Negotiating the Price Gap Between Buyers and Sellers

Sellers generally desire all-cash transactions; however, oftentimes partial seller financing is necessary in typical middle market company transactions.  Furthermore, sellers who demand all-cash deals typically receive a lower purchase price than they would have if the deal were structured differently. Although buyers may be able to pay all-cash at closing, they often want to structure a deal where the seller has left some portion of the price on the table, either in the form of a note or an earnout.  Deferring some of the owner’s remuneration from the transaction will provide leverage in the event that the owner has misrepresented the business.  An earnout is a mechanism to provide payment based on future performance.  Acquirers like to suggest that, if the business is as it is represented, there should be no problem with this type of payout.  The owner’s retort is that he or she knows the business is sound under his or her management but does not … [Read more...]

6 Tips and 90 Days to Protect Your Business

The April 2020 COVID-19 centered article, by Inc. contributor Brian Hamilton, “6 Actions to Take in the Next 90 Days to Save Your Business,” isn’t pulling any punches.  Hamilton believes that the next 90-days could be make or break days for business owners looking to navigate the choppy waters of the COVID-19 pandemic.  His article provides readers with 6 actions they should take now to survive the economic fallout of the pandemic.  Tip #1 Vigorously Control What You Can Hamilton’s first tip is to “Vigorously control what you can.  Vigorously ignore what you can’t control.”  As Hamilton points out, you can’t control the economy; instead, you need to focus on what you can control.  His view is that there has never been a more important time to focus, “More than ever, you’ll need to go to war with things within your control.”  Now is the time to exercise control. Tip #2 Guard Morale During tough economic times, employee morale can be a real issue.  This brings us to … [Read more...]

Tips for Telework

Rajshree Agarwal, Professor of Strategy and Entrepreneurship at the University of Maryland, explores how to get the most out of telework in her April 20th, 2020 Forbes article “Three Keys to Engaged, Productive Telework Teams”.  This timely article covers some very important territory for many companies dealing with the COVID-19 pandemic.  We explore Agarwal’s key points so that you can help your team get the most out of telework. Agarwal notes that people may shy away from sharing personal information and feelings while in the office.  But via video conferencing, the story can be different.  This is one reasons it is necessary for employers to keep in mind that the dynamic between you and your employees is often different when using video conferencing.  This will also be the case when your employees speak with one another.  She prudently cautions business owners against taking a “business-as-usual” approach to the COVID-19 situation, as it can make them look both unnecessarily … [Read more...]

The Benefit of Failure – How to Learn from It Instead of Fearing It

Failure is rarely fun.  But it is also a key ingredient in success.  While failure can be painful, there is no doubt that the lessons that come from failure can be powerful teachers that provide life-long lessons and even life-trajectory altering results.  Summed up another way, failure hurts.  But on occasion, not failing could hurt more, especially in the long run. In her Inc. article, “Why Tons of Failure Is the Key to Success, According to Seth Godin,” author Sonia Thompson points out that most people “avoid failure like the plague.”  Instead, they spend their time trying to achieve perfection.  When adopting this approach, people miss all kinds of opportunities because they are afraid of damaging their egos.  Embracing failure is a way to experience many “transformational benefits,” which would never be experienced without the lessons of failure. Thompson points to the work of 18-time best-selling author Seth Godin who has written about how entrepreneurs who fail more often … [Read more...]

How to Connect During a Crisis

Small business owners face new challenges during this crisis.  Communicating with customers requires more focus and depth than ever before.  In Mat Zuker’s latest article for Forbes Magazine, he cites Jay Mandel who runs The Collective NYC, a marketing consulting team focusing on a customer’s experience, who underlines the importance of businesses to understand their mission statement and values in order to re-enforce marketing strategies.  Information is Crucial.  Each customer visiting your website needs to understand your hours of operation, any limitations to service and what is being done to ensure cleanliness.  Providing this information establishes to your customer your seriousness of precautions which will be appreciated during this time. Connect with your community. Focus on your employees, donate to charities and offer discounted or free products, as far as your financial situation allows.   Provide Utility for your Customers.  Now, more than ever, it is important to … [Read more...]

Finding the Best Business for You

So, you want to own a business?  Of course owning the right kind of business is extremely different from owning just any business.  Owning the wrong kind of business can make you absolutely miserable.  If you are considering buying a business, it is essential that you invest time and effort into determining the best kind of business for your needs and your personality.  In a recent Forbes article, “What is the Right Type of Business for You to Buy?” author Richard Parker explores how buyers should go about finding the right business fit. Parker is an expert when it comes to working with buyers as he has spoken with an estimated 100,000 buyers over his career.  In that time, Parker has concluded that it is critical that you don’t “learn on your own time.”  His key piece of advice concerning what type of business to buy is as follows.  “While there are many factors to be considered, the answer is simple: whatever it is you do best has to be the single most important driving factor of … [Read more...]

Tackling Growth Delusions When Buying a Business

There is no doubt about it, it can be exciting to buy a new business.  However, in the process, it is very important that you don’t become unrealistic about future growth.  Keep in mind that in the vast majority of cases, if a business is poised to quickly grow substantially, the seller would be far less interested in selling.  Richard Parker’s recent article for Forbes entitled “Don’t Be Delusional About Growth When Buying a Business” seeks to instill a smart degree of caution into prospective buyers.  Parker notes that when evaluating a business and talking to the owner, many buyers come away with a sense that enormous growth is just “sitting there” waiting to be seized.  In particular, Parker cautions those buyers who are buying into an industry that they know nothing about; those individuals should be very careful.  When buying into an industry where one has no familiarity, there can be a range of problems.  The opportunities that you see may not have been tapped into by the … [Read more...]

A Closer Look at 3 Major Factors to Consider When You Buy a Business

The simple but undeniable fact is buying a business is one of the single greatest financial decisions a person can make.  Buying a business can lead to great financial success or great financial failure.  This fact helps to underscore why it is so important to work with an experienced broker who can help guide you through the often labyrinthian process of buying a business. In a July 2019 article from Smallbusiness.co.uk, author Kyle Carins explores three key factors that everyone should consider before they buy a business.  The first factor covered in Carins’ article, “3 Things to Consider When Buying a Business,” is appeal vs. viability.  Appeal Vs. Viability Not surprising, the most important variable for most prospective owners is that the business is indeed viable.  Not being able to differentiate between an appealing business and one that is viable can lead to financial disaster.  As Carins points out, “Do you want to make money or do you want to fulfill a dream?”  Sometimes … [Read more...]

Do You Know What Kind of Business Owner You Really Are?

Does your business have real, long-lasting longevity or is your business a temporary entity that will vanish the second you stop working on it?  In his insightful article in The Business Journals entitled, “Are You Living for Today as a Business Owner or Building Value?” author Kent Bernhard asks a very important question of readers, “Are you a lifestyle business owner or a value accelerator?”  Many business owners have never stopped to ask this very important, yet basic, question regarding their businesses.  So, let’s turn our attention to this key question that all business owners must stop and ask at some point. As Bernhard points out the core issue here is how a given business owner defines the idea of success for him or herself.  As Chuck Richards, the CEO of CoreValue Software notes, “At the end of the day, a lifestyle business is just a job.”  Richards goes on to note that this is fine for many people.  But if this is the case, it is a choice that one is making.  Therefore, … [Read more...]

Business Buyers Can Leverage SBA Lending

Finding the money to start your own small business can be a challenge.  Over the decades, countless people have turned to the Small Business Administration (SBA) for help.  A recent Inc. Magazine article, “Kickstart Your Business Dreams with SBA Lending,” by BizBuySell President, Bob House, explored how SBA lending can be used to the buyer’s advantage. The article covers the basics of an SBA loan and who should try to get one.  House notes that the SBA doesn’t provide loans itself, but instead facilitates lending and even micro-lending with a range of partners.  The loans are backed by the government, which means that lenders are more willing to offer a loan to an entrepreneur who might not typically qualify for one.  The fact is that the SBA will cover 75% of a lender’s loss if the loan goes into default.  Entrepreneurs can benefit tremendously from this program.  In some cases, an SBA loan even means skipping the need for collateral.  SBA loans can be used for those looking to open a … [Read more...]