what should i know about selling my business Archives - Page 9 of 16

Last-Minute Greed: The Business Deal Kiss Of Death (And How To Avoid It)

Posted in Buyers Articles, Sellers Articles

Published August 12, 2019

Buying or selling a business is a large undertaking. From start to finish it can take months of back-and-forth to reach and agree on a deal. One you get to that point, where a purchase contract is ironed out, you should be able to coast through the home stretch – right? Not always. This home stretch period should be a breeze, where sellers tie up loose ends and buyers get geared up to take over the helm – but in many transactions something strange happens. Last-minute greed.

What do we mean?

Buying or selling a business typically involves large amounts of money changing hands. It is completely normal to get 11th hour cold feet and panic for a moment with the thought that you are either paying too much or aren’t getting enough. Maybe you came to this thought on your own, or maybe a friend or family member has chimed in late to say they think you’re getting ripped off.

Momentary panic is one thing, but if you let this fear get the better of you it can have disastrous consequences.

For instance, in this panicked state you call your broker and demand to put the deal on hold while you reconsider or demand to head back to the negotiation table. The other side of the transaction is then appalled at your insinuation that the deal has somehow (very suddenly) become unfair and balks at the suggestion that you renegotiate. Guess what? Your deal is probably dead.

You have spent weeks and months negotiating, looking at numbers, pouring over books – and after all of that you have arrived at a number that both sides agreed was fair. Why the last minute doubt?

It’s just cold feet. The way you are feeling is completely normal, but remember that while you were in a more rational state of mind you decided that this deal was one you wanted. It was a deal you thought was fair. You have had many conversations with your broker, with the other side – and you felt comfortable moving ahead. Everyone always wants the most they can get for their money, and business transactions are no different. The emotional swings are just larger because there’s more money involved.

Last-minute greed isn’t going to get you a better deal. It’s more than likely going to end with no deal at all, and a colossal waste of time for everyone who’s been involved – including you. We’re not saying that you should agree to a deal that’s unfair. What we are saying that if you were fine with a deal until days or moments before the money starts changing hands – you’re probably just momentarily overwhelmed.

If you do suddenly feel like the deal isn’t right and you should be either paying less or getting more – give your broker a call. They’ve seen 11th hour panic many, many times and can help walk you through the ramifications of trying to renegotiate with the other side. They’ve also seen deals where something does come up at the last minute that requires renegotiation – and they can help you decide if that’s really the scenario you’re in.

Don’t destroy a perfectly good business opportunity because it’s scary to take a big plunge. Look to your broker for help, and do your best to remain calm and rational all the way to closing.

Are you thinking about buying a business but are worried about writing such a big check? Have you considered selling your business but want to know how you decide if an offer is fair? Do you have a story about last-minute greed in a business transaction you think would help other buyers or sellers? Feel free to leave any questions or comments here, we would be happy to help.

Michael Monnot

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

www.InfinityBusinessBrokers.com

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Business Broker 101: Making The Right Choice

Posted in Business Broker Why & How, Buyers Articles, Sellers Articles

Published July 15, 2019

Our industry sometimes gets a bad rap, but as professionals who deal with other business brokers on a daily basis – we get it.

Like any industry, there are great brokers who excel at their job, and then there are those who are not so great. This article is meant as a peek into the business broker world and a quick education of what business brokers (should) do with the hope of helping business buyers and sellers choose a professional who will be a help – not a hindrance.

For starters, what is a business broker? A business broker is someone who assists business buyers and business sellers with the business transaction process. They (depending on the state) are licensed and insured to do this type of work, and although the business world is very different than the real estate world – they are often licensed as real estate brokers.

You can liken what a broker does to the buying and selling of homes, but with some MAJOR differences. First, business brokers aren’t typically selling property. They are selling existing businesses, and most businesses don’t own the property where they are located – they lease it from someone else. Second, the marketing and sales process for a business is very different from the same process for a house. For example, business sales are inherently much more complex and the for-sale status of a business must be kept in the strictest confidentiality (businesses for sale are perceived to be businesses on the verge of failure, which is rarely the case – and without confidentiality the whole staff might quit, clients might cancel contracts, etc.).

A business broker is hired by a business seller to list their business on the business market, and also hired by business buyers to help them find and then purchase a business. The commission paid to a broker (or brokers) involved is typically paid as a percentage of the final sale price by the seller.

Not all business buyers who come into the market end up buying a business, in fact the rate is probably something like 10% of those who inquire about businesses actually end up buying. For this reason, many buyers find it difficult to get the attention of brokers and sellers until they are forthcoming about their financial information and are ready to make serious offers.

Not all businesses that get listed on the market sell, this is also just a fact of the industry. The average rate most brokers hold is somewhere between 20-25% of businesses they list actually sell. If that rate sounds abysmal to you, we agree. Ours is typically closer to 60%, and most good brokers will be in that range. Why don’t businesses sell? Why isn’t the rate higher?

There are a litany of reasons why businesses don’t sell. Some businesses are priced way too high right out of the gate, and as such won’t sell because they are far outside the range of what the market will allow. In some cases the sellers refuse to take anything but a full-price, all-cash offer, which almost never happens. Some brokers take listings just to load up on potential calls, but do little to nothing to actually sell all of the businesses they list. We see “marketing packages” that consist of three poorly photocopied pages of old tax returns and nothing else. We deal with brokers (and sometimes sellers too) who rarely, if ever, respond to requests for information. In other cases, a business may not sell because of the time constraints of the sale on the seller’s side. If you have a very niche business, you will need to wait for a very niche buyer. Even if you don’t have a niche business, patience is necessary as most businesses take somewhere between 9 to 12 months to get from listing to closing.

Now that you have an idea of how the business of buying and selling businesses works, how do you pick a good broker instead of a bad one? Ask questions. Lots of them. A good broker will have no problem supplying you with answers.

If you are a seller, ask to see what a typical marketing package looks like. If you’re a buyer, see how quickly your requests for information and phone calls are returned. Ask any broker what percentage of their clients come from referrals (a high percentage here is a great sign). When you listen to answers to your questions, is the broker being honest with you, or are they just telling you what you want to hear? How important is confidentiality to this broker? How many closings do they typically have a year? Does this broker have their own shop, or are they a part of a much bigger company (and if part of a big company, are the numbers of businesses closed and number of listings just theirs, or are they including the corporate numbers)? Are they properly licensed and insured to do this type of work? Is this person only a business broker, or is this a side job that they don’t focus on?

The help of a good business broker can mean the difference between success and failure in the business market, so ask questions. Once you’ve found a good broker you can work with – listen to their advice. A good (or great) broker is there to help you, and by helping you and others like you, help the small business community they depend on.

Are you a seller who wants to help your business sell with the right help? Are you a buyer who’s had trouble getting attention from anyone in the business? Do you have more questions about the business buying and selling process? Contact us today or leave us a question or comment. We would be happy to help.

Michael Monnot

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

www.InfinityBusinessBrokers.com

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Neat Paperwork Is Vital – Prepping Your Business For Sale

Posted in Sellers Articles

Published May 23, 2019

With tax day recently come and gone, as a small business owner you might think your your bookkeeping responsibilities can take a back seat for a while. They shouldn’t, and if you’re considering selling your business anytime in the near future they definitely should be kept front and center.

Why?

Selling your business is a big responsibility that takes a great deal of time and energy. You don’t want to be in the midst of the selling process and realize that your books won’t hold up to careful scrutiny by a buyer. The value of the business and the validity of your listing price are dependent on withstanding that scrutiny. A jumbled stack of paperwork isn’t going to cut it.

Boxes of receipts need to be sorted, scanned and accounted for. Contracts should be kept in one place and kept sorted. Employee documentation should be organized in some fashion. Tax documentation should be legible and organized as well. Current P&L statements should be kept with frequently pulled P&L statements that show your business as it fluctuates month to month and year over year. You get the idea.

Imagine the stress of trying to compile and organize all of this documentation while in the midst of the sales process, particularity if some sort of personal crisis is forcing you to sell quickly. Losing the all-important first impression with a prospective buyer because your ducks weren’t in a row is 100% preventable. So is keeping your stress level to a minimum during the selling process.

You can avoid this particular pitfall if you get your books in order now and keep them that way. If you haven’t been keeping track of your business accounting, then buying accounting software or enlisting the help of a business account can be extremely important in helping your business put it’s best foot forward when you decide to (or need to) sell. Showing up to the first meeting with buyers with neatly collated binders and files will show that not only do you care about your business, you’ve been keeping up with everything that’s important. Prioritizing your books will speak volumes about what kind of business owner you’ve been – and the health and potential longevity of the business overall.

Another note: Use a business CPA or a business transaction accountant when you are going through your books. Someone who has never assembled the paperwork of a small business is not going to understand the nuances of getting your business books in order. If you need help finding someone, your business broker will be able to point you in the right direction.

No one likes to do paperwork, but if you own a business and want to sell it someday – you’re going to need to get that paperwork in order. If you need help, talk to a business broker about what you would need to do to get your business paperwork ready for buyer’s eyes.

Did this article resonate with you because you have a huge box of unorganized paperwork under your desk? Would you like to know more about what documentation buyers are going to want to see? Do you need help getting your business ready to sell? Please contact us today or leave any questions or comments here, we would be happy to help.

Michael Monnot

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

www.InfinityBusinessBrokers.com

No Comments »

Keys To Business Transaction Success – Don’t Stalk Your Broker

Posted in Business Broker Why & How, Buyers Articles, Sellers Articles

Published May 6, 2019

We know that buying a business is a very stressful endeavor. Selling a business isn’t any easier.

Guess what? The person at the center of that stressful and difficult situation isn’t always in the land of sunshine and rainbows. They’re there to keep the transaction on track. That person is a business broker.

A business broker’s day is full of sending and receiving emails, conference calls, travel to and from meetings and the meetings themselves. When they aren’t in direct communication with one of their clients they are putting together listing packages, writing purchase contracts, dealing with bureaucratic licensing issues – they’re very busy people.

A business broker’s job is to act as a buffer during negotiations and get a transaction to closing. They are there to help sellers get their business ready for market and there to help buyers find a business that fits with their goals. A big part of a business broker’s job is talking to everyone involved – keeping the business transaction on track by making sure everyone is getting what they need when they need it.

Your transaction is, obviously, a big deal to you. It’s probably the one major thing you’ll have going on in your life. If you’ve got a good broker your deal will absolutely be a priority – but an important caveat to remember is it won’t be their only priority.

If you hired an experienced and qualified business broker, then you probably aren’t (and shouldn’t be) their only client. If you call, text or email your broker, you should expect a response in a timely fashion. Timely, however, does not mean instantaneous. If a broker doesn’t answer the phone during business hours, perhaps they’re in a meeting or on a phone call. An unanswered phone call doesn’t mean you should then call them an additional 30 times in a few hours. A constant barrage of requests for contact – be they calls, texts or emails – isn’t going to get a quicker response. All this lightly-stalker behavior will do is complicate the day of the broker who’s trying to help you. Call once, and if you don’t hear from your broker in a realistic amount of time send a quick text or email to follow up. That should be enough.

A note here. If they aren’t getting back to you at all, where you go days and days without a response – then perhaps you need a different broker.

You should also remember that business brokers have lives outside of work just like you do. If you call at 10 at night on a Friday or at 7 in the morning on a Sunday, you probably shouldn’t expect a broker (or anyone for that matter) to immediately return your call.

Calling or texting constantly doesn’t help your broker help you through your transaction, all it does is fill up their inbox and make it impossible to get back to everyone in a reasonable amount of time.

Calling over and over again isn’t going to get you an answer any quicker, especially if the information you need is coming from the other side of the table. Sometimes your broker‘s hands are tied if the other side of the transaction isn‘t being cooperative. Business transactions are big and messy, and can sometimes involve buyers, sellers, buyer’s brokers, seller’s brokers, buyer’s attorneys, seller’s attorneys, CPAs – the list goes on. Having to get a single information request through that string of very busy people can sometimes take a few days. If your broker says they’re on it and they’re waiting for a response, calling them 16 times a day isn’t going to get the information any faster.

Keeping realistic expectations in terms of response times from your broker, along with a good dose of patience for all of the parties involved, will help immensely in getting your transaction all the way to closing.

Are you looking at businesses to buy and want to know more about how a business broker can help you? Have you thought about selling your business but have questions about the selling process? Please feel free to 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

www.InfinityBusinessBrokers.com

No Comments »

Why Your Broker’s Referral Rate Is A BIG Deal

Posted in Business Broker Why & How, Buyers Articles, Sellers Articles

Published April 15, 2019

If you are looking at businesses to buy or are thinking about selling the business you own, you should really, really care about referrals.

Buying and selling businesses can be a tough and messy thing to do, so there are professionals out there called business brokers who help buyers and sellers reach a closing table.

Like any industry, there are business brokers who are fantastic and there are business brokers who are terrible at their job. How can you as a buyer or seller figure out if the broker you are considering working with is at the top of the game? Ask them a very simple question.

How much of your business comes from referrals?

Referrals happen when previous clients or industry professionals like accountants, real estate agents or attorneys find out that someone is looking to buy or sell a business. They refer that person to a business broker they have previously worked with or know on a professional basis.

No one is going to give someone the name of a business broker they hate, so if you are working with a broker who gets the bulk of their business from referrals – it can tell you as a potential client a great deal about how this person conducts themselves in a business transaction.

We, for instance, get a great deal of our business through the referral process. Like 80% or more. Does this mean that we’ve made every client absolutely happy? Nope. But it does mean that we work very hard to get our clients to their goal. We do more than is expected and our past clients see that – especially when the other broker in the transaction does little to nothing to help the deal along. The difference between what we do and what some other brokers don’t do is the reason people send their friends our way.

The same goes for the professionals we work with throughout the transaction process, like attorneys and accountants. They’ve typically worked with other brokers who make big mistakes and expect everyone else to do the work for them – and after working with us they send any potential business our way instead.

If you want the best help on your journey to buy or sell a business, your best bet is to ask any broker about their referral rate. The good ones will be happy to tell you that they get a good chunk of their business from past clients and business associates. The bad ones will probably change the subject – and that’s a big red flag.

Would you like to know more about what business brokers can do to help buyers and sellers in a business transaction? Do you have questions about our referral rate? Ask us! 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

www.InfinityBusinessBrokers.com

No Comments »

Opportunity Is Knocking – Grow An Entrepreneur, Not Just A Business

Posted in Sellers Articles

Published April 4, 2019

It can be an excruciatingly tough decision. You’ve created a successful business and are generally happy with where it’s headed. You spend every waking hour working on growth and you are reaping the benefits of all that labor. Selling your business and an exit strategy are probably something you’ve considered down the line – but times are good so you’re definitely not going to sell now. Right?

Here’s the thing. Your business is currently successful. The economy is booming. You have solid numbers for the last few years. Your business is probably worth a lot right now. How much are you willing to bet that this upswing is going to last? If you wait too long to sell, then the answer could be everything.

No one knows how long the economy will boom, but we all know it can’t be forever. If we have another crash like the one in 2008, could your business survive? You and your family might currently be in good health, but that could change and pull your focus away from the business to the point where the business falters.

The calculation of how long to hang on to a business while the going is good can be tough, but here’s a few things in the tea leaves that might make you consider selling sooner rather than later.

The Baby Boomers are retiring in record numbers. A lot of these Boomers are small business owners and as such will be looking to sell in the near future so they can retire. That means a glut of stable, long-term small businesses with good numbers will be hitting the market. All of these great businesses will be your competition, and too many businesses for sale will absolutely push prices down.

The economy is great, and there’s a rush of new construction happening everywhere – in both the residential and commercial sectors. Real estate prices are soaring. Sounds like life in 2006 and 2007, right?

So what’s a business owner to do? You may not want to sell because you are essentially selling yourself out of a job – but here’s another way to look at your business investment. You can only grow your current business so far, and if this article is resonating with you then you’re probably nearing or have already reached the peak. Selling and moving on to new ventures can grow you as an entrepreneur instead of just growing one business. Here’s another thought – if the economy does crash and you were able to sell before it happened, you will be uniquely positioned to invest in a new business venture when no one else has any capital and the prices for businesses are way down.

The tried and true notion of buy low, sell high absolutely rings true in the small business market. If you haven’t considered selling because everything seems great – maybe you should. Selling your business while it’s still worth a lot will give you choices and capital that you won’t have if you hang on through the wave of retiring Boomers and the next economic meltdown. Consider growing yourself as an entrepreneur and get on the path to sell today.

Are you a small business owner who hasn’t considered selling? Would you like to know what businesses like yours are currently getting in the market? Please 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

www.InfinityBusinessBrokers.com

No Comments »

How A Haircut Can Undermine Your Business Sale – A Cautionary Tale For Business Sellers

Posted in Sellers Articles

Published March 28, 2019

You’ve made the decision to sell your business. You found a good broker who spent a lot of time talking to you about the vital nature of confidentiality in business sales, and as such you haven’t told your staff, your clients or your vendors about your plans to sell and move on to the next phase of your life. You’ve been careful not to talk about your business sale in front of your kids or your neighbors. You’ve only allowed buyers with signed NDAs access to your business. There’s a good bit of interest and everything seems to be going well.

Then one afternoon you get a panicked call from one of your staff. The word is out and your manager just quit.

Everyone knows the business is for sale and now you’re trying to keep the rest of the staff from quitting and your biggest client from walking on next year’s contract.

You call your broker, and they look through all of the NDA’s and all of the buyers who have considered your business – but the breach isn’t from them.

What happened? It was you.

You got a haircut.

Barbers, hairdressers and bartenders. What do these people have in common? You probably tell them way more than you would tell any other relative stranger. It seems harmless. They aren’t in your social circle and what you tell them seems like a private and confidential conversation. Guess what? It‘s not.

It is the very nature of their job to have these kinds of conversations with lots and lots of people. People who you didn’t know are friends with your staff. People who are the wife of your biggest client. People you may not have considered as people who could blow the confidentiality of your business sale apart.

These seemingly innocent conversations can have a huge impact on your ability to sell your business – or even your ability to keep the doors open. Confidentiality means everyone, not just those who you consider the most likely to spill the beans. To drive the point home – we’ve even seen a conversation between strangers on an airplane lead to a breach, so talking about selling your business with the guy cutting your hair down the street from said business is probably a colossally bad idea.

If you want to keep your business sale under wraps, the best idea is to keep that information to yourself and to the select few who need to know. Otherwise, a simple haircut can lead to a complete disaster.

Are you thinking about selling your business and want to know more about why confidentiality is so important? Do you have a cautionary tale to share with other sellers? 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

www.InfinityBusinessBrokers.com

No Comments »

How A Business Seller Can Combat Bad Advice

Posted in Business Broker Why & How, Sellers Articles

Published March 11, 2019

If you are selling your business, it isn’t just the opinions of business buyers you need to contend with.

Business buyers typically come with an entourage – an entourage with very strong feelings about the sale of small businesses.

Who’s in this entourage?

There are spouses and in-laws who are very interested in how much money is going to be spent on a new business venture. There is a severely inexperienced real estate agent friend who wants the commission for helping with the purchase of the business – and as this is the friend’s first foray into business transactions they have no idea what they’re doing. There’s an uncle who’s a CPA for a school district who knows absolutely nothing about business transaction accounting – and this uncle will happily advise your buyer that your very fairly priced business should only be listed for a third of what it is. There’s a buddy from the gym who read an article about earn-outs and now thinks every small business sale should be done that way. The list can go on and on, but you get the drift.

This well-meaning but ill-informed entourage can play havoc in a business transaction. They can undermine negotiations and cause rewrites of contracts. They can even kill a deal. While they will always be there – there are things you can do as a seller to combat their terrible advice.

What can you do? Be prepared.

You can hire an experienced and professional business broker who will be your buffer with this entourage. They can keep inexperienced pseudo-brokers out of the deal, help you hire the right professionals to get your business ready to sell and they can use their experience to negotiate on your behalf with whatever entourage member is currently causing issues.

The buyer’s inexperienced CPA uncle won’t be necessary if you’ve had a CPA who is familiar with business transactions and valuations set up your books so any buyer can clearly see where the cash flow is coming from.

You can have your business records in order, with everything from receipts to contracts neatly organized and all of your financial data inputted to accounting software that will allow any buyer to see the day-to-day, month-to-month and yearly numbers.

You can also mentally prepare for this inevitable part of selling your business. If you know that ridiculous advice is inundating the buyer’s side you are less likely to be offended past the point of no return when some of that ridiculous advice starts to mess with your deal. By staying patient and staying the course you are much more likely to have a successful closing.

The point here is your best course of action when dealing with a buyer’s entourage is patience and preparedness.

Do you have more questions about how to prepare your business for sale? Would you like to know more about what a business broker can help you with? 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

www.InfinityBusinessBrokers.com

No Comments »

What The 1st Half Of 2018 Might Say About The 1st Half Of 2019

Posted in Sellers Articles

Published January 24, 2019

2018 was a banner year in the business-for-sale marketplace, and as the first two quarters of the year are typically stronger than the last two – it may be helpful to use the first half of 2018 to see where 2019 might end up.

BizBuySell’s 2nd Quarter 2018 Insight Report once again showed record highs in the business marketplace, with small business transactions up 6.7% over the previously record-breaking numbers in the same quarter of 2017. The market has been steadily growing since the recovery for small businesses began in 2013, but the second quarter of 2018 marked the largest number of businesses changing hands since data collection began in 2007.

That trend continued for the rest of 2018, rounding out a record-breaking year overall. 2018 saw 10,312 businesses sold – the highest number yet. This was a 4% increase from 2017 and a very large 31% increase over 2016.

Why are so many businesses changing hands?

Baby Boomers. This large demographic group currently owns a whopping 53% of small businesses, but they are very quickly approaching retirement. Close to 60% of Baby Boomer business owners plan to sell in the next two years, so the market is primed for an influx – if not a tidal wave – of businesses for sale.

What does that mean for the market?

It means a large selection of good businesses for buyers to choose from and more competition between listings for the seller’s side of the transaction.

Median revenues in 2018, up 7.4% from 2017, showed small businesses were healthy. Also, the continued growth of the economy meant sellers were reaping the rewards of high sales prices – as the median sale price of the first two quarters of 2018 was up 4.4% over the same quarters of 2017. Numbers this strong will likely continue, if not increase, as we move further into 2019 – but those who survived the meltdown of 2008 may be worried about another bubble.

Other economic factors, like ever-changing immigration policy, tariffs, government shut-downs and trade wars could also drive the small business market – although it remains to be seen what those effects might be.

The smart move?

If you own a business and were planning on selling in the foreseeable future, now is the time. The market is booming, with active listings up 5.1%. This trend may continue to climb or we may be quickly approaching the peak. There are buyers with money and your business is in the black, so the safest bet is to sell while the selling is good. This is also true if you were considering selling so you could reinvest in a different business. The businesses on the market today are healthy, so a serial entrepreneur would be smart to take the large profit from a sale today and jump into a new opportunity now.

Want to know what the market looks like for your industry in particular? Do you have questions about when you should sell? Contact us today.

Michael Monnot

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

www.InfinityBusinessBrokers.com

No Comments »

Market Confidence Drops While Prices Rise – What’s In The Tea Leaves?

Posted in Buyers Articles, Sellers Articles

Published January 21, 2019

Buyers and sellers aren’t sure what the future of the business market holds, so what does 2019 mean for those who are thinking about buying or selling a business?

While 2018 numbers have yet to be released, the results of the 2017 BizBuySell Buyer-Seller Confidence Index might give insight to those in the business marketplace.

The BizBuySell Buyer-Seller Confidence Index analyzes the survey responses of 2000 entrepreneurs. The Index is based on a score from 0 to 100, where 100 is the perfect market for buying or selling a business and 50 is a neutral response.

The 2017 Seller Index was down from 59 in 2016 to a score of 58 – meaning sellers are still confident that the market is in their favor, but that the positive vibes might not continue as many sellers are concerned that we are reaching a peak. Anyone who owned a business before the 2008 financial crisis remembers the boom before the bust – and with business prices inching higher and higher it’s hard to know when the market will top out.

Buyer confidence is down as well, from 49 to 46, but this drop is likely linked to rising business prices. Buyers have been lucky in recent years, with the 2008 recession driving business prices to bargain basement levels. In 2013 the small business market began to show signs of life, and prices steadily grew as the economy improved. Growing small business revenues have meant higher sales prices for buyers, leading to a drop in confidence that there are good deals for low capital investment. The drop may also be linked to high listing prices, as many prospective business buyers feel that many businesses are overpriced.

Although some sellers are definitely trying to take advantage of a market in their favor, most businesses are listing high because they are reporting very strong numbers. Buyers looking for a steal probably aren’t going to find one, but those buyers with the financial means to grab a business today will be getting a healthy business instead of a project on the brink.

What’s in the tea leaves for 2019 and beyond? Who knows. This booming market can only last so long, and with the slight drop in confidence on both transaction sides it may be coming sooner rather than later. The best advice is to sell now if you’re thinking about selling, and buy now if you want a business in the black.

Do you have more questions about the current state and possible future of the small business market? Contact us today 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

www.InfinityBusinessBrokers.com

No Comments »

Last-Minute Greed: The Business Deal Kiss Of Death (And How To Avoid It)

Business Broker 101: Making The Right Choice

Our industry sometimes gets a bad rap, but as professionals who deal with other business brokers on a daily basis – we get it.

Neat Paperwork Is Vital – Prepping Your Business For Sale

Keys To Business Transaction Success – Don’t Stalk Your Broker

Guess what? The person at the center of that stressful and difficult situation isn’t always in the land of sunshine and rainbows. They’re there to keep the transaction on track. That person is a business broker.

Why Your Broker’s Referral Rate Is A BIG Deal

If you are looking at businesses to buy or are thinking about selling the business you own, you should really, really care about referrals.

Opportunity Is Knocking – Grow An Entrepreneur, Not Just A Business

The calculation of how long to hang on to a business while the going is good can be tough, but here’s a few things in the tea leaves that might make you consider selling sooner rather than later.

How A Haircut Can Undermine Your Business Sale – A Cautionary Tale For Business Sellers

Everyone knows the business is for sale and now you’re trying to keep the rest of the staff from quitting and your biggest client from walking on next year’s contract.

How A Business Seller Can Combat Bad Advice

Business buyers typically come with an entourage – an entourage with very strong feelings about the sale of small businesses.

What The 1st Half Of 2018 Might Say About The 1st Half Of 2019

2018 was a banner year in the business-for-sale marketplace, and as the first two quarters of the year are typically stronger than the last two – it may be helpful to use the first half of 2018 to see where 2019 might end up.

Market Confidence Drops While Prices Rise – What’s In The Tea Leaves?

While 2018 numbers have yet to be released, the results of the 2017 BizBuySell Buyer-Seller Confidence Index might give insight to those in the business marketplace.

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