Ensuring that your employees stay on course during your ownership transition should be one of your key areas of focus. There are many key steps that you should take during this delicate time. Let's explore the best tips for keeping your employees engaged throughout the entire ownership transition process. Step 1 – Establish and Implement a Training Program Early On If you are selling your business, then be certain that you train replacements early on in the process. Failure to do so can result in significant disruptions. Additionally, if you are buying a business it is of paramount importance that you are 100% confident that there are competent people staying on board after the sale. Step 2 – Address Employee Concerns No matter what your employees say or how they act, you must assume that they are worried about the future. After all, if you were them wouldn't you be concerned at the prospect of a sale? The best way to address these concerns is to meet with employees in small … [Read more...]

A common question in the realm of buying and selling businesses is, “Is it possible to sell to a business competitor?” The short answer is yes, it is quite possible and rather common. That stated, selling to a business competitor is different than selling to a buyer who is completely new to the industry. The two types of buyers should not be treated the same way, as there are various differing variables. A Competitor Can Be a Great Buyer One reason is that a competitor may indeed be the right party to buy your business, is that they usually have an excellent understanding of how your business and your industry works. They may also enter the negotiation process already understanding the value of your business, and this can serve to speed up the process. Always Proceed with Caution Competitors, however, must be approached carefully. Unfortunately, there have been many cases where competitors acted as though they wanted to buy in order to acquire access to inside information. That's why … [Read more...]

In order to get top dollar for your business, it is necessary to prepare for the sale well in advance. In short, a tremendous amount of strategy and preparation goes into a successful sale. The amount you ultimately receive for your business is directly tied to how well you prepare. At the top of the list of making sure that your business is attractive to potential buyers is to make certain your business is as well positioned in the market as possible. Of course, this is often easier stated than done. Here are some of the best ways to make sure your business is optimally positioned. Tip One – Start Positioning Your Business Well in Advance Selling your business isn't something you should just do one day. You should start positioning your business at least one year before the closing. Quite often, experts say business owners should always operate as though a sale is on the horizon. This makes a great deal of sense on one hand. If you ever experience an unexpected turn of events and … [Read more...]

Quite often sellers don't give much thought to whether or not they are ready to sell. But this can be a mistake. The emotional components of both buying and selling a business are quite significant and should never be overlooked. If you are overly emotional about selling, then this fact can have serious ramifications on your outcomes. Many sellers who are not emotionally ready, will inadvertently take steps that undermine their progress. Selling a business, especially one that you have put a tremendous amount of effort into over a period of years, can be an emotional experience even for those who feel they are more stoic by nature. Before you jump in and put your business up for sale, take a moment and reflect on how the idea of no longer owning your business makes you feel. Emotional Factor #1 – Employees It is not uncommon for business owners to form friendships and bonds with employees, especially those who have been with them long-term. However, many business owners are either … [Read more...]

Many business owners are unfamiliar with the dynamics of selling a company, because they have never done so. There are numerous possible “deal breakers.” Being aware of the following pitfalls and their remedies should help prevent the possibility of an aborted transaction. Neglecting the Running of Your Business A major reason companies with sales under $20 million become derailed during the selling process is that the owner becomes consumed with the pending transaction and neglects the day to day operation of the business. At some time during the selling process, which can take six to twelve months from beginning to end, the CEO/owner typically takes his or her eye off the ball. Since the CEO/owner is the key to all aspects of the business, his lack of attention to the business invariably affects sales, costs and profits. A potential buyer could become concerned if the business flattens out or falls off. Solution: For most CEOs/owners, selling their company is one of the most … [Read more...]

If you are seriously considering selling your company, you have no doubt considered using the services of an intermediary. You probably have wondered what you could expect from him or her. It works both ways. To do their job, which is selling your company; maximizing the selling price, terms and net proceeds; plus handling the details effectively; there are some things intermediaries will expect from you. By understanding these expectations, you will greatly improve the chances of a successful sale. Here are just a few: • Next to continuing to run the business, working with your intermediary in helping to sell the company is a close second. It takes this kind of partnering to get the job done. You have to return all of his or her telephone calls promptly and be available to handle any other requests. You, other key executives, and primary advisors have to be readily available to your intermediary. • Selling a company is a group effort that will involve you, key executives, and … [Read more...]

Family-owned businesses do have some options when it comes time to sell. Selling the entire business may not be the best choice when there are no other family members involved. Here are some choices to be considered: Internal Transactions Hire a CEO – This approach is a management exit strategy in which the owner retires, lives off the company's dividends and possibly sells the company many years later. Transition ownership within the family – Keeping the business in the family is a noble endeavor, but the parent seldom liquefies his investment in the short-term, and the son or daughter may run the company into the ground. Recapitalization – By recapitalizing the company by increasing the debt to as much as 70 percent of the capitalization, the owner(s) is/are able to liquefy most of their investment now with the intent to pay down the debt and sell the company later on. Employee Stock Ownership Plan (ESOP) – Many types of companies such as construction, engineering, and … [Read more...]

Deals fall apart for many reasons – some reasonable, others unreasonable. For example: • The seller doesn't have all his financials up to date. • The seller doesn't have his legal/environmental/administrative affairs up to date. • The buyer can't come up with the necessary financing. • The well known “surprise” surfaces causing the deal to fall apart. The list could go on and on and this subject has been covered many times. However, there are more hidden reasons that threaten to end a deal usually half to three-quarters of the way to closing. These hidden reasons silently lead to a lack of or loss of momentum. This essentially means a lack of forward progress. No one notices at first. Even the advisors who are busy doing the necessary due diligence and paperwork don't notice the waning or missing momentum. Even though a slow-down in momentum may not be noticeable at first, an experienced business intermediary will catch it. Let's say a buyer can't get through to the seller. The buyer … [Read more...]

Goodwill has always been an important aspect impacting the sale of many, if not most, businesses.  Personal goodwill, as distinguished from enterprise goodwill can be of particular interest to small to medium-sized business – and often larger companies too. How is personal goodwill developed? An individual starts or joins a business and, during the process, builds one or more of the following: • A positive personal reputation • A personal relationship with many of the largest customers and/or suppliers • Company products, publications, etc., as the sole author, designer, or inventor The creation of personal goodwill occurs far beyond customers and suppliers. Over the years, personal goodwill is established through relationships with tax advisors, doctors, dentists, attorneys, and other personal service providers. While these relationships are wonderful benefits, they are, unfortunately, non-transferable. There is an old saying: In businesses built around personal goodwill, the … [Read more...]

Basically, there are three major negotiation methods. 1. Take it or leave it. A buyer makes an offer or a seller makes a counter-offer – both sides can let the “chips fall where they may.” 2. Split the difference. The buyer and seller, one or the other, or both, decide to split the difference between what the buyer is willing to offer and what the seller is willing to accept. A real oversimplification, but often used. 3. Give and Take. Both buyer and seller have to find out what is important to each. So many of these important areas are non-monetary and involve personal things such as allowing the owner's son to continue employment with the firm. The buyer may want to move the business. There is an old adage that advises, “Never negotiate your own deal!” The first thing both sides have to decide on is who will represent them. Will they have their attorney, their intermediary or will they go it alone? Intermediaries are a good choice for a seller. They have done it … [Read more...]