Getting The Best Price For Your Business Bu


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Even if you are yet to consider to sell your business, every business owner should know these three things.
Know the answers!
What is my business worth?
Will my business be ready to sell when I am?
How can I get the most for my business?

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Getting The Best Price For Your Business Bu

  1. 1. Legacy Businesses<br />Your business is an income generating legacy <br />Its legacy reflects your hard work, philosophy and character<br />It is unique to every other business<br />The strength of that legacy impacts the return you will get for your business<br />
  2. 2. Know the answers!<br />What is my business worth?<br />Will my business be ready to sell when I am?<br />How can I get the most for my business?<br />
  3. 3. What Is the Value of Your Business?<br />Fair Market Value<br />The hypothetical price at which a transaction occurs between a:<br />Willing buyer<br />Willing seller<br />Both reasonably informed<br />Neither acting under any compulsion<br />Both of whom have the financial capacity to engage in the transaction<br />
  4. 4. SANITY test<br />In the final analysis, the final price of a business must pass the SANITY test<br /> - Must cover debt service<br /> - Must provide a reasonable income for the buyer<br /> - Must allow for working capital fluctuations<br />Turnaround Opportunities – Businesses with a negative cash flow may not pass the sanity test but may be a good acquisition candidate for the right buyer.<br />While the Broker assists the seller in finding the best method to price a business, the final price and terms are determined by the seller.<br />
  5. 5. What Buyers Look For<br />Provable books and records<br />Reasonable price<br />Leverage and terms<br />Living wage<br />FF&E (current FMV, not overstated)<br />Appearance<br />Lease (reasonable term and cost)<br />Training (by seller for 1–6 months)<br />Covenant not to compete<br />Good reason for sale<br />Time is of the essence<br />No last-minute surprises<br />
  6. 6. What do businesses sell for?<br />
  7. 7. Sold Price to Sales<br />
  8. 8. Sold Price to Adjusted Net<br />
  9. 9. Get the Most for Your Business<br />There are dozens of benchmarks to consider when preparing to sell your business for the highest selling price<br />Act now, even if you don’t plan to sell your business at this time <br />Here are a few examples<br />
  10. 10. Earnings<br />Show every dollar<br />Example<br />Assume $1,000 not recorded <br />Assume 40% tax bracket (no help from CPA)<br />Assume business sells at 2.5 times net profit<br />Save $400 in taxes each year<br />Loose $2,500 when your business sells<br />Tax at least six+ years to make it worth while <br />
  11. 11. Sales Trend Up<br />Keep the growth effort up and sell before your company feels any “burn out”.<br />
  12. 12. Operating Records<br />Get it out of your head and on to paper. <br />Make it a system like Ms. Fields Cookies.<br />
  13. 13. Customer Data Base<br />Your customers are a special part of your business that makes it worth buying versus starting a new company<br />Keep it updated, detailed and very confidential<br />
  14. 14. The Brand, not the Owner<br />Get people to fall in love with your company and note you (the owner).<br />Ray Kroc bought McDonald’s and kept the name – the brand became valuable <br />
  15. 15. Key Employee Retention<br />Have a system that will help key people stay around after you are gone<br />
  16. 16. Prepare for the Unexpected<br />Have insurance and other tools for life’s unexpected curve balls<br />
  17. 17. Know Where You Stand<br />Update your business valuation each year and prove you are growing value<br />
  18. 18. Position for the Future<br />Keep your company ready for the marketplace change (Kodak went digital, Apple went IPod…)<br />Look for signs<br />
  19. 19. The Golden Rule<br />Stand in an Investor’s Shoes - Try to objectively and critically think as if you were outside looking to buy<br />
  20. 20. Impressions Mean a Lot<br />Freshen your look and style without breaking the bank. It matters.<br />
  21. 21. Maintain Confidentiality<br />It is almost always best to not let your employees, customers, and vendors know your business is for sale<br />
  22. 22. Reach the Masses<br />The best price is reached when a wide range of buyers can consider your business.<br /> The more potential buyers that know, the better chance of getting your price<br />
  23. 23. Race to the Finish Line<br />No sale is done ‘til its done <br />So keep the business going strong until the sale is complete<br /> <br />Lance Armstrong<br />
  24. 24. Patience<br />It can take a while to sell your business (from weeks to over a year)<br />
  25. 25. Be Proud<br />Nearly 50% of Americans desire to own their own business<br />Fewer than 5% of shopper ever buy<br />In this great and free country, it is a shame not to pursue one’s dreams<br />You are one of the few<br />
  26. 26. Thank You<br />If you ever care to contact us, our conversations and transactions will be completely confidential<br />Check us on the web at<br />Call us at 813 571 7700<br />Thank you <br />