Why Wait?

Aug 05, 2022 8:51 pm

I met with a potential seller earlier this week. They've had a good business for nearly two decades. They grew the operation to them plus five employees. In the last couple years every employee has retired or left on good terms. The owner just had a medical scare (they're fine, though). And because of this they don't want to hire and train good employees all over again. They're in the mid-60s and ready to retire.

Without even looking at a single page of their books I told them they needed to be prepared for a less-than-expected valuation. Unfortunately, I cannot sell the business that existed two years ago. We've got to work with what we have, and in this case it's a one-man operation. Is there still value in the business? Absolutely! Can we extract that value by transitioning to a new owner? For sure! Thing is, that value is going to be based on one person doing the work, not a half-dozen.

I hate having these hard conversations. I am a small business owner, I understand the time and effort it takes to create something. I understand the pride and connection that forms when a business you created is successful. I also understand that a buyer is looking for an investment--something that will make them time or money. If a business is priced too high we won't find a buyer and frustration for everyone involved will ensue.

So what can be done? The first step to any sale is a valuation. Even if a business owner is five years from wanting to sell we can perform a valuation to determine where the business is at right now and what can be done to better prepare it for a future sale. At the very least a business owner comes away with an idea of what they have. But often we can begin grooming the business and creating a game plan. These valuations can be updated yearly, and create a historical record of the business' performance.

If we can help you discover what your business is worth, please reach out. As always, I'm looking forward to hearing from you soon!

Happy Friday,

Josh

JOSH GRODE WOLTERS, MA, MBA, BTS

Business Broker | M&A Advisor

· $23M closed transactions ·