Cooperation of the landlord or landlady is absolutely essential for many business owners who want to sell. Lease Terms: Most any experienced business intermediary-broker or agent-can tell numerous stories about the agreements between a buyer and seller that came unraveled when they contacted the owner of the property where the business is located. If the business lacks a solid record of earnings, the likelihood of a successful sale declines by that percentage.Ĥ. Showing satisfactory earnings increases the chances of selling by 15%. From the seller's standpoint, this factor can account for 15% of the chances that the business will be sold at the desired price. The vital calculation for a buyer, when comparing earnings history and the price of the business, is the return on investment. If not, a buyer will need an explanation about what changes resulted in an increase or drop in the earnings figures from one year to the next. It's important to know whether adjusted net earnings or cash flow have been consistent over the past three to five years. ![]() And the smart buyer is interested in more than just the amount of the most recent adjusted net income. What he or she is looking for, specifically, is the net earnings available to a seller before deducting from earnings, the payments for interest, depreciation, amortization and other discretionary costs. The third factor is how much money the buyer can expect to receive from operations of the business. Adjusted Net Income and Earnings History: When a buyer evaluates an offering from someone selling a California business, the price and terms constitute two-thirds of the most critical components of a deal. In fact, 15% of the likelihood that the business will sell successfully result from the way the seller structures the financing of the offering.ģ. And they impact the salability of the business. Deal Structure: How much money is going to be required as a down payment to purchase a small or mid sized California business for sale? How much seller financing will be provided? And what are the terms of the seller's carry-back loan? Will the seller be willing to have his or her note subordinated to a loan made by a financial institution that provides the buyer with money needed for part of the down payment and some working capital? These and related questions are addressed when the seller creates the deal structure. Pricing a business correctly is the most heavily weighted factor in the checklist.Ģ. The majority of sellers in the state are so fearful of selling their businesses too cheaply-and failing to collect all the money they could have received- they make the mistake of asking too much. ![]() Price: As much as 30% of the likelihood of selling a California business is linked to the way it is priced. The factors and their importance in predicting success are:ġ. And the focus should be on those factors that are weighted more heavily than others on the probability checklist for salability. Taking those factors into account when preparing the company for the market will increase the chances of achieving a successful sale. The reality is, there are ten specific factors which determine the likelihood that a seller will get a deal at his or her terms. ![]() Others think that whether or not they can achieve a satisfactory deal is a matter of chance. Some owners interested in selling a California business believe they are destined to succeed in getting the price and terms they want because their businesses are so desirable.
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