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You Need To Know These 5 Things You Can’t Control When You Want To Sell Your Business

exitYou Don’t Have 100% Control Of All The Things

That Will Impact The Sale Of Your Business

We often hear business owners state the specific year when they will sell their business, such as “I will sell the business next year,” or “I will sell the business in the year 20XX….”

While it is good to have specific goals, when selling a business the outside world plays a surprisingly large role in determining how many potential buyers may be interested, and the price and terms you may ultimately receive. Selling your business for the maximum value involves careful timing.

There are five external factors nobody can control, but any or all of them may play a significant impact on your success at sale:

1. The Availability of Financing. When money is tight and buyers lack access to cash at attractive rates, generally this depresses business prices. For example the graphic below from the U.S. Federal Reserve Bank* shows the surge in banks tightening their commercial and industrial (C&I) lending standards in the midst of the recent US “Great Recession.”

2. The Overall Economy. When the overall economy is strong, business sales prices generally rise. In the reverse, during a weak economy business sales prices tend to fall. A rising tide lifts all boats, and a falling tide lowers all boats. The chart below shows median EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) multiples paid for U.S. companies purchased over approximately the last ten years.** As the economy has cycled through recessions and expansions, the chart shows median multiples have changed by 25% between highs and lows. 

3. Your Geographic Region or Country. In many cases, different regions of the country (and different regions of the world if your business operates internationally) will be growing at different rates. If your area is experiencing difficult economic conditions relative to other locations, than can reduce your business sale price. Of course the reverse can be true as well, raising a business’s sale price.

4. Your Specific Industry. Industries go through hot and cool spells, where demand for businesses in that industry will rise and fall. These cycles can greatly raise or lower business sale prices and favorable terms.

5. Tax Policy. Known or anticipated changes to relevant tax rates can impact business sale prices, both gross and net. For example, several years ago in the U.S. federal long term capital gains tax rates increased by about 20% for most taxpayers, a change everybody knew was coming. We witnessed multiple business owner clients sell their businesses earlier than planned, before the tax rates increased.

All five of these external factors change with time, sometimes quickly. To sell the business for the top price, owners need to build timing flexibility into their exit planning, and carefully monitor these outside factors. Owners also must start seriously planning their exit years prior to the actual event. An owner who wishes to exit anytime within the next five years or less needs to realize that it’s crunch time.

When you sell your business is not likely to be determined by the year you choose, but rather by whenever a willing buyer shows up with a price and terms that you are willing to accept.

We’d like to offer you the NO COST opportunity for You to get your “Value Builder Score”.  This is a score from 1-100.  Your Value-Builder Score is calculated through an analysis of your businesses performance on eight attributes proven to be important to acquiring companies when evaluating a business as a potential acquisition target.

If you haven’t gotten your copy of the FREE REPORT… “12 Fatal Mistakes You Can Make When Transitioning Your Business”

If you would like learn more about how you can plan for a successful sale of your business, call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.

Are You A “Baby-Boomer Business Owner”? If YES – You Need To Read This…

What do all these changes mean?

There is a way to successfully Exit your business and get to retirement.

If you were born between 1946 and 1964, and you currently own a business, this information is intended for you

I’m part of the Baby-Boomer generation.   Many owners of small businesses are, too.    Over the past 25 years, many of my clients have been part of this generation, and we’re now starting to think about retirement.

But, like many things in business, thinking about something and making it happen, are two completely different things.  Establishing a plan to Exit the business is one of the most important things you can do for yourself, your family, your employees and your business.

A successful plan takes time,  effort and energy.  But – it can happen and you can find the right path to your dream retirement.

Some key numbers you should know…

  • 14% of business owners plan to fund their retirement with their business
  • 19% of business owners plan to draw an income from their business
  • 59% of business owners think they will achieve most of their retirement income by saving current earnings
  • 40% of business owners don’t save at all
  • Of all the businesses that go up for sale, less than 10% ever sell.

 As the owner of your business, you need to take control and leave on your terms.  To do that, we suggest you consider the following…

  1. START NOW – Exit planning can be complicated and take time. Assemble  your team now
  2. CLARIFY YOUR GOALS – Share your dreams with your exit planning team.
  3. BUILD YOUR PLAN –Work with people that know the process There is much to consider
  4. MANAGE YOUR RISK – A strong plan should account for all the things that could derail the plan.  Protect yourself, your family and your business.
  5. VALUE YOUR BUSINESS – Find the right valuation formula for you.  Your exit planning team can help
  6. REVIEW YOUR PLAN – The only constant is change.  Review your plan yearly to identify any changes

Get your copy of the FREE REPORT… “12 Fatal Mistakes You Can Make When Transitioning Your Business”

I wish you all the insight and wisdom need to set your plans in place.  Until next week.

Health, Happiness and Abundance

Michael Stelter

Advanced Business Coaching, Inc.

“We help entrepreneurs leave their businesses with health, sanity and fair compensation for what they’ve created”

Watch the video and download your Free Report to learn how we can help!

Michael@ABCBizCoach.com

262.293.3166

Do you want to plan an exit from your business?

Business, Exit, Transition, Planning

Exit/ Transition Plan for Your Business

Is Exit / Transition Planning For You?

The information be shared is intended for a singular group of entrepreneurs Business Owners of companies with less than 50 employees.   There are many around us and they are a special group of people that we’ve had that privilege to work with and help through these past 25 years.

 

 

 

Do these things describe you?…

  • The owner/part-owner of a closely held business with less than 50 employees.
  • You want to exit your business over the next 3-10 years.
  • You’re part of the baby-boomer generation born between 1946 and 1964.
  • You’re not sure, but think you’d like to transition the business to a family member(s) or Key employees that have expressed interest in being ‘the owner’.
  • You know the business is worth something, but not sure how much?
  • You have no idea how to get the money out of the business and into your hands so that you can use it for your ‘golden years’
  • You’d like to business to continue to grow.  So you can leave a legacy and ensure that your employees and customers will be well cared for in the future.
  • You’d like to have a retirement that will allow you to be away from the business and have the confidence that it will be management well and continue to grow.

If the points above don’t describe you, or the situations/emotions you’ve found yourself, then the information we will be sharing is not for you.    You may be a the C-Suite executive of a bigger company, or a branch manager of a larger operation, an independent contractor, a real estate or insurance sales person, independent financial planner or a solo-entrepreneur with no employees.  All of these are wonderful accomplishments and your achievements are legitimate and should be honored, but the information we will be sharing will have very little impact on your current situation.

But, If the bullet points above resonate with you and you’ve experienced the things that create the special environment of the small business owner, then read on and we look forward to sharing this journey with you.

If you haven’t gotten your copy of the FREE REPORT… “12 Fatal Mistakes You Can Make When Transitioning Your Business”

I wish you all the insight and wisdom need to set your plans in place.  Until next week.

Health, Happiness and Abundance

Michael Stelter

Advanced Business Coaching, Inc.

“We help entrepreneurs leave their businesses with health, sanity and fair compensation for what they’ve created”

Watch the video and download your Free Report to learn how we can help!

Michael@ABCBizCoach.com

262.293.3166

Do You Know A Business Owner That Would Like To Retire In 3-5 Years? If Yes – Read This…

exit-planning-abcBusiness owners spend their time building their business and serving their customers.  

They rarely spend time to plan their exit from the business.  But unless they do plan their transition away from the business, they may not get the price they want or meet their expected timing.

If you know a business owner, please share this with them, and thank you for getting this information into their hands

Some key numbers you should know…

  • 14% of business owners plan to fund their retirement with their business
  • 19% of business owners plan to draw an income from their business
  • 59% of business owners think they will achieve most of their retirement income by saving current earnings
  • 40% of business owners don’t save at all
  • Of all the businesses that go up for sale, less than 10% ever sell.

 As the owner of your business, you need to take control and leave on your terms.  To do that, we suggest you consider the following…

  1. START NOW – Exit planning can be complicated and take time. Assemble  your team now
  2. CLARIFY YOUR GOALS – Share your dreams with your exit planning team.
  3. BUILD YOUR PLAN –Work with people that know the process There is much to consider
  4. MANAGE YOUR RISK – A strong plan should account for all the things that could derail the plan.  Protect yourself, your family and your business.
  5. VALUE YOUR BUSINESS – Find the right valuation formula for you.  Your exit planning team can help
  6. REVIEW YOUR PLAN – The only constant is change.  Review your plan yearly to identify any changes

Get your copy of the FREE REPORT… “12 Fatal Mistakes You Can Make When Transitioning Your Business”

I wish you all the insight and wisdom need to set your plans in place.  Until next week.

Health, Happiness and Abundance

Michael Stelter

Advanced Business Coaching, Inc.

“We help entrepreneurs leave their businesses with health, sanity and fair compensation for what they’ve created”

Watch the video and download your Free Report to learn how we can help!

Michael@ABCBizCoach.com

exit-planning-abc

5 Things Outside Your Conrol That Will Impact Your Ability To Sell Your Business

Hope For The Best, But Plan For Those Things Outside Your Control

We often hear business owners state the specific year when they will sell their business, such as “I will sell the business next year,” or “I will sell the business in the year 20XX….” While it is good to have specific goals, when selling a business the outside world plays a surprisingly large role in determining how many potential buyers may be interested, and the price and terms you may ultimately receive. Selling your business for the maximum value involves careful timing.   Thank you to Patrick Ungashick for much of the content of this article.

There are five external factors nobody can control, but any or all of them may play a significant impact on your success at sale:

1. The Availability of Financing. When money is tight and buyers lack access to cash at attractive rates, generally this depresses business prices. For example the graphic below from the U.S. Federal Reserve Bank* shows the surge in banks tightening their commercial and industrial (C&I) lending standards in the midst of the recent US “Great Recession.”
2. The Overall Economy. When the overall economy is strong, business sales prices generally rise. In the reverse, during a weak economy business sales prices tend to fall. A rising tide lifts all boats, and a falling tide lowers all boats. The chart below shows median EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) multiples paid for U.S. companies purchased over approximately the last ten years.** As the economy has cycled through recessions and expansions, the chart shows median multiples have changed by 25% between highs and lows.
3. Your Geographic Region or Country. In many cases, different regions of the country (and different regions of the world if your business operates internationally) will be growing at different rates. If your area is experiencing difficult economic conditions relative to other locations, than can reduce your business sale price. Of course the reverse can be true as well, raising a business’s sale price.
 
4. Your Specific Industry. Industries go through hot and cool spells, where demand for businesses in that industry will rise and fall. These cycles can greatly raise or lower business sale prices and favorable terms.
 
5. Tax Policy. Known or anticipated changes to relevant tax rates can impact business sale prices, both gross and net. For example, several years ago in the U.S. federal long term capital gains tax rates increased by about 20% for most taxpayers, a change everybody knew was coming. We witnessed multiple business owner clients sell their businesses earlier than planned, before the tax rates increased.
exit2

     Exit Planning Is Rarely Linear 

All five of these external factors change with time, sometimes quickly. To sell the business for the top price, owners need to build timing flexibility into their exit planning, and carefully monitor these outside factors. Owners also must start seriously planning their exit years prior to the actual event. An owner who wishes to exit anytime within the next five years or less needs to realize that it’s crunch time.

When you sell your business is not likely to be determined by the year you choose, but rather by whenever a willing buyer shows up with a price and terms that you are willing to accept.
If you would like learn more about how you can increase the likelihood you will be able to sell your business at the price you’d like to receive call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.
“12 FATAL MISTAKES YOU CAN MAKE WHEN TRANSITIONING YOUR BUSINESS”