Archive for category: General

It’s impossible to help people when they are not open and honest. As advisors we need to really understand our client’s situation so that we can develop a successful buy or sell strategy. Building a trusting relationship is critical.

In our last post we discussed motivation as a key factor in qualifying Buyers and Sellers of businesses. The next step in qualifying both Buyers and Sellers is their financial resources and requirements. Sometimes we feel like therapists trying to understand a person’s goals, desires, dreams, and pains, but this is necessary in order to understand the emotions and financial needs driving decisions.

Buying
Dreams and goals are great, but when buying a business, one has to have financial resources to get started.  If we try to help someone buy a million dollar business because it matches their dream, we need to make sure the buyer actually has funds for the initial down payment and working capital.

If funds aren’t there for a $1 million dollar purchase, maybe we need to adjust the dream to start at a more realistic $250,000 (for example). In all cases, the math needs to work to:
1. pay a loan,
2. provide the buyer their required income, and
3  still leave cash to operate the business.

It is easier to reach that ultimate goal if we don’t start out with a situation doomed to fail!

Selling
On the sell side, we need to make sure that the value of the business matches the seller’s expectation and that there will be money to fund retirement or their next project. If the market value doesn’t appear to be enough, we need to rethink the timing of the sale or reassess the seller’s real financial need post-sale. Sometimes a discussion with a good financial advisor will help identify a person’s actual retirement needs.

There may be other obligations that we should be aware of, for instance: tax or other liabilities weighing on the seller, family and estate issues, partnership difficulties, etc. These are stressors that can impact the seller’s financial picture but don’t change the value of the business. So, need does not equal value, but the need helps us develop a strategy for a transition. If we don’t know, it is hard for us to help.

Get some assistance from your Apex Business Advisor!

Doug Hubler
President

Time flies and we needed to update the Apex website. For companies needing to keep up with search engines like Google, it’s critical to have a mobile friendly site. KCApex.com is now mobile friendly! Our buddies at Blue Gurus are taking care of all the details and making it super easy to get caught up with the newest technology. We’ll have the same great content about selling and buying businesses, newsletters, and a list of our clients who want to sell their businesses.

Although I don’t have any plans to sell, I’m trying to follow our own advice, which is to keep up with marketing, have a strategy for growth, and have a succession plan. One of the mistakes many owners make is to get complacent and comfortable. This may be a good strategy if change is too stressful and there is no care about business value, but businesses really need to change just to keep pace with competition and to satisfy changing customer demands.

We’ve encountered too many businesses over the years that have become so outdated there is very little reason for a buyer to acquire the business. In those cases it could be easier and less costly to start from scratch. That’s not a position in which a business owner should find themselves!

So today, we launch our new website with Jason Terry and Mic Johnson because we need to stay relevant!

Reach out to one of our Apex Business Advisors to get some advice on the keys to selling a business.

When I read Jason Moxness’ Blog the other day, I couldn’t help but relate in terms of the Apex team, our buyers, and our business owners. Anyone who is successful has had to take risks along the way and probably failed at least once, but continually sought out potential opportunities.

Sometimes it’s luck, but I don’t think luck happens without significant action. Jason has certainly worked very hard, AND he also never shied away from new opportunities! We have a great team at Apex too, but it took effort and time to build.  There was risk along the way (and some fails), and we are “lucky” that it all worked out exceptionally well.

Business buyers have to put themselves in uncomfortable situations to seek out deals, and when they land a great business, it’s because they took risks and stepped out of their comfort zone. Business owners are faced with making their own luck e-v-e-r-y-d-a-y! Successful owners are active, present, involved, and always looking for new excuses to improve or grow.

Don’t just wish for success. Take action. As Jason says, “take the shot”!

Whether buying or selling a business, talk to your Apex Business Advisor to make it happen.

Doug Hubler
President

Welcome
Apex Business Advisors would like to welcome Brandt Hill to our advisory team.

Brandt has many years of Investment Banking and Entrepreneurial experience, which will be a huge benefit to his clients. Check out his bio link above to learn more about Brandt.

Contracts vs. Hand-Shakes
Contracts can be a painful process when completing transactions of any type, and It can be tempting to forego a contract for a simple “gentlemen’s agreement”. After all, we are all good people, we are friends, we trust one-another, so let’s just agree to agree. Right?

Wrong! Contracts actually strengthen our bonds of friendship and trust. Our intentions need to be written down so there is no confusion, especially when our memories get a little foggy a year or two from now. I’m talking about good people with good intentions who get confused or have differing perceptions of what it was they agreed to during that hand shake.

“Partnerships” start with high expectations and general agreement on most details, but it never fails that a couple years down the road, the grumblings start. One shareholder thinks they are contributing more to the business than the other guy and should get a bigger piece of the pie.  One partner thinks they are contributing more to the business than the other guy and should get a bigger piece of the pie.

If this hasn’t happened to you, you probably know someone who has gone through it. Business divorces happen all the time because the detailed business plans, goals, partner roles, and expectations were not in writing. Obviously, a contract won’t cover every variable, but it can be as detailed as necessary to memorialize your plans, goals, roles, etc.

The same consideration needs to be made when selling a business or buying a business. Clear expectations of training, transition, financing, representations and warranties, list of assets to be transferred, etc., need to be written down in detail. If I agreed to train a buyer of my business, I want to them to know that I will put in so many hours a week for a number of weeks and not leave it open-ended. Open-ended agreements will lead to problems.

Apex Business Advisors will guide our clients to get proper legal advice when completing a transaction, so talk to one of our Advisors about how to find a qualified attorney.

Doug Hubler
President

“Professionals in Business Acquisitions and Sales”