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So You Want To Sell  Your Business
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So You Want To Sell Your Business

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So you think you want to sell your business. How much do you know about the process

So you think you want to sell your business. How much do you know about the process

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  • 1. What You Need to Know About Selling Your Business
    Don’t think you can win at football by playing with badminton rules
    Presented by: Matthew Waymire CPA
    United Business Brokers
    Phone: 702-932-0992
    Email: Matt@UnitedBusinessBrokers.com
  • 2. We work for you
    We do not “dual agency” any deal in this office
    Duties owed
  • 3. Things you need to Understand about selling your business in order to actually sell the Business
    It has to make sense for the buyer to buy
    Understanding buyers is the key
    Why would a buyer buy this specific business?
    What are the characteristics of someone who would buy this specific business?
    Why would a buyer pay this amount?
    Why would a buyer buy with these terms?
    Selling a Business is tough
  • 4. Understanding Buyers
  • 5. To Sell your Business You Need to Anticipate Where Your Potential Buyer is Coming From
    For most business with Seller’s Net Cash Flow (SDE) under $500,000 you will be dealing with a financial buyer
    For businesses with Seller’s Net Cash Flow over $500,000 you may begin to deal with Strategic and Investment Buyers.
  • 6. All Financial Buyers Need:
    A reasonable salary
    Money to pay the acquisition loan
    A cash return on the down payment
    Many are forced Entrepreneurs.
    They are buying a Job
  • 7. What Financial Buyer’s Mentally Want:
    Control over destiny
    Job for life
    Will not be downsized
    Opportunity to make more
    Earning potential
    Build value in an asset
    Maybe the buyer will sell in several years?
  • 8. All Investment buyers want:
    Very high rate of return on their money
    As low risk as possible
    On-going management
  • 9. All Strategic Buyers Want
    Vertical or Horizontal Integration
    Economies of scale
  • 10. Buyer’s Questions a Seller Must Answer In Order to Sell the Business
    If this is such a good business why are you selling?
    How much money has the business made
    How much can the business make?
    How did you come up with the price?
    Why would a buyer spend cash to purchase your company rather than taking the same cash starting a similar business from scratch?
  • 11. Questions a Seller Will Have to Answer In Order To Sell The Business
    Will the Seller Carry Paper?
    Can the success of this business be transferred to a new owner?
    Does this business need to have an on-site owner or are there sufficient competent employees in place who can run the company?
    Is the Lease transferable?
    Are there customer or vendor concentration issues?
  • 12. Toughest Decision a Financial Buyer Will Make (after deciding who to marry)
    Even after a thorough due diligence the buyer can never get 100% comfort
    At some point in time they need to make a leap of faith
    Many times they are maxing out their borrowing ability and hocking their home to the max
    Many times they are risking their entire retirement savings
  • 13. Selling Your Business is Tough
    Nationwide average time to sell 181 days
    Nationally an average of 15% of all business sell
    About 50% of all sellers carry back paper – In today’s market % greater
  • 14. The 1 In x Facts About Buyers
    1 In 50 have Purchased a business before
    Need to be guided through the buying process
    1 in 10 are all cash buyers
    Need to either get SBA or Seller Financing
    Banks say they will lend but they really don’t
    If they have the cash they will most likely want to leverage
    1 in 20 of all leads purchase
    This is one of the toughest decisions to make
    1 in 20 of all purchasers buy the business they first call in on
    Allot of tire kickers
    1 in 10 of all buyers are entrepreneurs – the rest are risk adverse
    Need to develop comfort in making the decision
  • 15. Reasons Owners Sell Their Businesses
    Life Happens
    Illness (you/your family)
    Accident
    Health/Slowing Down
    Divorce
    Partner Disputes
    Need to pay non-business debts
    Spouse is transferred
    Homesick for a different region/state/city
    Children decide they don’t want to follow in parent’s footsteps
    Heirs don’t have the skill-set to manage the company
    Market Changes
    Need to add new locations
    Need to add new skills
    Well capitalized competitor moves into market
    Success Happens
    Growing too fast
    Out pacing management ability
    Business has maxed out it’s value
    Working capital needs
    It is time
    Burnout
    Boredom
    Overworked
    Frustration
    New interests
    New hobbies
    New investment opportunities
    Retirement/Semi-retirement
    Contact me, Matthew Waymire CPA (United Business Brokers) at 702-932-0992 or email me at Matt@UnitedBusinessBrokers.com
  • 16. Defective Reasons to Sell
    I am losing my shirt
    I am near bankruptcy
    Legal problems – etc.
  • 17. Selling a Business is Not At All Like Selling Real Estate
    REAL ESTATE
    Low Confidentiality
    Easy Established Financing
    No physical meeting of Buyer and Seller
    Moderate level of negotiating
    BUSINESS
    High need for confidentiality
    Average Banker will not lend for acquisition
    Buyers and Sellers will meet and should develop a high level of rapport
    Very high level of negotiating
  • 18. Financial Statements
    It won’t sell with squirrelly books
    I won’t take a listing with unorganized books
    Number one reason properly priced listings don’t sell is they can’t get through the due diligence process
  • 19. Even though we screen, buyers are flakey
    Miss appointments
    Nothing goes smoothly
    Even though we take a lot of the sting out of the process – the process is not easy
  • 20. Seller’s Conflicting Goals
    Highest Price
    Quickest Time Frame
    Most Cash