Buying or selling a business is neither rocket science nor a paint by the numbers proposition – it is a considerable investment in time and patience. Before becoming a business broker, I was puzzled about why anyone should need to recruit a broker to help them buy or sell a business. It appeared pretty straightforward to me:
- prepare an accounting package so that a selling price could be assigned,
- market the business,
- negotiate the final price and
- find an attorney to close.
Voila! (or Viola, if you remember the Smothers Brothers)
I’ve always been guilty of oversimplification – but looking back on my thoughts then and now is humbling – I absolutely had no clue. In fact, just organizing the lessons I’ve learned for the purposes of this blog is daunting – let’s start with how to package the accounting presentation. Above all:
The Beauty of Financials is Always in the Eye of the Beholder
This statement is not advocating ‘creative accounting’ but rather how to transform accounting data into information that is valuable to a potential buyer. Determining value requires that you think from that buyer’s perspective – what’s important to him/her? How do you address his concerns? For that matter, are some types of buyers simply out of your reach? Let’s start with 3 kinds of buyers that I’ve encountered: buyers only interested in cash, owner/operators, and investors.
- Just the cash, M’am
- Owning a Business is a Full-Time Job
- From Wall Street to Main Street – Investors