24 Mar 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 Entrepreneur entitled “Exit Planning for Modern Leaders: How to Determine Your Company’s Worth” discusses the importance of exit planning and the business valuation process. Exit planning is critical to the successful sale of a business because it prepares you and the business for a smooth transition, fosters a more profitable deal, and enhances the appeal to buyers.
Business valuation is a key step in the exit planning process. It involves determining how much the business is actually worth. This will help determine if you need to work to increase value in advance of your target sale date in order to realize the sale price you desire.
When approaching a business valuation, it is important to bring in an outside valuation expert. This expert will likely use one of three methods: asset method (assets minus liabilities), income method (based on cash flow), or market method (based on sale prices of comparable businesses).
A recent article from Nav entitled “Buying a Small Business: Everything You Need to Know” explores the ins and outs of purchasing an existing business. There are many advantages to buying rather than starting a business, yet it’s important to consider if it’s the right move for you.
An existing business has established customers, processes, and revenue streams. Yet it may also come at a hefty price, have hidden issues, or be saddled with debt.
Every business is different, so it’s important to get a thorough understanding of why the owner is selling, what costs exist beyond the purchase price, if there is debt, what the business needs, and what you will need as a buyer and owner.
Key steps to buying a business include due diligence, review of the business plan, valuation, letter of intent, financing (term loan, SBA loan, seller financing), and closing the deal.
A recent article from Kiplinger entitled “Planning to Sell Your Business to Key Employees?” explores important steps to take when selling your business to employees. It may be a logical and rewarding route to take, but it can also be a little messy.
Consider these key steps:
- Be clear on why you are selling
- Identify your buyer
- Get a professional business valuation
- Establish the sale structure
- Identify financing options
- Control the messaging and be consistent
- Have a little flexibility