Owner: Business for Sale URL:http://blog.torontobusinessbroker.com Join Date: Tue, 17 Jul 2007 10:07:43 -0500 Rating:0 Site Description: Selling or buying a business. What you need to know. Site statistics:Click here
How to Negotiate a Purchase Price for a Business 2007-07-08 10:11:17 As usual in the business purchase process, emotions play a huge role in negotiating a purchase price. Sellers are selling their babies and need emotional comfort and conviction that they are not giving them away. Frequently, they discuss the offered price with their accountants and in most cases accountants will not push in the direction of accepting the offered price. While accountants starve to provide a honest professional advice in their clients’ best interest, they have much more to loose than to gain from a potential sale of the business. They will probably loose the account after the sale since most buyers will bring their own accountants after the purchase.
Buyers must understand that pushing too hard to reduce the purchase price is generally not the best strategy to purchase a business and make it successful. While a seller might accept a price he is unhappy with, he will probably not fully collaborate in the due diligence and/or transition period.
First, in most cases Read more:Negotiate
, Purchase
, Business
Seller’s Remorse - Hesitations When Receiving a Good Offer 2007-07-01 20:31:15 A large number of business sellers experience a period of indecision right after receiving an excellent offer for their businesses. When the dream of selling the business is so close to come through, sellers struggle with their emotions. Their businesses are their babies. Separation is very painful.
How to recognize seller’s remorse?
In most cases, sellers start wondering if the price they are getting is too low. The whole idea of selling the business becomes questionable. May be I should hang on the business for a few additional years. I will make this same money in my business without having to sell it. Some sellers start asking for higher prices than those agreed upon or renegotiate terms and other matters already settled.
What is the effect of the seller’s remorse on deals?
It can be devastating. Buyers get very upset and get a sense that they have wasted a huge amount of time on an impossible deal. The tension between buyers and sellers increase and deals dye in most c Read more:Seller
, Offer
How to Deal with Business Brokers 2007-05-27 13:48:54 Business brokers specialize in helping business owners sell their businesses. Most business brokers represent the sellers rather than the buyers. As a result, business brokers are responsible for qualifying buyers to weed out “tire kickers” and make sure that only buyers with the motivation and financial resources to purchase a business are presented to sellers. There are two reasons for the need to qualify buyers:
Save the broker’s and sellers’ time. Statistics have shown that only 10% of business buyers actively looking to purchase a business end up buying a business. The other 90% never buy a business in their lives.
Protect the sellers’ confidentiality. The business could be substantially harmed if the word goes out that the business is for sale. Confidential information should only be given to serious buyers to reduce this risk.
What should a business buyer do to be considered a serious buyer?
Spend the necessary time: Buying a business is time an Read more:Business
, Brokers
Business Buyers’ Myth: Only Bad Businesses are for Sale 2007-05-21 15:59:15 When we present our businesses for sale to some of our buyers, we are frequently asked: if this is such a good business, why is it for sale? Why would somebody sell a business that makes money?
While we recognize that some business owners are selling their businesses because they are not making decent income, we also insist that many excellent businesses are for sale for reasons unrelated to profitability. Recent statistics about businesses for sale in North America show that the most frequent reason people sell their businesses is boredom. Business
owners are entrepreneurs. When their business becomes successful and only requires repetitive maintenance work, they lose their excitement and become unhappy, looking for new challenges. The only motivation for selling the business is freedom, the freedom to create a new business from scratch. The freedom from the repetitive tasks of managing a mature business.
We always tell our business buyers that our market economy thrives on different Read more:Buyers
The Necessary Leap of Faith to Buy a Business 2007-05-21 14:25:12 Statistics about the sale of businesses in North America have shown that 90% of people actively looking to buy a business never buy any business in their lives. This represents tremendous waste in time and effort. These people not only waste their own time and money but also brokers’ and sellers’ time.
Business
buyers generally need to gather as much information as they can about the business to make an informed decision. This could become a never ending process as the more information is accumulated the more issues and concerns are raised. In their effort to eliminate risk, business buyers end up looking for the ideal business that could only exist on paper.
The decision to buy a business is not a mathematical decision where all parameters are known. Business is full of uncertainty and the risk can never be completely eliminated. Due diligence and analytical thinking can help reduce the risk but not eliminate it. A leap of faith is necessary when the time comes to make a Read more:Necessary
, Faith
Emotions While Selling or Buying a Business! 2007-05-20 23:05:21 Most business buyers underestimate how emotions can impact the business purchase process. A lot of money, time and effort is repeatedly wasted on business transactions where buyers and sellers fail to deal with each others’ emotions.
From the seller’s perspective: Business
owners have spent a lot of time and energy building their business and when the time comes to sell it, they are generally not emotionally prepared. As often described in business language, their business is their “baby”. They want it to be in the right hands. They want the perfect buyer; the one that will pay the right price, will take care of employees and treat them the same way they were treated before the sale, will grow the business, will honor the seller’s previous engagement, etc. Obviously, this ideal buyer doesn’t exist. As sellers start to realise that the buyer is not ideal, hesitations start coming. Other hesitations usually haunt sellers: What if they are not satisfie Read more:Buying
Baby Boomers Looking for Successors. 2007-05-02 12:06:14 In our marketing efforts to find new business listings, we find that baby boomers in the retirement age represent a large percentage of business sellers. In most cases, selling their business is the only remaining option. Their children are offen not interested in taking over the business for multiple reasons:
Children are seeking more independence from their parents and do not share the values and strategies the parents are following in their businesses.
Children do not necessarily have the entrepreneurial spirit that has driven their parents to start and take the business to its current level of success. Their life goals might not be similar to those of their parents.
Parents are bright entrepreneurs but not necessarily good managers. They have hard time sharing information with the children and delegating tasks. This incapacity to delegate often frustrates children.
This situation creates great opportunities for business buyers. A lot of excellent businesses for sale will b Read more:Boomers
, Baby Boomers
Buy an Exiting Business or Start a New One? 2007-04-30 18:28:08 The skills and personality traits necessary to start a new small business and make it successful are much different from the skills necessary to take over an existing business and grow it . A small business start up needs an entrepreneur who has a vision and is passionate about his/her idea. The entrepreneur will work in a chaotic environment where idea generation and learning are the real engine for growth. This is a high risk transitional period when the entrepreneur should expect a high rate of failure and when failure should be used as a learning opportunity.
Most people are not very comfortable living in this chaotic environment since most people fear uncertainty. This explains why few people have the entrepreneurial personality necessary to create very successful companies from scratch.
Buying an existing business requires a completely different mindset. Management capabilities, organization skills and hard work are paramount. The owner needs to control the key parameters th Read more:Business
, Start
How to Value a Small Business? 2007-04-30 17:26:15 The most frequently used method in valuing a small business is Seller Discretionary Income (SDI) multiple. The SDI for the business is calculated by using the income statement and correcting it by adding back to the profit figure all perks and benefits that the owner receives from the business. Then, a multiple (generally between 1 and 2.5) is multiplied by the SDI to arrive to an approximate value. Please keep in mind that this method only gives an approximation of the asking price the seller can require for their business. The market will ultimately determine the real price as a result of supply and demand interactions. For more precise information about how to price a business for sale, please visit How to sell your business? Read more:Business
, Value
, Small
, Small Business
Business for Sale Listings 2007-04-30 08:25:29 Business buyers are constantly looking for new business for sale listings. Some spend long hours looking in different newspapers and magazines. Others rely mostly on networking, asking everybody they know about business opportunities on the market. Accountants and lawyers are also considered a source of information about new businesses for sale.
While these sources will certainly produce results over the long term, the process is very time consuming. The Internet emerged in recent years as a growing source of business for sale listings. Many new websites appeared in the last 10 years and some have gained high popularity. Some sites are international and have a decent number of listings, especially in large cities in North America. An excellent way to see these listings is to search for the term “business for sale” in Google and to visit these sites one by one. Most of these sites provide a geographical business search. Another effective way of searching for listings in your area is Read more:Business
How to Qualify Business Buyers? 2007-07-24 16:35:28 One of the main things that deters business owners from selling their businesses themselves is the difficult process of qualifying potential business buyers. Statistics of business sales in North America have shown that only 10% of people actively looking to buy a business end up actually buying a business. This means that 90% of potential buyers never buy a business in their lives.If you are selling your business, out of 10 people who expressed interest in your business 9 will be wasting your time. The remaining one will finally end up buying a business but it might be another one than yours.
With these lousy statistics, most business sellers get discouraged while selling their businesses after spending a lot of their time with tire kickers. Sellers end up concluding that their business will never sell and take it out of the market.
In order to deal with this ordeal, we recommend two possible alternatives:
List the business with a professional business broker: Competent business bro Read more:Business
, Buyers
Buying a Business in Canada 2007-07-29 14:54:42 Today’s business buyers are well educated and most of them do their homework before starting their business purchase process. Most of them research and study the subject of purchasing a business on the Internet and read books and publications about this subject. Unfortunately, most of these publications have been written about the US Market and very few address the Canadian particularities. How is the Canadian market for business resale different from the American Market?
The seller take back loan is much less predominant in Canada
: Most publications about buying existing businesses stress the importance of getting some sort of seller financing before making the purchase. If the seller finances a part of the deal, he/she will be motivated to teach the buyer in the transitional period and help the buyer become successful to pay back the loan. Also, the seller will only take this risk if he/she believes that the buyer has the capabilities to become successful. This is an indication t Read more:Buying
, Business
What to do after selling your business? 2007-10-08 18:39:36 A few years ago, I was attending a conference titled “Exit Strategy for Entrepreneurs” in which a successful Canadian entrepreneur was describing how he sold his business for top dollars. I was expecting the speaker to be full of joy and exhilaration after becoming a multi millionaire in just a few years. However, I was surprised to sense some kind of bitterness in his speech. The entrepreneur was simply describing his experience after the sale. The separation from their businesses causes most business sellers to feel some kind of regret after the sale. Many studies have been done and findings have confirmed that the few months succeeding the sale of their businesses are not the happiest for these business owners.
What should business sellers do to make the “after sale” experience better?
Know themselves and make sure they have good reasons to sell their business.
Have a meaningful goal and make a clear plan and start implementing it in the few weeks befor Read more:selling
Why Sell a Business? 2007-10-07 16:52:29 Business owners consider selling their businesses for many possible reasons:
Boredom or need for change: This is the most frequent reason (statistically). After starting their businesses from scratch and spending countless hours exploring their ideas and implementing them, business owners simply lose interest in their companies. While this seems hard to believe, most entrepreneurs are more excited in launching a new business than in managing it once it becomes established. Managerial tasks such as accounting, managing people and solving daily problems are not as rewarding as implementing new strategies and growing the business. Many of my clients want to sell their business simply because they want to do something different.
Succession planning/Retiring: The majority of small businesses are heavily dependent on their owners. If something happens to the owner, in most cases the businesses will not survive. When owners approach their retirement age, they need to find successors. Whil Read more:Business
Types of Businesses for Sale – from a Business Buyer’s Perspective 2008-04-05 21:34:08 One of the first questions my clients frequently ask me is the types of businesses that are for sale in the market. I personally see two distinct categories:
Liquid businesses for sale: by liquid, I mean businesses who sell very frequently. Supply and demand for this type of businesses is high. It is generally easier for [...] Read more:Business
, Buyer
, Perspective
Selling a Business – Tips and Tricks 2008-04-26 20:31:34 Many business owners think that selling a business is like selling a house. They put a price on the business that they think it is worth, they increase it to have room for negotiation and they start looking for buyers. If a buyer comes with an offer, they negotiate to the last penny to get [...] Read more:Business
Would You Buy a Business in a Recession? 2008-05-04 15:06:54 In times of uncertainty, making a decision about buying a business becomes difficult. Some Potential buyers continue to screen businesses for sale to find the perfect match but at the time of making an offer on the elected business, indecision becomes overwhelming. Tthese buyers experience an analysis paralysis period when they simply can’t make a [...] Read more:Business
Technical assistance with buying a new business 2008-06-16 23:50:25 As the potential purchaser of a new business, you have a lot going on from the moment that you make the decision to purchase an existing business to the moment the “doors open”. Then the real work begins of making that business a success and if you’ve done it before, you know that is going to take [...] Read more:Technical
Technical assistance with buying a new business 2008-06-16 23:50:25 As the potential purchaser of a new business, you have a lot going on from the moment that you make the decision to purchase an existing business to the moment the “doors open”. Then the real work begins of making that business a success and if you’ve done it before, you know that is going to take [...] Read more:Technical
Would You Buy a Business in a Recession? 2008-05-04 15:06:54 In times of uncertainty, making a decision about buying a business becomes difficult. Some Potential buyers continue to screen businesses for sale to find the perfect match but at the time of making an offer on the elected business, indecision becomes overwhelming. These buyers experience an analysis paralysis period when they simply can’t make a [...] Read more:Business
Selling a Business – Tips and Tricks 2008-04-26 20:31:34 Many business owners think that selling a business is like selling a house. They put a price on the business that they think it is worth, they increase it to have room for negotiation and they start looking for buyers. If a buyer comes with an offer, they negotiate to the last penny to get [...] Read more:Business
Types of Businesses for Sale – from a Business Buyer’s Perspective 2008-04-05 21:34:08 One of the first questions my clients frequently ask me is the types of businesses that are for sale in the market. I personally see two distinct categories:
Liquid businesses for sale: by liquid, I mean businesses who sell very frequently. Supply and demand for this type of businesses is high. It is generally easier for [...] Read more:Business
, Buyer
, Perspective
What to do after selling your business? 2007-10-08 18:39:36 A few years ago, I was attending a conference titled “Exit Strategy for Entrepreneurs” in which a successful Canadian entrepreneur was describing how he sold his business for top dollars. I was expecting the speaker to be full of joy and exhilaration after becoming a multi millionaire in just a few years. However, I was [...] Read more:selling
Why Sell a Business? 2007-10-07 16:52:29 Business owners consider selling their businesses for many possible reasons:
Boredom or need for change: This is the most frequent reason (statistically). After starting their businesses from scratch and spending countless hours exploring their ideas and implementing them, business owners simply lose interest in their companies. While this seems hard to believe, most entrepreneurs are more [...] Read more:Business
Buying a Business in Canada 2007-07-29 14:54:42 Today’s business buyers are well educated and most of them do their homework before starting their business purchase process. Most of them research and study the subject of purchasing a business on the Internet and read books and publications about this subject. Unfortunately, most of these publications have been written about the US Market and [...] Read more:Business
, Buying
, Canada
How to Qualify Business Buyers? 2007-07-24 16:35:28 One of the main things that deter business owners from selling their businesses themselves is the difficult process of qualifying potential business buyers. Statistics of business sales in North America have shown that only 10% of people actively looking to buy a business end up actually buying a business. This means that 90% of potential [...] Read more:Business
, Buyers
How to Negotiate a Purchase Price for a Business 2007-07-08 10:11:17 As usual in the business purchase process, emotions play a huge role in negotiating a purchase price. Sellers are selling their babies and need emotional comfort and conviction that they are not giving them away. Frequently, they discuss the offered price with their accountants and in most cases accountants will not push in the direction [...] Read more:Business
, Negotiate
, Purchase
Seller’s Remorse - Hesitations When Receiving a Good Offer 2007-07-01 20:31:15 A large number of business sellers experience a period of indecision right after receiving an excellent offer for their businesses. When the dream of selling the business is so close to come through, sellers struggle with their emotions. Their businesses are their babies. Separation is very painful.
How to recognize seller’s remorse?
In most cases, sellers start [...] Read more:Seller
, Offer
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