Considerations for Selling Your Business: Part 1, Mature vs. Decline

Should I sell now or waitShould I sell now or wait?

As a human being it is easy to become emotionally invested in your business. After all the things you have sacrificed for it – kids’ soccer games, recitals, family gatherings, etc., it is understandable how this can happen. However, this investment should be treated like any other. If you consult your financial adviser, stock or bond trader, they will advise you that the best time to sell when the price is highest. In the case of selling a business, it is the same thing.

Unfortunately, as most entrepreneurs are natural risk takers, often they will continue to operate their businesses past the maturity stage and into the declining stage of its life cycle.

To demonstrate the premise of this article, let us examine two identical enterprises:  Business A is in the maturity stage and Business B is in the declining stage. Continue reading

Which Business Owner Will You Be?

 which business owner c_optChoose to be Business Owner A and:

You Succeed in Selling Your Business

Businesses offered through business brokers have a much higher listing to closing rate than those offered through realtors or listed directly by business owners. We often hear that as owners trying to sell directly you become frustrated as you try to communicate the value of your business, or see potential buyers who walk away after you have spent a great deal of time with them. Our business brokers are trained to sell businesses. And that’s what they do!

You Deal With Qualified Buyers

Our business brokers know the market and have access to a database of active buyers—owner-operators, financial buyers and strategic acquirers—looking for businesses. We screen prospects for assuming your business so you won’t waste time with “tire-kickers.”

Our extensive network of professional contacts among accountants, lawyers, bankers, business coaches, consultants, wealth planners, insurance experts, venture and entrepreneurial sources also ensures that active buyers in the market are routinely, and in some cases exclusively, referred to us.

You Get Maximum Value

Small business financials do not tell the story. Experienced business brokers have the business and financial acumen to uncover the true benefits of ownership and illustrate them to the potential purchaser.

Our brokers have expertise in valuation principles, financial statement analysis, taxation implications, inventory, goodwill and so on. They know how to optimize the value of your business to move it up the value chain.

You Minimize Risk

The lower the perceived risk to a buyer, the more a buyer can afford to pay and the more a seller will receive.

We focus on finding the right business for the buyer—starting the transaction with a buyer that has the necessary experience, skills, ethics, financial resources, risk tolerance and passion is more likely to lead both parties to a successful outcome.

And we do it all confidentially. Telling the world that your business is for sale can cause it to lose employees, customers, suppliers and value.

You Save Valuable Time

Our process works for and protects both buyer and seller. While there are wide variations in the amount of time required to sell a business, a selling period of six to nine months is typical for a small business. And in the meantime, you can focus on running your business.

See our one-pager: Top 10 Reasons to Use a Certified Business Broker to Sell Your Business.

Consultez : Les 10 principales raisons de faire affaire avec un courtier d’entreprise pour la vente de votre entreprise  

Bringing a Dream of Entrepreneurship to Canada

Alberto and Eloisa Garcia, owners of Wag, Ottawa

Alberto and Eloisa Garcia, new owners of Wag, Ottawa’s first pet friendly shop and cafe

Going from diesel repair to doggie day care is less of a stretch than you think. Why? Because the skill sets required for both are transferrable. And that’s what Alberto Garcia counted on when he moved to Ottawa from Querétaro, Mexico, to buy Wag, a doggie-themed business in Old Ottawa South. Continue reading

Meet Luis Quevedo

Luis Quevedo-l

Sunbelt office owners are great people.

And we’d like you to meet them.

Meet Luis Quevedo, owner,

Sunbelt Business Brokers Montreal South Shore

Office(s): Montreal South Shore
Birthplace: Lima, Peru
Education: CPA Auditor, CMA, MBA
Volunteer commitment: Coach, Teenage Soccer
Business experience: Two years as a broker and 15 years as a commercial account manager for different financial institutions.
80% of my transactions have involved selling business in the $1- to $3-million price range. Currently owners of distribution, manufacturing and technological businesses.
Biggest lessons learned: Invest in yourself through training, reading. Always be ready to help others and take care of details.
Influenced by: Steve Jobs.  Warren Buffet.  Love what you do—that is the only way to succeed. Focus on one thing at the time.
First job: Washing dishes at a fancy restaurant.
First job at university: teller at a bank.
After university: financial adviser at a financial institution.
Advice I’d give the younger me: Be honest, work hard, invest in yourself, always put some money aside, and take care of your family.
Favourite pastimes: Soccer, reading, and spending time with my family.

I Have Never Seen a Better Market…

Canadian moneyDo you own a small- or medium-sized business in Canada? Is selling and retiring on your horizon?

Great news!

In the 15 years I have been in business brokerage, I have never seen a better market for business owners who want to sell and retire or move on to other things in life.

The market is also favourable for buyers.

Here’s why:

  • Real estate, the stock market, and business are all buoyant. We’ve finally recovered from the hard knocks of the 2008 financial crisis.
  • Interest rates are at an all-time low so businesses are now more affordable.
    • Typically a buyer requires the business they buy to
      • a) have sufficient cash flow that they can live comfortably,
      • b) look after the debt servicing, and
      • c) provide a good return on their invested capital.
    • Given that low interest rates have reduced the debt-servicing component, buyers are getting more for their business purchase than a few years ago.
  • The lower Canadian dollar is attractive to people bringing money from other countries; many of our buyers are first generation Canadians.
  • The lower Canadian dollar also makes our medium- and higher-sized businesses (businesses over $3 million in revenue) especially attractive to international investors, particularly those from the U.S.For private equity groups, they’re a bargain.
  • Changes to the lifetime capital gains exemption (LCGE) for small business corporation shares reduce taxes for owners who meet the CRA criteria.
    • The LCGE for 2015 is $813,600;
    • The LCGE is indexed to inflation, up to $1 million, for tax years after 2014;
    • Many businesses are owned by a family trust or by multiple members of a family. The exemption applies to each member.

Next steps

A professional appraisal will tell you what your business is worth and its most probable selling price (MPSP). If it’s not worth what you expect or need, you may need to work on your business to increase its value. Our brokers can also help in that respect, identifying the financial, operational and organizational factors that have the most impact. The same applies to minimizing the taxes you’ll pay when you sell—we can refer you to tax advisers familiar with the options to best meet your needs.

Take the first step. Reserve a free, confidential consultation at an office near you.

Shaking Up the Sports Drink Market

at_wimbledon-crDrink to this: the Wimbledon Vegan Strawberry & Cream Smoothie made with Wahta pure maple water. As some of the world’s best tennis players have discovered, drinking Wahta is a great way to rehydrate after a work-out. Here’s the recipe:

wahta_Wimbledon_smoothie_recipe

Blend these ingredients and raise a glass to Javad Shakooh and to the health benefits of Wahta. Marketed by Pure Canada, a company acquired by Javad through the Montreal Central office of Sunbelt Business Brokers, Wahta pure maple water contains half the sugar and half the calories of coconut water. It’s now poised to replace coconut water—and other sports drinks—as the rehydration drink of choice.

As a product, Wahta pure maple water was going nowhere until Gonzalo Suarez, vice president of business development at Sunbelt Business Brokers in Montreal Central, linked Javad to the company that owned the trademark.

One Business Leads to Another

Javad Shakooh-Wahta maple waterAs an engineer in Iran, Javad had owned a successful construction company. In 2010, a couple of years after arriving in Canada, he and a partner started a retail business in Montreal. When it came time to make a change, he sold his shares and began looking for another business.

An Internet search turned up an interesting franchise business brokered by Gonzalo. However, the deal fell through. Gonzalo felt so badly that he continued searching for another suitable business. The result was the trademark for Wahta. Negotiations started in October 2014 and were finalized in December 2014. During that time, Javad set up Pure Canada. Continue reading

Meet Jack Elias

 

Jack Elias

Jack Elias

 

Sunbelt office owners are great people.

And we’d like you to meet them.

Meet Jack Elias, owner,

Sunbelt Business Brokers Toronto Centre

Office(s): Toronto Centre
Birthplace: Winkler, Manitoba
Education: Electrical Engineer, Certified Business Intermediary, Real Estate Broker
Business experience: three years as a Business Broker and Intermediary. Prior to that I spent most of my career in the elevator business, starting as a mechanic, and for the final 15 years, as President of Schindler Elevator Canada. During those years, I acted for Schindler on many acquisitions, where I learned the value of the Business Brokerage function. Now I love to create a deal that works well for both the seller and buyer of a business, thereby fundamentally improving both their lives.
Biggest lessons learned: From employment – work hard; always do your best work; always provide your employer more value than what you are paid. Also – do what you love; do what you are good at; do something that will provide you with adequate financial rewards. And from life – understand and live by your morality; respect others; always do the right thing (the right thing usually becomes obvious when you live by your morality and respect others).
Influenced by: Many family members, friends, co-workers, bosses, and employees – all those who do things and behave in ways that I admire, and from whom I can learn. Each person has value, and from each person I can learn to be better. I have been fortunate to have three mentors in my career, who have taught me the most, and been most influential in me becoming the person I am today.
First job: Bus boy in an upscale restaurant in Winnipeg; then short order cook; then service station attendant; then elevator mechanic’s helper (not really a planned progression!)
Advice I’d give the younger me: Always be optimistic; enjoy life; through all life’s difficulties and challenges, if you understand yourself, do your best, and respect those around you, things will work out well.
Favourite pastimes: Reading for pleasure (mostly mystery novels), everything related to business, investment management, golf.

From Books to Blinds: How One New Ottawa Business Owner Found His Right Fit

no more window watchingAs an accountant for over 20 years, André Lefevre had worked on the books of other entrepreneurs. He saw how owning your own business can lead to financial success as well as to other rewards. “Other people are doing it. Why can’t I?” André thought. He had caught the entrepreneurship bug.

André had no idea of what business he wanted to take on. But business is business, and he felt that his experience and education equipped him to take just about any company to the next level. In 2014, the time was right; the opportunity was right: So André Lefevre bought Blinds with Flair in Ottawa. Continue reading

Meet Keith Pond

 Keith Pond, Sunbelt AtlanticSunbelt office owners are great people.

And we’d like you to meet them.

Meet Keith Pond, owner,

Sunbelt Business Brokers Atlantic

 

Office(s): SUNBELT Business Brokers Atlantic – Fredericton, Saint John, Moncton and Northern New Brunswick; Newfoundland and Labrador and Prince Edward Island.

Birthplace: Doaktown, New Brunswick
Education: Forestry, University of New Brunswick.  Importantly, a PhD from the “school of hard knocks”!!
Business experience: “Serial entrepreneur & developer ” for almost 50 years.  Hospitality operator of Ponds Resort on the Miramichi for 40 years. Owner commercial and residential rentals.
Biggest lessons learned: Keep “your eye on the ball” and be alert in business each and every day; no one will care for your business the way you will. “Like a beechnut” every deal has many sides and many perspectives…. Consider them all; make a decision and move on it.
Influenced by: My Pond grandparents in Porter Cove, who worked not only hard every day but also, worked “smart”.
First job: A “cub forester” for the NB Department of Natural Resources…for 4 months. It took that long to realize I needed to be my own boss.
Advice I’d give the younger me: Stay focused on the business at hand. Do not have too many balls in the air at the same time; it fragments energy to keep them all up there at once!
Favourite pastimes: Fly-fishing…primarily wild Atlantic salmon. However those you can fish in March in the sunshine are fun too! Outdoor pursuits and I love trees, my woodlots are special and spiritual to me.

Business Owners: Define What You Want as a Lifestyle and a Legacy

russ_allredA recently published article by Sunbelt business broker Russ Allred starts with sobering numbers:

Only 30 percent of businesses survive the owner and 67 percent of business owners fail to plan for succession.

He continues:  Most businesses don’t survive because the owners never intended to pass them on. The owners who want their business to continue often avoid planning for succession, the way most people avoid writing a will.

They perceive the outcome as an admission of their mortality. It is obvious that businesses with a succession plan have a better chance of surviving the founder, but should the plan only kick into effect when the owner kicks off?

Rather than relating succession planning to kicking the bucket… approach the effort as an item on your bucket list.

I agree.

Too often, small business owners don’t realize that their business has a value that could help them with more cash flow in retirement. Our network can help them increase that value substantially, especially if they get to us two or three years before they want to exit. We are not business coaches or exit planners however our network does include all of the resources most business owners need to get focused and take the actions they should to get ready for an exit and we do not hesitate to refer business owners to the resources they need.

You can read Russ’s article in The Californian.

You can also check out my post: Leaving Your Business on Your Terms: Transition Options for Small Business Owners