No one likes to think about all the what-if scenarios in life. Most business owners have no plan for exiting their business at all, much less exiting in the face of conflict or tragedy. As you finalize your business goals for next year, make time to protect your business against the five dismal D’s.
I see business owners approach the sale of their business with one of two mentalities. It’s either maximize my value, or just get me out at a fair price. There’s no right or wrong, but there are pros and cons to each approach.
We’re working with one seller, a younger business owner, who wants to run through the whole process and do everything he can to get the most out of his company. I always say these sellers want to go to sleep at night knowing they didn’t leave any money on the table.
When a business owner says it’s time to sell, one of the first questions I ask is, “What’s your timeframe? When do you want to be out?” And the answer I hear most often is, “Yesterday.”
That is a problem. Most business owners underestimate the time it takes to sell and exit their business. It’s not like selling a house, and you don’t get to hand over the keys and walk away on closing day.
I just met with a business leader who’s starting to explore his options around selling part of his company. Based here in Northeast Wisconsin, this business is considered an industry leader, well within the top five in its market throughout the U.S.
Because of the company’s size and success, finding a buyer won’t be the tough part. It’s finding the right fit and negotiating for the best terms that will add complexity.
When selling your business, one of your biggest hurdles will be that first management presentation or facility tour. This is the first time you’ll meet the buyer face-to-face in a room to talk. This can be as short as 1-2 hours or more often it is a four to six-hour
That’s the challenge we’re tackling on three different client engagements right now. In each case, these businesses have a lot going for them. From market leadership, to innovation, to high-quality products, these organizations check a lot of the proverbial “quality business” boxes. The problem is that their financial reporting is …
By Scott Bushkie
According to Q1 2016 Market Pulse survey I help coordinate through the IBBA and M&A Source, businesses in Main Street and the lower middle market are taking about nine months to close. New this survey, we asked how much time was taken up in due diligence, specifically what was the time frame from letter of intent to close?
For the smallest deals with a value of less than $500,000, due diligence takes two months. In most other market sectors, due diligence averaged 90 days.
As the old saying goes, you can’t compare apples to oranges. I always think of that when business owners talk about the multiple they hope to receive when selling their business.
Sometimes, a business owner hears someone got a multiple of 6x or 8x for their business. So of course they want the same results. But what they don’t know—what doesn’t get shared over a round of beers—is what that number was multiplied by.
Our team at is going through a leadership transformation class with Initiative One. And one of the things we’ve learned is the value of impeccable communication, internally and externally.
We have to remember that most business sellers don’t know what they don’t know. We can’t take anything for granted because assumptions can lead to unpleasant surprises that stop us from getting to the closing table.
Here’s what impeccable communication looks like when selling your business:
We’re doing our strategic planning and talking about our brand at Cornerstone. As our facilitator pointed out, there are three ways to compete as a business: price, quality, and service. Good companies compete on one. Great companies choose two. But you can’t do all three on a sustainable basis.