COVID-19 has altered the business landscape in Massachusetts, New Hampshire, Rhode Island and beyond. For many people contemplating the sale – or purchase – of a business, they may be wondering how a disease that arrived on our doorstep just a few short months ago could cause so much havoc.
And for the baby boomers who are considering retirement, the question they may be asking is, “Given everything that is going on, how do I sell my business in MA?” Or “How do I sell my business in NH?” “Has COVID-19 changed my options?”
There are still many opportunities when it comes to the purchase and sale of businesses, and we believe conditions will get even stronger. Yes, COVID has changed the landscape, but people are adaptable. Commerce will continue, and people will continue to buy and sell businesses.
For the business owner thinking about selling, the first question is often “Do I try it on my own?” or “Should I use a business broker?”
Just as many people who think about selling their homes opt to use a realtor rather than “go it alone,” many business owners would value the services of a professional business brokerage to help assure that they are getting full and fair value, and at terms that the seller finds favorable.
In our ongoing blogs, we will offer suggestions and tips on how to get yourself and your business ready for sale. Whether you want to sell an HVAC business, a dental practice, a manufacturing operation, or a business that provides services for other businesses, the first few steps form the foundation of any eventual sale.
In fact, it’s a question we get asked frequently. “What are the steps I can take to make sure my business is ready for sale?”
The first step sounds very simple: know where you are today. Think of it in these terms: if you are lost in the woods and trying to find a road, you first need to where you are on the map (whether that’s an old fashioned printed map or something on your iPhone app).
And for the business owner, “knowing where you are today” means having a reputable opinion of the value of your business, and also knowing what risks and factors might affect that value.
There is an old saying that a business is worth what an owner is willing to sell it for and a buyer is willing to pay. But there’s a lot of room between those two points that gets filled in by data.
Begin with a business valuation expert. Someone knowledgeable and experienced in business valuation will look at the numbers, the sales, the expenses, and from that provide you with a range of what the business should sell for. Sometimes your CPA firm can deliver this information; at other times you may seek the opinion of a valuation expert.
These are some of the questions your valuation expert may ask:
- Do you have solid, accurate monthly financial P&Ls and balance sheets?
- Is your business spread out over a large number of clients, or are there two or three who represent a disproportionately large sector of your business?
- What is your source of revenue? Does your business have recurring income each month or do you need to go out each day and find new business?
- Does the team stay with the company? Are there employment agreements in place that will assure the new owner that he/she will have a seasoned team in place?
- Is the company up to speed with the latest technology?