16 Nov Around the Web: A Week in Summary
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A recent article from Entrepreneur entitled “6 Critical Questions to Answer When Drafting Your Buy-Sell Agreement” explores the importance of a buy-sell agreement and what to consider when drafting one. A buy-sell agreement is a contract between business owners to provide for ownership succession. This is very important to the longevity of the business.
When drafting a buy-sell agreement, consider the following questions:
- How will you fund owner exits?
- How should you structure any insurance policies held to fund a buy-sell agreement?
- How do you replace owners that have exited?
- How do you prepare for the unthinkable?
- How will you valuate your business?
- How will you create a business prepared for your exit?
A recent report from Axial entitled “Lower Middle Market Pursuits: Buyer Sophistication Drives Quality in Q3” reviews recent data and trends across the lower middle market. Despite economic challenges, the lower middle market continues to provide a top source of quality deal flow.
Key findings include:
- Buy-side demand exceeds sell-side supply
- Sell-side activity in Q3 increased 19.6% over the same period last year
- The total number of new buy-side mandates in Q3 increased 42% over the same period last year
- It is taking more pursuits to get to LOIs
- Buyers and sellers have grown increasingly aligned and specialized
- The industrial space experienced another strong quarter
- Search funds are surging
A recent article from Entrepreneur entitled “Purchasing a Business Doesn’t Have to Be Difficult. Here’s Your Comprehensive Guide.” explores how find and analyze businesses for sale. Buying a business can be a great option, but it’s important to remember that every business is different and to assess each opportunity accordingly.
When searching for businesses for sale, you might utilize websites such as BizBuySell and BusinessesForSale, a business broker, online classifieds, and networking. Be sure to document your leads along the way.
When analyzing a business, it is wise to utilize an attorney and an accountant. Items you will want to review include profit & loss statements, the operations & processes, and the value of the business.
Potential funding sources may include friends & family, personal savings, bank loans, seller financing, and private financing.