- What were your gross sales the last 3 years?
- What are your gross sales year-to-date?
- What was your net income the last 3 years?
- What is your net income year-to-date?
- What are factors affecting your gross and net income and what are those trends?
- Do you have any clients that represent more than 10% of your gross sales?
- How does your asking price compare to your gross and net income, and industry norms?
- How much inventory is included?
- Is that value at your cost or the retail value?
- How much of that inventory is salable?
- What are your lease terms?
- How does that compare to your gross sales, and current market lease terms?
- Do you have any debt on the business that I'd have to assume for this purchase price?
- Are you offering seller financing for part of the purchase price?
- What is the minimum down payment a buyer needs?
- How many hours a week are you working in your business?
- How much vacation time do you take?
- Are there any key employees, and what is the likelihood they remain with the business after the sale?
- What are your functions on a daily basis?
- Is your business cyclical?
- What are the minimum cash flow needs?
- What special skills does the buyer need to possess to be successful?
- What kind of non-compete clause are you offering?
- What kind and amount of training are offering during the transition period?
- What is the likelihood that business will be lost because of a change in ownership?
- Will I get paid my normal fee for bringing a buyer to you that purchases your business?
Thursday, July 30, 2009
Do you have a buyer for my business?
When I speak with sellers, sometimes their first question for me is, "Do you have a buyer for my business?" As common as that question is, I am still surprised when I hear it asked. If I know nothing at all about your business, or, if I've seen your website, how is it possible to have someone looking for exactly what you are offering, without knowing the following?
Thursday, July 16, 2009
When is the right time to sell my business??
2009 isn't shaping up to be a stellar year for many businesses. What are you to do if you have an interest in selling your company right now? For those of you tempted to hold on to your business until conditions improve, I'll share some timing information for you to consider.
As always, the sale of anything is a factor of your motivation. If you aren't really motivated, you'll place an unusually high price on your item, and if someone makes you a full-price offer, they can have it!
What if the motivation is there, though business conditions aren't ideal to get the highest price possible (like if you sold last year when business was better). I haven't figured out a way to sell your business last year if you still are operating it. Here is some insight into how buyers will likely value your business.
They'll typically want to see the last 3 years of operating results, and, the year-to-date results. If your YTD results haven't been good, waiting until 2010 doesn't do much to help with the market value of your company. In 2010, you'll have a full year of 2009 to show your buyers. If 2009 was not as good as 2008, assuming business picks up in 2010 (dust off your crystal balls, right?), you'll need to have the full year of 2010 completed to get credit for it. Though, buyers want to see a pattern, and one year does not make a pattern. It might help explain away 2009's results, though, 2009 did happen, and that will get averaged in someway with 2008 and 2010. So, now you are 2 years out (the rest of 2009, and all of 2010, and part of 2011), without knowing if 2010 will be better or the same as 2009.
Reality is. You need to get in touch with your motivation. If you still see yourself running your business in 2 years, and if you are ok with the value of your business being the same or even lower than it is today, then holding on and running it might be your best strategy. Though, if you are motivated to sell, and don't want to be running your business in 2 years, now is likely just as good a time to sell as it will be over the next few years.
As always, the sale of anything is a factor of your motivation. If you aren't really motivated, you'll place an unusually high price on your item, and if someone makes you a full-price offer, they can have it!
What if the motivation is there, though business conditions aren't ideal to get the highest price possible (like if you sold last year when business was better). I haven't figured out a way to sell your business last year if you still are operating it. Here is some insight into how buyers will likely value your business.
They'll typically want to see the last 3 years of operating results, and, the year-to-date results. If your YTD results haven't been good, waiting until 2010 doesn't do much to help with the market value of your company. In 2010, you'll have a full year of 2009 to show your buyers. If 2009 was not as good as 2008, assuming business picks up in 2010 (dust off your crystal balls, right?), you'll need to have the full year of 2010 completed to get credit for it. Though, buyers want to see a pattern, and one year does not make a pattern. It might help explain away 2009's results, though, 2009 did happen, and that will get averaged in someway with 2008 and 2010. So, now you are 2 years out (the rest of 2009, and all of 2010, and part of 2011), without knowing if 2010 will be better or the same as 2009.
Reality is. You need to get in touch with your motivation. If you still see yourself running your business in 2 years, and if you are ok with the value of your business being the same or even lower than it is today, then holding on and running it might be your best strategy. Though, if you are motivated to sell, and don't want to be running your business in 2 years, now is likely just as good a time to sell as it will be over the next few years.
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