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Exit Planning Pitfalls for Property Managers [#1 of the series]
May 12, 2021 / in Exit Planning / by Charles (Chip) Trimmier
Everyone knows the three most important things in real estate are location, location, and location. For property managers, it’s documentation, documentation, and documentation. Experienced property managers are all accustomed to continually documenting the relationship with tenants. Where they sometimes fall short is in maintaining their formal contractual relationship with property owners. That can become a problem when it’s time to transfer control of the business. As a former corporate lawyer, I feel compelled to give …
Ten Commandments of Successful Business Exits
May 10, 2021 / in Exit Planning, Sell a Business / by Louis Cionci
Business owners contemplating a sale may be asking the question: What are the most important principles to achieve a successful business exit? Listed below are ten practical directives to help you make better exit planning decisions and achieve a successful sale. I. I shall plan ahead. II. I shall not depend on miracles III. I shall prepare my business IV. I shall not wait for perfect timing V. I shall help buyers buy VI. I …
How to Buy a Small Tech Company
May 7, 2021 / in Acquire a Business / by Exit Strategies
There are thousands of small tech companies for sale at any time they are often websites that take 1 or 2 people to run. There are listed for sale on bizbuysell.com, Flippa.com and similar sites. They can be run from home. Sometimes they require a particular expertise but other times they can be managed by the owner and technical or time-consuming work can be done by contractors, often offshore. Some examples are Amazon reseller businesses, …
Market Pulse Survey – Why business owners are selling
May 4, 2021 / in Exit Planning, Sell a Business / by Al Statz
The following chart shows the reasons business owners decided to sell their businesses in 2020. As in the past, owner retirements led the way. These are the results from the Market Pulse Survey conducted in the 4th quarter of 2020. Each quarter, the M&A Source and IBBA (International Business Brokers Association), in partnership with Pepperdine University’s Private Capital Markets Project, publish the results of a survey of North American lower middle market M&A advisors and …
Spring cleaning is good for business
May 4, 2021 / in Exit Planning, Sell a Business / by Al Statz
It’s time for spring cleaning, at home and at work. I only wish my clients did a regular Spring cleaning. It would make due diligence and the whole business sale process a lot smoother. Here’s what I mean: Clean financials: I harp on this a lot. Messy numbers and casual accounting practices create headaches when it comes time to sell. Audited financials, on the other hand, can actually increase a buyer’s offer. Hopefully, you have …
7 Keys to Making Your Business Sellable
April 27, 2021 / in Business Strategy, Sell a Business / by Roy Martinez
A business owner recently asked me what she could do to increase the value of her business. She wants to sell and retire in a few years. My advice was: It is easier to sell big businesses than small businesses. The magic number is $1 million in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). When a business has more than $1 million EBITDA, it becomes attractive to all buyer types: individuals, strategic buyers, …
Understanding Discount Rates The Equity Risk Premium – Part 2 of 5
April 19, 2021 / in Business Valuation / by Joe Orlando
Our prior post and educational discussion of the discount rate as “one of the most important inputs surrounding the valuation of the business” introduced the first input of the build-up approach, the risk-free rate. The second key input is the equity risk premium. In our reports, we define this input as “The ERP represents the extra yields demanded and earned (and risk assumed) over time by equity investments in large public companies over U.S. Treasuries. …
Avoid the Mistake of Selling on Your Own
April 16, 2021 / in Exit Planning, Sell a Business / by Al Statz
One of our former clients, Joe, reflecting on the sale of his company said, “only those of us that have toiled at it know what it really takes to succeed in this business.” How true. Until we risk our own capital and spend years building a team, perfecting products and processes and managing through multiple business cycles, we can’t fully appreciate what it takes to succeed in a given business. Similarly, its hard for business owners, …
Biden tax plan driving business owners to market
March 17, 2021 / in Business Strategy, News, Sell a Business / by Al Statz
During his campaign, President Biden proposed tax changes that could have a significant impact on business owners. Any business owner contemplating an exit in the next few years should consider how potential tax changes could reduce their net proceeds from a sale. If Biden’s tax plans come to fruition, the capital gains tax rate could effectively double, from 20% to 39.6% for income exceeding $1 million. Right now, that means business owners need to shift …
Understanding Discount Rates The Risk Free Rate – Part 1 of 5
March 15, 2021 / in Business Valuation / by Joe Orlando
One of the most important inputs surrounding the valuation of the business is the discount rate that is used in the analysis. This discount rate is the expected rate of return on the subject interest which in most cases is the equity in the value of an operating business. Most often in our practice, this equity is attached to a private business that is owner operated. Over the next few weeks, I will dig into …
Exit Strategies Group, Inc. is a leading provider of business sales and acquisitions, business valuations, and exit planning services for family owned and closely-held companies since 2002.
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