There is no denying that the Corona Virus Pandemic has dramatically changed the way we live and the way we do business. However, the Harvest Business team is encouraged that business transactions are continuing, although they are being handled slightly differently.
Case in point: Harvest Business Advisors Partner Richard Stopa recently held a buyer-seller meeting with seven people, with social distancing and other CDC recommended best practices incorporated.
A very interested buyer wished to meet with the owners of a Virginia accounting practice that Richard represents. The first inclination might have been to postpone the meeting or conduct the meeting virtually.
However, the buyer is eager to move the potential purchase of the business forward. Richard was happy to work out arrangements that helped the buyer learn more about the business and also gave everyone involved a degree of comfort in conducting a face to face meeting.
The meeting took place on a Saturday when the sellers’ employees were not in the office so as to maintain the confidentiality of the potential transaction and also reduce the number of people in one setting.
The buyer party and seller party, along with Richard, met in a very large open area of the sellers’ office where there was plenty of air circulating. All parties maintained proper social distancing (in this case actually 8 to 10 feet instead of the recommended 6-foot distance). We provided ample hand sanitizer, disinfecting wipes and other cleaning products. All parties, of course, wore face masks.
The only real difficulty was the limitations of the face masks. The parties couldn’t see each other’s entire faces (and expressions) and the masks muffled the conversation a bit, a minor inconvenience.
All told, the meeting was very positive. And the transaction will continue to move forward.
This meeting proved that business with our clients can be successfully conducted during a pandemic as long as all parties are cautious, flexible and open-minded.
Look for the transaction to be announced here in the near future.
And, if you would like to discuss any of the current business listings Harvest has posted or chat about listing your business for sale, we are ready to move forward with you.
This article was written by Richard Stopa, Harvest Business Advisors.
Clients choose Harvest Business Advisors for our accurate business valuations and our proven ability to deliver the highest price in the smoothest sale transaction possible. Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at firstname.lastname@example.org or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.
As a Maryland and New Jersey based business broker I found Chris Mercer’s article, “Seven Questions for Highly Effective Business Transitions” a useful guide for myself and certainly for my current and prospective business owner clients.
Before you go any further, I’d like you to look at the following if you’re considering selling your business.
Please click here for a downloadable e-book, “ 10 Ways to Increase the Value of Your Business“.
The Seven Questions: My comments are a little different than Chris’s.
1. Is your business ready for sale? Most are not. Since many of the reasons for selling a business happen quickly you should always keep your business ready for sale. Profitable, transferable, quality continuing customers, growth.
2. Are you ready for your business to be ready for sale? Probably not. Emotionally and in terms of legal and tax preparation.
3. What is business value all about? See 1. above and buy my book, “11 Secrets to Selling Your Business”
4. Do you treat your business as the (major) investment that it is? Read Chris’s book The One Percent Solution.
5. Will your buy-sell agreement work? They often don’t. Do not assume everyone will behave well and do what you hope.
6. Are you ready to make a successful transition happen? Attitude and motivation. Are you really ready?
7. What will you do after you sell or transition or graduate? Determining this often resolves the biggest barrier to really doing the other 6 steps properly.
Click here to read his article on preparing your business for sale.
Start today. Think this through. Good luck.
Ed Davis, CPA, CVA, Business Broker and Business Valuation Expert in the Mid-Atlantic
Ed Davis, CPA, CVA business broker and business valuation expert, will be participating in a panel discussion at the Atlantic Region Energy Expo in May 12-14 at the Taj Mahal in Atlantic City, New Jersey. The Atlantic Region Energy Expo is an annual trade show for companies that deliver fuel oil, propane and alternative fuels (bio) to a variety of residential and commercial customers. The topic, that all owners of privately owned companies think about, “Navigating A Successful Transaction”, will be hosted by Steve Abbate, Managing Member, Cetane Associates, LLC. Click here for more information.
Connect with Harvest Business Advisors today – email email@example.com or call 443.334.8000
All smart Business Brokers, Business Intermediaries, and Investment Bankers know, when a selling small business you must have an asking price in order to get business sales activity. Inexperienced Buyers absolutely want to know the business asking price. If the asking price is too far from the business valuation pricing rules of thumb, they will tend to say they are not interested even if there hesitation really is because of price. Americans expect to negotiate, but only a little. They tend not to want to insult the Seller by offering 50 cents on the dollar. For this reason, it is important to price a business that is for sale correctly from the start.
Considering Selling Your Business? Please click here for a downloadable e-book, “ 10 Ways to Increase the Value of Your Business“.
It is very tempting to price a business high and wait for offers. Business brokers have learned that they rarely come. Often when buyers do appear for an overpriced listing it is from someone looking to steal a business on the cheap who puts in very low offers on many businesses waiting for a desperate business seller to accept their offer in frustration.. Believe me, once you commit to sell your business, the process of selling your business seems to take forever even when it is progressing well. When no one is calling, it really drags out. Don’t overprice your business and, later, fall victim to this low-ball business buyer strategy.
There are buyers for almost all profitable businesses but there may be only two or three in a given market area. You need to get these buyers interested. Proper pricing will do that. We recommend that you price the business no higher than 10% above the high end of reasonable. This will give you negotiating room while presenting an attractive offering that will encourage prospects to continue looking at your business.
If, after 90 days of proper marketing and prospecting (ads are appearing in the right websites, direct mail and selected calling to the right people), you do not have serious prospects working on an offer then you should seriously consider cutting the asking price. The market is telling you something.
If you are in a hurry to sell, price the business near an average price based on your valuation. Make sure you still have some negotiating room in your asking price. Buyers will almost always find a problem and the ability to give a little back solves many problems. If possible, always keep a few chips in your pocket to use to solve problems all the way through settlement.
One of my first listings was a small daycare center. The Seller had made her decision to sell and was now in a rush to get it done. She had been marketing the business for the past two months herself. She did not have a huge investment and just wanted out so, because she wanted a quick offer, she had priced the business at about 75% of the fair market value. Her one prospect proceeded to negotiate her down to 60% of the fair market value and still chose not to close. Prospects assumed something must be wrong with the business for it to be priced so low. We immediately suggested raising the price to 95% of fair market value. This was low enough to generate contacts from real prospects and gave us money with which to negotiate with. The business was sold and settled at 85% of fair market value in 60 days.
Gregory R. Caruso, JD, CPA, CVA
Harvest Business Advisors
Harvest Business Advisors works with contractors, engineers, distributors, manufactures, professional and service companies as business brokers or intermediaries, valuation experts, and succession and exit strategy consultants in Maryland, Pennsylvania, New Jersey, and Virginia.