03 Jan 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 Northwest Indiana Business Magazine entitled “3-part framework: How to decide to sell your business or expand?” discusses the recent surge in mergers and acquisitions (M&A) activity in Northwest Indiana, driven by a dynamic business environment. Since 2020, over 155 business owners, constituting almost 20% of Indiana’s total transaction volume, have chosen to sell. Despite a brief slowdown in 2023, a significant uptick in M&A activity is anticipated in the coming year.
To help entrepreneurs navigate the decision to sell or expand, the article introduces a three-part framework:
- Assessing Market Position and Managing Risk.
- Understanding Financials and Business Value.
- Personalizing Goals.
Both selling and growing the business offer potential for success but come with challenges that need careful consideration. By considering these factors and seeking advice from professionals, entrepreneurs can ensure their choice aligns with their vision for the future.
A recent article from Forbes entitled “Why You Should Buy a Business Instead of Starting One” explores the alternative path to entrepreneurship through business acquisition, highlighting the advantages of purchasing an existing business over starting one from scratch, including:
Momentum: Starting a new business involves the challenge of building from scratch, including customer base, brand recognition, and income. Acquiring an existing business provides immediate momentum with established relationships, operational systems, and cash flow.
Likelihood of Success: Data from the U.S. Bureau of Labor Statistics indicates a high failure rate for new businesses, with over 20% not surviving their first year. Acquiring a business that has endured over time suggests it has found product-market fit, generated income, and established sustainable operations, mitigating initial risks.
The article also points out some considerations that entrepreneurs should consider before buying a business. This includes doing due diligence, assessing the costs, and the personal interests of the businessowner.
A recent article from MaineBiz entitled “Ask ACE: How can I get ready to sell my business?” provides advice on preparing a business for sale, emphasizing the importance of housekeeping and readiness for scrutiny during the due diligence process. Tips include:
- Prioritizing getting the business ready for inspection, even before finding a buyer.
- Considering the due diligence phase and what contingencies may be requested.
- Anticipating potential questions and addressing issues in advance.
- Dealing with concerns during the preparation phase, rather than when the buyer’s financing commitment is at risk of expiring.
Business owners should proactively prepare their businesses for sale by addressing potential concerns, anticipating buyer inquiries, and ensuring readiness for the due diligence process, ultimately aiming to streamline the sale and mitigate potential delays or complications.