Selling the
Business
Am I Prepared to Take the Leap?
Many would agree that the most daunting aspect of starting a business is taking that initial leap. However, there’s another equally challenging decision that business owners face: determining the right moment to sell. Choosing to sell a business is never a simple choice, but once that decision is made, effective strategic planning becomes crucial for a successful transition.
Most Business Never Sell
Historically only one-quarter to one-third of all private companies ever manage to find a buyer.”
~ Inc. Magazine.
Why the High Failure Rate?
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Business is priced incorrectly.
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Business is not properly prepared for sale
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Insufficient market exposure to potential buyers
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There are just more sellers (companies for sale) than buyers who could realistically buy and operate a business.
Who Are the Buyers
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Employees
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Family members
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Strategic or related industry acquirers
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High net worth individuals
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Professional investment firms such as Private equity firms
What Are Buyers Looking For?
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Profitable business
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Experienced, loyal, and motivated employees
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Diverse customer base
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Sustainable growth potential
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Strategically well-structured business
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Asset Protected/ Good Compensation / Advanced Tax Planning
What's My Business Worth?
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Unlike in real estate, comparable can be unreliable because almost every business is unique in costs, expenses, profits, and management.
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Unlike public companies, market share equity prices are unknown in a privately held business
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A common mistake is to use simple multiples or “rules of thumb”. This is what Business Brokers often do.
Selling a business to an outsider is probably the method that will result in the most cash for you.
Is selling your business the right option? Maybe, but you must prepare.
Key Factors to Successfully Sell a Business
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A business that does not have too many “issues” or eccentric features that can scare away a buyer.
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A business ready for sale is one that is prepared well in advance.
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Realistic Pricing in line with the market
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Provide the buyer with a fair market salary
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Availability of Capital, both debt and equity
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Service acquisition debt in 3 -5 years
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Fund capital expenditures required to maintain historic revenues
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Provide a reasonable return on investment
For a construction company contemplating a sale, the decision to sell is a critical one that carries significant personal and financial implications. It requires careful evaluation well in advance. An effective exit plan demands thorough planning, considering the unique challenges of the construction industry, such as project timelines, contract obligations, and workforce dynamics. Additionally, understanding the legal implications involved in the sale process is essential to safeguard your interests. Thoughtfully making this important decision can pave the way for a successful exit strategy and a smooth transition.