10 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 All Business entitled “What to Do Before Buying a Business” provides a comprehensive guide for individuals looking to buy a small business, highlighting 12 key factors to consider in the process.
The steps outlined include:
- Reviewing multiple business opportunities
- Conducting thorough due diligence on financial, legal, and operational aspects
- Signing a Non-Disclosure Agreement (NDA)
- Hiring a skilled business attorney
- Setting up a legal entity (LLC or corporation)
- Deciding on the type of business and acquisition
- Preparing a term sheet or letter of intent.
Additionally, it’s important for prospective buyers to assess risks, prepare financial projections, and create a well-structured acquisition agreement. By following these steps diligently, potential buyers can enhance their chances of a successful small business acquisition.
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A recent article from Forbes entitled “The Million-Dollar Question: When’s The Right Time To Sell Your Small Business?” explores the crucial aspect of timing when deciding to exit a small business. Four key takeaways are highlighted:
Follow the Money Trail: Understanding the financial aspects of the business is essential. Analyze revenue, EBITDA, pricing trends, and market valuation.
Feel Ready to Exit: If the business no longer brings joy, it might be time to consider an exit. The emotional journey of entrepreneurship is as crucial as the financial one, and paying attention to personal feelings is essential.
Sharing the Same Values: The ideal exit aligns with both financial considerations and personal values. Selecting a buyer who shares the same values makes the transition smoother.
Strategic Timing Matters: Consider market trends and industry shifts when deciding the perfect moment to exit. Seeking advice from industry experts and observing market conditions can significantly impact the success of the exit.
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A recent article from JD Supra entitled “The Importance of a Buy-Sell Agreement for Business Owners” emphasizes the importance of having a buy-sell agreement in place for business owners and outlines key considerations in drafting and implementing such an agreement.
The buy-sell agreement is described as a written contract among business owners, or between owners and the business itself, specifying rules and expectations for various triggering events such as death, incapacity, or voluntary transfer. The benefits of a buy-sell agreement include keeping ownership away from unfavorable individuals, ensuring a reliable process for business interest transfer, establishing fair valuation methods, and providing structure for ownership removal and business continuity.
The overarching advice is for business owners to seek experienced legal counsel to tailor a comprehensive and balanced buy-sell agreement that meets their specific needs, accounting for changing circumstances and tax laws. Regular reviews are recommended to ensure that the agreement continues to align with the owner’s objectives.
