The Importance of Quality Negotiations

When it comes to finalizing deals, successful negotiations are at the heart of the matter. It only makes sense to think about how to improve your communication skills and to choose a Business Broker or M&A Advisor who is well versed in the art of negotiation.  Cultivating Win-Win Situations Achieving a win-win for all parties is essential, and there are many components involved. It’s essential to understand what the other party is seeking and to help them also feel as though they succeeded in the deal.  One tried and tested strategy is to lead people through a series of “yeses” by starting with topics and points that can be agreed upon and then working forward. In the beginning of this negotiating strategy, the yeses may come from getting others to agree on what may be seen as trivial things. However, this step works to create the right climate for moving forward so that yeses can be obtained on more important issues. Maintaining the Flow of Information The flow of information is a … [Read more...]

How Changing Market Conditions Can Impact Your Business

Recently, the International Business Brokers Association (IBBA) released its Q2 survey report, The IBBA and M&A Source Market Pulse. This survey features feedback from an impressive 301 brokerage professionals across 44 states with 266 transactions taking place in the quarter. The report had numerous key findings that will be of interest to those looking to buy or sell a business. The Emergence of Covid-Proof Businesses  One key fact of interest is that a full 25% of businesses are still operating below capacity due to the pandemic’s enduring impact. The Market Pulse survey concluded that a quarter of all small and medium sized businesses are either in a position where they are temporarily closed or are operating below capacity. On the other side of the equation, the survey noted that 29% of businesses have either emerged as “Covid proof” or have actually benefited from the pandemic.  For sellers with Covid resistant businesses, now could be an excellent time to sell. For buyers, … [Read more...]

The 5 Must-Do’s When Considering Buying Any Business

There is no doubt that buying a business can be a very exciting idea; however, it is critical that prospective buyers don’t lose track of what is truly important. Let’s explore the five most important steps that any buyer needs to take when evaluating a business. The simple fact is that as a buyer, you have no choice but to look beyond the sizzle and work to find the steak. In other words, it’s essential to determine the true worth of a given business. #1 – Evaluate What is Actually Being Sold No buyer should assume that he or she understands everything that is, or is not, being sold when buying a business. One of the most important tasks for any buyer is to carefully evaluate the business under consideration and invest the time to understand what the business does and what is included in the sale. This is a task that your Business Broker or M&A Advisor will perform as well.  #2 – Understand Business Performance Understanding the performance of a business can be more complex than … [Read more...]

The Often-Overlooked Importance of Leases

When buying or selling a business, it is critically important that you evaluate the lease. It is a strange phenomenon that otherwise savvy business people will treat leases as a secondary concern. However, problematic terms in a lease can literally force you to pack up a business and move. This would not only be a jarring experience, but a very costly one as well.  Finding a good location is of paramount importance to both the profile and profitability of your business. You may feel that there are more important issues when buying or selling a business. But by the end of this article, you’ll see the wisdom in placing a lease near the top of your “to evaluate” list. There are three different kinds and types of leases: a new lease, an assignment lease and the sublease. All three of these options are most definitely different from one another and can potentially impact your business in different ways. The New Lease A new lease, as the name indicates, is the result of a lease that has … [Read more...]

Buying/Selling a Business: The External View

There is the oft-told story about Ray Kroc, the founder of McDonalds. Before he approached the McDonald brothers at their California hamburger restaurant, he spent quite a few days sitting in his car watching the business. Only when he was convinced that the business and the concept worked, did he make an offer that the brothers could not refuse. The rest, as they say, is history. The point, however, for both buyer and seller, is that it is important for both to sit across the proverbial street and watch the business. Buyers will get a lot of important information. For example, the buyer will learn about the customer base. How many customers does the business serve? How often? When are customers served? What is the make-up of the customer base? What are the busy days and times? The owner, as well, can sometimes gain new insights on his or her business by taking a look at the business from the perspective of a potential seller, by taking an “across the street look.” Both owners and … [Read more...]

The Advantage of Buying an Existing Business

Most people think of starting a business as developing an idea, requiring starting from scratch and building a company from the ground up. This, however, has many disadvantages including developing a customer base, marketing the business, hiring employees and creating cash flow … without any history or reputation to rely on. Buying an existing business may prove to be the better solution.  The many advantages of this approach include: The Business Is Established. An existing business is a known entity. It has an established and historical track record. It has a customer or client base, established vendors, and suppliers.  It has a physical location with furniture, fixtures, and equipment in place. The term “turnkey operation” may be overused, but an existing business is just that, and more. New franchises may offer a so-called turnkey business opportunity but, while some elements are established, they retain many disadvantages of a start-up. The Business Has Existing … [Read more...]

How Understanding Psychology Can Benefit Your Deals

We work closely with our clients to preserve the integrity of deals so that they have the best chance of a successful closing. In this article, we explore some of the most common ways that psychology plays into this process. The Element of Time It is critical that both buyers and sellers feel well prepared at every stage of the process. It is also essential that a certain momentum is established through every stage of the deal. When too many delays happen, this can start to derail deals.  Think about the Buyer and the Seller  For both parties, the buying or selling of a business is a life-changing event. For this reason, it is important that you invest the time to think about the point of view of the other people involved. No doubt, buying and selling can be stressful, so it’s important to take other people’s thoughts and feelings into account. You are not the only one who may be experiencing a little stress.  The Issue of Non-Active Partners In some deals, non-active … [Read more...]

Is Your Business Charging Enough For Goods & Services?

Many businesses could charge more for their goods and services than they do, but fail to do so.  A small increase in the price of your goods and services can make a tremendous difference to your bottom line.  Owners often do not realize the great value of charging just slightly more.  In this article, we’ll explore how charging even slightly more can dramatically impact your business. Consider a hypothetical example.  A business owner tells a potential buyer that he or she could safely increase their prices by 1.5% and do so without the price increase causing any negative impact to sales or business disruption.  The savvy buyer quickly realizes that the business, which has $70 million in sales, is leaving $1 million dollars on the table by not increasing its prices by 1.5%.  A smart buyer realizes that after purchasing the business, all he or she has to do is institute this small price increase in order to achieve a sizable increase in profits. In The Art of Pricing, Rafi … [Read more...]

Ownership Transition Survey Results

The ownership transition survey by Mass Mutual Life Insurance, though done about a decade ago, is worth examining even today.  These interesting survey results were based on feedback and answers from family-owned businesses.  Let’s dive in and take a closer look at the numbers and what they can tell us for 2021 and beyond. The one important point that leaps right off the page is the fact that a whopping 80% of family-owned businesses are still controlled by their founders.  A large percentage of those founders are Baby Boomers who will have little choice but to retire in the next few years. The survey indicated that 55% of CEOs over the age of 61 or older have yet to choose a successor.  This fact serves to emphasize the fact that a “retirement wave” will hit family-owned businesses, and will lead to some interesting shifts and opportunities.  While the survey indicated that 13% of CEOs state they will never retire, the reality of the situation is that ownership will eventually … [Read more...]

Insights from BizBuySell’s 3rd Quarter Insight Report

Wondering what 2021 and beyond will bring?   Insights from BizBuySell’s 3rd Quarter Insight Report and a survey of over 2,300 business owners can help. First, the pandemic.  The simple fact is that it has, unavoidably, had a major impact on the buying and selling of businesses.  Diving deeper than this obvious observation, there are a range of insights to be gleaned from the report. First, owners naturally understand that COVID is a massive force in business right now.  68% of owners surveyed feel that they would have received a better price for their business in 2019 than in 2020.  Only 37% of respondents felt that they would receive a better price this year.  Of owners who felt that they would receive a lower price in 2020 than in 2019, 71% of these owners said that their assessment was directly tied to the pandemic and its accompanying economic impact. Second is the impact of the pandemic on exit plans.  55% of owners responded that the pandemic had not changed their exit … [Read more...]