So you’ve been in Corporate America too long; you can no longer stomach the grind, the stress, and the hours. You’ve been padding your corporation’s pocket, yet your pockets are seemingly empty. Something has to change. You realize that changing companies might provide a different view, but what you really yearn for is a whole new landscape, the ability to create and mold your environment to your own advantage. And you want to feel duly compensated for the brainstorms, the headaches, and the emotional wear and tear. What are you waiting for? You have the skills, why not start your own business?
A close friend of mine from high school days has been in the process of acquiring a business. He has spent nearly a year agonizing over the pros and cons of various businesses. He has looked at businesses in multiple states, businesses of different size and businesses in a wide array of industries.
Vision is important in any company, large or small. If you have no idea of your end goal, the beginning of your business is likely to take off in the wrong direction. If you haven’t considered how you are going to exit your company in the future, you should – now.
The journey to value maximization commences with the starting transaction. Confidence in your business progression comes with forward-thinking strategies and a solid understanding of the sales process. The following are several crucial steps to establish that understanding.
Here are some responses to that question:
First: The Small Business Administration reports there are over 5.7 million businesses in the U.S. with at least one employee other than the owner. Formal and informal surveys indicate that approximately 20% of all businesses are for sale. For many reasons, of the 1.1 million businesses that are for sale, about 20% of those will actually transact a deal. On the Utah front, the Utah State Department of Commerce reports about 170,000 total businesses. Extrapolating, there are close to 34,000 businesses for sale in Utah. Not all businesses are “openly” on the market; business brokers, others by owner, represent many. However, you do the math, at any given time there is an impressive number of businesses on the market. …Read More!
Setting the Rules
Structuring a transaction through an employee buyout should accomplish the same objective as selling to an outside buyer. Your objective is to structure a sale that maximizes value while minimizing risk (tax consequences included). If an employee group can fulfill that objective, the offer is worth considering; if not, look elsewhere.
The world of business transactions is a complex place, with lots of details to keep track of. When looking to sell your business for maximum value and with as little hassle as possible, there are dozens of elements you’ll need to stay on top of and complete.
The first job facing many prospective business owners is rounding up the cash necessary to make the purchase. They may find that banks have made borrowing difficult (or all but impossible), and that even SBA loans have requirements too stringent to meet. One viable option is obtaining financing from the seller; another is to seek help from family and friends.
Fast Food? Manufacturing? How about distribution? Small mom and pop shop or publicly held corporate spin-off? Choosing a business to acquire is a lot like car buying—lots of models, lots of colors and a litany of price ranges. Fortunately there are some questions you can ask to narrow down the choices.
Don’t be greedy.
Sellers deserve a fair price for the years they have spent developing their business. Be prepared to pay for the goodwill of the business.
Have a good reason to be buying.
Buying a business is hard work! It takes commitment! Employees will be counting you. Spend time deciding why you want the responsibility of owning a business.