The Business Transfer Newsletter

View Our Businesses For Sale

December 2021

Selling Texas Companies Since 1974

Our monthly newsletters provide educational information about buying or selling a business, current economic conditions, and highlight some of our newest business-for-sale opportunities.

Review The Businesses We've Sold

Review Our Newsletter Archives

"The best library of articles about how to sell your business"

~says The New York Times

WHAT ARE THE EXIT OPTIONS

The fictional Willy Wonka handed off his chocolate empire to a little boy who was a loyal Wonka customer, someone who was chosen with great care through a selection process designed to weed out all but the most dedicated Wonka devotees. Wonka was able to choose his heir apparent and ride off into the sunset a happier entrepreneur.

We are in the middle of a burning-hot, business-for-sale-market right now. We’ve never seen anything like it during the 47 years that we’ve been working with owners on developing and executing their exit plans. Even business owners who were planning to sell internally are now changing their plans and selling externally.

If you are a business owner thinking about how to leave your business, by using this four-step process, you will be able to narrow the list of exit routes to determine which one is best for you.

A good exit plan is one that is anchored on your business value. The important thing is to start early.

Without proper planning, 30% to 50% of proceeds from the sale of your business could be consumed by taxes and fees.

Choosing a Path-->

Valuation – The First Step Towards Selling Your Business

“I have a medium sized company which I have owned for about 20 years. We specialize in the manufacture and distribution of chemical products and have built a good business. However, my children aren’t involved or interested in the business so I am considering selling it. The problem is that I have no idea how to begin the process.”

Since most business owners only sell a company once in their lifetime, it is quite understandable when an owner makes such an inquiry. While the thought of selling their company may seem overwhelming to many business owners, if thought in terms of small steps instead of giant leaps, it is really quite simple.

When is the Best Time to Sell?

‌

KEY TAKEAWAYS: Internal and external factors are important considerations when selling a business. Here are issues you should think about when trying to time your exit.

There are many factors that determine best timing for selling a small business: the financial condition of the company, valuation, growth cycle, profit history and the current market.

Usually, the best time to obtain the highest price occurs when sales and earnings are good and trending upward. A solid earnings trend will enable a buyer to pay a higher price and still meet his/her return on investment criteria. A history of good performance also gives the buyer confidence in projected future earnings.

When Should You Tell Your Employees That You Are Selling the Business?

The issue of what you tell your employees when you’re trying to sell your business is a tricky one that requires careful thought. Maintaining confidentiality surrounding the sale typically takes precedence over other concerns, yet it may be impractical — or even impossible — to keep employees in the dark.

The most common approach is to keep information about the sale limited to as few people as possible. The general public typically knows nothing about the small-business-for-sale marketplace because it happens below the radar. The primary reason for strict confidentiality is to prevent customers, vendors and employees from assuming that there is something wrong with the business and putting a successful sale at risk.

What is Seller’s Discretionary Earnings

Calculating SDE is a way to standardize or “normalize” a company’s earnings so it can be more accurately compared to the earnings of other companies and the industry as a whole.

If you own a small to mid-size business, it’s important to have a good understanding of Seller’s Discretionary Earnings or “SDE” and how its calculated.

By doing so, you’ll gain a better understanding of your business’ true earnings, an accurate picture of its value, and insight on things you can do to enhance its value as you move forward.

This blog fully explains what SDE is and how it’s calculated. and finish by showing a real world example of how you can recast your financials to calculate your SDE.

Finish by using a real world example of how you can recast your financials to calculate your SDE.

‌

How Goodwill Impacts Business Value

KEY TAKEAWAYS: Identifying and articulating the goodwill in your business can have a significant impact on value.

Since the biggest part of the purchase price of a profitable small business is goodwill, it is important for a buyer to have knowledge and understanding of just what goodwill is and why there is value in it.

Much of the value of a business is not to be found in its hard assets such as the fixtures and equipment, but in the intangibles that create the income. A simple way to describe goodwill is the difference between the current market value of the tangible assets of the business and the total value of the business.

The following are some examples of what can be categorized as goodwill. This is not a comprehensive list:

Reputation
Brand or trade name recognition
Websites, Domain names
Trade Secrets, recipes
Customer list, Exclusive supplier list
Copyrights, Trademarks, Patents
Licenses, permits, regulatory approvals
Contracts
Accreditations
Developed Processes
Proprietary Designs, Proprietary Know-How
Customized Software Programs
Step-by-Step Training Systems
Customized or Proprietary Databases
Published Articles or Industry Press

Deal Momentum:

A Key Factor When Selling Your Company

KEY TAKEAWAYS: A stable, skilled, quality workforce is one of the top value drivers that contributes to the purchase price of a business.

When a business for sale is being evaluated by a prospective buye r as a possible candidate for purchase, the quality of the human element will be considered. The staff is a major component and the backbone of any successful business operation.

Is 2022 A Good Year to Sell A Business

Between the high demand of businesses in the market, to labor shortages putting stress on small businesses, 2022 may just be the year to sell your business. If you are considering selling your business, be sure to contact one of our agents at Certified Business Brokers in Houston.

As the midpoint of the year passes, many business owners are re-evaluating their businesses. With uncertainties surrounding the economy and potential rises in taxes, it’s no surprise that business owners are leaning towards selling in the next year. So, is 2022 a good year to sell a business?

Supply and Demand >>

M&A and Business Brokerage Firm Since 1974
Historically, we have sold >60% of the businesses we listed vs. 25% Industry Average
Consistently sold businesses within 94.5% of appraised price
We specialize and are experts in the Greater Houston, Texas market
Closed approximately 3,000 business transactions in Texas
We are NOT a franchise
Authority on business transfer in our profession
Founding Members of the International Business Brokers Association (IBBA)
Founding Member of the Texas Association of Business Brokers (TABB)