Last week I met with a business owner after an introduction by his accountant. He was thinking of selling his profitable waste recycling business, a business he had been running for nearly 30 years. The business had a reliable management team, an enviable customer base and a strong balance sheet. Unfortunately, the owner had a vastly inflated idea of the value of his business.

His thought process went something like this: “I’ve built this business over 30 years so it must be worth a lot of money. A couple of years ago we built a nice place to retire to and need to clear the mortgage. We also need a couple of million to create a pension that will maintain our lifestyle. The business has provided us a very nice lifestyle and will do the same for the new owners – it has to be worth about $3 million.”

This young company is one of two authorized dealers with a full patented permanent home lighting product in the affluent areas in the Houston Metro area. The business has the exclusive right to sell and install original equipment from the manufacturer. The territory is very desirable and expected to have significant growth in sales. The business has been doing installs since June of 2017 and has demonstrated both profitability and month-over-month growth in sales. This unique company experiences a seasonal lift during the holidays, but also has consistent sales during other months of the year as the product is fully customizable

The current owner started the company in addition to working a full-time job and the ownership duties were taking more time than he was able to devote. The Seller ran it for three years before selling. The new owner can step into the business with a seasoned installation team and take over the current owner’s functions.

The Buyer is his first leap into entrepreneurship and will run the company full time. He used an SBA loan to purchase the company with a 15% down payment.

Chris Adkins listed the business and sold it.

A classic story of the master passing the baton to the apprentice. The owner built and grew this successful commercial locksmith business for over 40 years and was ready to retire. Certified Business Brokers was able to find a young locksmith, an employee of another company, who’s goal was to own and run his own operation. Of course, the parties had to reach agreement on the transfer price. Of equal importance was that the buyer and seller establish a personal rapport as they would be working closely during the transition period and the seller wanted to make sure that his customers of long standing would be well cared for. Because of the specialized technical expertise required, a longer than average transition period was negotiated whereby the seller transitioned from active participation gradually tapering down over a specified period.

Hal Poel listed this business and sold it.

Twenty-Twenty will be known as a year we didn’t see coming. Business owners had to adapt at a fast pace in order to thrive or even sometimes survive this year.

The businesses that had a clear vision and documented processeses, found that adapting was easier and had better outcomes. In addition, training new owners after selling a business, can be performed in a shorterened training time.