The Business Transfer Newsletter

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June 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.

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

~says The New York Times

5 Essential Elements Franchisees Need

to Know About Their Franchise Agreement

The franchisor and franchisee relationship is a bond built on many factors, including trust. Let's face it, the amount of risk incurred by both parties dictates an atmosphere of honesty, integrity and conviction — or failure is imminent.

For the franchisor, their brand is at stake. They need to be sure that the people who represent them and their business will do so with a similar passion. Franchisees also have a lot to lose — primarily the money invested and possibly other costs if they do not follow the legal requirements of the franchise contract.

With so much on the line for everyone involved, creating and maintaining a climate of trust is essential. No one can argue that a legal contract is vital to the process. This document is designed to protect both parties and facilitate success. Here are five crucial elements all franchisees should understand about their legal document.

Consider The 5 Following Points Before Signing a Franchise Agreement:

Get Rid Of Excess Inventory To Maximize Business Price

When selling a business, maintaining proper inventory levels is essential to maximizing value. Don't let poor inventory management drag down the value of your business.

Inventory is an ever-renewing, moving, and perishing thing. The longer it hangs around, the less valuable it gets, and eventually dies as a viable product. If it's not turning over fast enough, the inventory begins to stop-up cash flow and drain capital coffers. Inventory is a dollar-for-dollar part of the buying and selling process and buyers will make a close assessment of it prior to closing a deal.

So, when operating a business, the goal is to tie up as little cash as possible in inventory, while having enough inventory to meet ordinary business needs. And, when selling a business, prospective buyers looking at your business as a possible acquisition would rather see fully flexible cash, not less flexible inventory weighing profits down. Any free cash flow that can be found to help bottom line earnings when selling a business will be rewarded by a higher price when the business is sold.

3 Simple Ways to Start an Exit Plan in 2021

The new year always brings about a sense of a new beginning and planning for the future. Starting a new diet, hitting the gym or saving more money are all common New Year's resolutions. Oftentimes committing to a small step (throwing out all junk food, buying a gym membership or setting up automatic withdrawals into a saving account) is all that's needed to get the ball rolling in the right direction.

However, if you are procrastinating on selling your business, why wait for the start of a new year. Now is a great time to commit to small steps that will help with the exit planning process. Here are three suggestions to set you on your way for 2021:

Establish Your Exit Objectives

Establishing your exit objectives doesn't need to be rocket science. You don't need a formalized exit planning thesis or a high-priced consultant to help flush out your ideal outcome from an exit. You just need a pad of paper and some quiet time. Jot down notes to the following four questions:

KEY TAKEAWAYS

Don't wait for the New Year. Be proactive about your future and start your exit plan today, with these three simple steps.

Market Pulse Survey - 1st Quarter 2021

Presented by IBBA, M&A Source, and in Partnership with Pepperdine University

Top Reasons Business Owners Decided To Go To Market in 2021

10 Steps To Basic Preparedness to Your Business To Go To Market

Are you a business owner at that stage in your life where you are contemplating the potential sale of your company? Undoubtedly you have thought about selling a time or two and truth be told, 100% of all business owners have from time to time. It's perfectly normal to question why, when or how to sell your business. The main key to a successful sale is preparation. Keep in mind that whatever you put into the process is what you will get out of it.

Understanding the selling process and being prepared are the key indicators that will establish the tone of selling your business and help you be more comfortable when you are ready. The selling process is important and requires a huge amount of commitment. Selling your business needs to be a calculated decision based on many actors.

Therefore, when you are ready, recognizing "The 10 Do's of selling your Business" will position your company at the right place and help you understand the ins and outs of the process a bit better.

SELLING YOUR HOUSTON BUSINESS?

HERE ARE THE KEY VALUE DRIVERS TO FOCUS ON

Takeaway: Evaluate your company through the eyes of a buyer. Master these 10 value drivers and sell at the higher range of the multiples normally associated with your industry.

Business Value -- What Drives It?

A valuation is not about determining what a company is worth in the current owner's hands, it is about the company's transferable value. The purpose of this article is to help you evaluate your company through the eyes of a buyer. From that perspective we will ask you to focus on ten value drivers. Each driver is a characteristic of a business that either reduces the risk associated with owning the business or enhances the prospect that the business will grow significantly in the future. Simply put, the better your performance in these areas, the greater the selling price of your business. The likely result is that you will sell at the higher range of the multiples normally associated with your industry.

Financing and Tax Implications Of

Selling Your Business

Taking the time to research the financing and tax implications of a sale can provide you with a strong advantage come negotiation time.

Before you can understand the importance of negotiating a final small business sale agreement, it pays to brush up on facts about how sales are financed and how proceeds are taxed. Why? Because every decision regarding the payment structure affects when and how money transfers from the buyer to the seller and how the payments are taxed.

No one is asking you to become a financing or tax pro. That's what your sale advisors do, and you'll want to call on their advice through every step from here through to the closing of your deal and the transition of your business to its new owner.

But knowing some basic information will help you understand the advice you're receiving from those who are trained and up-to-date on the legal, financial, and tax implications of small business sales. Taking the time to research the financing and tax implications of a sale can provide you with a strong advantage come negotiation time.

Eight Smart Ways To Protect Your Interests When Selling Your Business

You’ve put a lot of time, money, energy and resources into building a successful business or product, and now that it is time to sell the company or your rights to the product, you want to ensure that your interests are well-protected. It’s essential for business owners to not only fully understand their company’s current condition but also the legal and financial consequences of potential sales agreements.