28 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 Axial entitled “How to Prepare For Selling Your Business” discusses insights from a survey conducted among Axial’s Investment Banking membership regarding exit preparation for business owners.
Key findings include that a significant portion of sellers are not adequately prepared for a transaction before hiring an investment banker. The article also focuses on the most important steps sellers can take to prepare for a transaction, as well as unexpected hurdles they may encounter. Key advice from surveyed Investment Bankers includes:
- Having a competent management team
- Understanding valuation and transaction structures
- Ensuring financial readiness
- Engaging professional advisors.
The unexpected hurdles that were highlighted include valuation expectations, time investment, understanding working capital, negotiating deal points, maintaining growth during the process, and emotional strain.
Click here to read the full article
A recent article from The Ascent entitled “Small Business Spotlight: This Wine Store Owner Got Started by Buying an Existing Business” discusses the benefits of buying an existing business as a strategy for entrepreneurship, highlighting the story of Tim Delaney, owner of Elma Wine & Liquor.
Tim shares insights from his experience of purchasing and growing the business, emphasizing the advantages of using a combination of bank and seller financing. He stresses the potential for significant returns on investment and reduced risk compared to starting a business from scratch.
Additionally, Tim emphasizes the importance of small businesses in serving communities and creating job opportunities. His success with Elma Wine & Liquor illustrates how purchasing an existing business can lead to financial success and community impact.
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A recent article from The New York Times entitled “Young Entrepreneurs Find a Way to Indulge Their C.E.O. Dreams” explores the growing trend of search funds, where entrepreneurial MBA graduates raise funds to acquire and run existing businesses.
It follows the journey of Edward Silva, who opted for this route instead of starting a business from scratch. Silva raised over $30 million and bought MásLabor, a consulting firm. Search funds, initially an experiment, have gained traction as a niche investment avenue, attracting both individual and institutional investors.
The model involves raising initial funds to cover expenses while searching for a target company, then raising additional funds for the acquisition. Success depends on finding profitable, owner-retiring businesses in fragmented industries. While searchers face skepticism, particularly from sellers, successful acquisitions can lead to substantial returns.
The strategy is becoming increasingly competitive, with entrepreneurs like Kelsey Holland also entering the fray. Holland, a recent Harvard Business School graduate, aims to acquire a healthcare company through a search fund, highlighting the trend’s continued growth and appeal among ambitious MBA graduates.
