Selling a Business

selling a business

Most people do not fully understand what all is involved in the process of selling a business.

Over 40 percent of North American businesses are owned by baby boomers between the ages of 55 and 75 and for many of these entrepreneurs, nearly 90% of their equity is tied to their business.

Statistics show that nearly 80% of businesses that go to market never sell. These are staggering statistics – especially when you consider that for most entrepreneurs most of their wealth is tied to their businesses.

Selling a business for maximum profit and the best terms is a complicated process and it takes time, experience, and expertise. Additionally, the transaction needs to initially be handled discreetly so as not to alarm any employees, customers, or vendors. This is why many business owners after spending so many years working in and on their businesses and experiencing many ups and downs throughout the years, should choose a qualified intermediary to help them transfer their largest asset.

There are horror stories about how a mistake cost a seller hundreds of thousands of dollars due to a lack of knowledge or a mistake that was made during the selling process. We advise our clients to begin their business exit plan well in advance and guide them along the way.

We also discuss important drivers that include business value and salability.

Business Drivers

Besides having clean books and records at a bare minimum, minimizing and removing owner dependency. No new buyer wants to invest in a business that relies heavily or solely on the seller to continue its operations.

Putting systems and processes in place, and hiring the right people, and putting them in the right seats.

Creating predictable and recurring revenue streams can really add fuel to the business sales price. This is ideally in the form of contracts or a subscription-based model but having a stable revenue matching that is likely to continue is very favorable in a buyer’s eyes.

Buyers want a business that is scalable with growth opportunities that will give them a return on their investment, pay them a suitable salary and cover the debt service on their new loan.

Also, when there is diversity with customers, employees, and suppliers, buyers are more comfortable since all the businesses’ eggs are not in one basket.

A Business Intermediary (Business Broker or M&A professional depending on the transaction size) will allow you to run your company without distractions while they manage the sales, marketing, qualifying, negotiating, and due-diligence process and work with the advisory team on both sides of the transaction to seamlessly keep the process moving forward to closing.

If you have any questions regarding our sales or business valuation process reach out to us at your earliest convenience for a no-obligation, complimentary strategy session.