The FTC and Roll-Ups

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The FTC and Roll-UpsOne of the industries that has seen a lot of rollups recently is healthcare (we did a case study in an adjacent field, veterinary medicine). The problem with this activity? The current head of the FTC, Lina Khan, isn’t keen on all that activity.

Prior to her appointment Khan got a lot of attention for her article, Amazon and the Antitrust Paradox, in which she argues, among other things, that America’s antitrust legislation is outdated. Indeed, it was articles like that which spotlighted her for a role in which she would get to put her theories to the test.

A couple weeks ago news broke that after the FTC began an investigation of private equity firms acquiring small medical practices, acquisitions of such firms are down (down over 20% year on year). Unsurprisingly, this has had a downstream effect on valuations of those healthcare firms that could have been acquired in a roll-up market environment.

In these cases the FTC cites concerns about reduced competition, higher costs, and lower quality of care as the specific reasons for the investigation into whether these roll-ups are, as they suspect, harmful to the US economy in general. Now, regulatory scrutiny can slow down deals (and make them pricier), but it doesn’t make them impossible.

And the FTC hasn’t exactly been on a winning streak with these cases, anyway.

One of the cases that recently featured a win/loss was Federal Trade Commission v. U.S. Anesthesia Partners Inc and Welsh, Carson, Anderson & Stowe et al, U.S. District Court for the Southern District of Texas, No. 4:23-cv-03560. The court dismissed the case against Welsh, Carson, Anderson & Stowe (the acquirers), saying that the FTC “had not shown how Welsh Carson as a minority investor in the acquisitions was actively violating competition law,” but ordered that the case against US Anesthesia Partners could be pursued, saying that the FTC had “plausibly alleged acquisitions resulting in higher prices for consumers.”

What is Khan’s strategy anyway? Robert H. Bork Jr. recently opined that she might be trying to “win by losing,” allowing the cases to signal to Congress that laws need to be changed. Whatever her strategy, as we already noted, that shouldn’t really affect deals in the medium to long term, while in some cases interest rates could be slow-walking deals in the short-term (though, as we have noted, good businesses sell in any interest-rate environment). If the FTC starts actually winning these cases or Congress does change laws, that’s when we’ll see major market effects, as we saw in health care after the Affordable Care Act.

Five More Items for Your Business Closing Checklist

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Five More Items for Your Business Closing ChecklistNow if we are telling you there are five more items for your business closing checklist, you’ll probably want the first five, which you can find here. As with that list, this list is full of items that are logical, but don’t occur to most first-time sellers, so don’t feel bad for not knowing them.

Inventory

If you do have inventory that is included in the purchase, you will likely already have drawn this up and had it properly valued. That’s not what we’re referring to here. We’re talking about an “annotated” inventory list.

For example, if there’s a particular product that you’ve been using but know there are different/more expensive/less expensive versions, you might want to share that information. If there’s a vendor you like to buy these parts from (or one that you couldn’t be paid to do business with) you should list them and give reasons.

One time we shared the possibility of doing this with a seller and his response was, “I’m not going to do that.” We were a bit stunned, given how long he had taken to build this company and how much this little bit of effort would help the new owner in a little way. Instead, the seller decided to take the low, entitled road, drawing a line on what he would be “willing to do” instead of setting up the future owner for success, which is a reasonable expectation of anyone passing on his life’s work.

Working Capital

It’s true that on the day of closing, you’re going to have purchases and payments going into your bank account as the new owner. But you’re also going to have bills and purchases due, with money coming out. That means you’re going to need some working capital in the business.

This is going to vary significantly on the type of business you’re buying, but the very best person to ask is going to be the seller. If, for whatever reason the seller isn’t helping you here (see the “I’m not going to do that” example above) you could ask for a monthly statement of the business bank account to see what amounts are coming out when. If you don’t get that either, then consult with your broker and put in your best guess.

You need working capital on day one, but you’ll need to line it up before then.

SWOT

It’s very likely that your broker will have helped develop a SWOT analysis as part of the sale process. The Strengths and Weaknesses are less important as you move towards closing; it’s the Opportunities and Threats part of the analysis you should be focusing on.

If the seller is willing to meet with you, a focused discussion built around, “What would be the 1-2 opportunities you would pursue if you were me, given sufficient time, energy, and resources?” The other matching question would be “What are the 1-2 biggest threats I should be aware of?” Again, this will likely have been gone over during the sale process, but this is your chance to go deeper with the seller as you move towards the close of the transaction.

Family Commitments

Believe it or not, we once had a deal fall through because a spouse threatened a divorce if the deal went through. The buyer had not done the necessary work to get her onboard. This may not have been about the business at all, but it sure identified problems at home!

While you may be the sole person funding/guaranteeing/paying for the business, no one ever builds a business by himself/herself. Make sure that your family is fully onboard with what you have planned and that you’ve done a realistic assessment of what your new life will look like. Their buy-in isn’t necessary for your success, but it can really make a difference when the going gets tough.

Licenses

We’ve shared before that deals were sometimes jeopardized because a license could not be transferred to a buyer and/or one can take a while to obtain.

Never assume that a license can simply be transferred, either to your business or to you personally. Assuming the opposite means that you will highlight this early on in your diligence process and not get burned weeks or days from closing.

Trust us, our closing checklist is a lot longer than one or even two articles with five items each. Call us today to get a list of what you should be doing as you move towards the close of a business transaction.

How Real Estate Impacts a Business Deal

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How Real Estate Impacts a Business DealWhen prepping your business to sell, many things can impact its value and the ultimate transaction. Real estate is one of them — when you sell a business, most of the time you either sell the property where it’s housed, or you lease it.

Like a myriad of other things to consider when selling, coming up with an accurate valuation of the real estate connected to your business could make or break a deal. Let’s take a closer look at the implications so you can be better prepared to sell.

Real Estate in Business

Rent is usually a term that’s used to describe the cost of real estate. This includes the base cost — either rent or a mortgage including the principal and interest — as well as insurance, real estate taxes, and maintenance and repairs on the property. That’s why it’s so important to consider the true real estate costs; it isn’t just the rent or mortgage on its own.

When buyers go through your P&L and they see a line item for rent, they need to dive into what actually makes up that rent. The maintenance, taxes, and insurance could fall into a completely different tax return.

For example, let’s say the owner of the business is called AK Enterprises LLC, and the owner of the property is AK Properties LLC — AK Enterprises may just be paying rent, but there are maintenance costs, taxes, insurance, and the like that may fall to AK Properties instead. Determining those specifics is key, as you need to make sure that you capture all of the costs that a buyer would be responsible for paying.

This information is critical for financing. The buyer has to go to their bank and show them their pro forma which indicates everything they’ll assume when they buy your business. That pro forma needs to include the rent or mortgage payment, but it also needs to show those other costs for the bank to issue the correct loan amount.

Little costs add up, especially in the eyes of the buyer, so you must be honest about them up front or the deal could crumble at the last hour.

Real Estate in Real Life

A few years ago we were working with a seller on listing their business. When we initially met with them, they gave us a specific rent number that they wanted to charge the buyer. For the sake of this story, let’s say it was $6,000 per month.

On the day of the deal, they presented a triple net lease that took that $6k a month and increased it to between $7,200 and $8,400 a month. This of course changed the cash flow of the deal and changed the ability of that business to make a profit and still be able to pay for the new rent.

Now that the seller decided to increase an expense, something else had to give for the deal to work out. Due to that slight change, the value of the business went down, just because the owner wanted to charge more in rent.

The value of the real estate of your business is ultimately dependent on the buyer’s ability to support the cost of that real estate. And if the seller can’t support the cost of renting or buying, then they may try to strike a new deal and buy the business but not the locale.

This wouldn’t be the end of the world — or necessarily the deal — but it would certainly change what your exit may look like.

Highest and Best Use

The concept of highest and best use can also impact the value of a building.

Sometimes a business may be in a building or locale that no longer makes sense for them. That means they aren’t getting the “highest and best use” out of their location. Over the years, the location may have evolved to a point where another business could occupy and generate more revenue. In that case, they should move somewhere else where they can have a lower occupancy cost and sell the location to someone who could generate a higher return.

We run into this a lot with lawn and landscape businesses. They open up shop in a rural community, and as time goes on and suburbs have encroached, the location no longer makes sense for them — or a new buyer. Again, in this case, the seller would be better off selling the business separately from the location. The business could be worth $400,000, but the land it’s sitting on could be worth $2 million. The choice is obvious: sell the real estate, monetize some of that wealth to relocate the business, and then sell that one day too.

There are several other ways real estate can impact a deal. Another, in particular, is when an owner of the business also owns the building and they don’t charge themselves rent. The new buyer will have to pay a rent payment that the current owner doesn’t. Regardless of the value of the business, they’re automatically going to have a few thousand dollars worth of negative cash flow per year when compared to the previous owner.

Ultimately, real estate can complicate even the simplest of deals. If you’re unsure of how yours may impact a sale, it’s crucial to be honest about your current costs and how they may impact a future buyer when you perform a valuation.

Because frankly, it does impact value significantly.

If you don’t know where to start, we’re here to help. Contact us today and we’ll evaluate the implications of your real estate and how they may affect a future sale.

The Downsides of Selling to Private Equity

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The Downsides of Selling to Private EquityPartnering with private equity firms has become an increasingly popular choice for entrepreneurs who are looking to take their companies to the next level but are not yet ready to sell entirely.

And why not? It offers access to capital, expertise, and resources that can encourage growth and expansion like never before. But before you jump headfirst into a deal, it’s essential to understand the potential downsides of selling to private equity.

Understanding Private Equity

Private equity firms are essentially pools of capital from high-net-worth individuals, pension funds, and other institutional investors. They invest this capital directly into private companies with the aim of generating high returns. Typically, they purchase a majority stake in the business, and the business owner retains the remaining shares.

Before we touch on the downsides of private equity, let’s first look at the benefits. There’s no doubt that these firms can provide hefty cash injections, strategic guidance, and expertise. Many business owners are intrigued by the potential for rapid growth and increased market share that teaming up with a private equity firm can bring.

Partnering with a reputable firm can also give credibility to your company. The backing of a well-respected investor could improve your reputation, attract top talent, and strengthen relationships with customers, suppliers, and other stakeholders. It can also open doors to even more strategic partnerships, joint ventures, and other growth opportunities that may not have been possible otherwise.

The real upside in having the right private equity partner is that the value of your share of the business could be worth much more than the original shares sold to the equity group.

However, it’s crucial to consider what this type of partnership could mean for your business.

The Risks and Challenges

One of the most significant concerns for business owners considering a private equity deal is the loss of control. When you sell a portion of your company to private equity, you’re essentially inviting new stakeholders to the table. This can lead to differences of opinion over strategic direction, operational decisions, and even company culture.

Business owners may find themselves with a smaller ownership percentage and less influence over decision-making processes. This shift in ownership dynamics could strain relationships between existing stakeholders and lead to conflicts of interest regarding the company’s direction and priorities.

Private equity firms are notorious for their short-term focus on profitability. While this can lead to quick wins like increased revenue and streamlined operations, it may come at the expense of long-term sustainability. As an entrepreneur, you must ask yourself whether you’re willing to sacrifice your vision for short-term gains. What could it mean for you, as the owner? What about your employees?

They may impose changes to your operation’s structure, processes, and even personnel in pursuit of their growth objectives. Private equity firms tend to implement strict performance targets and timelines to achieve returns on their investment. This pressure to deliver quick results can create a high-stress environment, which will negatively impact your team. Most of these firms are much more concerned with turning a profit and may not even consider what it could mean for your company’s culture.

What’s more, unrealistic growth projections will inevitably disappoint the firm if your company fails to meet certain targets. It’s understandable — who can work well under such stressful conditions?

Mitigation Strategies

Given these challenges and risks, business owners must approach private equity transactions with caution and careful consideration. That said, if you’re still keen to sell to private equity, there are ways to mitigate the risks.

First and foremost, thorough due diligence is key. Take the time to research potential partners, understand their track record, and assess their compatibility with your company’s goals and values. Be ready to negotiate terms that protect your interests so that you can find a middle ground between your vision and the firm’s objectives.

Seeking legal and financial advice is also essential. A seasoned business broker can provide invaluable guidance throughout the transaction process, helping you navigate complex negotiations and safeguard your company’s future.

While selling to private equity can offer significant benefits, it’s not without its drawbacks. Business owners must carefully weigh the pros and cons and proceed with caution. When you understand the challenges associated with private equity sales and implement specific mitigation strategies, you can increase the chances of a successful partnership that benefits everyone involved.

Remember, you don’t have to go it alone. As experienced business brokers, we’re here to help you navigate the sometimes murky waters of selling to private equity. Get in touch with us today to learn more about how we can help.

3 Things Every Business Owner Must Align Before Selling

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3 Things Every Business Owner Must Align Before SellingEntrepreneurs often approach our team of brokers with a business to put to market that isn’t ready, perhaps more often than you would think. So, how do you know when your business is actually ready to sell?

Three things need to converge to make the business saleable — the business needs to be ready, the owner needs to be ready, and the sale has to make financial sense for the owner.

#1: The Business Has to Be Ready

It may be obvious, but first, you need to make sure that the business itself is ready to sell. You should be able to hand the proverbial keys to the kingdom over to the next owner without too much explanation. As such, the structure needs to be ready, and you need a business valuation, just to name a few things.

As an example, is your organization reliant on one customer? If you find yourself in a situation where 60% of your revenue comes from one client who you swear will “never leave,” your business isn’t ready to be sold. Even worse if you’re sure they’ll never leave because your brother-in-law is the head decision maker. What happens when he retires or leaves? What happens when you don’t own the company anymore? 60% of your revenue could leave with him.

The truth is, the market doesn’t care if your brother-in-law is in charge — the only thing it sees is your business that relies on just one client as its bread and butter.

In terms of restructuring, as another example, if you need to unwind your C-Corp structure before selling, make sure you do it three to five years before you end up selling. And if you have no idea how much your business is worth, you must work with a professional so that they can perform a valuation. You won’t be able to determine what it’s worth — and if it’s ready to sell — without one.

#2: The Business Owner Has to Be Ready

You as the owner also must be emotionally and psychologically prepared to sell your business. This is especially true for entrepreneurs who have worked in the same industry and potentially the same company for their entire lives.

Do you plan on retiring, or will you pursue another career? If you do want to retire, what will you do with your spare time? A few months of relaxing and watching TV are always nice, but it’s not sustainable. If you’re married, are you prepared to spend a lot more time with your spouse if they’re retired too? These are all very important questions that need answers before you can move forward.

#3: It Has to Make Financial Sense For the Owner

The third thing that needs to align before selling your business is that the deal has to make financial sense for you. You have to determine how much money you will take away from the sale — we call it your “walk away money.”

Again, do you plan to retire, or will you use the money to fund your next venture? You need to have financial peace of mind in either instance.

When determining whether a sale makes financial sense for you, you also must keep in mind the professional fees you’ll be expected to pay at the time of the sale. Accountants, attorneys, and brokers don’t work for free, after all. That’s not to mention taxes!

When you sell a business, you can’t simply tell your broker what you need, and they go out and sell it for that exact price. Your business will sell based on its fair market value. This is why it’s important to get number one sorted before you move on to numbers two and three — if your business is too reliant on one customer or has to pay a lot of taxes after the sale due to corporate structure, you won’t be able to walk away with as much as you hope (or need). And if you aren’t emotionally and mentally prepared to sell, you won’t get very far either.

The moral here is that selling a business takes a lot of forethought and planning, and the earlier you get started, the better. If any of the three aspects mentioned above become off balance, it can cause a deal to be unmarketable or totally fall apart.

Our advice? Talk to us early on so that we can help. When you know what you’re getting yourself into from the get-go, and exactly what you need to do on your end to get it done, everyone wins.

Choosing the Right Exit Strategy for Your Business

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Choosing the Right Exit Strategy for Your BusinessAs a business owner, you’ve put in years of hard work to build your company. Now, you’re contemplating the next step: your exit strategy. Choosing the right one is crucial for ensuring a smooth transition and maximizing the value of your business.

Many entrepreneurs may be ready to sell, but it’s important to come up with a well-thought-out plan before you can cross that finish line. There are various factors you must consider to make an informed decision that will benefit you, the employees you’re leaving behind, and the new owner.

Understanding Exit Strategies

Exit strategies come in different shapes and sizes, each with its own set of pros and cons. From selling your business to a family member to considering an Initial Public Offering (IPO), there are plenty of options to choose from.

  • Sale to a third party: Selling your business to an outside buyer can provide a substantial injection of cash and allow you to exit the business entirely. However, it requires careful planning and due diligence to find the right buyer and negotiate a fair price.
  • Passing on to a family member: For some business owners, keeping the business in the family is a top priority. This exit option in particular can be emotionally rewarding. That said, it requires open communication, clear succession planning, and addressing eventual conflicts among family members. As with most things that involve relatives, it has the potential to get messy, quickly.
  • Management buyout: This exit strategy involves selling the business to key employees or management team members. It can be a win-win situation and provide continuity for the business while allowing the management team to take ownership. Though, financing and structuring the deal can be complex.
  • IPO: Taking your company public through an IPO can unlock significant value and provide access to capital markets. The cons? It involves strict regulatory requirements and high costs. You’ll also have to come to terms with the fact you’ll no longer have control over your company’s direction fairly quickly.
  • Liquidation: As a last resort, liquidating the business involves selling off assets and winding down operations. While it may not yield the highest returns, it can provide closure and minimize losses in certain situations.

Factors to Consider

Now that you know the different types of exit strategies, it’s time to take into account several different factors.

Firstly, your timeframe matters — are you looking for a quick exit? Or are you willing to invest your time (and potentially money) in a long game? Financial goals, personal preferences, and market conditions should also play a significant role in your decision-making process.

  • Is your business ready? You may be ready to move forward with an exit strategy, but it’s essential to determine whether or not your business is too. Consider its financial health, operational efficiency, and legal compliance. A thorough understanding of your business’s strengths and weaknesses will help you make an informed decision.
  • Have you sought out professional advice? Navigating the complexities of exit planning can be daunting. That’s why it’s crucial to seek professional advice from experts in the field. Business brokers (like us), financial advisors, legal counsel, and tax experts can provide invaluable guidance.
  • Have you planned for the future? Beyond choosing an exit strategy, you must consider your post-exit plans. Whether you’re retiring, pursuing new ventures, or simply taking a well-deserved break, having a clear vision for the future will help you transition smoothly from business owner to whatever comes next.
  • Have you thought about the tax implications? One critical aspect often overlooked is the tax implications of your chosen exit strategy. Understanding the tax consequences can significantly impact your financial outcome. Again, consult with a tax advisor to explore strategies for minimizing tax liabilities and maximizing after-tax earnings.
  • Are you emotionally prepared? Exiting a business may cause some emotional strain. It’s essential to prepare yourself mentally for the transition. Take the time to reflect on your achievements, acknowledge any feelings of loss or uncertainty, and envision your life beyond the business.
  • Have you thought about your family? For those of you who are considering passing the torch to family members or key employees, succession planning is key. Develop a clear roadmap for transferring leadership and ownership that will ensure a seamless transition and preserve the legacy of your business.

Choosing the right exit strategy is a critical decision that requires careful consideration, planning, and professional guidance. Ultimately, as it’s your business that you’re exiting, you have to be the one to decide which path to take.

If you need help determining what exit strategy makes the most sense for your unique situation, give us a call today. No matter which method you choose, the key to a successful exit is preparation and foresight.

Valuation Reports: Which One is Right for Your Business

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Valuation Reports: Which One is Right for Your BusinessAs you gear up to sell your business, you’ve likely been asked to produce a valuation report. It’s important to note that you can’t use a one-size-fits-all approach when determining the value of your organization — there are three distinct types of valuations and each one serves a specific purpose.

Whether you’re gearing up for a major merger, planning your exit, or simply curious about your business’s worth, knowing these valuation types can make a significant difference.

Valuation Type 1: Certified Appraisal

The best valuation report you can receive is a certified appraisal — an in-depth, independent evaluation conducted by a certified appraiser. This type of valuation is certainly the most intense. It’s typically reserved for transactions such as mergers and acquisitions, detailed estate planning, and other scenarios where legal standards demand as close to perfection as you can get.

In other words, certified appraisals leave no stone unturned. They involve a meticulous examination of every aspect of your business, ensuring the valuation can withstand the scrutiny of the most complex transactions. This level of precision comes at a price — certified appraisals can be both time-consuming and costly, especially when expert witnesses are needed, such as disputed valuations during legal processes.

Valuation Type 2: Independent Valuation

Independent valuation reports are also conducted by experienced appraisers, albeit not “certified” ones. These types of valuations serve a crucial role in business and exit planning and offer a detailed snapshot of your business’ worth within the current market landscape. They’re particularly helpful for organizations that are gearing up for the market, and consider factors like comps, benchmarks, trends, and in-depth financial analysis.

One advantage of independent valuation is that they are the most up-to-date valuation you can get. When entering the listing process, having a recent appraisal ensures that those benchmarks and comparisons are as fresh as possible. An independent valuation, like a certified appraisal, is also usually bankable for SBA loans.

Something else to note about this type of report: your business can benefit from regularly updated independent valuations, even when you’re not actively looking to sell. Use it as a strategic planning tool that will help you identify areas for improvement and other ways forward.

Valuation Type 3: Broker’s Opinion of Value

Finally, sometimes all you need are some quick insights and ballpark figures to help you make informed decisions. This is where a broker’s opinion of value comes in. While not as detailed as certified or independent valuations, it provides a quick and cost-effective starting point for businesses to determine where they’re at.

A broker’s opinion of value offers a broad range of information based on comps and industry averages. It’s a low-cost tool that can help align expectations and initiate conversations about your business’s value. It may not provide the precise figures found in other valuations, but it can set the stage for further exploration and eventual refinement.

As a token of our appreciation in Q1 2024, we are offering a free broker’s opinion of value. This is not just a gesture but an opportunity for business owners to gain a quick overview and range of their business’s value. To take advantage of this offer, simply send us an email at . One of our brokers will guide you through the process, ensuring you provide the necessary information for a well-informed broker’s opinion of value.

Key Takeaways

  • Tailor your valuation approach to your business’s unique needs: The type of valuation your business needs depends on its current stage, goals, budget, etc. Whether aiming for an in-depth certified appraisal or seeking a quick, cost-effective broker’s opinion of value, understanding your business’s needs is essential.
  • Regular valuation reports can become strategic tools: Regularly updated valuations help you see where your business can improve, compare it to industry standards, and plan for the future to make your business more valuable. Think of it as a tool for your long-term planning.
  • Align expectations early to avoid misunderstandings: Remember to use the broker’s opinion of value as a starting point for aligning expectations. This tool provides a broad range rather than precise figures. Initiating conversations based on this ballpark figure helps avoid misunderstandings later on, especially when selling.

Understanding the nuances of each type of valuation report is crucial. Certified, independent, and broker’s opinions of value each serve their own distinct purpose, and cater to different needs and situations. When choosing the right valuation for your business, remember to keep your specific needs in mind. Your business is one-of-a-kind — shouldn’t its valuation approach be too?

If you’re interested in obtaining a broker’s opinion of value, don’t hesitate to reach out. It can help set the scene for setting strategic goals and ensuring that your business is on the right financial track.

You May Be Ready to Sell, But Is Your Business?

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You May Be Ready to Sell, But Is Your Business?Selling a business is a significant decision that demands careful consideration, meticulous planning, and pragmatism. At Apex, we’ve encountered numerous scenarios where eager sellers, ready to embark on a new chapter, faced the challenge of a business that simply wasn’t sale-ready.

As such, we want to explore the critical elements of a smooth business sale: timing, preparation, setting realistic expectations, and working with brokers who care about you and your business, not an eventual payday.

The Common Dilemma: Ready Seller, Unprepared Business

In recent months, our office manager uncovered a surprising trend — we had to turn down 24 leads because the businesses weren’t ready for sale. This realization prompted us to take a closer look at the core issue: sellers prepared to transition but businesses that aren’t aligned with market expectations.

Apex operates on the principle of confidence — confidence that we can sell a business, present it to buyers, and secure bank financing. Unlike a buyer walking in with a briefcase of cash, most of our clients seek SBA loans. This necessitates non-negotiables like comprehensive financial documentation including tax returns, P&L statements, and balance sheets.

And, when it comes to SBA loans, there’s no room for negotiation. Business sellers need to be well-versed in providing the necessary financial documents, ensuring their business is not just ready for sale but also ready for financing. This rigorous process sets the stage for an ultimately successful transaction.

This is why we advocate for planning well in advance. We market businesses three to five years before the seller even envisions putting up the “For Sale” sign. We once helped a seller prepare with well-thought-out strategic planning — the result was a business that, initially valued at $575,000, sold for a staggering $1,450,000 after several years of preparation. As you can see, planning ahead pays.

Navigating Expectations and Industry Realities

A significant challenge in the business sale process is misaligned expectations. Sellers often receive conflicting advice, leading to valuations that don’t reflect the market reality. This misalignment, mostly due to misinformation, can lead to a disappointing experience for both the seller and the broker. Clear communication and realistic valuation are crucial to ensure that expectations align with actual market conditions.

While we understand that not every business owner is ready to sell immediately, we always encourage continuous engagement. Some sellers repeatedly postpone the conversation only to find themselves ill-prepared when the time finally arrives. Planning, after all, is a gradual process, not a rushed decision. Consistent engagement and open communication contribute to better preparation and understanding, which facilitates a smoother transition when the time comes.

All industries face their share of challenges, and downward trends can significantly impact a business’s value. Selling during a downturn poses risks, as the market will assess the business based on recent performance. Consistent positive trends over several years remain a key factor in achieving a successful sale. This is why it’s so important for sellers to monitor industry trends, adapt proactively, and position their businesses for long-term success.

Working with Brokers Who Provide Value

Here at Apex, we aim to build relationships and provide value beyond the transaction. We understand that buying or selling a business involves more than just financial transactions. It’s essential to work with brokers who really care about building lasting relationships and delivering unparalleled value. Our dedication to this principle is evident in our multifaceted approach.

This is why we offer free consultations, blogs, podcasts, and white papers — to assist business owners in navigating the complex world of buying and selling businesses. Additionally, there are plenty of other resources available that we can direct you to, to make sure you’re well-prepared when the time comes to sell.

Our goal is to empower business owners with knowledge, guide them through the intricacies of the market, and ensure they make informed decisions. By providing a wealth of resources, we strive to demystify the complexities of buying and selling businesses. These resources are designed not only to educate but also to encourage a deeper understanding of all of the processes involved.

Moreover, our commitment to transparency and integrity is the bedrock of our client relationships. We believe that by delivering value at every step, we contribute to the success of our clients beyond the immediate transaction. Whether you’re contemplating a sale, acquisition, or simply seeking industry insights, our diverse range of resources will meet your needs.

The key takeaway here is clear — start the conversation early. Think of selling your business like keeping a boulder in place at the top of a mountain: the time to act is well before it starts rolling downhill. When both you and your business are prepared you’ll be one step closer to a successful business sale.

Whether you’re buying or selling, the journey begins with knowledge, understanding, and preparation. We can help you with that. Give us a call today.

Year-end 2023 Numbers Matter for a Sale in 2026

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Year-end 2023 Numbers Matter for a Sale in 2026As we embark on a new year, there’s more at stake than just holiday celebrations and wrapping up projects. For business owners with an eye on the future, it’s the best time to dive into your year-end numbers — which can hold the key to unlocking a successful sale in 2026. That’s right: you need to start looking ahead to potential future sales now.

Key Performance Indicators (KPI) Review

Understanding your KPIs is a fundamental aspect of effective business management. In sum, if you don’t know what’s going on inside your business, you can never expect to sell it. KPIs can offer insight into your business’ health, performance, and potential for growth.

As you wrap up 2023, go beyond just knowing your total revenue and analyze the trends within the sales growth compared to previous years. Is there a particular product or service that stood out? Understanding these nuances can help you replicate success and identify areas for improvement.

Strategically position yourself for the future and study your:

  • Financial health: Your profit margins will reveal the efficiency of your operations. Take a closer look at your operating expenses — are there areas where you can trim without compromising quality? Your cash flow also deserves a thorough examination. Consider how a healthy cash flow not only sustains daily operations but also positions you for strategic investments.
  • Customer acquisition and retention: Your customers’ experiences are invaluable. Go further than the acquisition metrics — what channels brought in the most engaged people? Use customer satisfaction feedback as a compass for improvements. Happy clients not only contribute to your bottom line but can become loyal advocates who may influence potential buyers when the time comes to sell.
  • Market trends and analysis: No matter what industry you’re in, chances are it has changed and will change. Delve deeper into industry-specific trends — what are the disruptive forces at play? Understanding these shifts is essential to moving through what can feel like uncharted waters. Conducting a meticulous analysis of your competition is more than just benchmarking. It will help you identify differentiators that make your business an attractive prospect to buyers.

Strategic Planning for 2024-2026

As you set your goals for the upcoming years, take a hard look at the narrative that your financial forecasts tell. Think about your budget not just as a set of numbers, but as a strategic tool. What investments align with your long-term goals? Create marketing and sales strategies that resonate not only with your current customer base, but also with potential buyers who want to acquire a business with a clear roadmap.

Consider these strategies in particular:

  • Operational efficiency: Streamlining your processes will inevitably optimize your business’s efficiency. Dig into the details so that you can identify and eliminate inefficiencies. Consider how adopting technology can enhance not only the speed but also the quality of your operations. Operational efficiency isn’t just a cost-saving measure — it’s an investment in future scalability.
  • Team development: Your employees are the backbone of your business. Invest in training programs that not only align with current needs but also anticipate the skills needed for the evolving landscape. A skilled and motivated team is a testament to your commitment to excellence, a quality that will resonate with potential buyers.
  • Risk management: All businesses require a bit of risk mitigation. Identifying potential risks is the first step, but developing strategies is where resilience is formed. Can your business adapt to sudden shifts? Stay on top of regulatory changes, not just to comply but to leverage emerging opportunities. Internal risks are often the most challenging. Address them head-on with strong contingency plans and a diversified approach to your revenue streams.

As you bid farewell to 2023, remember that your year-end numbers are a lot more than just figures on a spreadsheet — they’re the keys to unlocking your business’s future success. When you analyze, understand, and act on your year-end numbers you not only prepare yourself for the upcoming year, but you also set the stage for a strategic sale in 2026.

Do you need help understanding your year-end numbers so you can prepare your business for a future sale? That’s where we come in. Give us a call today.

What You Need To Know For Retirement As A Business Owner

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What You Need To Know For Retirement As A Business Owner“Leadership requires two things: a vision of the world that does not yet exist and the ability to communicate it.” – Simon Sinek, Start With Why

Retirement as a business owner often requires:

  •  a vision of the world that does not yet exist for you
  • the ability to communicate your business’s value to potential buyers

Realizing these two goals can be challenging, but they are achievable if you move forward with a clear picture of your why, followed by solid planning, finished with execution.

Business Succession Planning

You may be reluctant to let go of the reins of your business when you are ready to retire. A sense of responsibility for your employees, partners, and customers can make it feel like your needs should be an afterthought. To overcome this feeling and make your and your family’s needs the priority, you will need to assuage the fear of letting others down by knowing that the company is in optimal shape to succeed when you step away. What the buyer may do with the business after you take your leave is out of your control, but what you do to position your business to be in its best possible position for success is all that you owe anyone else.

This is where a succession plan comes into play. Prospective buyers may have different ideas than you on how to carry on with the business, but having a plan in place that lays out how the business can successfully move forward shows a level of commitment and forethought to your team and potential buyers. Frequently the fear of how a business may progress after the owner sells it off can be enough to dissuade someone from moving forward with the acquisition, and having a succession plan can ease any reservations that the buyer may have as well.

No matter what your company’s fate may be, doing your due diligence in advance to help ensure its success moving forward is worth the time and energy spent to make sure you have left your livelihood, your employees, and your reputation in the best possible position for a new owner.

Financial Security Planning

Once you know that your business is in capable hands, you will be forced to reconcile the status of your retirement income, and how it will provide for you and your family in the future. While business succession planning may be focused on your former business’s survivability, your financial security very much focuses on the well-being and providence of yourself and your family, as far out as you may see as worthwhile. That means paying attention to capital gains taxes and inflation rates is a primary focus to help ensure your current lifestyle is achievable in your golden years or until you find your next project.

Foresight of A Retiree

When considering if you are in a position to sell your business and retire, you must know your why just as strongly as the buyer does. Knowing your why will help you make the right decisions when it comes to selling your business, and help avoid the emotional hangups of walking away from something you have put so much of yourself into.

Why are you retiring now? Asking yourself this one question will guide you toward the proper resources for selling your business and ensuring your family’s well-being. You will also start to realize how much work goes into selling a business, and how many areas one can err in that could have serious financial repercussions. The process of selling your business may start when you decide to retire, but the true work comes with understanding the value of your business and what you can expect to receive from a buyer. This requires accurate valuation and strategic positioning of your business to help maximize your returns.

Deciding to retire is rarely easy, and obtaining maximum value for your business when it sells is also a difficult undertaking that should be overseen and orchestrated by true experts in the field of brokering business sales.

If retirement is around the corner for you and selling your business plays a part in that retirement, contact us at Apex and let us work with you in realizing your dreams.