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BUSINESS WEALTH SOLUTIONS,LLC
Joan M. Ridley
Pres., CFP™, CEPA, CBI


2911 Turtle Creek Blvd., Suite 300
Dallas, Texas 75219


E-MAIL:  info@businesswealthsolutions.net
PHONE: 214.692.9192
FAX: 214.523.9001

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Everybody Wants to Sell My Business

by

Joan M. Gruber Ridley, CFP

It’s easy to see why you would say that. You are probably inundated with telemarketers, direct mail, seminar invitations, and all sorts of strategies used by mergers and acquisitions firms, also called brokers, to get your attention. You might be surprised to learn that the best brokers accept engagements from only a fraction of the business owners who wish to sell. A broker might take a look at 30, 50, or even 100 businesses before accepting an assignment to represent a seller. The reason is that a quality brokerage is only interested in representing a business that is very likely to sell and go to closing because brokerage firms are chiefly compensated only when a sale closes. So what might appear as courting, is, in reality, a process of qualification and elimination for the broker. No experienced broker with integrity who is compensated by a success fee will be willing to invest time and resources unless success is reasonably assured.

Broker/Purchaser Checklist

There are several factors that brokers, and subsequently, purchasers focus on. Here is a short list of those factors:

♦ Motivation of seller ♦ Effective sales/marketing team
♦ Historic profitability ♦ No compliance issues
♦ Future profitability trends ♦ No pending litigation
♦ Customer diversification ♦ Strong market position
♦ Written plan for sustainable growth ♦ Barrier(s) to entry
♦ Strong management team ♦ Future ability to compete
♦ Loyal, experienced employees  

Dress Up for the Party

All businesses have strengths, weaknesses, opportunities, and threats. All four aspects need to be addressed before meeting with a broker, much less a buyer. Some strategies to improve profitability and marketability will not be economically feasible. Get it right and you could attract offers that far exceed your expectations. Get it wrong and you won’t get a second chance. Your personal goals will weigh heavily in your decision about what action to take. For instance, if your goal is to spend more time with your grandchildren and spouse before you turn 65 and you are already age 64, you do not have the luxury of time to invest in long-term business improvement projects.

Objectivity is Key

Like the loving parent of a child, you might not be able to view your business objectively to determine what needs to be done to improve its value and marketability. Before meeting with a broker or offering your business to a prospective purchaser, prepare for the inevitable. Both will subject your business to scrutiny beyond your imagination. Spruce it up much like you would your home before inviting buyers through the door. To do otherwise puts you on the defensive- not a good place to be if you’re expecting top dollar. Pre-marketing preparation will allow you to offer the best product and to demand the best terms from the right buyer.

Get a Check-Up

Meet with an experienced business consultant to review your business in advance of meeting with a broker or purchaser. You will learn, from a buyer’s viewpoint, where improvement is needed, how your business stacks up to others in your industry, and what can be done to increase its value. With professional advice, the proceeds from your business could provide you and your family with sufficient after-tax resources to fund the lifestyle you envision.

 

Joan M. Ridley is president of Business Wealth Solutions, a Dallas-based advisory firm that consults with business owners about how to successfully grow and leave their business. Visit our website at www.bwsllc.net. Call us today at 214.692.9192 for a complimentary meeting to learn how we can help you get where you want to go.

Copyright 2005 Joan M. Ridley

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