Don't pay the price of poor inventory control when selling a business

Posted by James Price | JPAbusiness on 15-Sep-2021 02:00:00

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.

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Topics: Business Value, Selling your business, Advice, Cash flow, Case study, Inventory, business advice, selling a business, cash flow management

How to do 'vendor due diligence' when selling a business [checklist]

Posted by James Price | JPAbusiness on 28-Jul-2021 02:00:00

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:

  • financial performance
  • business performance
  • staff and organisational aspects
  • contracts, systems and suppliers
  • how the business creates and drives value in terms of its point of difference in the market
  • forward order book i.e. the pipeline, to understand the true nature of the business as a going concern
  • how exposed the business might be to individuals or particular customers or suppliers.
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Topics: Selling your business, Template, Checklist, business advice, selling a business, Business selling, vendor due diligence, business sale

10 pieces of info to share when selling a business

Posted by James Price | JPAbusiness on 02-Jun-2021 02:00:00

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. 

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Topics: Selling your business, infographic, business advice, selling a business, Business advisor, business broker, James Price, JPAbusiness, Parramatta, Central West NSW

What is 'strategic' value when buying or selling a business?

Posted by James Price | JPAbusiness on 12-May-2021 02:00:00

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).

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Topics: Business Value, Buying a business, Selling your business, Template, strategic value, Checklist, business advice, Business advisor, business valuer, JPAbusiness, Central West NSW, business sale transaction advisor, business value drivers

5 tools to help business sellers 'seal the deal' [cheat sheet]

Posted by James Price | JPAbusiness on 28-Apr-2021 02:00:00

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:

  • all parties are well informed,
  • the negotiating process progresses smoothly, and
  • everyone can feel comfortable with the end result.

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.

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Topics: Selling your business, Due diligence, cheat sheet, business advice, selling a business, Business advisor, business broker, James Price, Parramatta, Central West NSW, business sale, business sale transaction advisor, business seller

5 questions for business sellers to help maximise value on exit

Posted by James Price | JPAbusiness on 03-Mar-2021 02:00:00

Q.1 Do I really want to sell my business and, if so, why?

  • Do you want to sell because you’ve had the business for five years and the results have been poor?
  • Do you want to sell because you’re over-exposed to borrowings, your cash flow is tight and you can’t see a way to get ahead?
  • Do you want to sell because it’s time to retire or move on to the next stage of your career?

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.

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Topics: Business Value, Selling your business, Advice, Business transfer, selling a business, Business advisor, business broker, James Price, JPAbusiness, Parramatta, Central West NSW, business sale transaction advisor, business transaction advisor

Top 10 do’s and don’ts of selling a business [infographic]

Posted by James Price | JPAbusiness on 16-Dec-2020 02:00:00

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.

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Topics: Selling your business, Advice, Business Planning, infographic, selling a business, Business advisor, James Price, JPAbusiness, Parramatta, Central West NSW, business sale, business sale transaction advisor

When should I tell my team I'm selling? [Video]

Posted by James Price | JPAbusiness on 09-Sep-2020 02:00:00

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:

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Topics: Selling your business, Video, staff management, business advice, selling a business, Business advisor, James Price, JPAbusiness, business basics, Parramatta, Central West NSW

How to prepare your business for sale [eBook]

Posted by James Price | JPAbusiness on 19-Aug-2020 02:00:00

In a perfect world, business owners would be preparing their businesses for sale from the moment they established or purchased them. For example:

  • important business structures, systems and processes would be carefully devised and executed from day one;
  • succession plans would be in place and understood by senior members of the team;
  • clearly worded partnership agreements would reduce the chance of misunderstandings on exit, and so on…
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Topics: Selling your business, Free download, business advice, eBook, selling a business, Business advisor, Business selling, vendor due diligence, JPAbusiness, Central West NSW, business sale

Mapping a path to a multi-million-dollar sale [client case study]

Posted by James Price | JPAbusiness on 15-Jul-2020 02:00:00

We recently helped facilitate the sale of a client’s business for twice its assessed value – a value we had independently appraised!

The valuation was based on the business’ sales performance, its recent past earnings, our assessment of the repeatability of those earnings given internal and external business health factors, and the assignment of a multiple of earnings.

So, how did the business owner achieve a sale price that so far outstripped our initial valuation?

The short answer is that he had an open mind and was willing to work with us to explore all options for exit.

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Topics: Selling your business, Case study, Exiting your business, strategic value, business advice, Business valuation, Business selling, succession, business sale, exit strategy

 
Disclaimer: The information contained in this blog is general in nature and should not be taken as personal, professional advice. Readers should make their own inquiries and obtain independent, professional advice before making any decisions, taking any action or relying on any information in this blog. 
 
 

 

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