Happy New Year! Holiday celebrations have wrapped up and it’s time to set your sights on the year to come. As you make your plans for a successful 2020, consider the following marketing tips for business brokers.

Commit to Consistent Branding – Make sure your brand colors, logo and font styles carry throughout your marketing materials. This includes your website, email marketing, business cards, brochures, CBRs, one page summaries, etc.

Dive in to LinkedIn – LinkedIn is a powerful tool for B2B marketing. Make sure your profile is up to date and complete, including a professional headshot. Connect with professionals who fit your target market such as local business owners or local centers of influence (CPAs, attorneys, etc.). Also post fresh content regularly so that your connections are continuously hearing from you.

Consider Google Ads – The quickest way to appear in search results is with paid Google Ads. You can target keywords (i.e. business broker, how to sell a business, sell my business, exit planning) and a geographic area so that your ad shows up when people in the targeted geographic area search with the targeted keywords. Your ad will have brief text and link to your website.

Be a Networking Pro – Beyond networking on LinkedIn, make time for networking in person. This may include attending chamber of commerce events, state business broker association events or IBBA events. Consider hosting events at your own office such as a networking event or a workshop on exit planning. Also take advantage of opportunities to speak at events, as this is a great way to demonstrate your expertise.

Build an Email List – Email marketing is a powerful tool, and it’s even more powerful with a larger list. Build your email list through activities such as a signup on the home page of your website and offering a free resource (such as a whitepaper with 10 steps to increase the value of your business) in exchange for an email address. Have these signup tools feed directly to your email marketing program so that your list is always up-to-date.

Try Facebook Ads – Facebook ads can be targeted geographically, by age, by interests, etc. You might wish to use Facebook ads to build brand awareness, to promote a workshop, to drive traffic to a landing page with a free resource (building your email list), to promote a listing, etc.

We wish you a prosperous 2020! Feel free to contact Deal Studio anytime with questions about marketing your business brokerage practice.

Email blasts can be a highly effective way to reach both your existing clients and leads. Of course, it is vitally important that your messaging only contains relevant information that is truly seen as helpful.

A recently published article from Business.com entitled “Why Every Business Owner Needs an Exit Strategy” outlines the importance of having an exit strategy for business owners, no matter what point they are at in running their business. The author uses an analogy involving building construction: if multiple exit options are required for each floor of a multi-story commercial building in preparation for disaster, why not plan for the same in your business?

As can be expected with most elements of a business, exit strategies will vary depending on the business and will be tailored to each specific business’s circumstances. The basics, however, include the following:

1. Business Goals
2. Timeframe
3. Intentions for the Business
4. What’s Next for the Business Owner

While some may argue against incorporating an exit strategy into a business’ initial business plan, some benefits for exit planning early on include enhanced business value and the ability to use the strategy as a blueprint for success or a flexible template for sale preparation. Whether or not an owner decides to pursue exit planning now or further down the road, these are all factors to consider.

Click here to read the full article.

A recent article from Divestopedia entitled “Who is the Right Buyer for Your Business?” illustrates the thinking that should go into determining which type of buyer will fit best in the sale of a business. A single business transaction can present several different types of potential buyers, each having their own goals and motivations for buying a business. Understanding these types of buyers can help an owner make the right choice for their own personal goals as well as for the good of the business.

Some buyer types include:

1. Defensive
2. Synergistic
3. International Entity
4. Financial or Private Equity

While sometimes surprises do happen during the sale process, it is invaluable for a seller to have some knowledge and understanding of the types of buyers they will encounter during the sale process.

Click here to read the full article.

A recent article posted on the Axial Forum entitled “Succession Planning — A Critical Missing Element in Many Family-Owned Businesses” outlines shocking statistics from a recent survey that shows the succession plans of U.S. family-owned businesses: only 52% plan to keep their businesses in the family! This is down a whopping 22% from only two years ago and raises some questions regarding the goals and plans owners have for their businesses after their death or retirement.

These statistics can help to reveal some important findings about the owners of family-owned businesses in this country: they often have little understanding of the fair market value of their businesses. Unfortunately, many small businesses overestimate the true value of their investment, which can come as a shock when it comes time to sell. According to the survey, less than 25% of respondents had a clear, actionable transition plan in place, while almost a third had no plan in place at all. These things alone can debilitate any seller, especially in the necessity of a quick sale.

Understanding what an effective transition plan and process entail is a great start for any business owner, especially one that falls into the category of owners without proper transition plans. These things can be better understood with the help of an M&A advisor or business consultant, who will help iron out some of the wrinkles and prepare a business for its future.

Click here to read the full article.

A recent article posted on The Business Journals entitled “How to Pass a Family Business from an Overbearing Father to the Next Generation” illustrates a hypothetical example of a difficult business transition from a ruthless old-school owner to a seemingly less passionate and less aggressive family member. It explains how transitioning from an overbearing leader is often difficult because not only are potential family successors unmotivated to take over, existing employees are also alienated due to harsh and improper treatment.

The author’s solution for this is forgiveness: when it comes to business, animosity can kill motivation and productivity and revenge is never the right answer. Business survival relies on proper practice and great leadership, among many other factors, so forgoing personal grudges for a seamless transition can prove to be vital to future and ongoing success.

Click here to read the full article.

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A recent article published by Divestopedia entitled “The Only Valuation Method that Really Matters” explains the best method to use to value a business: the Business Buyer Valuation Method. While there are certainly other valuation methods, the author suggests that this one is the best and will bring you close to what a buyer is actually willing to pay.

Steps like determining who the most likely buyer is for your business and how this buyer may structure the transaction, among others, will help a seller build a valuation that will both make sense and be fair for a potential buyer.

Click here to read the full article.

A recent Axial Forum article entitled “Take Customer Due Diligence to the Next Level – Here’s How” identifies revenue growth as the majority driver of new value growth after a business transaction. The article outlines the vitality of due diligence within both the overall market and the customer base. One huge factor in this process involves customer due diligence, or the exploration of customer relationships with the business that is being purchased. This typically includes customer feedback, typically through interviews or surveys, and helps to educate potential new owners on things like customer satisfaction and loyalty, risks and opportunities, market growth outlook, market trends, and more.

Click here to read the full article.

A recently published Business.com article entitled “Your Five Year Plan to Build a Business to Sell” explains the steps involved in building a business for the purpose of a sale. Although many owners think that this is just a fantasy, there are actually some early steps that can be taken to help push a business toward a potential sale in the future. While the process can take several years, it truly can pay off in the end for both the seller and buyer.

One of the first and often overlooked steps in this process is to build a business in a market that is not only lucrative now, but will be in the future as well. This is much easier said than done in some instances of course, because many markets and industries are difficult to predict three to five years out, so this step should be taken with care.

The next, and arguably most important, aspect of creating an attractive business is profitability: a business that is profitable and one in which the profit is growing is the most attractive to potential buyers. Bidders want to see a business that is both making money and growing.

Other important aspects of an attractive business include keeping the business “clean” and building a corporate structure that doesn’t depend on the involvement of the owner. Clean businesses are ones that are transparent with well documented processes and transactions, as well as a problem-free workforce. An independent corporate structure is one that is able to function without the current owner as the core of the business. A business that cannot function when the owner is absent is not an attractive option for buyers.

Click here to read the full article.

A recent Forbes.com entitled “How To Make Millions Off Your Exit: 7 Entrepreneurs Worth Over $2 Billion Explain” outlines important insights for making an exit, taken directly from entrepreneurs that have started and sold businesses of their own. The list below outlines the entrepreneurs’ advice:

1. Sell to Make Your Business Grow
2. Prepare in Advance
3. Create an Expert Team
4. Sell the Potential of Your Business
5. Focus on Providing Value
6. Seek Advice
7. Actively Look for Buyers

While some of these aspects of a successful business sale may seem obvious, many are often overlooked. Another important lesson to take from this: learn from those that have experience making deals!

Click here to read the full article.

A recent BizBuySell article entitled “Top 4 Small Business Funding Methods of 2017” outlines some of the best options for funding the purchase of a small business when personal savings, loans from family and friends, or credit cards don’t quite cut it. They include:

1. SBA Small Business Loans
2. 401(k) Business Financing
3. Home Equity Lines of Credit
4. Unsecured Loans

Each of the above methods have their own pros and cons, and deciding which method is best when looking into funding options is ultimately up to the borrower. While there still several options outside this list, these are some of the most common and are widely available to applicants in a wide variety of situations.

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A recently published Divestopedia article entitled “The Top 10 EBITDA Adjustments to Make Before Selling a Business” explains common practices in adjusting EBITDA before selling a business for the purpose of helping the seller get the best value from the sale. The process of normalizing a company’s financials is often done by investment bankers before a sale to help show potential buyers the best possible version of a company’s financials with the ultimate goal of getting a higher selling price. The following adjustments are some of the best:

1. Non-Arms-Length Revenue or Expenses
2. Revenue or Expenses Generated by Redundant Assets
3. Owner Salaries and Bonuses
4. Rent of Facilities at Prices Above or Below Fair Market Value
5. Start-Up Costs
6. Lawsuits, Arbitrations, Insurance Claim Recoveries and One-Time Disputes
7. One-Time Professional Fees
8. Repairs and Maintenance
9. Inventories
10. Other Income and Expenses

Adjustments in these factors can be crucial to getting the most out of a business sale. Follow the link to read more about how each of them can affect the sale price of a business.

Click here to read the full article.

A recent article published on Axial Forum entitled “Dying is Not an Exit Strategy” speaks on the importance of having an exit strategy and succession plan. There can be nothing worse than the unexpected illness or death of a business owner without a proper plan for the business in place. These unfortunate circumstances will not only burden the family of the owner, but will likely result in the liquidation of a business at a fraction of its true value.

Three important factors to consider when planning a succession strategy include:

1. Who will run the business?
2. Who will own the business?
3. How will proceeds from a sale be distributed?

Whether or not you’re in a position to think about selling your business in the near future, it is still important to think about how you’d like to transition in the event of unexpected circumstances.

Click here to read the full article.

The recent article published in Divestopedia entitled “Who Will Buy My Company?” helps business owners understand the avenues for finding a buyer for their business. With options in selling internally, externally, or a combination of both, there are multiple paths and opportunities to finding the right buyer. Each of these paths can result in a unique outcome, so it is important for a seller to choose the one that best fits their needs.

The article identifies two important and useful steps in understanding who will want to purchase a business: identify best buyers and take an offensive approach. Having at least a general idea of who would even consider buying your business is a great first step, which can be refined with better and more pertinent information over time. Taking an offensive approach involves actively becoming a bigger presence in different communities related to the business or industry, giving a seller better insight into what potential buyers may be interested in.

Click here to read the full article.

The recent article published in Divestopedia entitled “If You’re Selling Your Company, Don’t Get Sandbagged” explains what a “sandbag clause” is and how sellers can avoid them during the transaction process. As explained by the author, sandbagging occurs when a purchaser goes through with closing a deal when they are aware of misrepresentations in a seller’s contract. This is often used as basis for an indemnity claim by the buyer after the sale.

Sellers can get sandbagged in a few different ways, with some of the more common related to the fact that the seller doesn’t know every exact detail about the daily operations of a business. Often times, a buyer can uncover some of the finer details that may have been missed in the contract, which is why it is of utmost importance for sellers to be diligent in the process. As the article suggests, having an experienced M&A lawyer may help to mitigate these risks.

Click here to read the full article.

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The recently published Axial article entitled “How Customer Due Diligence Led to a 30% Reduction in Offer Price” explains how important the due diligence process is for a prospective buyer during a business transaction. The author goes in-depth into a case study that demonstrates how proper due diligence can save a bad deal from coming to fruition, while giving examples from the case to show the effect that due diligence can have on a sale.

In the author’s case, further research into a business that seemed to have a great track record and excellent position in the market turned out some interesting information:

1. Competitors were making progress
2. Customer service could be improved
3. Innovation was lacking
4. Customer loyalty was much lower than average

These things could have easily been overlooked without a proper vetting and due diligence process, but since the business was researched thoroughly, the buyer was able to bring down their offer price by a significant amount.

Click here to read the full article.

The recent Forbes article “When Negotiating to Buy a Business – Attitude Is Everything” illustrates how negotiations can and should be treated with care, especially in regard to the attitude of the buyer. It explains how deals can take a quick turn due to things like struggles over non-negotiable points of interest or simply a bad attitude on the part of either the buyer or seller.

Money, of course, always comes into play at some point during negotiations, which is a point of contention and heavy negotiation. Understandably, money talks can draw out a lot of emotion: sellers want to make sure they are getting what they deserve and buyers want to get a deal that will be profitable in the long-term. It is so important for both parties to have respect and to build trust in these negotiations, as a deal can fall through easily if not treated with care.

Click here to read the full article.

The recently published Axial article entitled “Selling? Look for a Buyer Who’s Walked a Mile in Your Shoes” explains the benefits of due diligence and patience when selling a business. The article outlines the sale process of the footwear brand Flojos, the pride and joy of the Lins, a couple that built the company into a $50 million+ business over their tenure as owners and operators.

After finding an M&A advisor with experience in the consumer products field, the Lins focused on finding a buyer that would understand and succeed in the business, as well as continue the legacy that they had created. They wanted a buyer that represented their business well, and after receiving a few offers, they were able to select a buyer that was able to do this.

Click here to read the full article.

A recent article in The Business Journals “3 Questions to Consider When Looking at Mergers and Acquisitions” outlines what a prospective seller should consider regarding mergers and acquisitions as a means to exit their business. The current state of the M&A market makes this option very lucrative, with record transaction numbers and valuations. But no matter the state of the market, knowing whether or not this is the best option is important. When considering a merger or acquisition, you should ask yourself:

1. Does M&A align with your company’s strategic plan and vision?
2. Have you conducted adequate due diligence?
3. Do you have a post-deal integration plan?

While time and patience are very important during this process, it is also very important to understand everything about the process, why you’re undergoing it, and what it means for your business. A merger or acquisition could mean very good things for your company if you are well prepared and know what questions to ask.

Click here to read the full article.

The recent article in Divestopedia “What Role Does Your Brand Play in a Successful M&A?” explains how a business’ brand often takes a backseat to most other business activities during the M&A process. The author explains how crucial the brand really is within the transaction process, as it represents how the new business is both perceived and received by the public and shareholders of the acquiring entity, as well as employees and customers.

Branding in consideration of employees is very important in the transaction process, as the cultures of the now combined companies may differ drastically. This makes consideration in terms of culture and structure so important for both entities to ensure the process runs smoothly and the new entity is able to move forward seamlessly.

In consideration of the customers of both entities, the transaction process should flow and occur in a way that will least affect customers. This includes seamless integration of customer service processes as well as pricing and product availability, among others.

Other stakeholders to be considered during the M&A process include investors, partners, and others that are directly affected by the sale. A brand strategy that takes into account these members’ best interests will lead to a better rate of success.

Click here to read the full article.

Copyright: Business Brokerage Press, Inc.

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