What To Do With Skeletons: How Business Buyers Should Deal With Due Diligence Issues



If you are looking at buying a business, then the due diligence step will be in your future. This part of the business transaction process occurs when the seller accepts your initial purchase offer. Due diligence is important because it gives you a chance to peek behind the scenes, scour the books and dig up any skeletons lurking in your future business before you sign on the dotted line.

 

One open drawer reveals skeletal bones that were previously hidden.

 

Wait, skeletons? What should I do if I find potential problems during due diligence?

 

First of all realize that it isn’t “if” you are going to find skeletons, it’s “when”. Small businesses are complicated, complicated things – and most have some kind of issue that you as a buyer will find less than ideal. Perhaps the largest customer contract is expiring shortly after you take over as owner. Perhaps the business has unpaid taxes. Perhaps the numbers initially provided by the seller don’t really add up. It really could be anything.

 

Once you have come to grips with the fact that you are likely to uncover something potentially ugly – don’t freak out when it happens.

 

Think of it this way – if essentially all small businesses have issues, and these businesses with issues are still running and are appealing enough for you to have made an offer – then perhaps the issue that you’ve found can be dealt with without completely killing the deal.

 

Issues that can affect your bottom line as the new owner can mean a renegotiation of price and a price reduction to accommodate what you’ve found. Issues with things like unpaid taxes can mean adding provisions to the purchase contract. The point is not everything you find should send you screaming into the night. Concessions and negotiation may be able to solve the issues you find.

 

What if what I find is really, really bad?

 

Unfortunately, some skeletons are definite deal killers. You don’t want to take over a sinking ship, so if what you find is irreparable – you should absolutely walk away. The message here is just don’t jump the gun.

 

If you find something that makes you uncomfortable, ask your broker how bad it really is. A good broker has seen it all and will be able to tell you if a potential issue is negotiable or a deal killer. If it’s negotiable, take a deep breath and head back to the table with the seller to see what you can work out.

 

Do you have more questions about what can be done when skeletons come to light during due diligence? Would you like to know how to decide if an issue is a deal killer? Ask us! Leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


Big Personalities – How Business Sellers Can Survive The Selling Process



If you own your own business, you already know the type of personality it takes to be successful. You have to be driven, hard working, thick-skinned and able to make tough decisions. The typical type-A personality.

 

Guess what? The person who is going to buy your business will likely have all of the same personality traits you do. If you’ve ever tried to collaborate or negotiate with someone who’s as type-A as you are, you probably know that it can be tough.

 

negotiation by phone

 

As the owner of a business, your say is the final say – but in negotiations with a buyer you will have to shift gears and compromise to get the deal done. This can be tough when you are used to being the one in charge.

 

How do you survive this major change of roles?

 

Take deep breaths, early and often.

Selling a business can be a very stressful process, so knowing that it is probably going to be tough will help you mentally prepare for the challenges ahead. Expect to feel overwhelmed, expect long lists of requests and expect strong personalities on the other side of the table. Some business transactions are very smooth and stress-free, but others are not – so prepare yourself mentally to take on the challenge.

 

Put yourself in the buyer’s shoes.

Whether you started your business from scratch or bought it from someone else, it can be very helpful during the business transaction to occasionally remind yourself to look at the situation from the buyer’s point of view. Sure, they may have already asked what feels like a million questions – but if you were about to write a check that big you would probably have lots of questions too.

 

Keep your thick skin intact.

Buyers are going to try and get your business for the least amount of money possible. You would do exactly the same thing if you were in their shoes. Low-ball offers or offer reductions after due diligence are not a personal attack on your or on the business you’ve built. It’s simply business. Keep your personal feelings out of the equation and try to see their offer and the reasons for their offer from a buyer’s perspective.

 

Mentally prepare yourself to let go.

As a type-A business owner, you are probably a bit of a control freak – which is a very useful trait for business ownership. When the time comes to hand over the keys, it can be hard to put that control-freak on hold. This difficulty can be compounded if you aren’t madly in love with the person who is trying to buy your business. Again, a successful transaction means putting your own personal feelings aside in the name of business success – regardless of what is happening with the strong personality on the other side of the negotiating table. Don’t focus on whether or not you like the buyer, instead think about your new future and what your plans will be for the proceeds of your business sale.

 

Selling your business can be tough, especially if the person buying your business is a type-A personality like you. Remember to take deep breaths, keep your personal feelings aside and focus on your future – these things will help you make it to the closing table.

 

Do you have questions about how to deal with difficult buyer situations? Are you curious about what you might be able to get for your business in today’s market? Ask us! Leave any questions or comments here and we would be happy to help.

 

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


Business Sellers: Deciding When To Let Go



Sometimes in the life of a business owner, the all-important decision of when to sell your business is made for you and is totally outside of your control. A sudden family illness, a need to move to another area or state – for these situations it is easy to make the decision to sell because you have no choice.

 

What if you’re never forced to sell? If you don’t want to stay the owner forever, never retire or pursue a different goal, then you will have to make a decision about when the right time to sell might be.

 

Question mark heap on table concept for confusion, question or solution

 

First and foremost, you need to be readyemotionally ready. If the first buyer who makes an offer causes you to panic and pull your business from the market – then you have wasted a colossal amount of time and energy listing the business in the first place. You won’t be able to hand over the keys on closing day if you haven’t prepared yourself to let go.

 

Secondly, the business itself needs to be ready to hit the market. If it isn’t you need to be ready, willing and able to get it where it needs to be. If all of your paperwork is in a big, disorganized box under your desk, you haven’t filed your taxes in three years and half of your equipment is broken – you probably need to take some time to sort out all of the parts of your business a buyer will want to see before you list. Someone who really wants to sell a house is willing to clean out the clutter and give it a fresh coat of paint. If you aren’t willing to do something similar to get your business ready to sell, then perhaps you yourself aren’t really ready.

 

Lastly, you need to look at the market. If you were thinking about selling your business right after the financial crisis that caused the recession, you probably would have decided that it would be smarter to wait until the market came around. Market fluctuations in the small business world can vary as a whole, by specific industries and/or by local area. The best thing you can do to feel out the market for your business is to have a conversation with a business broker. Finding out the general health of the small business market, how your area is faring and what businesses comparable to yours have recently sold for will probably help you immensely in determining if now is the right time to sell.

 

Deciding the right time to sell can be very difficult because the perfect time to sell doesn’t exist. You need to weigh your goals and the market to determine when the best time would likely be. Talk to a good business broker today and then do some personal soul searching to decide if you really are ready.

 

Would you like to know what businesses comparable to yours have recently sold for? Do you have more questions about how to decide the best time to sell? Please feel free to leave any questions or comments here and we would be happy to help.

 

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


Thinking About Buying A Franchise? Why “Used” Is Better



In our society, the word “used” typically carries with it a less than ideal connotation – it means that someone else got the best and the “used” buyer is left with what’s left. In the business world, however, “used” gets a boost because a “used” business is an existing business. Existing businesses are good.

 

Blurry convenience store shot by moving camera with slow shutter speed

 

If you are thinking about getting into the franchise ownership game, you will have to initially decide if you want to start a new franchise location or try to find an existing franchise location to purchase. If this is your first business or your first franchise – then buying existing is probably the best option.

 

Why?

 

An existing location is proven.

A franchise location that already exists and is currently running is far less of a gamble than putting a brand new franchise in an unproven location. An existing location also has an existing staff and it’s own established daily operations. There won’t be as much guess work for you as the franchise owner because there will be a seller there to train you as to what works and what doesn’t at that particular location and with that particular staff. An existing location is turn-key instead of starting from scratch.

 

An existing location has records.

Another major benefit only an existing location will have? Records. Deciding how much a business is worth to you as a buyer is far easier if there are records of the cash flow and finances of an already existing location. Buying new means a great deal of guesswork as to the future projections on your investment.

 

An existing location already has customers.

You might be considering a franchise because it comes with the added benefit of an already loyal customer base. The brand will definitely get people in the door, but and already established location will come ready-made with regular clientele.

 

An existing location offers flexibility during negotiations.

When you start a new franchise location, there are often strict rules and fee structures you must abide by – and very little (if any) room for negotiation. When you buy an existing franchise, there will likely be fees associated with an ownership transfer, but the price you pay and the terms of your deal will be largely in the hands of you and the seller. This may allow you some wiggle room in terms of price and contract terms, but this will depend on the franchise itself.

 

If a franchise is the business path for you, don’t get hung up on the “used” nature of an existing location – for most buyers it can be a far better bet. Ask your business broker about what franchises are currently available on the market and about the terms required to take over an existing franchise location.

 

Do you have more questions about how the process to buy a franchise differs from buying an independent small business? Do you want to know what the purchase of a franchise might cost? Please feel free to leave any questions or comments here and we would be happy to help.

 

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com

 


Breaking The Mold – How A Business Buyer Can Stand Out



business 300

 

Thinking about buying a business? The best way to go about buying a business of your own is to employ the services of a business broker. If you have already started your business search, you may find that it is difficult to get business brokers to pay attention to you. Why is this?

 

For most business brokers, dealing with buyers is frustrating. Up to 90% of potential buyers who enter the market never buy anything, and a big chunk of that 90% are people who are just kicking tires and have no real desire to ever buy a business.

 

If you are among the 10% who really do want to buy, separating yourself from the rest will be critical in getting a deal done. So how do you as a buyer get business brokers to take you seriously?

 

Ask questions.

Serious buyers ask great questions, and they ask lots of them. Buying a business is very different from buying a house because you aren’t buying aesthetics and a structure, you are buying cash flow. As such, the physical location and furnishings aren’t really important. Great buyers want to see the books and have conference calls with the owners, they don’t want to go on a walk through.

 

Be ready to answer questions.

Yes, personal financial information is intensely private, but when you are buying a business you are going to have to provide proof of funds and answer lots and lots of questions about your money and your work history – so just be willing and able to answer from the very beginning. Sellers don’t want to reveal proprietary information to potential buyers who haven’t proven they can afford the business and landlords/property managers won’t be willing to negotiate a new lease with buyers who don’t have the appropriate financial means.

 

Be patient.

Your business broker (if they’re a good one) has many clients and many listings to manage, so if they don’t immediately call you back – don’t call 17 times in a row. If you have shown that you are a serious buyer, you are important to your broker and they will work hard to get you the best business for you. Likewise, you also have to understand that business sellers are also small business owners, so you aren’t their top priority – the business is. Your questions will be answered, so be patient.

 

Be flexible.

You might think you really want to buy a bar, when in fact a completely different business would better meet your goals for business ownership. Entering the market with a flexible mindset will be instrumental in getting you the right business. You also need to be flexible with the process of a business transaction – negotiations and appointment requests may not always go your way.

 

If you are ready, willing and able to buy a business – stand out from the rest by asking and answering questions, having patience and being flexible. By showing your broker and sellers that you are serious you will be well on your way to business ownership.

 

Do you have questions about the business transaction process? Are you wondering if the business you think you want to buy is actually the right business for you? Ask us! Please feel free to leave questions or comments here and we would be happy to help.

 

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com



Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907




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