Posted in Sellers Articles

It can be very difficult to sell your business. It’s a place that’s been your home away from home. You’ve put in your time, your energy and your money and now the time has come to pass on the reins to someone else. If you are selling your business and that person will be a stranger, it can sometimes be very difficult to let go and walk away.

Mental preparation is an aspect of the business sale process that most sellers don’t consider – but it can be crucial to getting a deal done. 

Why do I need to mentally prepare?

Most entrepreneurs and business owners have strong personalities. The type of person who can successfully own and operate a business is a person who has the drive and passion to succeed. As a business owner, you know what it takes. Guess what? Business buyers are entrepreneurs too. They will probably have a strong personality as well. It can sometimes be very difficult to work out a complex deal when the personalities on both sides are equally tough.

It can be tempting to let personal clashes between you and a potential buyer escalate – but keep reminding yourself that it will make it easier for you in the long run if you do your best to maintain a positive relationship with a business buyer.

What if I don’t like the buyer? Why do I have to be nice?

It can take a long time to get a business from initial offer all the way through to closing. Think weeks and months, not days. You also need to tack on a training period that will happen after closing, so you will probably have to work with this person for an extended period of time. Another thought? Once the transaction is over, the business brokers are no longer going to be there to act as a buffer. The one-on-one time with your buyer can be excruciating if you aren’t getting along – so it is in everyone’s best interest to keep the relationship amicable.

What if I don’t want to stay on and train them?

There are very few business transactions that don’t include a training period. The good news is most training periods are only a couple of weeks. It would be foolish for someone to walk in on day one and try to take over without knowing how the business is run. If you have employees or clients, you owe it to them to get the new owner up to speed before you walk away. It can be tough if you and the buyer aren’t on the best of terms, but the transition for your staff and clientele will be far less stressful if it appears that the relationship between you and the buyer is good. So for yourself, the future of the business and the sake of your staff be as nice as possible to the business buyer.

How can you stay focused on being nice?

Keep reminding yourself why you are selling. Whatever life will look like for you after the sale, keep focusing on that goal. Your time with the business buyer is short – and you can weather the storm. 

Are you considering selling your business and are worried about having to hand over the reins? Would you like to know more about how a training period works? Ask us! Leave any questions or comments and we would be happy to help.

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Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

If you’ve ever bought a house or have even just rented an apartment, you know the importance of agents in those transactions. Your real estate agent or your rental agent helped you with locating potential properties, let you in to take a look around, assisted with your purchase or lease contract and was there throughout negotiations. While it is possible to buy a house on your own or rent your own apartment, it’s definitely easier with someone who knows what they’re doing by your side. When it comes to the small business market, the same will be true. It’s going to be much easier with help.

Business transactions are inherently very, very complex.

If you’ve never been through a business transaction before you are probably going to have an impossibly difficult time navigating everything that needs to happen. That’s where business brokers come in. 

A business broker is a transaction agent. Their job is to get a business sale from start to finish. They help buyers by guiding you through from you initial contact all the way past the closing table.

Your broker will talk to you about your goals for business ownership, the amount of capital you are able to invest, the areas where you would like your business to be located and your education/experience. Your broker will then help you with your business search, narrowing down the choices based on your feedback. Once you have found a business or two that interests you, you will sign nondisclosure agreements to gain access to the business name and some cursory financials. If you like these businesses your broker can schedule conference calls with the sellers as well as site visits when there are no employees or clients around. Your business broker will then help you write your offer which, if accepted, will become the purchase contract. The business brokers will act as buffers during negotiations between you and the seller – a very important role. They will also negotiate with your future commercial landlord and property manager to ensure you get a fair lease. Your broker will also help you with the licenses and permits required for you to take over as owner.

This is a big list – and it would be quite an undertaking for someone who has never been through it before. Very few business transactions go through successfully without help. An experienced and qualified business broker has not only been down this road many times before, but they know where the pitfalls are going to be and can help you avoid them. 

The message here? Could you buy a business without a business broker? Maybe. Should you? Definitely not.

Are you considering buying a business but aren’t convinced you need a business broker? Do you have more questions about what a business broker can do to help you throughout the transaction process? Please feel free to leave any comments or questions. We would be happy to help!

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Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

You’ve done the searches. You’ve analyzed your options. You’ve done a few conference calls with sellers and you think you’ve found the right business for you. Your next step is a big one, and your decisions here can absolutely make or break your chances of buying this business. It’s time to make an offer.

Your offer is important for a number of reasons. The offer you put together (if accepted) will become the purchase contract. This contract will include not just the final sale price but many other parts of the transaction that will need to be negotiated. Think the length of your training period, the terms of the deal and how existing contracts will be assigned – just to name a few.

This all-important document essentially contains all the parts of your deal that will need to be negotiated. The fluid nature of an initial offer/purchase contract means the first version – your version – is just a place to start those negotiations. It should go without saying that you need to start off on the right foot. 

The relationship you have with the seller, although not a permanent one, will be critical to the success or failure of your transaction. You have to talk to this person, meet with this person, iron out a deal with this person and then most likely work side by side with this person during your training period.

This is not a relationship you want to start with a perceived slap in the face.

What do we mean by that? You do not want to low-ball a seller just to see how desperate they are or how great of a deal you can get. People who intentionally low-ball business sellers aren’t business buyers. They’re tire-kickers. Your initial offer speaks volumes to a seller about how serious you are and what it’s like to work with you. You are making a financial offer for something that seller has invested countless hours in, has spent years building and has made sacrifices to maintain. Yes, business transactions shouldn’t be emotionally driven, but in the small business market it really can’t be helped. No one wants their blood, sweat and tears treated like a cheap car.

What should you do instead?

Make a JUSTIFIABLE offer.

A justifiable offer is a simple concept – it’s something based in reality and backed up by data. You’ve looked at the numbers, you’ve considered the current market and you’ve come up with a number that makes sense – not the lowest, rock-bottom price you’d love but something you feel (based on the data you have) is fair.

Making a fair offer tells a seller that although you may not want to give them their full asking price, you are a person interested in making a deal happen. You are someone who values their business and all they’ve invested. 

How do I make sure my initial offer is fair? Talk to your business broker about what you’d like to offer, and then listen to their advice. They know the market, and can give you insight into whether or not the number you’ve come up with will be a good point to start negotiations.

The message here is simple. If you are serious about buying a business the best way to start your transaction is by making a fair and justifiable offer. 

Have you looked at businesses and want to know more about how sellers come up with their listing price? Do you have questions about what an initial offer/purchase contract entails? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Posted in Become a Business Owner, Buyers Articles

If you are someone who is interested in buying a business, you are more than likely looking for a profitable business that has a good share of the market and a great location. You are probably not going to be willing to buy a business that is on the fast track to failure and bankruptcy – so as you begin searching for businesses you may have pondered a pretty big question.

Why would anyone sell a perfectly good business?

This question is a very important one to ask as you search for businesses, and it is a question that any business seller should be willing and able to answer. If you are unable to get an answer from a business owner, this could be a major red flag.

Here’s something many people don’t understand. Most of the reasons for selling a business have very little to do with the business itself. A large percentage of the time a business is on the market because of the personal life of the owner, not because the business itself is somehow in trouble.

Let’s look at some reasons for selling that have more to do with the owner than with the business:

Retirement. This one goes without saying. An owner who is ready for another chapter in life is willing to sell a perfectly good business so they can move on.

Divorce. When husbands and wives are partners in a business, sometimes the business gets sold as part of the divorce.

Partnership disputes. Most partnerships start well, but not all end that way. If there is a breakdown in a partnership where both parties want out, it can mean putting the business on the market.

Medical reasons. If the owner or a member of their family has a medical condition that will take precedence over the business, or will keep the owner from being able to run the business, the business will likely end up on the market.

The kids decided not to follow in the family footsteps. Many small business owners have their children work with them in the business, but when the time comes for mom and/or dad to retire the kids may want to do something else.

There are many reasons that a perfectly good business ends up on the market, the key is to find out the real reason the owner is looking to sell. If the reason has little to nothing to do with the business itself, then you are looking at a potentially great business acquisition.

Are you looking for a business to buy, but have come across many that seem too good to be true? Do you have questions about how to find out the real reason a business is for sale? Leave us a comment or question here, and we look forward to working with you on your road to business ownership.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

Buying a business can be (and often is) an intensely frustrating process. When you have questions, when negotiations are in full swing – even getting initial information usually means you spend a lot of time waiting. Waiting for the seller’s broker to contact the seller. Waiting for the seller to get together the documentation you’ve requested. Waiting for an attorney to look over a contract. Waiting for approval by your new commercial landlord. Waiting for licensing and permitting requirements to go through. It takes an enormous amount of personal patience to see it through.

This huge patience requirement can make you feel a little crazy – maybe even crazy enough to try and push the process along by yourself.

What do we mean by that?

The process of buying and selling businesses comes with a rather rigid set of rules. The majority of those rules seek to protect the deal on two fronts. They protect the confidentiality of the transaction itself and they protect the buyer and seller from each other.

Why does a transaction need confidentiality and why shouldn’t you push to break it? Breaching confidentiality might not only kill your deal, it could potentially cause a fatal blow to the business you are hoping to buy. Business sales happen under a strict veil of confidentiality for a few very important reasons.

The most important of these reasons is the incorrect but pervasive assumption that a business for sale is a business on the brink of failure. This notion can destroy a business if the news gets out that it’s on the market. Employees can panic and leave. Clients can cancel big contracts. It can be devastating. As a buyer you have to keep the for-sale status of prospective businesses under wraps. You will not only be required to sign non-disclosure agreements – you will be forbidden from talking to staff on your own, from emailing the owner directly (in many businesses the owner’s email is accessible to their staff), from calling the place of business and asking for the owner, from visiting the premises without permission, etc.

While it might be tempting to email or call the seller because you’re tired of waiting for the brokers and attorneys involved to get you the information you’ve been asking for – don’t. One seemingly insignificant point of contact can cause a disastrous cascade. The rules exist for a reason. You have to follow them.

This leads us to the second set of rules that protect the buyer and seller from each other. Even if you are following the rules that protect confidentiality to the letter, it might be tempting to bypass the intermediaries and talk one-on-one with the seller (if you somehow have their home phone number, for example). Don’t do this either.

Why?

The better question is why do the intermediaries, the business brokers, exist? They exist because the complex tangle of a business transaction requires experience and it also requires a buffer. A seller is selling their blood, sweat and tears – something that may be their life’s work. They have a deep personal connection to their business – and a buyer can quickly and easily derail a deal by asking the wrong question, by making an innocent assumption, by saying the wrong thing. Those questions and remarks can offend a seller to the point that they will refuse to work with you – and your deal is dead.

Follow the advice of your broker and keep the flow of communication between you and the seller flowing through the people who you hired to keep your deal on track. Negotiations are far easier when the seller is still willing to talk to you.

The message here is the rules that cover your business transaction are there for a reason. Someone, somewhere messed up their chances of becoming a business owner – and their cautionary tale will keep your deal safe.

Are you a business buyer who thinks the rules are a pain and want to know more about why they are so important? Do you have a story about a derailed deal that could have been protected? Please leave any questions or comments here, and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

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