23 Sep Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent article from California News Times entitled “8 Reasons You Need a Business Broker” discusses the importance of working with a business broker for sellers and buyers. A business broker, or business intermediary, manages the sale process and helps see the deal through to the finish line.
Business brokers can help in the following ways:
- Identifying how to increase the value of the business before going to market
- Deploying a comprehensive marketing program to attract multiple buyers
- Performing or facilitating a business valuation
- Managing the due diligence process
- Maintaining an objective position
- Locating businesses for sale for the buyer to consider
- Securing buyer financing
A recent article from Exit Strategies Group entitled “Keep widening your moat” discusses the importance of competitive advantages in relation to how appealing a business might be to buyers. A competitive advantage is what the business does uniquely well that competitors cannot easily replicate.
A competitive advantage is like a moat, protecting the business from those who wish to conquer it. A business owner should always be looking to widen that moat and strengthen the business’ competitive advantages.
When developing these competitive advantages, strive for at least three uniques. This makes it very difficult for competitors to replicate and very appealing for buyers looking to minimize risk.
A recent article from Axial entitled “Roll Up Your Own: How Selling Several Companies At Once Can Increase Multiples” explores the concept of packaging together multiple businesses in a single deal to maximize value. Valuation is heavily influenced by size and scale, so by bringing together multiple businesses the sellers may realize a greater valuation than they would have if they sold their business by itself.
This transaction structure is referred to as Pre-investment Roll Up or PIRU. To help your PIRU deal work, consider the following tips:
- Cast a wide net to identify complimentary businesses that would sell well together
- Once the businesses that will be sold together are identified, work to develop a unified vision and integration strategy
- Put in writing how sale proceeds will be divided between the sellers
- Implement a penalty structure for any seller who backs out
- Make the transaction simple for the buyer by appointing a lead counsel for the group and setting a single purchase price