Tuesday, February 21, 2012

Ask Julie!
America’s Business Broker

Weekly Syndicated Column, February 21, 2012

Question: Why would a buyer want to buy MY business?

Answer: There are 5 reasons why there will ALWAYS be a buyer for your business (whew! :):

1) To avoid the Risks of Start-Ups or Organic Expansion
Experienced entrepreneurs know how difficult it is to start a business from zero. You probably remember that it takes hours and hours of dedicated thought, implementation, mistakes, and correction. If a buyer has started a business and failed, or started a business and sold it, they understand the value of an established entity. They will value all elements of the infrastructure you have created and will pay you a fair price for your enterprise. They also have the ability to perform, or as brokers like to say “pull the trigger,” and make an offer if most of the information they learn about your business fits their criteria.

2) To achieve Growth More Rapidly by Acquiring New Products, Technology or Markets
Once a business has achieved the milestone of a million dollars in sales, owners begin looking for ways to grow faster and easier than it took them to get to the first million, so acquisition often becomes a key strategy. By acquiring a new product line, technology, or market share, a similar business with a strong cash position can be an attractive buyer candidate.

3) To acquire an Established Presence or Strengthen Market Position

We are now getting into competitor territory, so qualify the buyer thoroughly and advance information slowly. If you have a business that serves the western region, regional players in the central or eastern states may be interested in growing their market share with a synergistic purchase of your company. These buyers are competitors, so they are professionally qualified, but make sure that they have a strong balance sheet (a lot of cash and a small amount of debt). You should also be prepared that you will probably be asked to stay on in a management capacity to continue running the region after the merger. This is a big decision because if you sell and merge your business, you will become an employee of your own company!

4) Acquire Undervalued Assets
At the writing of this post, we are experiencing the worst economy since the depression era. With so many businesses with declining revenues, there are bottom-feeding buyers with cash to burn and an appetite for acquisition. Be sure you are sitting down when you read their offer, but really, can you blame them? Don’t throw in the towel just yet—if you are willing to participate in the financing and help grow the company back to profitability, there just might be a pot of gold at the end of the rainbow.

5) To achieve the American dream of being self-employed.
You know this one from personal experience. Enough said. :)

Do you have a question or comment for me? Just leave it below and I promise to reply!

Talk to you soon and remember...

Your Exit Journey Began the Day you Started Your Business!

Julie Gordon White, CBB, has worked with hundreds of business sellers and buyers over the last 10 years as a Certified Business Broker, and is the bestselling author of “EXIT! 12 Steps to Sell Your Business for the Price You Deserve”. Julie is a trusted resource for Inc. Magazine, Entrepreneur, Bloomberg BusinessWeek, San Francisco Business Times, and Enterprising Women; the Current Past President of the California Association of Business Brokers; and has been a member Women Presidents’ Organization since 2007. Discover more EXIT! info + videos at www.TheExitBook.com.

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