Posted on Tue, Aug 17, 2010
While we don't want to go too far out on a limb and start speculating, it is generally accepted that on average about 20% of all businesses are for sale at any given time. That does not mean, by any means, that all businesses for sale will actually sell. This number is based on ALL businesses, of all types and sizes. The number of small to mid-sized, privately owned businesses for sale in the United States (the type of business you are most likely considering selling if you are reading this page) is estimated to be approximately 1 million at any given time.
The percentage of businesses that actually sell, as a percentage of businesses for sale, seems to be a function of the size of the business itself, with a higher sales percentage for businesses the larger they get. Here are some round numbers from The Complete Guide To Business Brokerage By Tom West that illustrate the point:
- 1 in 5 small businesses sell
- 1 in 4 small to mid size businesses sell
- 1 in 3.5 mid-size companies sell
- 1 in 3 large companies sell
Conclusion: if you are reading this page, then you are likely in the small to mid-size business category, meaning that your business has about a 20-25% chance of selling. Are there things that you can do to increase the likelihood that your business for sale ends up in the winner's circle? You bet.
Have a look at the Sellers Section of our website, and download the questionnaires contained there. Be honest with yourself as you answer the questions they contain. If you have done your homework before placing your business for sale, and are realistic in your willingness to accept a market-based determination of its value, there is no reason why your business should sit on the shelf too long getting stale.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Thu, Jun 03, 2010
This great article by Mitch Biggs from Associated Content, raised 5 important questions that any potential business buyer or seller should think about when interviewing a business broker.
I like Mitch's to this, and fully believe that business brokers should be 100% transparent with their prospective clients and willing to answer these questions:
1. How long have you been a business broker?2. How many active listings do you currently have listed?3. What is the price range of your current listings?4. How do you get paid?5. How will you market my business and what success have you had with each method?To see the Mitch's original article, just click here.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Thu, May 27, 2010
This excellent article appeared recently on the INC Magazine blog at http://www.inc.com/articles/2001/10/23561.html#comment-51927727
When selecting a broker to sell your business, be suspicious if:
The broker wants a significant or total fee paid upfront.
Many brokers have begun taking upfront fees, but generally the total fee is a combination of an upfront fee and commission paid upon sale of the business. But in what Glen Cooper, president of Maine Business Broker's Network in Portland, Maine, calls a "take away" sale, an unreliable broker meets with you, runs some quick numbers, tells you that you can get your price or even more for your business, and then asks for a check to get started. In many cases, business owners are so relieved that they've found a broker and elated that they'll write a check on the spot, without checking any references. "They get to 'take away' your check when they leave," says Cooper. "You'll never see them again, if they can help it."
During your first meeting , the broker says he or she can get your asking price or higher. Be wary of too much optimism. "The key to selling is that the price be reasonable," says Jeff Jones, chairman of the board of Certified Business Brokers LC in Houston and president of Certified Appraisers, Inc., the firm's appraisal practice. And according to Tom West of Business Brokerage Press in Concord, Mass., most owners overvalue their businesses. An unreliable broker might suggest after a brief meeting with you that he or she can get you your asking price or higher for your business.
The broker doesn't have a Web site. Most likely, if the broker doesn't have a site, he or she is behind the times. The Internet is a powerful marketing tool for business brokers, according to Cooper. Is the site well-written? That's another way to gauge a broker's competence, he adds.
The broker can't or won't show you printed marketing materials. "Today, all brokers prepare some kind of offering summary for each business they represent," says Cooper. He or she should be willing to share materials prepared for past clients to show you how they might handle your business.
The broker doesn't seem well grounded in business valuation.
"Your broker should be able to explain business valuation to you clearly," Cooper says. If he or she can't, then how can he or she explain to a buyer what your business is worth? Make sure your broker is confident in this area.
The broker is not licensed to sell or lease real estate in your state. Ninety-two percent of business brokers have a real estate license, according to an annual survey of business brokers West conducted. Even if your business doesn't include real estate, make sure your broker carries the license. "Unlicensed brokers are usually new to the business or out-of-state con artists," warns Cooper. And just because the broker holds a real estate license doesn't mean he or she should be selling commercial or residential real estate too. A good broker will hold the licenses but be focused on selling businesses.
This excellent article appeared recently on the INC Magazine blog at http://www.inc.com/articles/2001/10/23561.html#comment-51927727
Copyright © 2001 Inc.com LLC
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Sat, Oct 10, 2009
If you want to sell a business in Tucson or Southern Arizona, or make a Tucson business investment, choose your business broker carefully.
Most business owners seeking to sell their business in Tucson or Southern Arizona have a pretty good idea of what they would like to get for their business. And there are many business brokers who will simply ask them what price they want for their business, and then tell them what they want to hear. “Sure, I can sell a business in Tucson like yours for that price,” they’ll say. They will tell a business owner that they can get whatever he or she wants for the business in order to get the listing. They base this decision not on any analysis of comparable businesses for sale in Tucson or Southern Arizona in the past or present, nor based on the soundness of the business’ financials, rather on their desire to get the listing. Such brokers are in the “listing business”, and are not being 100% honest with business owners seeking to sell their business in Tucson or Southern Arizona during this process.
When you sell a business in Tucson or Southern Arizona, what you end up getting for your business is not what you want for it, but what a buyer, someone wanting to buy a business in Tucson or make a Tucson business investment, will be willing to pay for it. Any rational buyer (and nearly all buyers of small businesses are highly rational about how to invest their hard won dollars) will perform due diligence on your business and determine what they are willing to pay for it based on the reality of its historical financial performance and a realistic assessment of future cash flows. The fact is that this has very little to do with what you may want for your business, or think it is worth. If you are trying to sell a business in Tucson or Southern Arizona, keep in mind that the asking price is what a seller wants, and the sales prices is what a seller gets based on market realities.
If you work with a business broker who is in the “listings” business, and who goes along with listing the business at the price you might want, but a price that is not supported by the financial performance of the business and prevailing market realities, you will get a wake up call not long after the business has been listed. Your broker will tell you, usually within 30-60 days, that your business hasn’t received many inquiries from investors seeking to buy a business in Tucson or Southern Arizona, and that they would like to lower the asking price. They will lower the price repeatedly over time until it reaches the range of its realistic market value. In other words, the price it should have been listed at to begin with. At this point, buyer inquiries are more likely to occur and to be serious.
If this sounds to you exactly like what happens when you are selling a house, you’re right, because it is. Most business brokers operate their businesses based on the real estate model, and have no further training or certification to enable them to properly understand the differences between valuing and selling a business and a home. But the two could not be more different.
If you want or need to sell your business, wouldn’t you rather work with a broker who counsels you to set a realistic market price based on fact-based analysis, and who will sell your business as soon as possible because it is priced right?
Allen & Young’s brokers have achieved many additional accreditations and specializations within the field of business brokerage, and we do not run our business based on the real estate model. Our customers are only satisfied when we put money in their pockets, as soon as possible. We will not list a business at all unless the seller agrees to set a realistic asking price.
If you are serious about selling your business, and want to deal in a straightforward process based on experience, integrity, facts and analysis, please contact us.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com