Seeking to exit a business just a few weeks or months after making the decision to do so, is not the best way to optimise value in a business sale.
As I explain in this video, it’s much wiser to incorporate exit and succession plans into your ongoing business planning and prepare for a sale over a period of several years.
Topics: Selling your business, Exiting your business, Video, Succession planning, selling a business, business succession
There are many important issues a vendor needs to deal with in the transfer process leading up to a business sale settlement.
The last thing anyone wants is a handover whereby business performance is negatively impacted by transfer issues not planned out ahead of time and dealt with appropriately. These issues may include:
Topics: Buying a business, Selling your business, Business transfer, Checklist, selling a business, business buying, Business selling
A few years back the JPAbusiness team facilitated the sale of a business involved in import and distribution.
It was a well-known, independent brand that had been established for well over 50 years and had solid bottom-line performance.
Unfortunately, when it came time to exit the business, it soon became apparent there was too much inventory (stock on hand).
We negotiated a price for the goodwill, plant and equipment etc, based on a multiple of Business Maintainable Earnings (BME), which is essentially the cash flow of the business.
Then it was time to address the stock value.
Topics: Business Value, Selling your business, Cash flow, Case study, Inventory, selling a business, client case studies, cash flow management
When business owners come to see us, wanting to sell their business, we often get involved in providing what we term ‘vendor due diligence’.
When conducting vendor due diligence for clients, our role is basically to ‘pretend’ we are the buyer.
We look at a range of business health factors including:
Topics: Selling your business, Template, Checklist, selling a business, Business selling, vendor due diligence, business sale
When selling a business, you need to provide solid, robust and transparent information to support the performance of the business if you want to attract a confident purchaser who is willing to bid up strongly.
The more clearly you can describe your value proposition and present supporting information in the business sale process, the more chance you have of driving business value. Remember, for a business person, information can reduce risk and, therefore, increase confidence.
The following infographic is a simple guide to 10 key pieces of information you need to share when selling your business.
Topics: Selling your business, infographic, selling a business, business seller, business sale advice
Strategic value is the value a purchaser is willing to pay for a business, over and above what an impartial business valuer might determine is ‘fair market value’.
As we have discussed in our eBooks, one common method of determining a business’ fair market value is to use a multiple of earnings.
Multiple of Earnings is the term for how many years or months a purchaser is prepared to wait before they recoup the value they paid the outgoing business owner, based on an assessment of business maintainable earnings (or sustainable earnings).
Topics: Business Value, Buying a business, Selling your business, Template, strategic value, Checklist, business value drivers
Getting a business sale transaction 'over the line' is not about tips and tricks.
Instead it's about efficiently managing the information flow through the detailed due diligence process to ensure:
A good advisor or broker will successfully manage that interface for you.
The cheat sheet below introduces some of the tools the JPAbusiness team uses to manage information flows during the detailed due diligence process and, ultimately, seal the deal.
Topics: Selling your business, Due diligence, cheat sheet, selling a business, business sale, business seller
Your reasons for selling will help you create a negotiation framework to determine what an acceptable offer might be, so it is critical you be honest with yourself when answering this question.
Topics: Business Value, Selling your business, Business transfer, Exiting your business, selling a business
Planning, professional marketing, timing and finding the right match regarding value and terms are just some of the ingredients that go to making a successful business sale.
The following infographic is a distillation of lessons we've learned over many years as business sale transaction advisors.
Use these tips to help you make the right decisions when preparing your business for sale.
Topics: Selling your business, Business Planning, infographic, selling a business, business sale
Our guiding principle is that open and transparent communication with your staff is always a positive thing.
However, this is complicated by the fact selling a business is a sensitive issue and disclosing the fact it’s for sale can be detrimental to a business’ operations.
A pending sale can unsettle your team and, if it gets out in the market, it can cause difficulty with clients or suppliers.
In this video I share some strategies for sharing business sale plans with key staff:
Topics: Selling your business, Video, staff management, selling a business
