Selling your business
As a business owner you, at some time, will likely consider selling your business. Some business owners consider this every day! For others, it is only considered occasionally. Selling your business is an event that takes careful consideration since it can be one of the most important decisions you will make when you consider the amount of money involved. Selling your business is often the largest financial decision you will make in your life.
The Sales Process. The first question that comes to mind is how to influence the sales process? Selling a business will require the help of a M&A professional (usually for businesses with EBITDA over $1 million) or a business broker (for businesses under $1 million). The reason I make this distinction is larger businesses require a slightly different skill-set and you will want to hire the professional to handle what could be the most important financial decision of your life.
The first thing to consider is you will want to optimize the cash flows of your business leading up to putting your business on the market. Minimize non-essential expenses. Ensure that capital expenditures support your growth model. Reduce working capital needs by addressing inventory, accounts receivable, and accounts payable.
Since businesses sell based on a multiple of EBITDA (earnings before taxes, interest, depreciation, and amortization) you will want to increase EBITDA as much as possible.
Managing your multiple. Since your multiple of EBITDA is so crucial to your selling price, you will want to define and carefully monitor future cash flows once you put your business on the market. Make sure you have a strong management team in place. Perform a SWOT (strengths, weaknesses, opportunities, and threats) analysis of your business. They Purchaser will do this so it is a good idea for you to do it as well to be prepared for his questions.
Accuracy of information. It is crucial for you to provide accurate information to your M&A Professional or Broker. This may seem rudimentary, but do NOT lie to a potential buyer. If you have issues or think of issues talk to your M&A Professional or Broker before hand to get his advice about how to handle problems before you market your business or before the buyer is informed about them.
Rick J. Krebs – Business Sales Group
Rick brings a unique blend of sales, entrepreneurial, and financial experience to Business Sales Group. He began his career as a CPA, working in Nevada and Utah where valuable financial experience was gained. He uses those skills every day. He graduated with a Master’s of Science Degree and Bachelor’s Degree from Utah State University. As a business owner he started Liberty Mortgage, a mortgage bank licensed in 23 states nationwide. He eventually sold the successful company to an investor from California. He has been helping people sell their businesses since July, 2010. During his first year as a business broker with BRC, he listed and sold more businesses than the entire office combined.
As a sale-side advisor for Mergers and Acquisitions transactions he brings a unique blend of financial, advisory, accounting, and management skills to the table helping sellers maneuver the intricate details of the deal through closing.