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The Business Transfer Newsletter
November / December 2016
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8 Ways To Avoid Cash Flow Surprises That Could Kill Your Business





Why Small Businesses Don't Like The Trans Pacific Partnership Agreement



Triple Play: Tips For Owners Considering Selling A Business



The Problem with the U.S. Economy Isn't Something Politicians Can Fix





5 tips for business success from a man who hustled his way into the NFL 





Warren Buffett's 9 Essential Rules For Running A Business






This 14-Year-Old Is On Track To Be A Millionaire In 2 Years




Finally, Media Is Realizing That Taxes & Gov't Policies Have Hurt Small Business





When Suddenly The Kids Are In Charge Of Dad's Factory





 Texas Senator Files Measure To Expand E-Verify To State Contractors 






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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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Selling Texas Companies Since 1974


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Trump, Brexit and Baby Boomer Business Exits
The world has watched in shock and disbelief as the UK voted to leave the European Union and then America elected maverick businessman Donald Trump as their next president.
Commentators have quickly pointed to common factors underlying these two momentous events. In particular, the decimation of manufacturing industries, factory closures, job losses, the disintegration of many communities and flow on concerns about immigration and security.
These factors haven't just suddenly appeared. To understand them properly we need to turn the clock back a few decades.
After World War 2, most Western economies experienced periods of sustained growth and prosperity. Business boomed, often sheltered behind protective trade barriers, and the average person's standard of living rose rapidly.
Over recent decades, these economic advantages have been progressively eroded in Western economies due to globalisation, free trade, information technology, the internet and, more recently, industry disruption and automation. Developing economies, particularly in Asia, have been the primary beneficiaries.
At the end of the day, the votes in both the UK and US were pretty straight forward.
The establishment, youth and minority groups generally voted for maintaining the status quo. And the disillusioned and disenfranchised working and middle classes in the UK north and across most of the US voted for a radically new way.
In the UK they voted to lift the yoke of Euro-bureaucracy and free the UK to once again pursue its historical place as one of the world's great nations. In the US they punted on a maverick can-do businessman who has promised to "make America great again".
We would be kidding ourselves if we didn't think these issues were also at play in the last Australian federal election. The difference here was voters had no clear alternative, so many just reluctantly voted for one of the major parties, or in record numbers for alternative parties and independents.
So what have business exits got to do with this? Quite a lot actually, because there's another huge wave of change starting to hit the private business market place that's not yet on anyone's radar screen, particularly governments.
Over the next 20 or 30 years we will see a massive transfer of wealth from baby boomers to the next generation. Many are describing it as they greatest wealth transfer in history and, with one key exception, it will probably occur in a fairly orderly way.
Baby boomers also own the vast majority of private businesses, up to 80% in developed economies. The transition of private businesses owned by baby boomers to new owners is likely to be far more challenging than the transfer of their general wealth to the next generation.
According to recent data on the US market from the Exit Planning Institute:
*76% of business owners (mostly baby boomers) plan to transition their business over the next 10 years (representing 4.5 million US businesses and over US$10 trillion in business value);
*49% of business owners have no transition plan; and
*70% of businesses put on the market don't sell.
The position is similar in Australia and most other Western economies.
This developing scenario has been described by some commentators as a "baby boomer business exit tsunami". Exactly how it will play out in practice is difficult to tell, but I believe it's just as important as developing issues like industry disruption and automation.
I have previously posted about the "baby boomer business exit tsunami", it's potential flow on implications and the Australian government's lack of focus on the issue. The biggest risk is that a lot of baby boomer businesses don't transition, resulting in substantial job losses and some industry sectors becoming significantly weakened or even unviable. You can read my previous post here.
The recent votes in the UK and the US emphasise the importance the average Brit and American puts on fundamental things like the opportunity to earn a living, support their families and pursue their dreams. I'm sure we can add Aussies to that list.
In most developed economies like Australia, at least half the work force relies upon private business owners to provide them with jobs so they can pursue these objectives.
Donald Trump, Theresa May and Malcolm Turnbull have massive tasks ahead of them to provide a robust framework for their private business sectors to endure and flourish. This will involve navigating difficult issues on free trade arrangements, industry disruption and automation. They need to add the "baby boomer business exit tsunami" issue to their list.
By: Geoff Green (Melbourne, Austraila), a well - known business exit strategist, entrepreneur and corporate lawyer. He is also the author of The Smart Business Exit, Getting Rewarded for your Blood, Sweat and Tears
Small Business Transactions Are Up
Small Business Transaction Up 15% From Last Year, Reach Highest Levels Since Q2 of 2008
BizBuySell's Third Quarter 2016 Insight Report shows 2016 on pace to have highest number of businesses changing hands since report inception in 2007. Active for-sale listings reach record high too. Small business transactions reached the highest levels since the second quarter of 2008, right before the recession hit. The report results are statistics from business-for-sale transactions reported by participating business brokers nationwide. A total of 2,090 transactions were reported in the third quarter this year, representing a 15.2 percent increase from last year. This marks the highest number of small business sales recorded in a third quarter since tracking data in 2007. The 5,865 to-date transactions positions 2016 for a record breaking year of small business transactions.
With closed transactions reaching post-recession records, listings at an all-time high, and time-to-sell data showing quicker sales, all indicators are pointing to a robust business-for-sale environment that is beneficial to both buyers and sellers.
Market Pulse Survey - 3rd Qtr 2016
Presented by IBBA, M&A Source and in Partnership with Pepperdine University
What Industries Are Hot?: Looking at the overall market, manufacturing led among hot industries, followed by wholesale, distribution, consumer goods, and personal services.
   *CBB is always a contributor to Market Pulse Surveys and is a Founding Member of the IBBA
Texas Motor Freight

This freight company, established in 2001, has been hauling commercial products within the Houston Area for the last 15 years. The owner was ready to retire.
The buyers are in the bulk material handling and machined plastics industries in the Houston area and started looking for a business with us in September. This acquisition allows the company to quickly deliver the products they manufacture to their customers.

The business was sold within 8 months of going to market.

Anita Charpiot listed and sold the business.

Anything But Plain

This long-established, award winning high-end residential specialty finishes and interior plaster contractor in Houston enjoys an excellent reputation in the residential interior design industry with designers, architects, and builders. The seller started the business in 1989 and was ready to retire after 17 years of operating the company.
The buyer is an attorney, investment banker and was somewhat agnostic regarding the industry of the business he purchased. Rather, he was more interested in building upon a stable company that could be positioned to scale.
The happy new owner started looking at businesses with us in August and closed on the deal in November.
The business was sold within 5 months of going to market.
Ron Consolino listed the business and Peggy Tate sold it.
Ask The ExpertsQuestion Ask The Experts


I have a small business that I want to sell late next year. How important is it that I decrease my role in managing the operations of the business.
A business is more valuable when perceived risk is low. A business is less risky when it is making money without its owner's involvement in daily operations. Three things about value:
  • Value is dependent on risk
  • Value is not about what the business is worth in the current owner's hands, but in someone else's.
  • The more dependent the business is on its owner, the higher its risk, and the lower its value.
If all decisions and key actions must come back through you, then you become the single greatest bottleneck inside your own business. What's more, you don't have a business, you have a self-employed job. Most potential buyers would be averse to purchasing a business if the owner's shoes are too big to fill or if the owner's hand would be too difficult to unravel from the operation.
You need to build an owner-independent business. Let go of parts of your business to your team, systems, and internal controls to make your company sellable and more valuable.  It is important to have systems running the business and an experienced staff running those systems. The lesson? Ensure your business could survive your absence for an extended period because only then will you be in a position to sell at a fair 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.


Industrial brokers: Nationally, most investors still bullish on Houston


7 Sectors To Watch In 2017 - Aircraft parts, packaging for consumer goods, construction materials and cybersecurity are some of the industries expected to see strong M&A activity

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