by Eric M. Magister, M.A. in Law | Business Valuation, Sell a Business |
When all other factors are equal, the presence of a significant concentration among customers, suppliers, and/or employees results in a lower business value than might otherwise be expected due to the underlying inherent risks associated with any or all of these concentrations.
by Holly Magister, CPA, CFP® | Business Valuation, Exit Planning, Sell a Business |
If you intend to grow and sell a valuable business, the Great Resignation that kicked off in mid 2021 means everything. Everything that is if you care about the value of your business.
by Neal Isaacs, MBA, CBI, CM&AP | Business Valuation, Exit Planning, Grow a Business, Sell a Business |
Business owners who address the three hallmarks of a valuable business are very likely to have more options for exit and attract multiple buyers.
by Holly Magister, CPA, CFP® | Exit Planning, Sell a Business |
Learn about the three phases in a business exit plan and why each is important for the business, its employees, the owner and his or her family. This post includes our most popular FAQs on this topic as well. Wondering about the Exit Planning designations for professional advisors? We’ve covered that in this post as well.
by Holly Magister, CPA, CFP® | Business Valuation, Exit Planning, Sell a Business |
What should a business owner do to prepare to sell his or her business some time in the near future?
Aside from right-sizing the business’s overhead costs to line up with its current level of revenue, and looking for opportunities the pandemic may be presenting, there are four things a business owner can do now to prepare to sell. And more importantly, doing these four things will mean that when a Letter of Intent is received from a buyer, the business will be very well-prepared to survive the due diligence stage of the sale.
by Holly Magister, CPA, CFP® | Grow a Business |
Our PEO series is aimed at addressing the common questions about PEOs, and uncovering some of the lesser-known facts about working with a PEO so that you may make the best choices for your business.
So far, we’ve learned about what a PEO company does. Here, we’ll dive into some muddy waters and decipher who is really the employer in a PEO relationship.
by Neal Isaacs, MBA, CBI, CM&AP | Business Valuation, Exit Planning, Sell a Business |
As a business intermediary helping owners determine the “Most Probable Sales Price,” or MPSP of their businesses here in the Triangle, I hear a common question:
“That value makes sense, but what about all my stuff? Can I get paid for that too?”
The answer is rarely what the business owner wants to hear, but there’s a sound reason for it, and understanding how businesses are priced can help an owner with decisions on how to allocate resources for assets; especially if they are planning to sell in the near future.
In this article, we’ll explore the market approach for small businesses and what value the assets carry…
by Neal Isaacs, MBA, CBI, CM&AP | Business Valuation, Exit Planning, Grow a Business, Sell a Business |
Doing deals can be expensive. A lot of entrepreneurs want to save money by not hiring an advisor or they don’t know when they should make the investment on an advisor. It’s important to understand the roles of the broker and other advisors, especially legal counsel, and to know when to bring in a professional. Here are some milestones in a deal, and how to know when to hire a business advisor.
by Holly Magister, CPA, CFP® | Business Valuation, Exit Planning, Sell a Business, Selling a Business Questions |
One of the greatest risks any buyer faces is what will happen to the business’ best customers post-sale. Will the top customers celebrate the founder’s great accomplishment or maybe decide it’s a good opportunity to negotiate better pricing or payment terms with the new owner? Or worse yet, will they be spooked by the new owners and find an alternative vendor?
Astute buyers measure this risk quickly. Typically, one of the first questions experienced buyers ask the business broker is about the presence or lack of a customer concentration.
For the business owner considering the sale of his business in the near future, having a clear understanding if a customer concentration exists is vitally important. In fact, the lack of a customer concentration is a great selling point.
by Eric M. Magister, M.A. in Law | Business Valuation, Exit Planning, Sell a Business |
Depending on the circumstances and objective of the owner, the value of a business can vary considerably. For instance, upon sale to unrelated party, an owner would expect to receive the maximum purchase price for their business the unrelated party is willing to pay. However, that same sale to a family member or employee may need to be structured so the cash flow of the business can support the purchase price.
For a closely held business, owners generally have little idea about the value of their business, or whether their business is generating an adequate return on investment, and what drives its value.
by Holly Magister, CPA, CFP® | Exit Planning, Sell a Business, Selling a Business Questions |
For the business owner who desires a great outcome, including the business owner’s family in the exit planning process, as well as the decision to sell, is vital.
by Holly Magister, CPA, CFP® | Exit Planning, Sell a Business, Selling a Business Questions |
Our Featured Advisors, Attorney Mark Fazio and Business Broker Neal Isaacs, answer a few questions to help business owners learn how to prepare for due diligence when selling a business.
by Holly Magister, CPA, CFP® | Grow a Business, Start a Business |
In this post we will be addressing how to protect your business name and whether filing for a DBA, registering a trademark or copyright, creating a URL, filing a patent application, and registering your business in your state of operation is appropriate, and most importantly why.
Understanding the differences between the various methods used to protect your intellectual property allows you to be prepared to make the best decisions possible for your new business. By doing so, the fence around your valuable business will be strengthened!
by Holly Magister, CPA, CFP® | Business Valuation, Grow a Business, Trepopedia |
v Have a Question? Add it to the bottom of this post! For many entrepreneurs, launching a new business often means walking a fine line between pursuing earnings growth and growing the top-line revenue. A business can’t be successful in the long-term without earning a...
by Holly Magister, CPA, CFP® | Business Valuation, Exit Planning, Grow a Business, Trepopedia |
Contribution margin is an important method of not only understanding how profitable a business is, but also how its products and services contribute to the bottom line. It’s important to understand that contribution margin is different from profit margin, since profit...
by Holly Magister, CPA, CFP® | Sell a Business |
There are many ways to compute the value of a business, and an equal number of differing opinions regarding a particular methodology’s relevance to an entrepreneur who starts and grows a viable business. But what seems to truly matter most to the entrepreneur who has...
by Holly Magister, CPA, CFP® | Business Valuation, Sell a Business |
EBITDA Margin and Adjusted EBITDA Margin are similar measurements used by business owners and others who value businesses for sale. Let’s break down the two terms to help your understand which measurement of profit and cash flow are most relevant for your...
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business |
How could there be risks in your business relationships? For most business owners who’ve started a business from scratch, the notion of regarding as risky the many positive relationships they’ve built over the years with customers, vendors, and even employees is...
by Holly Magister, CPA, CFP® | Business Valuation, Grow a Business, Sell a Business, Trepopedia |
The term business value is a broad term that refers to any form of business valuation which determines the financial health and potential of a company. While a purchase or selling price is simply an amount that may be asked to be paid for a 100% ownership of a given...
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business, Trepopedia |
EBITDA Valuation is an industry multiple or ratio method that is used commonly to determine the Enterprise Value of a company operating in the lower-middle or middle market. It differs from the method typically used by small businesses (also referred to as Main...
by Holly Magister, CPA, CFP® | Sell a Business, Trepopedia |
v Have a Question? Add it to the bottom of this post! Enterprise Value, also sometimes called “EV,” is a measure of a company’s total business value. EV is the theoretical price for a company if it were to be bought, and because EV accounts for a company’s debt and...
by Holly Magister, CPA, CFP® | Business Valuation, Grow a Business, Sell a Business, Trepopedia |
The investment banking market is made up of two sides – the buy-side, and the sell-side, both of which are responsible for researching and assessing stocks and other investments. The buy-side refers to advising institutions concerned with buying investment services....
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business, Trepopedia |
Non-Solicitation Agreements (NSAs) are made by two parties to protect one party from a potential loss of income or assets. This type of agreement is warranted and often made when one party is about to become aware of certain important relationships the other party...
by Holly Magister, CPA, CFP® | Business Capital, Grow a Business |
Subordinated debt (sometimes also referred to as a subordinated loan, junior debt, subordinated bond, or subordinated debenture) is a debt that ranks below other, regular debt on a company’s balance sheet. In the event the company faces bankruptcy or liquidation,...
by Holly Magister, CPA, CFP® | Business Capital, Grow a Business, Trepopedia |
An asset-based loan (also sometimes called “asset-based financing” or “commercial finance”) is a type of business financing secured by an asset (or multiple assets) of the company. Often, these loans are structured to function like revolving lines of credit, allowing...
by Holly Magister, CPA, CFP® | Business Valuation, Exit Planning, Sell a Business |
As a business owner journeys through entrepreneurship, it’s inevitable for most to seek a quick business valuation on one or more occasions. Such a conversation with a business advisor may be about the need to understand the value of the business for the purpose of...
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business, Trepopedia |
In business, the term exclusivity refers to a party’s sole rights with regard to a certain business activity. This may include business relationships, pricing, products, or sales. Another application of this term in the business world involves relationships between...
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business, Trepopedia |
The term ‘rule of thumb’ generally refers to the idea of a principle with a broad application – something that is not intended to be exact or strictly accurate. In the business world, the term ‘rule of thumb’ refers to a guideline that provides simplified advice about...
by Holly Magister, CPA, CFP® | Business Valuation, Grow a Business, Sell a Business, Trepopedia |
Intangible assets are those assets in a business which are not physical in nature. Some examples include: intellectual property, (like patents, trademarks, and copyrights), brand recognition, special knowledge, and business methods. Such non-physical assets add value...
by Holly Magister, CPA, CFP® | Sell a Business |
When a business owner begins to negotiate the sale of his or her business with buyers for the first time, he or she will inevitably face a difference between the buyer’s offer price and the desired selling price. It’s at this point when a lively debate between the parties will occur over the underlying reasons for the business’s asking price being what it is. At this time a seller will be well-served if able to offer justification for an increased business valuation and a higher business selling price.
by Jane and Scot Noel | Grow a Business |
You’ve invested in Search Optimizing your website with better content, meta-code, and Social Media links. Traffic to your site has increased, and you’ve even started to receive more calls and orders. What’s next? The first thing to realize is that SEO is an open-ended process that is never really complete. It comes with victories and setbacks, and you need to be vigilant about the ways in which your web visitors interact with your site.
by Kathleen Kuznicki, Patent Attorney | Grow a Business |
As businesses grow and develop, so do their intellectual property (IP) assets. And if these businesses are engaging in proper IP management, they are filing trademark and patent applications to protect their IP. However, because of the public nature of both trademark and patent prosecutions, one may get an inkling of their competitors’ business plans if they monitor these application filings. Though not a perfect way to predict the exact nature of your competitors’ future offerings, keeping track of IP filings can be a guide to where your competitors are moving.
by Paul Cronin | Grow a Business, Sell a Business |
My business partner, the author Jack Beauregard, and I recently had breakfast with Lorraine McGregor from Vancouver, BC Canada. Lorraine is the author of books on Exit Planning and Entrepreneurship, as well as an experienced business consultant. We were all discussing why so many business owners were delaying (the inevitable) transition planning from their businesses.
by Sabrina Baker, PHR | Sell a Business |
In a perfect world, when one business buys another, the staff of the purchased company would be able to transition into a role with the buying company. Unfortunately, this isn’t always the case. What’s more, the company being purchased may not know what is...
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business |
One of the many questions asked by entrepreneurs as they plan for the sale of their business is related to the Adjusted EBITDA definition.
by Chris George | Business Capital, Grow a Business |
Most individuals who consider themselves entrepreneurs believe they must start their own business to earn the title. However, what some do not realize is that the entrepreneurial spirit can be fulfilled in a variety of ways, not the least of which is purchasing an existing business. The following is a list of advantages for buying a business over starting one from scratch.
by Matt Harnett, CAIA | Business Capital, Grow a Business |
As markets recover post-recession, business owners are presented with growth opportunities. However, a business owner may not have access to the capital needed to execute on a growth strategy. Where does a business owner turn?
by The Exit Promise Contributors | Business Capital, Grow a Business |
Many entrepreneurs faced with the demands on cash of a growing business are tempted to sell equity to outside investors, or perhaps give away stock to retain a valuable employee. Diluting your stake in this way may solve the immediate problem, but it can have unforeseen consequences when the business eventually is sold. Stockholders’ personal circumstances evolve in different ways over the lifetime of a company, and whatever the original intention everyone may not be on the same page when you are ready to sell.
by Holly Magister, CPA, CFP® | Exit Planning, Sell a Business |
You have endured multiple meetings with potential buyers. You’ve written dozens of emails and suffered through several rounds of negotiations to secure the best price and deal structure. At last you have decided on the offer to accept. That’s the worst of it over then? Think again – you have yet to experience the joys of due diligence and sale contract negotiation.
by Holly Magister, CPA, CFP® | Exit Planning, Sell a Business |
If a customer’s total revenue for the year represents 8% or more of all revenue for the same year, you have a customer concentration risk.
by Chris George | Sell a Business |
The reasons for selling a business are many and varied; in the end, however, the desired result is the same – money. So how does one go about maximizing profit when selling a business?
by Greg Younts, CMAI | Business Valuation, Exit Planning, Sell a Business |
A business plan is critical to the success of any business. And, if the plan is frequently reviewed and updated, it becomes increasingly valuable over time. It provides valuable historical information to help a business owner make decisions on the future direction of the company.
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business, Trepopedia |
If you’ve grown a valuable business, there is no doubt your employees are a big part of your success. You also know that hiring, training, and managing a great team of productive employees is a difficult task. And keeping your best employees is yet another accomplishment! But the painful truth is your competition would be very pleased to hire away your best employees.
by Sabrina Baker, PHR | Grow a Business |
For most companies, the end of the year is a time when employees and leaders go through the annual review process. This process is designed to rate performance for the year and, if applicable, apply a merit increase. Many companies consider this their performance management system. A true performance management system however is much more involved.
by Andrew N. Jones | Sell a Business |
Most entrepreneurs build a business with a view to an eventual profitable exit. Most probably have lifestyle aspirations in mind that imply a certain amount of money to be realized from a sale. Whether they are looking at an exit now – or a decade from now – they need more than the subjective opinion of friends and acquaintances as to how much their business is worth.
by Holly Magister, CPA, CFP® | Sell a Business |
In many cases, the business owner finds it difficult to know who they should target as a potential buyer for their business. At first glance, any buyer with a checkbook may be attractive. In practice finding the right buyer when selling a business is both an art and a science.
by Kathleen Kuznicki, Patent Attorney | Grow a Business, Start a Business, Trepopedia |
The legal definition of a trademark is a word, phrase, symbol, or design that identifies and distinguishes the source of goods and services. Most commonly we think of names and logos, but marks also include taglines, slogans, and even product shapes, sounds, smells, and colors.
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business |
Often, business owners ask me one of those “quick questions” – what can I do to maximize the sale price of my business? The answer? Not as simple as you may think. But there are 4 factors that can increase the value of your sale price.
by Holly Magister, CPA, CFP® | Business Capital, Grow a Business, Sell a Business, Trepopedia |
EBIT is an acronym for Earnings Before Interest and Taxes. This is a term Bankers often use as a measure of a business’s earnings from operations. The EBIT reveals operating profitability without non-recurring or unusual income or expenses.
by Paul Cronin | Sell a Business |
This is a story with an unhappy ending. I heard this story from employees who worked for a company many years ago. I knew the company well and as far as I know, this is the truth.
by Holly Magister, CPA, CFP® | Business Valuation, Sell a Business |
As I meet with entrepreneurs, I’m often asked the same question: “When is the best time for me to sell my business?” The answer to this question is not the same for every business owner, for many reasons.
by Jane and Scot Noel | Grow a Business |
Search optimization is all about getting more visitors to your website, right? Not really. If you think about it, SEO should be about getting more customers, not just visitors. Optimization is about attracting and converting your target market, not just any old...
by Holly Magister, CPA, CFP® | Business Valuation, Grow a Business, Sell a Business, Trepopedia |
EBITDA is an acronym for Earnings Before Interest Taxes Depreciation and Amortization. EBITDA is often used as a measure of a business’s cash flow. Also it is used frequently in many business valuation formulas, depending on the business’s specific industry.
by Holly Magister, CPA, CFP® | Grow a Business |
Profitability is directly related to a company’s gross revenue, particularly as it relates to its varied customer types. What does gross revenue mean to your company’s profitability? Everything. Let’s back up to review the concepts we’ve covered in previous posts so we may explore gross revenue further.
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business |
The best solution to a problem lies in uncovering what the root cause of the problem really is. So often, this is the case when an entrepreneur is struggling with profitability in their business. Over the past few posts, we have discussed the concepts of how a minimum order policy and Pareto’s Principle applied to the customer/client base can be very powerful to help an entrepreneur improve the value of their business.
by Kathleen Kuznicki, Patent Attorney | Grow a Business, Sell a Business, Start a Business, Trepopedia |
Proprietary information such as customer lists and recipes are intellectual property. However they are not formally protected in the same way as are trademarks, copyrights or patents. These and other types of confidential information can only be protected if they are treated as trade secrets.
by Holly Magister, CPA, CFP® | Grow a Business |
If you own a business, you want to know that your entrepreneurial efforts will result in making money. However, many entrepreneurs struggle to recognize where they are making money and where they are not!
by Holly Magister, CPA, CFP® | Grow a Business |
Most entrepreneurs find themselves extremely reluctant to turn away an order for any reason. The notion of telling a client or customer that their business or order is too small is frightening to even the most seasoned entrepreneur. However, if you don’t want to leave money on the table, and instead desire to make more profit, setting and enforcing a minimum order policy is absolutely necessary!
by Andrew N. Jones | Sell a Business |
One of the most crucial, yet subjective, aspects of any business valuation is determining the specific company risk premium of the business being appraised. The specific company risk premium varies with each company and is intended to be an adjustment to reflect a variety of circumstances inherent in the company and its industry.
by Holly Magister, CPA, CFP® | Grow a Business, Start a Business |
As I listen to the stories told by many entrepreneurs, it reminds me of the dangers they face in part because of their own abilities. Many entrepreneurs are literally jack of all trades. They are very good at doing many things! This trait has allowed them to strike out and start their own business. How in the world could this trait be bad you wonder?
by Kathleen Kuznicki, Patent Attorney | Grow a Business, Start a Business, Trepopedia |
Intellectual property is a concept that is not obvious to most people; you probably have heard of it, but what is it really? Intellectual property is the result of human ingenuity and creativity and the law provides mechanisms through which creativity can be protected. Intellectual property can be broken down into three parts.
by Eric C. Pfeil, Attorney | Business Valuation, Sell a Business |
Anyone who owns a family business is intimately familiar with the blood, sweat, and tears associated with building and then keeping the business viable. Nevertheless, it is not unusual for the business entrepreneur to postpone consideration of various issues involved in transferring the business to the next generation, including determining the value of the business.
by Kathleen Kuznicki, Patent Attorney | Grow a Business, Start a Business, Trepopedia |
A patent is a governmentally granted monopoly that gives an inventor the exclusive right to make, use, or sell their invention for a limited time, in exchange for disclosure of that invention. There are three types of patents: design patents, plant patents, and utility patents. Generally utility patents are being referenced when you hear the word ‘patent’ and these will be the focus of the rest of this article.
by The Exit Promise Contributors | Grow a Business |
The Deceptive Busyness Trap℠ is a debilitating business problem eroding cash flow and stifling growth.It’s a common issue facing many business owners who, over time, unknowingly become subject to its influence.
by The Exit Promise Contributors | Sell a Business, Trepopedia |
For every entrepreneur, a smooth transition of business ownership will be of importance at some future point. The Buy Sell Agreement deals with a specific exit strategy case. An agreement by and between business owners, it establishes a mechanism for the purchase of ownership interests following the departure of an owner due to a triggering event (i.e., death, divorce, disability, retirement, etc.).
by Holly Magister, CPA, CFP® | Grow a Business |
If indeed, a greater amount of profit remaining at the bottom of the Profit & Loss Statement is what a business owner is striving for, then one should consider undertaking this exercise before attempting to grow the business by increasing sales.
by The Exit Promise Contributors | Grow a Business |
“We need sales training” is a comment expressed by many business owners who feel frustrated that their company is not realizing its full growth potential. Many times this comment is rooted in a frustration caused by gaps in the existing sales process that impede profitable growth. The lack of an effective sales process is one of the top challenges for many entrepreneurs trying to grow a profitable business.
by Andrew N. Jones | Grow a Business, Sell a Business |
Understanding a company’s operating results is an important factor for a business owner to determine the value of a business. However, the operating results must be placed in the proper context by comparing them to results of the industry as a whole. By doing so, a business owner is able to understand how they are doing financially relative to their industry peers. This exercise is known as benchmarking.
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business, Trepopedia |
What is a Stay Bonus Plan? A Stay Bonus Plan is a formal agreement between a business enterprise and one or several of its key employees. The purpose of this type of bonus plan is to entice key employees to remain (or stay) employed by the business enterprise during a...
by Andrew N. Jones | Business Valuation, Grow a Business, Sell a Business |
At some point in time, every business owner will leave their business (voluntarily or involuntarily). Through proper planning, an owner should expect to achieve their desired goals. Statistics show that the value of an owner’s business accounts for over 90% of their personal wealth. However, more than 75% of all business owners do not have a formal transition plan in place.