There are a number of ways that the sale of a business can be structured.100% all cash deals are rare.In most cases, deals are created where a combination of cash, financing, stock, and/or earn-outs are used.The key to any structure is ensuring that it protects your financial legacy and is set up so that you are able to close an optimal deal with a premium buyer.
A growing economy, along with the below listed favorable trends driving today's M&A market, make it a good time to transition a business:
When it comes to selling a business, owners care about more than just money. In a survey of 315 business brokers and M&A advisors, representing 37 states, they indicate that cash at close is a key desirable for sellers, as is taking care of their employees. Getting out quickly and leaving a legacy are also highly valued. Results indicate that a relative minority of sellers are interested in employment contracts and other deal structures that keep them active in business.
Identifying your priorities when you make the decision to sell can lead to different exit plans.
Below are the results of what sellers care most about besides money in the survey:
An industrious, profitable business is more attractive to a buyer than a stagnant one. Continue running your business – and improving it – while looking for potential buyers. This requires hard work, but you’ll have the energy to accomplish this if you utilize a business broker and other professionals to help you sell the business.
Here are a few tips to keep your company in good shape during the sales process.
You're thinking of selling your business and are eager to cash in and be rewarded for all of your hard work you've put in over the years.Often times it is beneficial to build recurring revenue streams into your business model, to increase your business value, in order to net enough from the sale to fund your future plans.Recurring revenue is a key strategy and value driver to any business.
Recurring revenue is a guaranteed revenue for some period of time that does not require the same level of sales and owner effort as one-time revenue. It typically results in much higher profit margins which is always highly coveted by buyers.
Examples of recurring revenue include:
There are several types of business assets you need to consider when you determine your company’s valuation before a sale. Assets are grouped by usage, convertibility or physical existence, although some accountants may use other classifications.