Newsletter #1
Hi Friend!
Finding the time to consider selling your business can be challenging, but I hope this newsletter aids in clarifying your thoughts and provides you with practical ideas to ultimately maximize your business sale.
A Tip for Selling your Business
A Success Story
An M&A Term to Know
Today's Tip:
Are you a “do it all" Owner? Do you work more than 40 hours a week? Would your business suffer if you took a month off? If so, your business may suffer from “Owner Dependency”, making it hard to sell. Buyers will dig into your business before they buy and if they get the sense that you are irreplaceable they will walk away. If you want to sell your business start to turn it into something that could run without you!
Success Story:
Not all Sellers are looking to retire, some just want a change in lifestyle. Such was the case with our recent clients Jenny and Nate Jeffery, former owners of Onside Performance Centre, they had a young family and wanted to get away from the morning/evening/weekend hours required to operate a gym. They weren’t sure they could find a buyer for their business and feared they may need to shut it down if they wanted to pursue other ventures; but without even publicly listing the business for sale Change Pilot was able to get multiple bids for the business and negotiate a successful sale.
"We were completely intimidated by the idea of selling our business and had no idea where to start. Enter Rob O'Brien from Change Pilot. From the get-go, Rob was knowledgeable and professional, guiding us through every step of the way with ease.
Rob asked all the right questions and provided a thorough valuation of our business, helping us confidently ask for what our business was worth. His expertise took the stress away from what could have been a nerve-wracking experience, allowing us to continue focusing on our day-to-day operations.
Having Rob represent us through the negotiations was invaluable. I only wish we had called him sooner. If you're even remotely considering selling your business, I highly recommend having an initial discussion with Rob. You won't regret it."
-Jenny Jeffery
Earnout:
When the Seller and the Buyer disagree about the forecast for the business, “Earnouts” can be a valuable tool for helping get a deal across the finish line. In this type of deal structure, the buyer agrees to pay the seller an annual "bonus" if revenue targets are met.
Why the Buyer wants this: They can sometimes pay a lower price at closing by offering incentives to encourage the seller to help them succeed in the future.
Why the Seller likes it: If they believe in the future of the business and they don’t need all their money right away, they can accept an earnout and share in some of the future success of the business.
In this scenario, the seller is taking on more risk than just a straight sale. They will want to ensure they believe not only in the future of the business but also in the buyer and his/her ability to run things.
Earnouts can work well if the Seller is going to stay employed with the company.
Let's work together
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