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VALUATIONS

M&A POLL

Will Business Values Increase Over Next 12 Months?

Substantially - 10%
Moderate - 31.4%
Stable - 30%
Decrease - 24.3%
Plummet - 4.3%
The voting for this poll has ended on: 06 Mar 2012 - 21:24

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M&A Home -> SELLING YOUR BUSINESS

Selling Your Business

Selling a business with Princeton Capital means you are maximizing the value and minimizing the headaches.

PRINCETON adds value beyond a typical business broker, and will assure you receive the maximum value for your business through our Professional and Discreet process. Please provide us with your name and email to begin a discussion on how we can help you.

Have you ever wondered about the possibilities that could result from a sale of your business?

Princeton can help you understand the value of your business, and provide the resources and process that can help you execute.

  • Confidential Process - Whether you are selling a business due to a recent events or, if you are not srue you want to sell at all, we have a proprietary, confidential process that can help you at this critical juncture in the life of your business.

  • Value - Princeton will help you confidentially determine how much your business is really worth at no cost to you to help you in your process.

  • Targeted Marketing - Princeton will look for the best ways to get exposure for your business, whether through our many bulletin boards, direct mail to strategic buyers, our proprietary database, or word of mouth.

  • Qualified Buyers - Princeton will not bombard you with "interested" buyers - we run each buyer through a qualification process to make certain the buyers are capable before introducing them to you.

  • Discreet - Unlike larger business brokers, the name of your company will be known only to a limited number of people.

  • Professional and Experienced - Princeton have years of experience in Mergers & Acquisitions, from small to large, private to public. We pride ourselves on providing the highest level of quality, professional services.

  • Trusted Advisors - Princeton represents the seller on most transactions, therefore you have and experienced trusted advisor throughout the entire process, looking out for your interests.

  • Systematic Process - We do not accept every client that contact us. Princeton focuses on a few clients, and will run a systematic, customized approach for each of them. Our proprietary, customized process will assure the best offer for your firm

  • Some of our brokers are Licensed REALTORS, in order to be able to help you with all your purchasing needs.



INTERVIEW WITH BUSINESS SALES INTERMEDIARY

Recently, we participated in a Q&A regarding how to sell your business:

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LEARNING FROM EXPERIENCED SELLERS

Recently I reread a study that had been conducted by Newport Partners in 2007 to determine what successful business sellers would do differently if they had to do it all over again.  The results are extremely important for all business sellers or business owners looking to sell their businesses.

The study interviewed 100 Canadian business owners who have sold businesses in the last five years.

Business Owners are selling their companies as a reactionary process, instead of planning the process out methodically. When asked why they sold their businesses, they received the following responses:

  • 26% “I received an attractive offer"

  • 14% "I needed more capital or strategic support"

  • 13% "sale was motivated by partners or shareholders"

When asked if they had planned the sale in advance:

  • 23% planned the sale in advance, 62% wish they had done so

All professionals and sellers agree that selling a business is much more successful when methodically planned in advance.  This statistic means that many business owners are leaving a significant amount of money on the table, and experiencing more angst in the process than they should be.

Business Owners are not getting the proper advice when selling their company. 81% of the respondents relied on advice of their attorney, and 68% relied on their accountant for advice.  Only 32% hired a Mergers & Acquisition Intermediary, Investment Banker, or broker.  71% of the business sellers recommend you select an advisor experienced in business sales, but only 40% of them did.

The process of selling a business always appears on the onset to to be a simple sale, much like selling a building or a large asset.  The truth is sellling a business is very complicated, and there are a large number of traps and pitfalls involved.  You need to have the right team with you from the start, it is too important to learn as you are going along.

Sellers are not marketing their businesses to all the potential buyers, and therefore not obtaining maximum value for their business. Only 42% of the business sellers evaluated all types of buyers, but 74% recommend that other do that.  This is another reason why an outside business broker, or M&A intermediary is important to the process.  The business intermediary will know how to identify and market to a large range of prospective buyers.  Marketing businesses is their core expertise, and they have experience recognizing buyers that you might not have thought of otherwise who would have an interest in buying your business.

It is important to learn from others who have been through this process before, and heed their advice so that you get the maximum value for your company.

Princeton Capital Strategies, Inc.

Princeton Capital Strategies, LLC

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Why do People Buy a Business?

A survey of Business Brokers and M&A intermediaries was run to determine what the buyers are looking for as they look for a business for sale.  The survey was conducted by BusinessesforSale.com.  The top four responses were as follows:

  • They want to move into a different field of work

  • They want to relocate

  • They are looking to expand a current business

  • They want to be their own boss

If you want to have a successful business sale, you need to look at these to determine how you can best market your business.  If you look at any one of these, the "feature" a prospective business buyer is seeking in order to make his decision is simplicity.

Many of the buyers we work with here in Connectictut, or the New York area, are scared away from a prospective business due to the complexity involved.  With complexity, comes increased risk, and fear, and then it is almost impossible to have a buyer make a commitment.

It does not matter if the prospective buyer has experience in the industry or not.  In almost every case, each business is unique, and has a unique business model.  The prospective owner does not want to spend years coming up to speed on that model, or learn how that business makes money.

As a business owner, you need to work with a business broker, M&A intermediary, or Investment banker to outline the business business model, and make the business as simple as possible.  The buyer will want to know that they can step in tomorrow and begin making money, like clockwork.  You must draw that map, and show them the way.

 
WHO CAN BEST REPRESENT ME TO SELL MY BUSINESS?

As a Business Intermediary here in CT and NY that works with many Business Brokers and M&A (Merger & Acquisition) Advisors, I feel it necessary to disclose the fact that Princeton Capital is successful because business owners select Business Brokers and M&A Intermediaries to help them sell their businesses.  I am writing this objectively, which is how we operate, which can be seen by the multiple times we steer business owners from our firm toward other professionals, when we feel someone else can add more value.

To anwer the question...The fact is that most businesses are not sold by business brokers or M&A (Merger & Acquisition) intermediaries.  Most are sold by owners because a buyer happened to knock on their door at the right time.  When they seek help in selling their businesses, most small business owners turn to their trusted advisors.  For obvious reasons, small business owners rarely have a business broker or M&A intermediary as one of their advisors.  (A recent study showed that Accountants are the most trusted advisors of the Small to Medium sized, or Middle-Market, business owner.)  The decision to sell your business is a very important one, if not the most important professional decision a business owner will make.  Should you use someone to help you?  Which professional should the business owner use to sell their business?  Can they trust a complete outsider to do what is in their best interest?

In my experience I have found that in most situations, (certainly not every circumstance), the business owner's accountant or attorney will offer to be the lead, and basically orchestrate the transaction.  They obviously want to do what is in the best interest of their clients, and probably do not understand the value that an intermediary will provide.  They might not have relationships with a lot of intermediaries, and might not fully understand the process that led to the closing.  In addition, the fee looks extremely attractive.  Whereas they typically have more experience with their trade than the typical business broker or intermediary, most accountants and attorneys do not have the overall skill to get the most value for a business.

I feel the largest value we add to our clients comes from areas where a typical accountant or attorney does not have the experieince or expertise, and therefore "short changes" the business owners.  Those two areas are in the areas of marketing, and running a controlled auction.

There are so many potential buyers for any particular business.  The intermediary or Business Broker earns his fee by looking at buyers that are outside of the "usual suspects".  Strategic Buyers will certainly pay more for a business, but are their strategic buyers outside of your industry peers?  What is the true value of your business?  Is it in your customer base?  Distribution Channel?  Intellectual Property?  Employees?  In addition, Where are the best places to find those buyers?  The list is endless.  The intermediary can discover and articulate the true value of your business, and market that value to a broad audience to get the highest offers.

Running a controlled auction is extremely difficult, but arguably the most valuable service we provide our clients.  Creating a competitive environment for a company, whereas buyers understand that if they do not provide an offer with sufficieint value, the company will go to another buyer, is essential.  This is not easy to do, and contains many pitfalls that can be fatal to the deal.

Therefore you would like soemone to help you who is an expert at marketing, negotiating, and orchestrating the sale.  It costs money, but if that intermediary can get you 20-30% more for your company it is well worth it.  And the right intermediary will be able to do just that.

Princeton Capital Strategies, LLC
www.PrincetonCapitalllc.com
Providing Value Beyond a Business Broker

 
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