Out with a Bang in 2012!

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fireworks2With the last of our deals getting done on December 28th, it’s time to look past the fiscal cliff craziness to the deals that are in the works for 2013. There has been a recent surge of business owners that are now prepared to sell – for various reasons:

Some were sellers who had focused on uncertainty over potential tax changes and delayed their deals. Some were waiting for the election to determine what administration was going to be leading our country, and then decided to sell. And for others it is just the right time.

So, some business owners acted quickly to get their businesses sold in 2012, some moved more slowly and will potentially pay a higher tax in 2013, some are not concerned about the tax issue and just want/need to sell as soon as possible, and the other 98% of the businesses are not ready to sell.

The point to this is that as we look out our windows, the cars are still moving, people are going to work, we are buying goods and services, the world did not end, and the fiscal cliff will not determine our future.

2013 is looking like another great year! We wish you all a fantastic 2013 in your business and personal lives.  You deserve it!

Another Reason to use a Broker to Sell Your Business

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This comes from a recent success. We had been engaged in conversations with this particular seller for a year or so. We knew he was getting ready to sell and that he had already been in a conversation with a potential buyer.

As we established a relationship with the seller and learned more about his business, it became apparent that the results of his current negotiations were not netting him full value for his business.  His buyer continued to press him for an even better deal, yet it was unclear how the buyer was going to be able to fund the acquisition. Ultimately, the deal fell apart.

As we continued to work with the seller, we realized that his business possessed many of the key attributes upon which buyers focus.  It had been established for nearly two decades, had weathered the economic downturn, revenues were increasing, long-time staff was in place, the owner’s role in the business was minor, and cash flow was strong. The owner had done a phenomenal job of building a business that would be attractive to buyers and readying the business to put on the market.

Here’s the good part:  We were able to present him with an offer on his business that was 50% greater than what he had been willing to accept just a few weeks earlier.  Consult with your Apex Advisor to make sure that you are not leaving money on the table when you sell your business!

Selling Your Business to an Employee

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ProConThere are a few options for a business owner who wants to retire. Selling the business to an employee or group of employees is one of those options. This may seem like the easiest way to transition, but the seller should still have professional assistance to make sure the sale is successful and the future of the business is secure. (Most business sellers care about the future success of their business).

Make sure the employees are experienced, trained, and mentally prepared to own and operate the business. Employees can make terrific managers, yet fail when it comes to the rigors of ownership. Handing over a substantial business to an employee who has only limited resources and experience is dangerous.

Being charitable is commendable, but the seller may be putting their buyer and the business at extreme risk. Will the buyer have a substantial investment or will they be relying on the seller to finance? Will the buyer have the fortitude to resist taking all the cash out of the business when they have personal debts to pay? Can they skip their salary if business is down? Will they be able to secure a line of credit if the need arises? If it is a group of employees that will manage together, do they have a realistic and detailed partnership agreement? These are just a few of the questions that need to be addressed.

Another consideration for a business owner when contemplating a sale to employees: is the seller getting solid market value for the business? Does the price include a premium for seller financing risk? It will be critical to get a market valuation completed to ensure the seller is not leaving anything on the table. Personal and emotional decisions should be limited.

If you are a business owner considering a sale to your employees, call an Apex Business Advisor for a review of your plans.