what you should know about selling your business Archives - Page 5 of 17

Buying/Selling? Why You Really Need A Broker

Posted in Buyers Articles, Sellers Articles

Published March 7, 2022

Buying or selling a business? Are you ready to negotiate?

No one has ever bought or sold a business without a great deal of back and forth between the parties involved – and many, many deals have died over the negotiating table. Nothing is more frustrating for buyers and sellers than the death of a perfectly good deal. If you are thinking about buying or selling a business, how do you keep your deal alive?

Use an experienced and qualified business broker. A good business broker is essential for success.

Of course you would say that – you’re business brokers. Yes, you have us there – but we would advise you to use the services of a business broker whether that’s what we did for a living or not.

Why? The business selling process and the businesses themselves are both complicated, messy animals. No where does that inherent messiness come out more boldly than during negotiations.

What needs to be negotiated? Essentially everything. The purchase price, the length of the due diligence phase, seller financing agreements, a non-compete clause, a new lease, the value of the inventory, the length of the training period, the value of the equipment and furnishings, the continued employment of certain staff, the closing date – the list goes on and on.

With such a monumental list of things that need to be agreed upon by two parties with vastly different goals it’s no wonder that many deals fall apart. A seller is dealing with handing over a business with which they have strong emotional ties as it has been a very big part of their life. Sellers are also nervous about selling themselves out of a job, essentially becoming unemployed the moment the deal is signed. They want to get as much as they can out of the sale of their business. Buyers, on the other hand, are dealing with writing a huge check to a complete stranger for a risky new entrepreneurial adventure. They want to spend as little as possible so they can keep working capital available.

How do you meet in the middle of such vastly different goals? An intermediary like a business broker.

A broker’s responsibility is to keep the deal together and help it get to the closing table. Your broker acts not only as an experienced advisor who ensures everything that needs to be done gets done, they also act as an all-important buffer between the two parties. Business sellers and business buyers are entrepreneurs at heart – and to be a successful entrepreneur you need a strong and driven personality. If you’ve ever tried to argue with someone who has this personality type – you should understand why a buffer is needed. Too many perfectly good deals have fallen apart because someone asked the wrong question, made the wrong request – and the other side was offended to the point of no return.

Don’t try to go-it alone. If you are serious about selling or buying a business, you need a business broker to help you negotiate your way to closing table success.

Are you thinking about selling your business and want to know more about how a business broker can help you? Do you want to buy a business and want to know more about the negotiation process? Ask us! Please feel free to leave any questions or comments and we would be happy to help.

Michael Monnot

Selling Your Business? What To Do When You Hate The Buyer

Posted in Sellers Articles

Published February 17, 2022

Selling your business can be tough. There’s the to-do list of getting the business and your books in order, the extra workload of providing everything a buyer asks for during due diligence and the stress of negotiations. At the end of the transaction process you have to hand over the keys to a business that has been your blood, sweat and tears – usually to a buyer who is essentially a complete stranger.

This last bit of the process, the part where everything becomes final, can bring out an emotional response that sometimes surprises business sellers. Those big emotions can be exacerbated when you really, really don’t like the buyer. Sometimes the distaste for a buyer can even derail a deal.

Here’s how to keep that from happening:

Is the problem is the buyer, or you relinquishing control?

Business owners are a particular breed. They’re decisive, strong-willed and hard working. Most have a type-A personality. This is a great personality while you’re in charge of your business, but it can cause issues when the time has come to hand over the reins. In the vast majority of cases buyers are going to come into a business and make changes. Changes that maybe you as an owner would never make – and the relinquishing of all control over the fate of your business can cause a seller to balk. You need to understand that not only are changes likely to happen, you are probably going to have this kind of negative reaction. Remember that just because the choices this buyer wants to make don’t align with your own – they are likely still a good buyer, perfectly capable of purchasing and running your business. Sellers who aren’t prepared to let go will often project their strong emotions onto their buyer, deciding that it’s the buyer who’s the problem. If you know going into the process that you might feel this way you can be better prepared to keep your big emotions from impacting your deal.

Is the problem a clash of personalities?

The transaction process can be a long one, sometimes forcing together two people who really struggle to maintain a professional relationship. Maybe you and your buyer have differences of opinion on how the business should be run. Maybe you and your buyer fundamentally disagree about everything under the sun. Wherever the clash of personalities comes from, it can be really difficult to remain objective during meetings, negotiations and the like when your buyer is someone you would never engage with in any other situation. If this is the case for you, slow down and take a breath. Remember that point of this transaction isn’t for you and your buyer to be best friends or work together forever. The point is to get to a closing table and get a financial return on all of your investment of time, energy and money that you’ve put into your business. It can be really helpful in the high stress moments to keep your eye on the prize. This type of situation is also where your business broker can be instrumental in the success of the transaction. If you don’t like interacting with the buyer – don’t. Use your broker as a buffer between you for as many situations as possible.

It can be difficult to get a deal to closing when the parties involved aren’t fond of one another- but it’s not impossible. Think about where the animosity is coming from for you, remind yourself that this process doesn’t last forever and keep your broker in the middle.

Have you tried to sell a business and had personality issues with a buyer? Do you have questions about how a business broker can act as a buffer during the transaction process? Please fell free to share your experiences or ask questions. We would be happy to help.

Michael Monnot

Selling? Frustration And Staying The Course

Posted in Sellers Articles

Published February 10, 2022

The decision to sell your business is a big one. Is the timing right? Is the market in a place where I’m going to get the best possible return on all of my investment? Am I ready to sell?

Once you’ve crossed all of those mental hurdles and actually listed your business for sale it can be tempting to enter the same mode one does when you’ve put in a two-week-notice. It’s time to coast and then move on, right?

Not really. It can take a long time to sell a business. Typically something like 9-12 months. Longer if your business is something in a niche market.

We get that ideally you’d like your business to sell right away. Some businesses do sell on an accelerated timetable. Most don’t. If it takes a long time to find the right buyer, you’re in good company. Most sellers have to wait.

It can be frustrating when your business doesn’t immediately sell and it can be tempting to pull your business back off the market because of that frustration. Don’t do that. It takes the right buyer and the right moment – so you need patience.

Even if you’ve found a decent buyer the process itself can seem to drag on. Conference calls, meetings and sight visits scheduled and then rescheduled. Lists of questions to be answered. Due diligence periods. Extensions. Issues with commercial lease negotiations. Issues with licensing. It can seem never-ending – but it’s not. If you stay the course you will eventually reach that closing table.

If you feel like your frustration with the length of time it’s going to take to get you to a closing table is making you rethink selling at all – remember what the alternative is. Working at your business until you’re dead or locking the doors and walking away with nothing. If all that stands between you and a return on all the investment of time, energy and money you’ve put into your business is a process that can feel a little long – is it worth it to pull out? Definitely not.

Are you thinking about listing your business for sale and want to know the average time from listing to closing for your industry? Do you have questions about the length of time each phase of the process typically takes? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Michael Monnot

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

Entrepreneurial Legacy: Why Selling Your Parents’ Business And Buying Your Own Is The Right Move

Posted in Buyers Articles, Sellers Articles

Published November 1, 2021

If you are the child of entrepreneurs, then you grew up inside a business. You did your homework in the back office, you helped out on your days off and you probably became an employee once you were old enough.

When your parents look toward the future, they probably assume that their retirement plan includes handing you the reins. Great, if that’s something you want.

What if it’s not?

It can be difficult to tell your folks that you don’t want the business they consider their legacy – but the reality of taking over a business you don’t have a passion for is you likely won’t be as successful as you could be. Entrepreneurs need an edge that only passion can give you. As the child of entrepreneurs you know this already. Guess what? Your parents know it too.

If you don’t want your parents’ business – you have to tell them how you feel. We know it’s a hard conversation to have, but it’s one you have to face.

The good news? You can still continue your parents’ entrepreneurial legacy. You can fulfil their dream for you to be an entrepreneur and still follow your own passions. How? You can sell their business and buy your own.

Selling your parents’ business can give them a return on their investment in cash – cash they can use for their retirement and also use to help you purchase a business where you can be successful.

For instance – if your parents own a flower shop, but you’ve always dreamed of owning a pizzeria they could cash out on their flower business and then help you with a decent down payment on an established pizzeria. You can then finance the rest of the purchase with your own cash, with seller financing or a loan. You can pay your parents back over time, or let them maintain a silent partner/investor position so they can still have income in their retirement years.

The point here is you can still become the business owner your parents have always hoped you would be without giving up your own dreams and adopting theirs. Have the tough conversation, and then give them the sell/buy alternative for the continuation of their legacy.

Are you the child of entrepreneurs and have always dreaded taking over their business? Would you like to know more about the possible options for a sell/buy scenario? Please feel free to leave any questions or comments, we would be happy to help.

Michael Monnot

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

Selling? The Questions Your Broker Should Be Asking Buyers

Posted in Business Broker Why & How, Sellers Articles

Published October 21, 2021

If you are ready to sell your business, then you might already know the importance of confidentiality during a business sale (if you don’t, read this now).

Keeping the for-sale status of your business as need-to-know-only information will be pivotal to a successful sale, and the best person to help you maintain confidentiality is an experienced and qualified business broker.

Notice that we said experienced and qualified. Like any industry there are brokers who know what they’re doing and those who could care less. You don’t want the latter on your team. You don’t want a broker who responds to every form or email inquiry about your business with an automatic nondisclosure agreement (NDA) – without any idea of who the person is that’s signing it. Allowing dozens and dozens of NDAs on your business opens you up to a myriad of problems.

A prospective buyer should be answering some very important questions before they’re just handed the NDA. If anyone who tries can get access to your business information, the likelihood of maintaining confidentiality (as well as the likelihood of finding the right buyer) will probably be small.

The initial vetting of prospective buyers is critically important, and if your broker knows what they’re doing they will be asking questions like these:

Do they have any practical experience with a business like yours?

You’ve worked hard to make your business what it is today, so you aren’t likely to hand the keys to someone who is destined to immediately drive your business into the ground. Potential buyers need to have some sort of practical experience, training or education in your industry so they don’t have to add learning an entirely new industry to the already steep learning curve of taking over an existing business. This is also very important if you lease your business location, as a commercial landlord is unlikely to transfer a lease to someone who would have no idea what they’re doing. It’s a safer bet for the landlord to have you stay on as the owner and keep paying the rent.

Do they have the financial means to actually buy your business?

The business market is full of buyers who think they can afford businesses they definitely can’t – incorrectly assuming they will be able to finance 80-90% of a sale. In most business deals where financing is involved – be it SBA loans, seller financing or a more traditional loan – a buyer will need to come to the table with a sizeable down payment. A good broker will have a very serious discussion with a prospective buyer about how much cash they actually have available to buy a business, how much financing they would actually be able to get and then only disclose to that buyer businesses they can afford.

Is this buyer who they say they are?

One of the ways confidentiality can be breached is by letting the wrong person sign the NDA for your business. Think a current or former employee who is looking to confirm a rumor or a competitor looking to move in on your niche. Your broker should ask you to come up with a list of people who can’t know the business is for sale, and then verify someone’s identity before handing them the NDA to sign. Good brokers ask a lot of questions, require some personally identifying information and then wait to verify that information before disclosing your business.

The point here is in order to reach a closing table successfully, you need to make sure you have the right help. Ask your broker what they do to vet potential buyers. Are they asking questions? Or do they disclose to anyone who asks?

Are you getting ready to sell your business and want to know more about why confidentiality is important? Would you like to know more about our process to vet buyers? Ask us! Please feel free to 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

Why It’s Not Worth It To “Win”

Posted in Buyers Articles, Sellers Articles

Published October 18, 2021

Business deals don’t just have a lot of moving parts, they have a lot of people. People with a lot to lose and people with a lot to gain. People who do this kind of thing for a living and are therefore unbothered by potential issues and people who’ve never bought or sold a business who think every small issue is a disaster. People who have to write very big checks and the people who are counting on those checks.

In any situation where you combine a lot of people and relatively high monetary stakes – drama is inevitable. There has probably never been a business transaction where everything was smooth and no one got upset.

Here’s why we bring this up. People who are going to buy a business and people who already own one are a tough bunch. You could call it type-A personality. You have to be strong, resilient, willing to make decisions and willing to take risks to be a successful entrepreneur. This personality, however, can be a bit of an issue when a business is changing hands.

Why? No ONE person can “win” in a business transaction.

The contract used for the sale of a business will end up being a very carefully crafted and heavily negotiated document. Heavily negotiated because businesses are inherently complex, and as such there are a lot of things to discuss and then decide on. How much is the buyer going to pay? Will there be financing of some sort? How will the lease be transferred? How will the licenses be transferred? What are the time frame and responsibilities for both parties during the training period? How long will the seller let the buyer have for due diligence? This list goes on and on.

The reality that essentially everything needs to not only be discussed but agreed upon as well means that neither side is going to get everything they want, exactly as they want it. Everyone, EVERYONE in the deal is going to have to make a few compromises if they want to get a deal done.

What this means for you if you’re a buyer or a seller is you can’t die on your sword every time something isn’t going your way. You can’t be petty about small things because you’re frustrated about something that has happened in the weeks or months that it takes to put a deal together. It means you can’t be petulant and difficult just because you feel like it.

At this point you’re probably saying “I’d never do that” – right? You might.

When a business changes hands, so does a lot of money. It’s a business that is someone’s blood, sweat and tears – and is getting handed to a complete stranger. The entire process can be long and incredibly stressful. It will be very hard for both sides of the table to always remain objective and not feel personally challenged during many parts of the process. You have to go into this knowing that your buttons will be pushed, your stress might get the better of you and your feelings might get hurt.

When that inevitably happens, don’t do this. Don’t make everyone change the time and place for a meeting last minute just because you want to be difficult on purpose. Don’t drag your feet with documentation that the other side has requested just because you think their questions are annoying. Although mildly entertaining for you in the moment, petty nonsense like this only wastes your own time and puts your own deal in jeopardy.

Power plays to “win” will do nothing but aggravate everyone in the deal – a deal that’s hard enough already and doesn’t need the additional drama. Go into your deal knowing that this process will be challenging, but worth it if you can remain patient.

Have you been in a business transaction where emotions got the better of someone and have an experience to share? Would you like to know more about the challenging parts of a business transaction? Leave any questions or comments, we would be happy to help.

Michael Monnot

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

Saving Yourself From A Nightmare – How To Get Ready For Due Diligence

Posted in Sellers Articles

Published October 14, 2021

Selling your business can be tough and time consuming. In addition to your day-to-day responsibilities as a business owner you have to be available for conference calls and meetings with brokers and potential buyers, you have to host on-site tours, you have to train the new owner and most importantly you have to provide the information and documentation a buyer requests during due diligence.

This last part – the documentation – can become a massive issue if you as a seller aren’t ready with what a buyer will probably ask for long before they actually ask.

Here’s why. Once you’ve accepted an offer from a buyer the due diligence period can begin (where a buyer typically gets a couple of weeks to go through your business records and decide if they want to continue with the purchase) – but it only officially begins once you’ve supplied a buyer with the information they’ve requested. Your business is essentially off the market during this time, so prolonging the time before due diligence starts by being unprepared on your end can keep your business away from the eyes of other potential buyers should this deal fall through.

This part of a business transaction exemplifies the saying “an ounce of preparation is worth a pound of cure” because you don’t want to be scrambling to assemble lists of expenses, months of payroll, multiple years of tax returns, copies of business licenses and permits, leases for your business location, registration information for equipment and/or vehicles, dates of purchase for equipment or inventory, leases or purchase documentation for company vehicles, client contracts, vendor contracts, lists of assets, multiple months of inventory records, employee files – all while the pressure of a due diligence timeline hangs over your head. It can be a maddening and stress-fueled nightmare if you aren’t ready.

The best thing you can do for your sanity, your hopes of reaching a closing table and your relationship with potential buyers is be ready.

Talk to your business broker about what a buyer is going to want to see – then get all of that documentation ready. Create files that can be shared, collect copies of documentation and make sure your financial records are easy to read and decipher. If your books are a mess your broker might recommend having a CPA who specializes in business transactions put your financial records together in a way that will make sense to buyers.

The message here is it won’t be good for you or your hopes of successfully selling your business if you’re trying to do ten years of books in three days. Get ready first.

Is selling your business something you’re considering in the near future? Do your business records consist of hundreds of unorganized pieces of paper currently shoved in a big box under your desk? Would you like to know more about what potential buyers are going to want to see? Feel free to 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

Selling Your Business? Why You Should Keep Your Employees In The Dark

Posted in Sellers Articles

Published October 7, 2021

We get it. When you have employees, it can be hard to see them as just employees. They’re trusted colleagues who may have been working with you for a long time.

When it’s time to list your business for sale, it can be tempting to keep everyone in the loop. They should know that the business is potentially changing hands in the near future, right?

Unfortunately, no. Here’s why:

No one likes change. Particularly when that change could upset or derail someone’s paycheck or career plans. Employees who find out their place of employment is for sale invariably panic and a good number of them quit before a sale even happens. Think an entire kitchen staff including the head chef leaving en masse. Or an entire salon staff walking out and taking their regular clientele with them.

A huge staffing issue like this, at a time when prospective buyers will be scrutinizing your business and it’s sustainability will obviously kill any potential deals. It can cause massive issues for your bottom line and has tanked businesses completely before they got anywhere near a closing table.

Don’t do this to yourself, your business and your chances of successfully reaching a closing table. You have to keep your employees in the dark about the for-sale status of the business until after closing.

What about someone pivotal to the business, like a head chef or manager? Can’t I tell them what’s happening?

It depends. There are some instances where a key employee can be in the loop, but for the most part you need to keep anyone who is on your payroll out of the business transaction itself. We realize that it can feel like you’re deceiving the people who trust you – but what you’re actually doing is protecting the integrity of the place where they work. Keeping the business in good standing will keep them employed, and employees who are good at their jobs have little to worry about if they continue to be good employees under new ownership. No one wants to take over a successful business and toss out the people who make that business successful.

Talk to your business broker about the employees you have, the roles they play and whether or not you’d like some of them to know about the sale before it happens. Your broker will be able to help you decide if it’s worth the risk to your business to let some of your staff know what’s going on. In almost all cases, the answer will likely be that it’s better if no one knows.

Have you considered selling your business but are concerned about the future of your employees after a sale? Do you have questions about what types of employees should be kept in the loop? Feel free to 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

Ready To Take The Plunge? Buying An Existing Business

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

Published August 30, 2021

Have you always wanted to own your own business but aren’t sure how to take the plunge?

One path to entrepreneurship that many choose is to buy an existing business. This can be a good option for a number of reasons.

First and foremost, the business has already been set up for you, and the business model has been proven because the business is currently up and running. The location is equipped and a customer base has been established too.

What do you need to do to get started if this is the path for you?

The first step is deciding on a type of business to buy. More often than not, a budding entrepreneur will start the process by seeing what businesses are available. This is a mistake because it can cause you to fall in love with a business that wouldn’t meet the goals you have for business ownership.

When entering a new business venture, you should choose something where you have at least a bit of background or experience. The learning curve for a new business owner is a steep one, and that’s without having to learn an entirely new industry as well. Give yourself a great head start by deciding on an industry before you search, and be sure to pick an industry you know.

The second step is to begin your search. Now is a great time to employ the services of a business broker, as they will have access to more business listings than you will be able to find on your own, they will know about businesses that are not yet on the market, and they will be able to market you as a buyer to other business brokers and their sellers.

Talk to your broker about the goals you have as a business owner – like how many hours a week you want to work, what type of return you are looking for with your investment, where your experience will suit you best and how much capital you have to invest. Identifying your goals, experience and available capital are critical to finding you a business where you can be successful. If the broker you are working with hasn’t had this conversation with you, perhaps it is time to find someone else to work with.

Once you have your goals ironed out and know what industries would set you up for success, you can do a cursory search for businesses by visiting our Business Search page.

Once you find a business that fits your goals, you will likely decide to make an offer. This step is then followed by a period called due diligence where you will get a chance to review things like finances and contracts in depth. After this review you will decide if you would like to proceed with the sale or not.

Are you ready to take the entrepreneurial plunge? Do you have questions about the search process or are you unhappy with the help you are getting from your current broker? Leave us a comment or question; we look forward to assisting you with your business search!

Michael Monnot

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