Archive for 'Improving Business Desirablilty' Category

Raising Prices Prior to Listing the Business for Sale Increases the Sale Price

By Hoke - Last updated: Wednesday, January 29, 2014

                [box] If you can, raising your product prices before the sale is a great way to increase the discretionary income and therefore the sales value of the business. The prices should be raised with enough time (2-3 months) that any customer reaction because of the price changes […]

What is Due Diligence?

By Hoke - Last updated: Monday, September 3, 2012

Due Diligence part of the sale process when the seller opens all aspects of the business to the buyer. In essence this is where the seller must convince the buyer that the business performs and is as represented. This convincing is done mostly via providing historical documentation and buyer observation. The buyer has an opportunity […]

Financial Due Diligence Checklist

By Hoke - Last updated: Saturday, September 1, 2012

This typical list is complete and detailed. Many smaller businesses may not have available this depth of detail. Bank Statements for the for past three years Cash Receipts Journals for the for past three years General ledgers for the for past three years Cash disbursement journals/check registers for the for past three years Copies of […]

Leases: A Cautionary Tale

By Hoke - Last updated: Friday, August 6, 2010

If you have decided to sell the business, why renew the lease? You have an “excellent” relationship with the Landlord. Here is a not so uncommon cautionary tale. Ready to retire, the Seller put his excellent, very profitable, key location retail business on the market. The Business was valued at about $600,000. He reasoned that […]

What are typical questions Business Buyer’s ask?

By Hoke - Last updated: Sunday, August 1, 2010

1. What is the age of this business? 2. What are the Revenues for the previous three years? 3. Are the Revenues and Profit shown on the Financial Statements and Tax Returns? 4. Will the Financial Statements and Tax Returns correlate with the Bank Statements? 5. If no to #3 and #4 above, how can […]

Who is the best Buyer for A Business?

By Hoke - Last updated: Sunday, August 1, 2010

In most cases your ongoing business will present the most value to a new First Time Business Buyer. They will need training and will respect the Business Seller’s expertise. More experienced, Industry Insiders may only value the Customer List, disregarding the Employees and Equipment. The Industry Outsider Buyers greatly outnumber Industry Insider Buyers creating a […]

What is an “Automatic” Business?

By Hoke - Last updated: Sunday, August 1, 2010

Like the proverbial money tree, the Automatic Business makes money steadily and regularly. These are the most desirable form of small business. The Profits of an Automatic Business are not proportionate to the amount of effort the Owner exerts. The Owner may do little work. Some established retail stores, manufacturers and wholesalers could be classified […]

How important are Tax Returns as a means of proving Discretionary Income?

By Hoke - Last updated: Sunday, August 1, 2010

Tax Returns are just one of several means to validate Income. Some Buyers think that Tax Returns are absolute. However, they are not foolproof. There are cases where the Business Seller overstated the Tax Returns. Commercial Banks typically require the recent three years of Seller’s Tax Returns when making a Business Acquisition Loan.

How important is the Initial Ask Price?

By Hoke - Last updated: Sunday, August 1, 2010

Getting the Initial Ask Price right is a key to maximizing sales value. If the initial price is too high, the business stays on the market too long creating doubt with Business Buyers and weakening the Business Seller’s negotiating position. If the Ask Price is too low, the business may sell quicker, leaving some of […]

The Attributes of an Attractive Business

By Hoke - Last updated: Thursday, July 22, 2010

Stable or growing Revenues. Over three years in business (more is better) Good Accounting Records Easy to Run (or the Business Buyer has experience in this industry) Good Lease situation