan for the sale of their business at least three years in advance. You may even want to plan for an eventual sale as you're still establishing and building your business.
But even if you have no current plans to sell, managing your company as if it will be sold is likely to result in a more efficient, financially-viable business. For example, your business plan should evaluate growth opportunities, market position, and business goals; and explain how to progress in reaching these goals will be measured. Not only is your business plan an important tool in unlocking the current value of your company, but it also serves as an initial prospectus for prospective buyers.
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When a Minnow Swallows a Whale: Bigger Can Be Better - And Riskier
When growing your business by acquisition, it can pay to pick on someone larger - even companies two or three times your size. Buying big can be a quick way to go from being a small player to a market leader. But you don't have to look far to see the risks of this strategy.
Don't Be Dazzled
It's easy to look at a big company and think of its potential as an acquisition: increased revenues, new customers for your existing offerings, new products or services to offer current customers, economies of scale, and higher profits. But don't let the thought of moving up in your industry's food chain allow you to lose track of your priorities.
All too often businesses compromise their strategic goals and acquisition criteria when an attractive target comes on the market. To avoid an acquisition you'll regret, have a strategic plan that outlines where you want your company to be in five years - and stick with it. Review your plan annually and let it drive your internal and external growth so that you won't be tempted to make an acquisition that doesn't advance your goals.
You also should identify holes in your product or service offering, geographic reach, and customer base. Before venturing too far afield - especially if that field is one you don't already know well - work on filling these holes through other means.
Dig Deeper
If you've decided an acquisition - particularly the acquisition of a larger company - fits your company's growth strategy, you should be aware of the risks. All companies sell for a reason, and you need to know what that is for your target. Larger companies, for example, may experience slower growth because they serve mature markets. They may need a new cash infusion to maintain their traditional competitive advantage. Or their product or service offerings may be nearing the end of their lifecycles.
Uncovering these issues requires strenuous due diligence. Make sure you get more than the numbers from this process. Have a thorough understanding of what you'll receive in terms of assets, products and services, operations, and customers. Learn what - if any - business units won't be a good fit with your company, and if you'll have opportunities to dispose of unwanted units once the sale is completed.
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What Happens To A Lease When You Sell Your Business?
by Neal Isaacs, MBA,CBI, CM&AP, Owner VR Business Brokers/ Mergers & Acquisitions in Raleigh, NC
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Here's the answer to one of the MOST important questions I get from business owners. Over 2K people have watched this in a week and more than 100 Q&As have been traded on the blog I originally posted this article over at Exit Promise. This is indeed a hot topic for business owners!
This video covers the following subjects:
- What happens to a lease when you sell your business?
- Lease
- Small business
- Rent
- Assignment
- Commercial Lease
- Landlord
- Personal guarantee
Anyone who has operated and sold a business would know that it is a two-step process: selling the business assets and assigning the lease for the premises. The procedure for assigning the lease involves seeking the lessor’s consent. It’s important to understand the process and your rights whether you are the party assigning the lease (assignor) or buying the business and taking over the lease.
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Using Technology, Automation, and Regionalization to Overcome Supply Chain Bottlenecks
As if skilled labor shortages weren’t enough, supply chain disruption has reared its head as one of the biggest challenges facing precision manufacturers. For many firms the easiest way to deal with these challenges is to simply not to deal with them, meaning sell your company now to a competitor or a private equity firm and let them figure it out. Recent consolidation moves in the metal service center industry have been driven in significant part by supply chain pressures. For everyone else, though, there are practical and affordable solutions you can implement today that will make your company more efficient, profitable, valuable, and sustainable for the long term.
In the last five years, reducing supply chain risk has evolved from an academic Boardroom discussion to a bonafide mandate for companies of all sizes. Issues ranging from geopolitics to the pandemic have radically accelerated the need to rethink how companies structure their supply chains. And while the issues facing various industries differ in magnitude, they are acute for precision manufacturers in the US. The good news is that there are practical and affordable solutions you can implement today that will make your company more efficient, more profitable, more valuable, and more sustainable.
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Fishing/Bait & Tackle Store in South Florida
This very established and well-known fishing supply company has over 35 years of serving anglers locally and the entire marine industry nationally. They have an excellent reputation in the business, with the best possible location and showroom centrally located near many marinas.
Their main business is retail walk-in traffic and they also provide rod and reel repairs, service, and anything a novice or professional fisherman is looking for. Also offers big game rigging with very limited competition. Their extensive inventory includes rods, tackle, small wares, and a large selection of frozen bait in large quantities for extended trips. They also offer custom rod wrapping in-house with the best turnaround on service and can build custom rods at more than competitive prices.
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VR Office Located in Artesia/Los Angeles, CA Sold A Dessert - Ice Cream Franchise for $1,400,000.
High volume dessert franchise serving tea drinks and ice cream. The business was the franchise corporate-owned flagship store. It was located in a high-profile, busy outdoor mall with many national franchise restaurants. It had a new improved interior at a great location—low food cost. Easy operation. It will be a fun franchise to own!
Congratulations to Ran Kim for your successful closing.
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Thinking of selling your business or looking for an established
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Strategy – Create, Structure, Deliver.
by Richard Shrapnel, CBA’s M&A NEWS
One of the most powerful tools that leaders possess that enables performance and underpins the future success of their business is their approach to developing their business’s strategy. Few realize the potential of strategy to engage and motivate their entire organization simply by adopting a more open and adaptable approach to crafting that strategy.
Active knowledge question:
Does everyone in your business get excited when they hear strategy is being reviewed and renewed?
To compete
Strategy is how you intend to compete, but to compete effectively requires unity, with clear direction, alignment, and focus, across your entire organization.
If used correctly, strategy setting can be a process that unites and inspires an entire business behind a single vision and goal. The power of focus and alignment of all resources in a single direction can catapult a business into territories it never thought
it could reach. However, in many businesses, strategic planning is a lost art that has become regimented in tradition – same thing, same time each year.
As we all know, a well-crafted and articulated strategy is only words until successfully implemented. And you may well find that the thoughts expressed in your plan, or envisaged in your mind, need to evolve when it ‘hits the road’ and is delivered in the competitive marketplace. This requires an organization committed to delivering the strategy’s vision and is adaptable to ensure its success. But many businesses develop their strategy and structure in a manner that will only hinder delivery and performance.
To leverage your strategy setting to its impact, consider following the following three stages:
Crafting the strategy
Aligning (at times redesigning) the organization’s structure to enable the strategy to
be fully effective, and
Supporting the team to deliver it
Crafting
Your Lens
Whilst there exist very clear elements that must be considered in crafting strategy, each time the team comes together to review and recast strategy, it is vital that this is done with freshness.
The risk of ‘same thing, same time each year is that assumptions and understanding are carried forward from cycle to cycle. More often than not, I have found that as teams sit down to develop strategy, they are impatient to get on with it and decide what will be done. Many participants have already locked in their view of what needs to happen before attending the strategy session. As a result, time is not taken to re-examine the most fundamental assumptions to determine what may have changed nor to ensure everyone is on the same page. And if they are not on the same page, use the opportunity to listen to everyone’s thoughts.
Working through the key elements that inform strategy is vital to ensure everyone uses the same lens to view the business, its customers, market, and its capabilities. The strategy typically falls out naturally when key elements are used as the lens.
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VR is The Only Remaining Founding Firm of The International Business Brokers Association ("IBBA").
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Have You Ever Considered Selling Businesses?
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