The Smart and Savvy Exit - What to Look for in a Potential Buyer - Ellen McIlhenny

Ellen McIlhenny - “The Smart and Savvy Exit – What to look for in a potential buyer”

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INTRODUCTION
It occurred to me this weekend that one of the things I had not really researched was how the pandemic affected business sales in the United States.

Well not surprisingly it really has been dependent on how pandemic-proof your business is. We know that there are some industries that have thrived during the past year; ones that offer help to people and businesses adapt to new lifestyles and working conditions. 

By mid-year last year of the businesses that were able to sell, median sale prices rose by about 6%. This comes from the online marketplace for businesses, BizBuySell.com. But numbers of transactions dropped 39% from 2019.  There were real winners and losers in 2020. As you might expect full-service restaurant owners were the hardest hit, many of whom were forced to delay plans for retirement from the business.

Also, not surprising is the mix of people who ended up buying businesses in 2020.  Again, from BizBuySell, most were people who lost jobs due to the pandemic, others were existing owners looking to expand and those hoping for a bargain in the pandemic’s small-business wreckage.

Gyms and fitness centers were part of another business segment that was hard hit by the pandemic. Not only were potential buyers skittish on the outlook, but lenders were almost universally avoiding financing for businesses in certain segments. It is hard to justify valuations on businesses that had virtually no income last year.

In the coming year, of course the outlook is much brighter as more people are vaccinated and life slowly returns to normal. However, there will probably be a delay in the re-marketing of businesses in the hard-hit segments until there are at least a few quarters of numbers that indicate a turnaround.
 
Show Objectives - The Why
 
Today we will be talking about how to vet a potential buyer. You have spent too much time building your business to let someone who does not match your company values come in and potentially change or even ruin what you created. We will look at some of the qualities and intentions you should look for in someone wanting to buy your business.

Key Issues

1. Important questions you should ask all potential buyers.
   
2. Determining who are your potential buyers.
   
3. Determining the best place to look for your potential buyers.
4. Qualifying your potential buyers.
5. What to do to attract the right buyers.
6. Keeping those right buyers. Know exactly what you want before negotiating.
7. Closing the deal.
8. A story of what can happen when the buyer and seller are not clear on intentions. This is a personal experience that you will not want to miss.

 Shows 

• Previous: Podcast Episodes 37 – 40 of Season 4 - The Smart and Savvy Exit – The Importance of Having a CPA on Your Exit Team – We talked about how a CPA can help mitigate the tax burden when selling your business.

Find My Podcast at https://pod.co/future-financial-confidence-with-ellen-mcilhenny

Next Week: Episode 12 of Season 4 – An interview with a Financial Advisor.

Resources:
Written by Ellen McIlhenny 
Owner of CFO Plus Services, a Fractional CFO services firm which also offers Back Office Bookkeeping Services.  Author of the business novel The Big Turnaround; How Bad Management Nearly Destroyed an Exceptional Company. Check it out at https://thebigturnaround.com

You can connect with Ellen on any of her #cfoplusservices platforms or ellen@cfoplusservices.com
https://cfoplusservices.com
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