When selling your business, it’s important that you value the information you have put together on the business and don’t just share it with anyone.
I would advise working with a broker or advisor who is sensitive about how they share your information and who actively uses a prequalification process in dealing with potential purchasers.
Topics: Selling your business, Advice, selling a business, Business advisor, prequalifying buyers
Goodwill is an intangible value associated with a business and is based on the business' potential to provide a future flow of earnings beyond the current owner.
Stock, plant and equipment, and other fixed assets, are tangible items that can be relatively easily valued on a market. Goodwill is intangible; essentially it is the risk premium around how and what business maintainable earnings (BME) will be delivered into the future if the business is acquired by someone else and run in basically the same way.
Topics: Business Value, Selling your business, Exiting your business, Business transfer, Due diligence, Advice, goodwill
This is always the million-dollar question when clients come to us seeking help to exit their businesses.
I typically indicate to clients that they need to expect a business sale process to take at least six to 12 months.
The fastest we have sold a business from start to finish is actually six weeks. However, we regard that as a record that will probably never be broken, because it was a unique situation where, strategically, the ‘stars aligned’ between the buyer and the seller.
Topics: business advice, selling a business, Selling your business
Businesses – particularly family businesses – often use real estate assets as part of their wealth generation strategy.
This may lead to situations where the business and real estate assets are interdependent, creating complexities when it comes time to exit and establish a fair market valuation.
Topics: Family business, Business Value, Selling your business, Buying a business, Starting a business, Advice, Valuations, cartoon
There are many issues vendors need to deal with in the lead-up to a business sale settlement, from staff contracts and entitlements, right through to P&E roadworthiness certificates.
When selling – or buying – a business, the last thing you want is a handover in which business performance is negatively impacted by transfer issues not planned out ahead of time and dealt with appropriately.
Topics: Selling your business, Advice, selling a business, Buying a business, Business transfer, cheat sheet
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. (As we often say, selling a business is not an exact science!)
The following infographic is a distillation of lessons we've learned over many years of advising business sale clients.
Use these tips to help you make the right decisions when preparing your business for sale.
Topics: Selling your business, Advice, infographic, selling a business, Business Planning
When business owners come to see us, wanting to sell their business, we often get involved in providing what we term ‘vendor due diligence’.
Vendor due diligence has two main components:
1. Understanding what my business is really worth
This is something we have covered previously in eBooks and blogs about business valuation and market appraisals.
It involves getting independent advice on what your business is really worth in the market, on a realistic, fair value market basis.
Topics: vendor due diligence, selling a business, Business valuation, business valuer, Selling your business
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’.
So how much more than its fair market value will a purchaser pay for a business with strategic value?
The answer is largely determined by the potential purchasers’ individual circumstances, which impact their appetite for the opportunity, but it can also be influenced by the vendor’s management decisions long before sale time.
Topics: strategic value, Selling your business, Business advisor, selling a business, business valuer
Ideally, a business will be set up for sale from the moment it begins operating.
After all, you never know when someone may approach you about buying your business, or when unforeseen circumstances may force you to sell.
A previous JPAbusiness client is a good example of why it pays to be prepared.
Topics: Selling your business, Exiting your business, Advice, Family business, cartoon, Business advisor
I recently read a blog post about the pros and cons of seller earnouts, which I believe is worth sharing.
The blog post was written by M&A specialist Dave Kauppi from MidMarket Capital, Inc, which is based in Chicago, USA. (You can click here to read Dave’s post.)
It’s a useful article if you’re considering buying or selling a business and you want to explore measures to manage the risks of transfer and protect the value of the business, including delayed or ‘at risk’ payment of part of the purchase price consideration, such as an earnouts.
Topics: business advice, Capital gains tax, seller earnouts, selling a business, Selling your business, Business advisor
