When considering the value of your company, there are basic value drivers. While it is difficult to place a specific value on them, one can take a look and make a “ballpark” judgment on each. How does your company look? Value DriverLowMediumHigh Business TypeLittle DemandSome DemandHigh Demand Business Growth LowSteadyHigh & Steady Market Share SmallSteady GrowthLarge & Growing ProfitsUnsteadyConsistentGood & Steady Management Under StaffedOkayAbove … [Read more...]
Archives for 2015
The Confidentiality Agreement
June 9, 2015 by
When considering selling their companies, many owners become paranoid regarding the issue of confidentiality. They don't want anyone to know the company is for sale, but at the same time, they want the highest price possible in the shortest period of time. This means, of course, that the company must be presented to quite a few prospects to accomplish this. A business cannot be sold in a vacuum. The following are some of the questions that a seller should expect a confidentiality agreement to … [Read more...]
CABI 2015 Summer CREC Education Summit, Thursday, June 18, 2015
May 15, 2015 by
Sustaining Sponsors Course Sponsors (Make Payment Below) Education Summit Details Cost: Members $99 / Non-Members $149 Date: Thursday, June 18, 2015 Time: 7:30 a.m. to 5:00 p.m. Location: Denver Centerpoint I 2nd Floor Conference Room 3900 E. Mexico Ave. Denver, CO 80210 Map & Directions Education Agenda (8 CREC Credit Hours / No Prerequisites) 7:30 a.m. to 8:00 a.m. - Registration/Continental Breakfast 8:00 … [Read more...]
Common Reasons for Selling
May 5, 2015 by
It has been said that the sale of a business is usually event driven. Very few owners of businesses, whether small or large, wake up one morning and think, “Today I am going to sell my company.” It is usually a decision made after considerable thought and usually also prompted by some event. Here are a few common “events” that may prompt the decision to sell: Boredom or “Burn-out” – Many business owners, especially those who started their companies and have spent years building and running them, … [Read more...]
Valuing the Business: Some Difficult Issues
April 29, 2015 by
Business valuations are almost always difficult and often complex. A valuation is also frequently subject to the judgment of the person conducting it. In addition, the person conducting the valuation must assume that the information furnished to him or her is accurate. Here are some issues that must be considered when arriving at a value for the business: Product Diversity – Firms with just a single product or service are subject to a much greater risk than multiproduct firms. Customer … [Read more...]
Considering Selling? Some Important Questions
April 22, 2015 by
Some years ago, when Ted Kennedy was running for president of the United States, a commentator asked him why he wanted to be president. Senator Kennedy stumbled through his answer, almost ending his presidential run. Business owners, when asked questions by potential buyers, need to be prepared to provide forthright answers without stumbling. Here are three questions that potential buyers will ask: Why do you want to sell the business? What should a new owner do to grow the business? What makes … [Read more...]
Is Your “Normalized” P&L Statement Normal?
April 16, 2015 by
Normalized Financial Statements – Statements that have been adjusted for items not representative of the current status of the business. Normalizing statements could include such adjustments as a non-recurring event, such as attorney fees expended in litigation. Another non-recurring event might be a plant closing or adjustments of abnormal depreciation. Sometimes, owner's compensation and benefits need to be restated to reflect a competitive market value. Privately held companies, when tax time … [Read more...]
Do You Have an Exit Plan?
April 8, 2015 by
“Exit strategies may allow you to get out before the bottom falls out of your industry. Well-planned exits allow you to get a better price for your business.” From: Selling Your Business by Russ Robb, published by Adams Media Corporation Whether you plan to sell... … [Read more...]
Member’s Corner – April 1, 2015
April 1, 2015 by
By Marsha Golgart AIBA, CMEA, CEPA, ISBA President / CEO Nationwide Valuations What Are the Main Factors That Impact the Value of a Business Interest?The value of a business interest is impacted by a number of factors, many of which may change from year to year. Factors that impact the value of a business include the following:Financial performance - If a business has poor earnings capacity or is on the verge of bankruptcy, the value of the business is going to be negatively impacted. If … [Read more...]
The Devil May Be in the Details
March 23, 2015 by
When the sale of a business falls apart, everyone involved in the transaction is disappointed – usually. Sometimes the reasons are insurmountable, and other times they are minuscule – even personal. Some intermediaries report a closure rate of 80 percent; others say it is even lower. Still other intermediaries claim to close 80 percent or higher. When asked how, this last group responded that they require a three-year exclusive engagement period to sell the company. The theory is that the longer … [Read more...]
