Evaluating a Red-Hot Market
A new article from BizBuySell entitled 2018 Set New Small Business Sales Record as Buyers Eagerly Exit Corporate World is quite an eye-opener. Simply stated, businesses, all kinds of businesses, are selling like never before.
If you have a business and you are considering selling, then realize that now truly may be the time to jump in and put your business on the market. The market is historically hot. All one has to do is take a closer look at the numbers as outlined by BizBuySell.
In 2013 the number of closed small business transitions stood at 7,056, whereas in 2018 this number jumped considerably to 10,312. Between 2016 (10,312) and 2017 (9,919), there was a massive jump. Last year only continued to build on the already impressive numbers from 2017.
It is also important to note that the last three years have all been record years. Brokers have noted that there has been an increase in both the number of buyers and sellers.
Of course, all of this leads us to some questions. Why are so many business owners looking to sell and why now? Why is the market so very hot?
In the BizBuySell article, a surveyed owner commented that purchasing a business has become easier for first-time buyers and this factor has, in part, contributed to the noticeable increase in sales volume. Other factors cited in the article include Baby Boomer retirement, and owners selling to avoid dealing with rising operational costs stemming from increased minimum wage requirements and health care. Some of those surveyed also included pending regulations, both political and economic, as factors in their decision to sell.
On the buyer end, it appears that two factors are at play, namely, buyer confidence that the economy will continue to be strong and greater access to capital. Additional factors, such as business owners noting that their businesses were performing better, also likely contributed towards making 2018 yet another record-breaking year.
For those looking to sell, there is considerable good news. The median asking price and sale price have both continued to trend upwards. Business brokers are optimistic about the future and for good reason. Whether you are considering buying or selling a business in the near future, it is prudent to talk to an experienced business broker. A broker can help you navigate this very hot market and make a deal that is beneficial for all parties involved.
Read MoreNew Year’s Resolutions & Selling Your Business
Most people fail to keep their New Year’s Resolutions. But where buying and selling a business is concerned, failing to keep those resolutions could mean an abundance of lost opportunity.
Todd Ganos at Forbes recently penned a thought-provoking article entitled The 8 New Year’s Resolutions for the Sale of Your Business. In this article, he compares selling a business to getting in shape in the months preceding your visit to the beach. It is necessary to do a great deal of planning and hard work if you want to be in good shape for the big “beach body reveal.”
When it comes to selling a company, Ganos believes that there are eight factors that must be taken into consideration. Listed below are those factors he feels are a must for business owners looking to get their business ready for “the beach.” These are the eight factors that Ganos believes are most essential and should be on your New Years’ Resolution list for your business:
- Planning
- Legal
- Leadership
- Sales
- Marketing
- People
- Operations
- Financial
In order to get your business ready, it is necessary to take a good long and honest look at each of these eight important categories.
Planning is at the heart of everything. He points out that owners who truly want to get their business ready for the market will want to adopt a focused month-by-month plan.
This plan means having discipline, developing a business plan and involving your team in the development of that plan. Once the plan has been developed, it should be reviewed with your leadership team each month.
New Years’ Resolutions fail because they don’t get properly integrated into peoples’ lives. And the same holds true for making changes in one’s businesses. Ganos correctly asserts that in order to get your business ready to sell, you have to make it an “all-of-the-time thing” in which you are constantly focused on success.
New Years’ Resolutions have to be about doing things differently, having a plan and then sticking to these changes permanently.
Copyright: Business Brokerage Press, Inc.
Read MoreConfidentiality Agreements: What are the Most Important Elements?
Every business has to be concerned about maintaining confidentiality. In fact, it is common for business owners to become somewhat obsessed with confidentiality when they are getting ready to sell their business.
It goes without saying that owners don’t want the word that they are selling to spread to the public, employees or most certainly their competitors. Yet, there is something of a tug of war between the natural desire for confidentiality and the desire to sell a business for the highest amount possible. At the end of the day, any business owner looking to sell his or her business will have to let prospective buyers “peek behind the curtain.” Let’s explore some key points that any good confidentiality agreement should cover.
At the top of your confidentiality list should be the type of negotiations. This aspect of the confidentiality agreement is, in fact, quite important as it stipulates whether the negotiations are secret or open. Importantly, this part of the confidentiality agreement will outline what information can be revealed and what cannot be revealed.
Also consider the duration of the agreement. Your agreement must be 100% clear as to how long the agreement is in effect. If possible, your confidentiality agreement should be permanently binding.
You will undoubtedly want to outline what steps will be taken in the event that a breach does occur. Having a confidentiality agreement that spells out what steps you can, and may, take if a breach does occur will help to enhance the effectiveness of your contract. You want your prospective buyers to take the document very seriously, and this step will help make that a reality.
When it comes to “special considerations” category, this should be elements that apply to the business in question. Patents are a good example. A buyer could learn about inventions while “kicking the tires,” and you’ll want to be quite certain that any prospective buyer realizes that he or she must maintain confidentiality regarding any patent related information.
Of course, do not forget to include any applicable state laws. If the prospective buyer is located outside of your state, then that is an issue that must be adequately addressed.
A confidentiality agreement is a legally binding agreement. And it is important that all parties involved understand this critical fact. Investing the money and time to create a professional confidentiality agreement is time and money very well spent. An experienced business broker can prove invaluable in helping you navigate not just the confidentiality process, but also the process of buying and selling in general.
Copyright: Business Brokerage Press, Inc.
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