SELLING PRIVATELY HELD BUSINESSES


–SINCE 1982–

Articles & News

9 Things Every Business Owner Needs to Know Before Selling

By Mason Myers, Greybull Stewardship, Business Investment Fund When selling your business, it pays to learn lessons from others.  Most business owners will not get a second chance to do it well, and it is such an important process for your employees, your customers, and your own bank account that you want to maximize your chances of success. I have been involved in over 30 business purchases – most with between $1 million and $5 million in profit – and have earned scars from broken deals, learned many humbling lessons, and burned the midnight oil doing my best to craft

Read More »

Starting the Year Off Right

At the FBB Group, Ltd., we finished the year with a multi-company closing on December 31 and started 2015 the right way by closing a transaction in Denver on January 5.  The next several months are historically our strongest time for buyer activity and, with the strengthening economy, we expect that trend to continue. Speaking about the economy, last week, I attended the ACG lunch in Denver.  The featured speaker was Alan Beaulieu, who had previously presented at this venue with significant accuracy.  Alan was particularly bullish about the U.S. economy due to low energy prices, falling unemployment rates, and low

Read More »

“Business Ownership Blues? Four Questions to Your Freedom” by Jon Hokama, Principal and Founder of Jon Hokama and Associates, LLC

If I were to distill the top Frequently Asked Question (FAQ) I get from business owners, it’d be this: “How can I/my business do ‘better‘?” My response is, “Do you mean you personally or your business? And what do you mean by ‘better‘?” This is The Question of about what I call “alignment” between the owner and the business. We at Jon Hokama and Associates, LLC (JH&A) have found that all business owners want their businesses to serve their life, but often feel that they are in a wrestling match to gain the upper hand! Too often these owners find that

Read More »

Earning Calculation Methods: EBITDA vs SDE

The Differences Between EBITDA and SDE We are often asked “What is SDE?” and “What is EBITDA?” by both buyers and sellers of businesses. While both earning calculation methods for business, the use of these methods vary depending on the business structure. In this month’s article, I will attempt to explain the differences, and when those terms are typically applied. Seller’s Discretionary Earnings(SDE) SDE is an acronym for Seller’s Discretionary Earnings, and is a metric for determining the historical cash flow of a business. It is a recasting process that starts with the net profit of a business, from either the business

Read More »

Set Your Business Apart – A Holistic View of the Business Lifecycle

By Kathi Gurin, Sales Xceleration & Customer Experience Consultant, Sage Consulting, Inc. If you’re reading this, you’re likely receiving some great support as you move toward the purchase or the sale of a company. You have already read the excellent articles in previous FBB eNewsletters outlining the “dos”, the “don’ts”, and the “don’t forgets” surrounding the very important business decisions you’re about to make (or have just made). And, as either buyer or seller, you’ve reviewed the target company’s finances, legal and HR compliance, tax implications, and much more, all under the expert guidance of professionals. But what can you

Read More »

Methods Of Accounting: Cash vs. Accrual

By Russ Anderson, SSA, P.C., Certified Public Accountants & Advisors Generally, most small business can elect either the cash or accrual method for income tax reporting purposes. There are exceptions related to size of business, type of entity that might be a partner, and whether inventory is a material factor in producing income. The decision as to which method to use is often based on the timing of when income is received and expenses are paid. Under the cash method, income is recorded on the financial statements when it is actually received and expenses are recorded when paid. The accrual

Read More »

Improving the Probability of Selling Your Company

At the end of March, I attended the ACG Capital Growth Conference, which celebrated its 13th year.  The conference enjoyed record attendance of approximately 750 attendees, including many regional attorneys, accountants, and lenders.  The conference was also attended by many Private Equity Groups from around the country.  My takeaways from the conference are, first, that there is a lot of interest in lower middle market companies (defined here as companies with a value between $5 and $50 million) and, second, there is plenty of money for attractive deals. The next question is, “what is an attractive deal?”  Although the majority of business sales

Read More »

The Importance of Accurate and Timely Financial Information

If you are thinking of selling your business, I cannot over emphasize the importance of addressing the need for accurate and timely financial information.  Most sellers want to maximize the price that they get for their business and keep the maximum amount of cash received at the closing table. In order to achieve these objectives, one or more lenders are typically involved.  This means that not only will the prospective buyer and its team of accountants be scrutinizing the financial records, but the lender’s analysts will be spreading the numbers.  Usually this financial due diligence will be for a minimum of three

Read More »

Term Sheet vs. Letter of Intent vs. Purchase Agreement

I am in the middle of a transaction in which a fairly sophisticated buyer submitted a Term Sheet for a service business having a value of approximately $3 million. During the process of analyzing the offer with my client, the Seller (who is also a fairly sophisticated business man), a number of questions came up regarding the differences between a Term Sheet, a Letter of Intent (“LOI”), and a Purchase Agreement (“PA”). Note: the Purchase Agreement can be either a Stock Purchase Agreement or an Asset Purchase Agreement. Below is a brief discussion of the use and differences of the

Read More »

Customer Concentration

Although this year has been the exception, buyer activity typically slows down during the summer, and picks up with intensity after Labor Day, as the vacation season ends and buyers realize that there is still time to complete a transaction before the end of the year. In anticipation of this increased buyer activity, our firm is actively engaged in bringing additional businesses to market. During this process, we find out the good, the bad, and sometimes the ugly about some clients and potential clients. The issue of customer concentration falls within this rating system and is the topic of this

Read More »