Category Archives: Sell Your Business

Options in selling your business: asset vs stock sale.

by Kelly Deis of SoundPoint Consulting
So, you want to sell your business. For most of us, it is a once in a lifetime event. There is no reason to expect that you should know the intricacies of a transaction.
That is why it is oh so important to have good advisers help walk you through the process.
One of the fundamental decisions you will need to make is whether the transaction will be an asset or stock sale. It will depend upon your individual circumstances as well as your business structure.  Continue reading

Do you think you might want to sell your business?

The Value Gap

by Kelly Deis of SoundPoint Consulting

business for saleHave you ever heard of it? Well, if you are thinking of selling your business in the next few years, it is a term that you should get familiar with.

The value gap is the difference in price between what the seller thinks his/her business should sell for and what a buyer is willing to pay for it. Bluntly, it is unrealistic expectations on the part of the seller.

Sadly, it is one of the bigger reasons why deals go awry in the lower-to-mid market tier. And, it can be avoided.

Causes of the Gap

There are a variety of reasons why a seller may think that their business is worth more than what others are willing to pay for it.

Continue reading

Selling your business? Timing is everything.

by Kelly Deis of SoundPoint Consulting

Owners want to sell their businesses for for a variety of reasons – some want to retire and others are ready to move on to something else. Most owners ask – “is now a good time to sell?” Not surprisingly, the answer is, “it depends”.

Here are three factors to consider when timing the sale of your business. Of course, it is best when all three are optimally aligned, but that is not always possible.

The State of the Owner

The owner is critical to the success and ultimate value of a business. Typically, once the owner is beyond his or her prime, the business value will begin to falter.

It is best to sell when the owner is engaged, still excited about the business and perhaps wiling to stay on after the sale. Likewise, the more youthful and healthy the owner the less they will appear eager to sell.

You want to be the owner that wants to sell, not one that has to sell.  Continue reading

How to retire from your own business.

by Kelly Deis of SoundPoint Consulting

You started your business 10, 20 or even 30 years ago. It has been good to you. You’ve built it from infancy, fed it, grew it and, in turn it has provided you a comfortable lifestyle.

But, you’re done, or you want to be done. You are ready for the good life that retirement promises. But there is only one catch – there is no playbook for retiring from your own business.  Continue reading

How much is your business worth?

It’s not all about the bottom line.

by Kelly Deis of SoundPoint Consulting

Most business owners focus on increasing profit margins as the only means of improving the value of their business. Profitability is absolutely important, but it is not the only factor to consider.

In fact, there are three components which can increase – or decrease, the value of a business: risk, profitability and growth.  Continue reading

Some day you will want to sell your business.

Asset or Stock Sale How do they Differ?

by Kelly Deis of SoundPoint Consulting

So, you want to sell your business. For most of us, it is a once in a lifetime event. There is no reason to expect that you should know the intricacies of a transaction.

That is why it is oh so important to have good advisers help walk you through the process.

One of the fundamental decisions you will need to make is whether the transaction will be an asset or stock sale. It will depend upon your individual circumstances as well as your business structure.

If you are an LLC, then a stock sale is not an option as there is no stock to sell (although owners may sell their membership interests).

S-Corps have the option of the 338 election which treats the transaction as a stock sale for legal purposes and an asset sale for tax purposes, but that is WAY beyond the scope of this newsletter.  Continue reading

It’s a great time to buy or sell a business.

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The economy is solid for both business buyers and sellers.

Do you want to own a business but don’t like the idea of starting one from scratch? Maybe buying one is a better option. Or do you want to sell your small business to pursue other endeavors? Download our infographic to learn more on small business transactions.

The sales of small businesses jumped from 2012 and have been stable since 2013.

  • In 2012, 4,730 businesses were sold
  • In 2013, 7,056 businesses were sold
  • In 2014, 7,494 businesses were sold
  • In 2015, 7,222 businesses were sold

The prices of small businesses are also increasing.

  • In 2012, the median asking price was $187,000 with a sales price of $164,000
  • In 2013, the median asking price was $195,000 with a sales price of $180,000
  • In 2014, the median asking price was $200,000 with a sales price of $185,000
  • In 2015, the average asking price was $225,000 with a sales price of $199,000

Average prices by industry.

  • Internet B2B small business = $364,400
  • Gas station = $320,000
  • Business/Medical Services = $272,400
  • Restaurants/Bars = $155,000
  • Internet B2C small business = $154,000

Restaurants accounted for 22% of all business sales in 2015, the highest of any industry.

Tips on buying a small business.

If you are planning on buying a business, brokers suggest investing less than 15% of your net worth. They recommend keeping at least 10% of liquid assets free. Expect to pay around 20% to 40% of business costs out-of-pocket.

Tips on selling a small business.

Start planning two to five years in advance, and learn the due diligence process. Consider seller financing which may increase your price by more than 15%. But maintain realistic expectations by researching business prices in your industry.

For more data and suggestions on buying or selling a business, download our infographic. Remember to consult an experienced, trusted SCORE mentor for help with your individual situation.