Newsletter #2
Goal for 2025:
Empowering you to Sell Your Business with confidence and clarity.
Today (Jan. 10, 2025) :
How To Maximize Your Exit Value:
Understanding the Buyer
Valuable Insights for Success
Mastering the Language of Business Transactions
Small Businesses Have 3 Types of Buyers:
Individual Buyer - has some cash, wants to be their own boss, looking for an opportunity to buy a business where they can do the job and earn a good living.
Strategic Buyer - currently owns a business(es) and believes that buying your business will make them stronger. They see a strategic advantage to be gained. Could pay more than the other.
Private Equity Firm (PE) - Private Equity groups have raised funds from private and institutional investors for the purposes of buying and growing privately held businesses, eventually selling them off and returning the proceeds to the investors. They have big pools of money and expert advisors. They use these to build market power.
A 4th Type: There is an emerging trend that may be bringing a fourth type of buyer into the market. “SearchFunders” are entrepreneurs that have the backing of PE Firms or large investors. They blur the line between Individual buyer and PE Firm. It’s still too early to tell how this trend will evolve, but it adds an interesting dynamic to the market. I get approached a couple times a week by “Searchfunders” looking for opportunities. Are they really individual buyers or just PE firms in disguise?.
Who do you visualize buying your business? Is your business setup to appeal to them?
Insight: The Importance of Sellability
Recently, a business owner reached out looking to sell their highly profitable business. However, the owner worked 60-80 hours a week and was always on call. This made the business nearly impossible to sell. Why? because people with enough money to buy this business won't want to grind long hours in the field.
Make Your Business Sellable!
To increase your business's sellability:
Reduce owner dependence
Streamline operations
Create and document systems and processes
Build a strong management team
TERM TO KNOW:
“Vendor-Take-Back" (VTB)
Is a tool used in over 90% of small business sales to help close the deal.
Also known as vendor financing or seller financing, in these deals the seller agrees to finance a portion of the purchase price.
This approach helps bridge the gap between the selling price and the buyer's available funds, making it easier to complete transactions that might otherwise be difficult to finance through traditional means.
VTBs typically have shorter repayment terms and lower interest rates compared to bank loans, and they can provide benefits such as increased flexibility, seller engagement during the transition, and the potential for a higher selling price.
The current owner staying invested in the future of the business gives the Banks comfort and that makes them more likely to Finance the deal.
The Q3 2024 Market Pulse Survey by the IBBA found that few deals are getting done without some sort of seller financing, earnout or rolled equity component:
Upcoming Opportunities:
Not all owners want their business listed publicly so be sure to let us know what you are looking for to access off-market deals.
Coming soon:
Commercial Bakery
Safety Consulting, Training and Supply
Commercial Construction
Automotive Repair and Service
Adventure Tourism
Iconic Restaurant
Let’s work together.
Visit our website for testimonials and more.
Change Pilot, 59 Bedford Hills Rd, Bedford, Nova Scotia Canada B4A 1J8, Canada, 9025363431
