27 Mar Around the Web: A Week in Summary
A recent blog post from VR Business Brokers entitled “Changing the Approach” explores how the expanding number of options available to consumers demands change in the way people market their products.
Before the internet, marketing consisted of a simpler, broader approach. The introduction of the internet however has created a need for more targeted, permission-based advertisement. Consumers now possess the ability to compare hundreds of different products, research the validity of claims and actively ignore any content they’re not interested in consuming. This new dynamic requires marketers to be more authentic and to grow a loyal audience.
A recent article from Exit Oasis entitled “Selling Your Stuff is Different than Selling Your Business” explains what it truly means to sell your business and what trap to avoid falling into as a small business owner regarding the sale of your business.
Often, small business owners believe that there is a great, hidden value within small businesses that allows them to sell their business even when it’s not making a profit. However, there is a difference between selling your ‘stuff’ and selling your business. When a business produces a profit well beyond the intrinsic value of the assets it possesses, then a buyer will pay for that profitability. Otherwise, a buyer will pay significantly less to purchase the facility, equipment, name, contracts, etc. and this classifies as selling your ‘stuff’ rather than selling your business.
A recent article from Divestopedia entitled “Crazy M&A Myths You Need to Stop Believing Now” debunks the most common false things that business owners believe in today’s market.
A successful business sale requires the implementation of a professional deal team and an understanding of the sales process. Without both, it’s very possible for a seller to wind up losing out financially or ending up with difficult deal terms. The following is a list of five myths that every business owner should stop believing regarding the sale of their company to avoid losing out and difficult deal terms:
- The negotiating is over once you sign the LOI – Negotiations will continue right up until the purchase agreement is signed by both parties.
- You have to take seller paper- Often sellers only take seller paper if it bridges a large discrepancy in the valuation.
- Everyone that makes an offer has the money to follow through – It’s not uncommon for an interested buyer to attempt to raise capital after getting an owner to agree to a sale. The most prudent step a seller can make is to enlist an investment banker or trusted advisor to check out the credibility of all potential buyers.
- I don’t need a deal team to help me sell my business – Hiring a trusted deal team has shown to increase transaction values by an average of 20%, while protecting the sellers interests much more thoroughly during the sales process.
- You have to sell 100% of the business – It is becoming more common for business owners to find investors who are willing to purchase a portion of the business granting the current owner majority ownership and the funding for expansion.
No matter what you’ve heard regarding the sales process, it is always recommended that you contact a professional advisor to best help you navigate the M&A process and protect your interests.