[vc_row type="in_container" full_screen_row_position="middle" scene_position="center" text_color="dark" text_align="left" overlay_strength="0.3" shape_divider_position="bottom" bg_image_animation="none"][vc_column column_padding="no-extra-padding" column_padding_position="all" background_color_opacity="1" background_hover_color_opacity="1" column_link_target="_self" column_shadow="none" column_border_radius="none" width="1/1" tablet_width_inherit="default" tablet_text_alignment="default" phone_text_alignment="default" column_border_width="none" column_border_style="solid" bg_image_animation="none"][vc_column_text]For any business owner, even those who aren’t directly considering selling in the near future, having a handle on basic exit planning steps is still important. A good exit plan contains several elements that help you achieve business success, plus keeps you prepared when either market factors or your own desires dictate that the time to sell has come.

At Utah Business Consultants, we’re proud to high-quality business broker and business exit planning services to a variety of clients, from those looking to sell right away to those simply trying to be prepared for the future. In today’s blog, we’ll go over a few themes or questions to go over for yourself if you’re wondering whether you’re ready to exit your business, including both practical and personal factors.

business owner exit readiness factors

Assess Business Value

First and foremost, many of the answers you’re looking for here will present themselves when you take inventory of the business’s value. While you can get a broad idea of your business’s value with certain online tools, we recommend working with both your internal accounting team and our business brokers to get a clear, precise value.

Simply put, it’s very common for business owners to find that the actual value of their business is much different from what they think it is. There are several market factors that play a role here, and it’s important to remember that the marketplace makes the final call here.

Do You Truly Want to Sell?

If you’ve done the legwork to obtain a precise business value and the numbers line up favorably, the next big question to ask yourself is often a personal one: Do you truly want to sell? Some get right up to the one-yard-line before deciding they can’t leave a business they’ve built from the ground up.

This decision might also be financial, however. Your valuation efforts might reveal that this is a poor time to sell, either based on unfavorable market conditions or some issue with the business itself. This just underscores the importance of a precise, accurate business valuation.

Getting Organized

If you’ve moved through both the above steps and have determined you still want to move forward with the sale, it’s time to get organized. If you are not already working with a business broker, now is well past the time to get in touch with one. The goal will be ensuring that any prospective buyers will have the proper information on the business, from prior year profit and loss statements to tax returns, lease documents, loans, franchise agreements and many other potential items.

For more on the themes and questions to ask yourself when determining if you’re ready to exit your business, or to learn about any of our exit planning, business valuation or business brokerage services, speak to the staff at Utah Business Consultants today.[/vc_column_text][/vc_column][/vc_row]

For many business owners attempting to sell their business in the near future, one great method of drumming up interest is putting out ads. The more people who know the business is for sale, after all, the greater the chances you get leads and a good quantity of prospective buyers as you move forward with the process.

At Utah Business Consultants, we employ the best business brokers in Utah and have helped numerous clients with every step of the process for selling a business, including assisting with formulating ads for those who wish to go this route. Here are some top tactics we can recommend when it comes to crafting business sale ads that fill the role you’re hoping from them.

formulating business sale ad

Headline Quality

The headline of any ad is what grabs attention and brings eyes to the rest of the content, so you should take the time to ensure the headline is interesting and engaging. This is particularly true if you’re utilizing online ad formats, where people’s eyes have become trained to skim quite quickly and will only lock onto something if it truly interests them.

In many cases, we recommend pinpointing your business’s single most appealing feature. Emphasizing this as part of the headline will likely grab the folks most interested in the areas you succeed in.

Being Descriptive

Throughout the ad, be as descriptive as you can without being too lengthy. If readers have already been drawn in by your headline, they’ll now want to see a detailed picture of your business and its features. Don’t leave them wondering about important elements of the business, as this may prevent them from taking the next step.

Imagery Used

The headline isn’t the only element of your ad that should capture attention – you should also include high-quality images that will do the same. Consider professional photography if you plan to use a picture of your actual business, as such individuals will know how to highlight the best attributes in visually appealing ways.

Include Key Data

To whatever degree is realistically possible, also include some basic key financial data. Serious potential buyers will want to know about these areas, such as cash flow or income statements, as they determine whether purchasing this business might be a viable move.

Proof It!

Finally, one element you absolutely cannot skim past: Proofreading. Nothing will turn off a potential buyer faster than finding typos or incorrect information in a business sale ad, so ensure every line and word is pored over and deemed correct before finalizing your ad.

For more on crafting ideal ads for selling your business, or to learn about any of our exit planning or business valuation services, speak to the staff at Utah Business Consultants today.

If you’re considering selling your business in the near future, there will be several important areas of documentation involved in the process. From basic valuation forms to offer sheets, sale proposals and numerous others, be prepared to deal with some paperwork as you move toward selling a business.

At Utah Business Consultants, we’re here to help with this and much more. Our business brokerage and exit planning services have helped numerous clients sell their businesses for a great return, all while minimizing hassle and allowing for focus on other areas while we handle the heavy lifting. One vital document for sellers to be aware of here is known as the offering memorandum, which we’ll be glad to assist you with – let’s go over what this is plus the important elements within it that will help improve your sale prospects.

business sale offering memorandums

Offering Memorandum Basics

Broadly speaking, an offering memorandum is a legal document that lays out your objectives, risks and the terms of any investment made in the company if someone decides to purchase it. It lays out areas like your financial statements, management biographies, descriptions of your business operations and much more.

Essentially, it’s a broad document that allows prospective buyers to get a closer look at some of the vital details of a potential acquisition. In some cases, you may also see these referred to as selling memorandums.

Our next couple sections will go over the important areas of an offering memorandum to keep an eye on.

Executive Summary

Perhaps the most important section of the offering memorandum is the executive summary, which generally comes at the beginning. This is one of the only sections where “promoting” and “selling” themes are generally accepted – much of the rest of the document should only contain direct facts and numbers without any spin.

In this section, you layout why acquiring your business would be a good decision for a prospective buyer. Include highlights of your company, from how it was formed to how it’s managed, the employee structure and other positive qualities. Include information on your market, and also take the time to explain why you’re selling at this time. This is your change to pique the interest of prospective buyers and get them interested in learning more.

Other Important Factors

Here are some other important elements to include in your offering memorandum:

For more on the offering memorandum during a business sale, or to learn about any of our exit planning or business valuation services, speak to the staff at Utah Business Consultants today.

At Utah Business Consultants, we provide the best business broker and exit planning services around for those looking to sell a business. From your earliest thoughts about selling all the way to the final paperwork confirming a sale, we’ll work with you to ensure you properly value your business and check all the right boxes on your way to a successful sale.

We’re also here to help limit the kinds of errors or issues that may get in the way of a smooth sale process. And while some of these issues take place during the sale itself, many others will actually trace back to prior concerns within your business, areas that may either complicate or even potentially derail a business sale. Here are some of these issues and how you can work on getting them in order in advance of a potential sale.

Bad Record-Keeping

One of the single biggest mistakes business owners can make, whether or not they’re considering a sale in the near future, is poor record-keeping practices. Having proper documentation of all major business areas, from expenses and income to more detailed specifics, is vital for everything from assessing your daily success to attracting investors.

In addition, proper records are vital for any sale process. Both business brokers and potential buyers will need to go through your recent books to get an idea of what they might be purchasing, and they’ll look at everything from sales history to operating costs and much more. If your records are in such poor order that this becomes a difficult process, many potential buyers may look elsewhere.

Instability in Workforce

Another issue that might raise red flags for certain buyers is too much instability within your workforce. Too much employee turnover could be a turn-off for many prospective buyers, many of whom crave stability and simplicity when they’re purchasing a new business.

Delaying Investments or Improvements

Even if you think or know you’ll be selling in the near future, it’s vital to continue to invest in the growth and success of the business. This helps it showcase potential future growth value to buyers, something many are keen on when they look into this sort of thing. If you’re delaying such improvements just because you know you’ll be selling, you’re hurting the potential value you could receive.

Limited Innovation

Down similar lines, no prospective buyer wants to put their money into a business that has failed to meet trends and innovate, whether in terms of technology or some related area. If you’ve resisted an online presence when competitors in your field have taken advantage of such elements, for instance, you will not be as attractive as other businesses.

To learn more about avoiding the kinds of process errors that complicate business sales, or for information on any of our business valuation services or how we’ll help you sell your business, speak to the staff at Utah Business Consultants today.

Poor Ebenezer Scrooge.  The last thing he wanted the night before Christmas, was to be reminded of his mistakes, and poor judgement.  In actuality, the Ghosts who visited him that night were a godsend – changing his life for the better, forever.  If only there were business Ghosts – what would they say to you?

Ghost of Business Past

The Ghosts that visited Scrooge were specific to his circumstance.  Since every business is distinctive (by virtue of industry, size, geography and etc.) the conversation you have with your Ghosts may be unlike their discussion with anyone else.  Rather than a somewhat moralistic argument that encompassed Scrooge, the Ghost of Business Past would likely concentrate on elements of your business that could have made a significant contribution to your bottom line and future business value.  Elements you could have controlled but didn’t.  How about those bad debts you experienced?  Rather than addressing them as receivables when they were due, you let them languish, rationalizing that you were too busy with “today’s work” than following up on “yesterday’s”.  Over time they evolved from receivables to bad debt.  What about that product line you knew needed updating, but you were compelled to disregard because of pressures to get the product out the door today.  Before you knew it, your competitor had phased you out.  If only you had taken the time.  It shouldn’t take a deceased partner like Jacob Marley to convince us that we made impactive mistakes in the past.  The Ghost of Business Past realizes you can’t change the past, but the perspective of past foibles can help you change the future.

Ghost of Business Present

This Ghost proclaimed to Scrooge that “The sins of man are huge, a never ending symphony of villainy and infamy”.  I can think of no greater “sin” than to conduct business without really “seeing” what is going on.  Have you stopped long enough to consider how productive your employees are?  Are you simply putting up with behavior that is unacceptable because an employee has been with the company for awhile, because you personally hired them and now feel that making a change would be an admission you made a mistake, or worse yet, because the employee is a relative of yours?  Whether an employee is taking money out of the till or being paid without producing, he/she is constructively embezzling the company through their actions.  Have you thought about how your clients perceive your business?  What do they see?  Are your marketing pieces fresh, with new creativity and pizazz?  And your website - is it useful, informative and interesting?  What do clients “see” when they come to your place of business – does it convince them that they should do business with you or run to your competitor?  The Ghost of Business Present gives you the opportunity to see what’s happening today – right before your eyes, and before your client’s eyes.

Ghost of Business Future

For Scrooge, this Ghost was the one he feared the most.  He saw his clients singing and rejoicing at his demise saying “Thank you very much, that’s the nicest thing that anyone’s ever done for me”!  As business owners, the song at our demise would be sung by our competitors – who are eager to take our clients at the mere hint of a mistake or miscalculation on our part.  Have you taken time to forecast the coming year?  Will you need additional capital?  Do you have a line of credit established that is sufficient?  Do you have a broad enough supplier base?  Multiple suppliers allow you to force price competition, and give you a fallback position in case your primary supplier is slow.  Will you have enough room to meet the future production or distribution requirements that growth will require?

Remember, annual bottom line performance translates into business value, whether it is perceived by you the owner putting dollars in your pocket, or by someone making you an offer to buy your business.  How you operate your business today, every day, will make a distinct difference in the ongoing profitability and prospective value of your business.  The point being that making changes, both subtle and dramatic, will impact your business in immediate and long-term ways.  The difference in Scrooge’s life wasn’t necessarily the visits by the three Ghosts.  The difference was that he made up his mind to change and did it!  Making that change Christmas morning had an immense impact on Scrooge’s life.  Implementing the necessary changes in your business will have a substantial impact on your business life.

 

 

-Bradley G. Marlor MBA, M&AMI, CBI is a Managing Partner at Utah Business Consultants and a Certified Business Intermediary. Utah Business Consultants is a full-service Business Brokerage and Valuation firm

One of the enjoyable aspects of business brokerage is meeting with business buyers. Some are experienced, most are green and would be considered first-time buyers. Typical first-time buyers meet with us to discuss the process and ascertain whether they can financially put a deal together. One of the most intriguing parts of our discussions with first-time buyers relates to what kind of business they are looking to purchase. When asked what kind of business they would like to buy, the vast majority of response is “well, just tell me what you have and I’ll let you know if I’m interested”. This approach certainly works, yet there is another way to zero in on the right business.

Buyer Searches

With the right technology you can find the business you really want, rather than choosing from the current list of inventories. We have a database network that allows us to use a rifle approach to put the crosshairs on the business that is right for you. The technology allows you to fine tune your search with the following factors:

By Industry

Businesses are categorized by SIC Codes (Standard Industry Classification Codes). There are general categories to choose from like manufacturing, distribution, retail, restaurants etc. Within the general categories are literally hundreds of sub-classifications. Under manufacturing you may be interested in everything from nuts and bolts to cabinets and countertops. The selection is huge. Take a look at this website for SIC Codes – www.SICcode.com.

By Size

This generally means by revenue or level of profit. Typically, when you choose the size of business you are limiting in scope your interest by the amount of capital you bring to the table and the financing you qualify for. The selection of specific businesses under the general classification codes may help stimulate ideas about which businesses are a good match for you.

By Geography

Are you only interested in a Wasatch front based business, or are you looking for one in Tucson, Arizona? The technology allows us to look at any area in the country by zip code.

Selecting from our current inventory of businesses (shotgun approach) may work just fine for you. If not, consider zeroing in (rifle approach) by choosing the industry, size and geography that really makes sense to you, and find a business that is a great fit. The only thing more enjoyable than meeting with buyers looking for businesses, is finding one that becomes a match.

 

-Bradley G. Marlor MBA, M&AMI, CBI is a Managing Partner at Utah Business Consultants and a Certified Business Intermediary. Utah Business Consultants is a full-service Business Brokerage and Valuation firm

In part one of this two-part blog series, we went over some of why it’s important for those attempting to sell their business to be prepared for surprises along the way. Selling a business will follow some general steps, yes, but there can be a few unexpected hiccups you have to be on your toes for.

At Utah Business Consultants, we’re proud to provide assistance with any area of exit planning or selling your business, including preparing you for any surprises that may show up during the process. In today’s part two, we’ll dig into a few areas of price flexibility, confidentiality and keeping a focus on your business even while it’s in the process of being sold.

Offers Versus Listed Price

As the seller of a business, you’ll have a general price in mind when it comes to selling. You’ll usually want to be aggressive here and post a strong pricing structure.

A reality many sellers are not fully prepared for, however: The first offers here will usually come in significantly lower than the price you’ve listed. You have to be ready for this, as it’s simply part of the negotiation process. Rather than simply being insulted and turning down all offers that don’t meet your threshold, you should work with an intermediary like ours to set a price structure that can work for both sides and allow for good-faith negotiation.

Confidentiality Concerns

We mentioned confidentiality in part one of this series as it relates to your own operations and involving managers or other staff members, but there’s another side of this to consider as well. In some cases, particularly if your business is well-known locally or nationally, word may leak out that it’s for sale or the confidentiality may become exposed.

You must have a contingency plan in place in case this happens. This is usually just a simple explanation that growth capital is being considered or expansion is being investigated.

Inflexibility

While we understand many business owners are used to being in charge and want to retain this control during the sale process, it’s important to realize that there are areas where flexibility is vital. While standing firm on a few major price points or sale contingencies is fine, demanding your way on every single item ultimately won’t lead to good results. Be prepared for some give-and-take during the process.

Losing Focus on Business Operations

Finally, one of the chief reasons why business sellers employ business brokers like ours is to allow them to retain their focus on the business. Your business doesn’t suddenly shut down when you consider selling it – maintaining its operations is vital for keeping its value high until the sale goes through. Buyers will want to know how the business operates, even during a potential sale period.

For more on being prepared for unexpected events during a business sale, or to learn about any of our business valuation or exit planning services, speak to the staff at Utah Business Consultants today.

While an ideal business sale will take place after multiple years of prudent planning and organization, the reality is that not all sales follow this playbook. Many are dictated by recent events, whether they’re partner disputes, health concerns, divorce proceedings or many other potential precursors.

At Utah Business Consultants, we’re here to help you sell your business with quality exit planning services regardless of your timeline or previous preparation. In situations where a business owner has to quickly decide to sell and then move forward with the process, and particularly for those who have never been involved in a business sale before, there may be some unexpected elements that pop up. This two-part blog will go over several such events or situations to help you prepare.

Time Required

First and foremost, many business owners drastically underestimate the amount of time they’ll have to put into this process – and the balancing act that will need to be maintained between selling the business and continuing its current operations. Businesses don’t simply cease to operate when they’re in the process of being sold, and if the owner negotiating the sale is also heavily involved in day-to-day operations, this can create a time crunch.

It takes a significant period to compile the information needed for an offering memorandum, plus other documents needed throughout the process. You also have to consider making time to meet with potential buyers and your intermediary, who will help screen prospective buyers and separate legitimate candidates from less realistic ones.

Confidentiality Concerns

Confidentiality is a big part of business sales, and it can be a bit of a challenge both on its own and within the scope of time commitments. For instance, say you’re the owner of a business and attempting to sell, and you’re leaning on various managerial staffers to pick up the daily operations slack as you focus on the sale. At the same time, though, several of your management team members have vital, confidential information that’s needed for the offering memorandum.

These people need to be part of the sale process, but you also can’t allow daily operations to suffer. In addition, you have to ensure these individuals understand the confidentiality rules at play and do not violate them. While all of this is easily enough organized, it can spring up on some owners if they aren’t prepared.

Other Stockholders

Many privately-held companies have both a majority owner and minority stockholders and/or family members who hold business interests. While the controlling owner has the largest say and ultimate control, minority holders also have strong rights and may have to agree to sell, plus to other details like the price and terms of the deal. If you haven’t considered how to deal with other shareholders, now is the time to do so.

For more on elements of the business sale process that often surprise business owners, or to learn about any of our exit planning or business valuation services, speak to the team at Utah Business Consultants today.

No, this article is not about religion; although for those of us in the business brokerage industry, getting the deal done becomes a religion.  Every brokerage deal I have ever been involved with has at one point in the process effectively died. Fortunately, even though many deals suffer setbacks, they still can and do consummate.  The important concept is that just because a deal has gone sideways, it may still be salvageable. We always continue working on the deal until the coffin is definitely shut.  Why do deals die?  Here are just a couple of reasons with perhaps some anecdotal remedies.

Lender Financing

Financing the deal is always challenging, and securing the financing for the buyer through banking sources is truly the bane of our existence.  Having multiple lending sources available is paramount. Just when it appears that the deal won’t work because of the lending community, another viable source comes to the rescue. For some odd reason, one lender won’t get its arms around a deal while others will; and it happens interchangeably. An important factor to realize is that the banking community in general (and banks individually) go through cycles. One day they are begging for deals, the next they can’t be satisfied with a perfect deal. The key is to just move on once a deal has been rejected.  Getting turned down from one bank is not necessarily indicative of the merits of the deal; submit it to another reputable lender. By the way, the current environment for SBA financing is excellent.

Buyer Financing

I doubt there is anything worse than spending a lot of valuable time with a buyer, including meeting with seller clients and structuring a letter-of-intent, only to find out that the buyer exaggerated his/her ability to financially close the transaction.  When a buyer indicates they have $300,000 in capital to fund a project, rather than taking their word carte blanche, find out specifically where the money is. If their money is liquid and immediately accessible, great. Just because they are in the process of selling some real estate, or they have some money tied up in their 401-k doesn’t mean they are ready to execute on a business acquisition.  They key is to effectively interview the buyer and review his/her financial statement to understand every line item.  I’ve even dealt with buyers who put value on their financial statement attributable to their uncle who said he would help fund a transaction.  I’ve found that buyers, who are counting on family or friends to fund the deal, are likely not real buyers.

Due Diligence

The longer I’m in the brokerage arena, the more detailed questions I ask of the seller before starting an engagement to sell a business.  Having ghosts in the closet, or undisclosed issues on the part of the seller, is a sure fire way to kill a deal.  The remedy is to ask the seller pertinent questions such as: “Are the financials statements accurate in their entirety, or are their income and expense items missing? – the buyer will likely find them if there are”.  Or another good one is: “Is there any outstanding litigation currently against the company, or any anticipated? – we don’t need any surprises before closing (or after for that matter)”.  And of course an important question to understand is: “Tell me specifically why you are selling the business? – is there any other reason why you are selling now?”  Resolving these and other questions will help prevent the deal from dying midstream.  It can be very frustrating to be within a few days of closing on a transaction only to have a due diligence item raise its ugly head.

Understanding why the business is for sell is paramount.  I’ll never forget being within a day of closing and having a seller say, “I’m not going through with the deal; I just can’t part with the business – sorry”.   Know why the seller is selling and what he/she plans on doing post transaction. Sellers who have a concrete idea of what they’ll be doing in a few months are great clients, those who have no idea are suspect.

-Bradley G. Marlor MBA, M&AMI, CBI is a Managing Partner at Utah Business Consultants and a Certified Business Intermediary. Utah Business Consultants is a full-service Business Brokerage and Valuation firm

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