Certified Business Brokers
The Business Transfer Newsletter
July 2016
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6 Reasons Why No One Will Buy Your Crappy Company





Consider Deal Structure When Buying Or Selling A Business


Is Your Company An Attractive Acquisition Target?





Does Your Company's Future Potential Affect It's Current Value? 




Who Are Today's Small Business Buyers and Sellers?




Forget Shark Tank:  Why Buying A Small Business Is Better Than Starting One



 The 3 Pillars Of Your Financial Numbers  



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Close  >60% of the businesses we list vs. 38% Industry Average

Consistently sold businesses within 94.5% of appraised price

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Closed approx. 2,000 business transactions In Texas.

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Some business owners are understandably disappointed when they learn that their business is not as valuable as they thought. They often discover this when they are trying to sell their business and they see what potential buyers are willing to pay. This is what we call a "value gap" - when the amount of money the owner needs or wants from the sale of their business won't be reached.
There are several potential causes of value gaps. A common one has to do with expectations, that is, the owner is thinking about what s/he put into the business (money and lots of time) versus the buyer thinking about what they can get out of it and the risk of not achieving it.
A value gap may also arise if the buyer's valuation doesn't agree with the seller's valuation, based on different assumptions and methods used to evaluate the same company. The risk to the company's future growth and cash flow may be perceived differently by buyers and sellers and thus play a considerable role in the size of the valuation gap.
Another valuation gap may be the difference between what an owner needs for retirement and what can actually be attained from selling the business. There may also be differences between what the buyer offered, what the buyer actually pays, and what the seller ultimately gets after taxes.
Selling a business is a complex process with many financial and non-financial factors, some of which can cause value gaps.

While there's no doubt that running and selling a business are two completely different animals, there's enough in common between the two...if you're doing it right, that is - that entrepreneurs and business owners can confidently, quickly, and profitably sell their businesses with the right knowledge and preparation.
The following list includes three common personality traits or habits of successful business owners and how they can apply to negotiating a profitable business sale.
1. They're organized and detail-oriented
A successful business owner needs to be thoroughly organized and able to focus on minute details if they're going to effectively maintain and grow their business.
Likewise, a successful business seller needs to exhibit the same attention to detail, especially in the way they maintain and present financial records, legal records, and employment records in preparation for prospective buyers to review them.
The company's financial and legal records - including employment contracts, real estate leases, vendor contracts, and any other obligations the company has - is one of the key means by which a prospective buyer learns about your business and makes an informed decision to move forward.
If the records are messy, disorganized, or out-of-date, it can create a negative impression that could overshadow an otherwise profitable business the buyer should be interested in owning. On the other hand, clean and organized records reflect well on the business and the owner himself.
2. They surround themselves with top talent
All great business leaders are known for their ability to identify the areas where they personally lack knowledge or experience and to locate the right people to join their team and fill those gaps.
When it's time to put a business up for sale, there are likely a number of aspects of the process in which the owner is not knowledgeable or experienced. A smart seller will apply the same recruiting strategy to this business problem and build a team of advisors who can improve the likelihood of a smooth and successful transaction.
This team will generally include some or all of the following members:
  • An attorney specializing in business sales
  • An accountant specializing in business sale transactions
  • A business broker familiar with the local and regional sales climate

With these advisors assisting, the owner is in an excellent position to appropriately value the business, list the business for sale, identify optimal buyers and negotiate a profitable sale.

3. They understand the importance of image and perception
In many ways, how a business presents itself and how its customers, suppliers, and public perceive it can have a direct and tangible impact on its quantifiable value and ability to grow.
When that same business is up for sale, the importance of image and perception is even more important.  Human beings will conclude and make assumptions based on first impressions. If, the first time they visit the location, they're immediately struck with how messy and run down it appears, no review of financial records will be able to erase that negative first impression from their minds.
Likewise, if they search for information about the business online and find dozens of negative customer reviews that have not been resolved or responded to, or they find few if any positive reviews to balance them out, they're going to assume that business is failing, regardless of what the paperwork says.
By focusing time and energy on maintaining and improving the company's image, especially in preparation for a sale, a smart business owner can put the company's best foot forward in the eyes of prospective buyers.
All three of these traits help a business owner build and run a successful business. Interestingly, they also help that same business owner sell their business quickly and profitably as well.

Ask The ExpertsQuestion Ask The Experts


What is the most important aspect of my company that would help me sell my company for the best price?
While there are many factors (aka value drivers) that contribute to perceived higher value by the marketplace of buyers, there is one factor that stands out as the mother of all value drivers.....a stable staff / management team.  Why?  Because it's the people that create, manage, and run all the other parts of the business that produce value.

An in-place team that can provide continuity and assist in the growth of the business under new ownership is a key asset. If a company's success is reliant on capable, well-trained employees - not the owner - it means the business will not be negatively impacted under new ownership. This reduction of risk will pay off with increased purchase price.
Texas Economic News

We watch economic and market conditions compared to the rest of the country because these factors affect business value. The following articles were all published since our last newsletter.



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