Do you really know what the health of your company is? Too often we find that business owners don’t really know their numbers and financials when it comes time to sell their business. This list shows you some of the metrics bankers, investors and buyers look at to measure the health of your company. You will also want to check out this comparision of EBITDA vs Cash Flow.
There are plenty of indicators that 2014 will be a good year for selling a business as highlighted in this article from Inc. Magazine. I especially agree with the advice that advance planning is key. Having a plan for your next chapter and knowing how much you need to fund it is vital.
Good news! The market for small businesses is finally turning around. You might even say it is heating up. During the economic downturn many business owners were forced to postpone plans to sell their businesses and had to delay their retirements. The Wall Street Journal reported last week that there were 1,685 small businesses sold between July and September. This is the third consecutive quarter of year-over-year growth. Service companies have been the been the biggest seller, followed by retailers and restaurants. You can read the full article here. Did you think you had missed the boat for selling your business? [...]
How Wealth Planners can help their clients and increase their assets under management. Right now, today, as you read this article you could be sitting on acres of diamonds … in the rough. What do they look like? They are your business owner clients who over the last 15, 20 or maybe 30 years have focused their life’s efforts on building a successful small business and are now ready to move on to the next chapter of their lives. Are you positioned to help them make that transition? Current estimates suggest 10,000 baby boomers are retiring every day, and [...]
Understanding business valuation continues to be a challenge for business owners today, as discussed in this article from Inc. Magazine that I contributed to a few years ago. Thanks to Warren Meyer's Coyote Blog for the link.
Not All Buyers are Created Equal Before considering the sale of their business every business owner should answer the WIIFM question: What’s In It for Me? You have heard the old saying, if you don’t know where you are going, any road will take you there. For a business owner getting ready to sell, this adage might read, if you don’t know what you need out of a transaction, then most any buyer will do. However, we know this is simply not the case; most business owners would not accept just any consideration or sell to just any buyer. Before [...]
How to Exit Your Business on Your Terms and Your Timing Most successful businesses have a Strategic Business Plan which focuses on making the business successful and ensuring its growth and continuity. However, many business owners have rarely thought about or put into action a plan to help them decide when to sell or transition out of their business, what proceeds they will need, how they will find the best buyers and what they will do next. Have you got an exit strategy? Ben Franklin said, “In this world nothing is certain but death and taxes”. For the business [...]
EBITDA is Good, But Cash Flow is King At a recent M&A Source Conference, this was a recurring comment from Private Equity participants: “EBITDA is good BUT we need to understand the Cash Flow of any business we look at buying." Many business owners, their advisors, and even intermediaries, often mistake EBITDA for Cash Flow. EBITDA is defined as Earnings before Interest, Taxes, Depreciation and Amortization. It is easily calculated by taking normalized operating income and adding back interest, depreciation and amortization expenses. It is better to think of EBITDA as an indication of profitability and only a “proxy” for [...]