Dealing with Inexperience Can Ruin the Deal

The 65-year old Cincinnati, Ohio owner of a multi-location retail operation doing $30 million in annual sales decided to retire.  He interviewed a highly recommended intermediary and was impressed.  However, he had a nephew who had just received his MBA and who told his uncle that he could handle the sale and save him some money.  He would do it for half of what the intermediary said his fee would be – so the uncle decided to use his nephew.  Now, his nephew was a nice young man, educated at one of the top business schools, but he had never been involved in a middle-market deal.  He had read a lot of case studies and was confident that he could “do the deal.” Inexperience # 1 – The owner and the nephew agreed not to bring the CFO into the picture, nor execute a “stay” agreement.  The nephew felt he could handle the financial details.  Neither one of them realized that a potential purchaser would expect to meet with the CFO when it came to the finances of the business, and certainly … [Read more...]

The Variables that Drive and Influence Business Valuations

If you’ve never bought or sold a Cincinnati, Ohio business before, then the factors that drive and influence business valuations likely seem a bit murky.  In a recent Divestopedia article from Kevin Ramsier entitled, “A Closer Look at What Drives and Influences Business Valuations,” Ramsier takes a closer look at this important topic.  Business brokers and M&A advisors play a key role in helping business owners understand why their business receives the valuation that it does.  No doubt, the final assessed value is based on a wide array of variables.  But with some effort, clarity is possible. In his article, Ramsier points out that “value means different things to different buyers” and that the “perceived value depends on the circumstances, interpretation and the role that is played in a transition.”  It is important to remember that no two businesses are alike.  For that reason, what goes into a given valuation will vary, often greatly.  Looking to EBITDA Ramier points to … [Read more...]

Is Your Business Really Worth Handing Over to the Next Generation?

Before you begin your business in Cincinnati, Ohio, you should be thinking about how you will hand that business over to someone else.  No one runs a business forever.  Whether you sell your business or let a relative inherit it, at some point you will need to step away.  When you finally do separate from your business, it is critical that you are certain that it is worth handing over.  In his January 2019 article in Forbes magazine entitled “Make Sure Your Business is Worth Handing Over,” author Francois Botha dives in and explores this very topic. In this article, Botha emphasizes that family businesses should not “fall into the trap of prioritizing job creation for their children.”  Instead, that the priority should be to perpetuate the business.  Botha cites the co-founder and chairman of The Leadership Pipeline Institute, Stephen Drotter, who feels that the main goal of any business needs to be its suitability. Drotter established five principles designed to assist family … [Read more...]

Erase the Stress of Selling Your Business by Finding the Right Buyer

There is no denying the fact that life is much, much easier when one can find the right buyer for his or her business in Cincinnati, Ohio.  Buying or selling a business can be a stressful affair, but much of that stress can be eliminated by getting the right support. The Concept of the “Right Buyer”  In the recent Inc. article entitled, “How to Find the Right Buyer for Your Business and Avoid Negative Consequences,” Bob House builds his article around a relatively simple and straightforward, but powerful, concept.  House’s notion is, “the right buyer is worth more than a big check.” House correctly points out that far too many sellers become fixated on exiting their business and grabbing a big pay day.  In their focused interest in the sum they will receive, these sellers ignore a range of other important details.  In part, sellers often miss the single greatest variable in the entire process: finding the most qualified buyer.  The simple fact is that if sellers want to reduce their … [Read more...]

Do You Know What Kind of Business Owner You Really Are?

Does your Cincinnati, Ohio based business have real, long-lasting longevity or is your business a temporary entity that will vanish the second you stop working on it?  In his insightful article in The Business Journals entitled, “Are You Living for Today as a Business Owner or Building Value?” author Kent Bernhard asks a very important question of readers, “Are you a lifestyle business owner or a value accelerator?”  Many business owners have never stopped to ask this very important, yet basic, question regarding their businesses.  So, let’s turn our attention to this key question that all business owners must stop and ask at some point. As Bernhard points out the core issue here is how a given business owner defines the idea of success for him or herself.  As Chuck Richards, the CEO of CoreValue Software notes, “At the end of the day, a lifestyle business is just a job.”  Richards goes on to note that this is fine for many people.  But if this is the case, it is a choice that one … [Read more...]

Business Buyers Can Leverage SBA Lending

Finding the money to start your own small business in Cincinnati, Ohio can be a challenge.  Over the decades, countless people have turned to the Small Business Administration (SBA) for help.  A recent Inc. Magazine article, “Kickstart Your Business Dreams with SBA Lending,” by BizBuySell President, Bob House, explored how SBA lending can be used to the buyer’s advantage. The article covers the basics of an SBA loan and who should try to get one.  House notes that the SBA doesn’t provide loans itself, but instead facilitates lending and even micro-lending with a range of partners.  The loans are backed by the government, which means that lenders are more willing to offer a loan to an entrepreneur who might not typically qualify for one.  The fact is that the SBA will cover 75% of a lender’s loss if the loan goes into default.  Entrepreneurs can benefit tremendously from this program.  In some cases, an SBA loan even means skipping the need for collateral.  SBA loans can be used for … [Read more...]

How Employees Factor into the Success of Your Business

Quality employees are essential for the long-term success and growth of any business, especially if it's located in Cincinnati, Ohio.  Many entrepreneurs learn this simple fact far too late.  Regardless of what kind of business you own, a handful of key employees can either make or break you.  Sadly, businesses have been destroyed by employees that don’t care, or even worse, are actually working to undermine the business that employs them.  In short, the more you evaluate your employees, the better off you and your business will be. Forbes’ article “Identifying Key Employees When Buying a Business”, from Richard Parker does a fine job in encouraging entrepreneurs to think more about how their employees impact their businesses and the importance of factoring in employees when considering the purchase of a business.  As Parker states, “One of the most important components when evaluating a business for sale is investigating its employees.”  This statement does not only apply to … [Read more...]

7 Big Questions to Ask Yourself Before Moving Forward

The first step towards successfully selling a business in Cincinnati, Ohio is finding a qualified business broker to work with.  Sellers in Cincinnati, Ohio should also ask themselves an array of important questions.  A recent article, “7 Questions to Answer Before Selling Your Business,” published by Good Men Project, has a great overview of questions sellers should answer before moving forward. Author Troy Lambert believes that at the top of the list is one very simple and powerful question, “Are you ready?”  For example, your financial reports should be ready to show. The second question is, “What’s it worth?”  Determining what a business is worth means you’ll need a professional business valuation.  A great deal can go into evaluating your business and you need an expert to help you determine that value. Third, Lambert believes that prospective sellers should ask themselves, “How’s the health of my industry?”  He emphasizes that honesty is key here for a variety of reasons.  If … [Read more...]

The Historic Levels of Small Businesses Being Sold Drops Slightly

The number of small business transitions in Cincinnati, Ohio and across the country continues to be strong for the first quarter of 2019.  In fact, despite a small decline, small business transitions remain at historically high levels. Looking at the Statistics According to a recent BizBuySell article entitled, “Number of Small Businesses Changing Hands Dips Slightly, But Market Remains Ripe for Buyers and Sellers,” now is still very much the time for both buying and selling a business.  It is true that the number of businesses sold in the first three months of 2019 dropped by 6.5% when compared to 2018.  Yet, it is important to keep in mind that the number of completed transactions remains very strong.  Likewise, inventory is increasing, with a 6.1% increase in listings in Q1 of 2019 when compared to the same period in 2018. While the market is indeed strong, the BizBuySell article did note that some experts feel that there are signs that the market could become more challenging … [Read more...]

IBBA and M&A Source Market Pulse Survey Report Predicts Major Changes

The IBBA and M&A Source Market Pulse Survey Report for the fourth quarter of 2018 has a range of interesting insights.  The survey’s purpose is to provide an “accurate understanding of market conditions for businesses being sold in Main Street (values $0-$2MM) and the Lower Middle Market (values $2MM-$50MM).  This national survey was designed as a tool for business owners and their advisors and has the support of both the Pepperdine Private Capital Markets Projects and the Pepperdine Graziadio Business School. One of the most striking facts to leap out of the report is the fact that a full one-third of advisors fully expect the strong market to end this year.  Overall, advisors are not optimistic that the current climate will continue through 2020.  In fact, advisors are encouraging sellers to consider placing their businesses on the market now, while the market is still strong.  This is according to Craig Everett, PhD and Assistant Professor of Finance and Director of the … [Read more...]