Working With Buyers - The Business Broker

For Buyers

These articles are courtesy of BobSweeney of Innovative Travel Acquisitions. This firm is one of, if not the preeminentfirm, travel brokerages in the country. Their comments are of interest to all businessbrokers.

Many experts are predicting a huge wave of businesses will become available for sale over the next two decades as baby-boomers will be ooking to retire. We suggest you ask five key questions when acquiring a tour or travel-related business.

Five Questions for Buyers

Who runs the business and how does business function when the owner takes a two week vacation?
Do the numbers add up? – Will the business provide a rasonable return on your investment and time?
How does the business attract leads? – Which marketing channel provides the most/best leads?
Will the business survive the transition and will key employees stay on post transaction?
Will the seller put any skin in the game? – Are they willing to stand behind the business’s 1st year post-sale performance?

Posted on 7/24/2012 4:45 PM By Bob Sweeney
In: [Working With Buyers] | No Comments »

4th Quarter Market Snapshot

Almost half of people trying to sell their business have had a much worse response from potential buyers than expected, according to the latestBusinessesForSale.com survey.

Seller trends

Respondents were selling their businesses in geographical locations worldwide including Sweden, Indonesia, Pakistan and Jordan, among others. Seventeen percent of sellers were hoping to sell hotels or guesthouses, the most common type of business for sale, followed by real estate property (13%), manufacturing (13%), retail (11%) and cafes and restaurants (11%).

Of sellers whose businesses have been on the market for some time, 47% said...

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Posted on 3/22/2012 9:00 AM By businessesforsale.com
In: [State of Industry], [Working With Buyers], [Working With Sellers] | No Comments »

Benefits of Meeting with a Business Broker in Person

COMMENT FROM TOM WEST:

This Sunbelt office publishes an e-mail newsletter on a regular basis. The following is from their most recent issue. An excellent article on why buyers should be using the services of a business broker. If you email your potential buyers on a regular basis (and you should be), why not tell them what you do – and why they should use your services.

The testimonial letter included at the end shows the patience it takes to put some deals together. Gary Stehle, you provide a good reason why it does pay to “hang-in” – a deal was made.

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Posted on 2/8/2012 10:03 AM By Ralana Shelley
In: [Working With Buyers] | No Comments »

Offering a Valuable Service

Some months ago I agreed to serve on a volunteer group with four other local business people to review the small business permitting process of our town and create a permitting guide. We delved into all of the steps one must go through to obtain a business license, the necessary permits, etc. It can be a cumbersome process.

This recent experience brought to mind how, in my past business brokerage experience, we did try to work with the buyer in dealing with the California alcoholic beverage control board when selling bars, etc. and other local boards and departments.

If you’re just selling your service and knowledge of the business buying process,...

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Posted on 1/11/2012 2:02 PM By Tom West
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Born to Own a Business?

You may not think to ask potential buyers about other business owners in their family or about their interest in extreme sports or other thrill-seeking activities, but it could be useful information. In Scott Shane's opinion piece for Entrepreneur.com, Are You a Born Entrepreneur?, Shane discusses the impact of genes, experience and personality on entrepreneurship.

In particular, he briefly discusses the genetics of people who are more likely to engage in sensation seeking activities and points out that starting a business is just such an activity. Interesting information for ideas of where to market for potential buyers; where might brokers find those sensation seekers? Also helpful for some additional questions to ask potential buyers to possibly separate tire-kickers from those ready and even thirsting for the adventure of business ownership.

Posted on 12/27/2011 7:21 AM By Business Brokerage Press
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Who Are The Business Buyers and What Are They Looking For? (Part 2 of 2)

Comment from Tom West

Two comments on the information in yesterday's posting. First, some additional information on what businesses are in demand in today’s market. In addition to the top 20 posted yesterday, here is the October 2011 list of businesses that buyers searched for on businessesforsale.com, a leading site for businesses listed for sale.

1. Nightclubs
2. Miscellaneous Restaurants
3. Bars
4. E-Commerce Businesses
5. Websites

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Posted on 12/14/2011 11:29 AM By Tom West
In: [General Business Brokerage], [Working With Buyers] | No Comments »

Who Are The Business Buyers and What Are They Looking For? (Part 1 of 2)

Bloomburg Businessweek and BizBuySell, the leading business for sale web site, recently conducted surveys answering the questions in the title above.

First, why do people want to own or start their own business?

According to Businessweek, when prospective buyers were asked, "Why do you prefer working independently?" the responses were:

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Posted on 12/13/2011 1:20 PM By Tom West
In: [Working With Buyers] | No Comments »

Veterans and Franchising Report

Franchise Business Review has recently created a special report on Veterans and Franchising based on the "independent satisfaction ratings and reviews by nearly 2,000 military veteran franchise owners.”

The report includes a list of the top 100 “Veteran-Friendly” franchises according to veteran franchisee satisfaction as well as a top 10 list of franchise systems with the most veteran franchisees.

Interesting information if you are working with military veteran buyers looking into franchise opportunities.

The report is available for viewing here.

Posted on 11/17/2011 11:30 AM By Business Brokerage Press
In: [Franchises], [Working With Buyers] | No Comments »

Gen X Buyers

I'd like to share some quotes and statistics about Generation Xers taken from “Realty Bites,” Bloomberg Businessweek – September 18, 2011.

Generation Xers, the 33-to-46-years old who grew up with the breakfast club and the compact disk, are in the prime in their working lives and it isn’t pretty. At least according to a study by the Center for Work–Life Policy, sponsored by 67 companies, including Bloomberg LP. The study found an overworked, underrewarded generation.

Gen Xers who aspire to become entrepreneurs:
Men 39%
Women 28%

On Job Loyalty
“I’d rather know that I’m going to lay myself off than get blindsided by a boss and have security lead me out of the building.”
Even as the recession sent many GenX entrepreneurs back to corporate jobs, few see their positions as a long-term safe haven.

Answers to "Why do you prefer working independently?"

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Posted on 11/16/2011 12:29 PM By Tom West
In: [Marketing], [Working With Buyers] | No Comments »

First Impressions (Part 2 of 2)

This article is a continuation from yesterday's posting about a potential buyer's first impressions with various brokers and franchise representatives.

OK, so what did work?

Two main things impressed me. One was one gentleman in particular who we are now working with. The other was an email that included an attachment “Questions to help you evaluate a business.” That particular broker sent it with the explanation that the questions would be helpful for us to have whether or not we chose to work with him. That got my attention. If we had not already been working with the first company, we may have pursued working with him, just because he included something in his email that demonstrated his desire to help us.

It’s hard to put into words what we liked about the one we are now working with, but I can tell you when I listened to three voicemails in one day, I literally wrote...

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Posted on 11/2/2011 9:00 AM By Anonymous
In: [Marketing], [Working With Buyers], [Working With Sellers] | No Comments »

First Impressions (Part 1 of 2)

Although we've been interested in owning our own business for many years, recent circumstances plunged us into a more intensive search just recently. The variety of first impression experiences has been interesting and, I believe, informative for brokers.

We inquired about a few businesses on a national business listing site, and inquired about new franchises as well. Here are some of the responses to our inquiries.

#1: Zero Response
We have heard absolutely nothing from a few of our inquiries. Obviously this did not leave a good first impression. We had noticed that some of the listings on the national listing site were not on the representing broker’s own web site and wondered if that meant they had already been sold or withdrawn but not removed from the listing site. Whatever the situation, the broker lost the opportunity to find out our readiness, our available cash to invest in a business, and what we are looking for in a business.

#2: Vague or Incomprehensible Response
While the email responses generally referred back to the specific listing we inquired about, the phone responses didn’t always do the same. In one particular voicemail, the broker

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Posted on 11/1/2011 9:37 AM By Anonymous
In: [Marketing], [Working With Buyers], [Working With Sellers] | No Comments »

Something Special

Read your article on the BBP blog…very interesting and applicable. I’d say a majority of the businesses I visit in this area fit into the category of ‘too much asset’ for cash flow…generally that asset causing the problem is real estate included in the sale. It seems to me this causes the same problem as ‘fancy’ equipment, etc. Am I wrong? You mention “unless the seller is willing to do something very, very special (which I’ll explain some other time)”…I’d appreciate your elaborating on that a bit.

Regards
Montana Broker

BILL'S RESPONSE

Thanks for the kind comments.

The banks I deal with call these business elements “underperforming assets”. That’s any asset that isn’t producing enough profit to make the deal viable.

For example:

If an owner has a business that is generating EBITDA + owner benefits (what I call NOB…Net Owner Benefits) of, say, $200,000, and, if that owner also owns a building that might appraise at $1,000,000, I would do the following evaluation:

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Posted on 10/27/2011 5:48 AM By Bill Martin
In: [Pricing & Valuation], [Working With Buyers] | No Comments »

Ten Questions Buyers Should Ask

Inc. recently posted "10 Questions to Ask Before Buying a Business." The 10 questions are excellent and certainly a prospective buyer should try to get answers to all of them. Below are a few comments based on many years of experience both as a business broker and business owner.

Listen to the Wife

If the wife does not want her husband to buy a business, it won’t happen. People get used to a regular paycheck. The idea that there is no paycheck and sometimes there won’t be a paycheck or the amounts of the paycheck month to month will not be the same, is the one thing that many wives cannot live with. The pay one receives owning one’s own business is what’s left at the end of the week. If the wife is not supportive, then the husband better keep looking for a regular "job-job". If she is supportive, success is almost assured. The good business broker should ask every buyer before getting too involved if he is married and, if so, is his wife supportive of him going into his own business. Then, if the answer is that she is concerned, ask the buyer to bring his wife in for the next visit. If she won’t come, she is likely scared to death and there will be no sale. On the plus side,...

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Posted on 5/26/2011 9:20 AM By Tom West
In: [Working With Buyers] | No Comments »

Category: Working With Buyers