Buying or selling a business is a complex matter.  There is no question about it.  The complexities start from the moment a buyer and seller start interacting.  These include, for example, the buyer not having any history or knowledge about the operation of the business and so have to rely entirely on the representations of the seller.  Conversely, the seller lives and breathes the business, knows its ups and downs as well as its strengths and weaknesses.  My Golden Rule when assisting with a business transaction is for each party to put their feet in the shoes of the other party.  In other words, the seller should see things from the buyer’s perspective and the buyer should see things from the seller’s perspective.
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Everyone is familiar with the Christmas song, The 12 Days of Christmas.  Without going into every verse of the song, the carol works forward with the first day of Christmas being a partridge in a pear tree, the second day of Christmas two turtle doves and so on.  The song is full of optimism and hope that the giver and receivers of the gifts will be thankful for life, the opportunity to share and hope for the future.

From researching the origins of the song, I came across something interesting.   One of the articles I read suggests the 12 days of Christmas is not about the 12 days prior to Christmas but in fact, the 12 days from Christmas until the beginning of Epiphany which begins on January 06.  When I thought further about this, it naturally combined with another favorite thing we do during the Holiday Season and that is to make New Year’s Resolutions.
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The following article is re-printed from an email sent by Mike McGrane, an SBA lender with Wells Fargo based in Roseville, CA.

The Senate and the House have both passed various versions of the following improvements to the Small Business Admin 7a and 504 loan programs. This is a very good thing for Small Business, Entrepreneurs, Banks and Business Brokers and Developers. There is something for everyone in this Senate Bill outlines below. It still needs to be signed into law and the SBA needs to make their official guidelines public, but this should be what is coming.
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Buying or selling a business is complex task as there are so many moving parts. The moving parts obviously include the buyer and seller but may also include lenders, landlord, franchisors, attorneys, accountants, customers, suppliers, competitors, employees and others. Just as you can get help from a residential real estate to buy or sell a house, there are also business brokers or intermediaries who provide the services of an intermediary. If you are looking for the help of an intermediary or business broker, consider the following.
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As a business owner, and part of the baby boomer generation, you’ve seen your share of ups and downs in the business world.

If you are considering the sale of your business there are a growing number of brokers and mergers and acquisition specialists available to offer professional assistance to help you determine the value of your business and how the market might respond.
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As baby boomers begin to hit retirement age, many who are business owners are ready to sell. It’s created a market that has many businesses for sale.

At the same time, concerns about the economy had made it tough to get financing for many potential deals. Seller financing is one option that could be the solution to get many deals done.

Seller financing involves a seller helping to finance the sale of the business by taking back a second note on the business. It differs from a traditional Small Business Administration (SBA) loan because the seller essentially extends credit to the buyer against the purchase price of the business. However, seller financing is misunderstood by many, even though it may be the best way to sell a business during a stagnant economy.
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Selling a business and walking away can be very difficult. But in many cases, there’s a transition (“training” and/or “consulting”) period dependent on the size of the company and the role of the owner. Transitions may be as short as a month or two or as long as a year. In most situations, the buyer wants the seller to remain on board to shorten the learning curve and help with the smooth transfer of key relationships.

In the typical business sale, a transition period of four to eight weeks is included, and sometimes a “telephone consulting period” is added (e.g., 6 months of telephone consulting not to exceed 5 hours per month). Also, the seller may additionally be retained as a consultant at a negotiated rate. In some instances, a long-term employment contract is negotiated and the seller maintains daily involvement for a much longer period of time. READ MORE

As you prepare to put your house on the market, you get the word out to as many people as possible. The “For Sale” sign is placed in the front yard, you invite people into your home during an open house and you put ads in the newspaper and online. You want everyone to know your house is for sale.

However, that’s not the case when selling a business. Place an ad that your business is on the market and people start to wonder. It creates an air of uncertainty that can be detrimental to your bottom line and put the company in jeopardy.

To increase the likelihood of a successful sale of a business at an optimum price, keep it confidential!

What’s likely to happen if people find out the business is up for sale?
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The Merriam-Webster Dictionary defines Due Diligence as “research and analysis of a company or organization done in preparation for a business transaction.” Some even look at it as a pre-marital background check and counseling. But it should be noted that dissolving a merger is much more difficult than ending a marriage if things aren’t as they appear.

Ultimately, due diligence is the process of being sure that things are as they appear before a deal is sealed. For someone considering a merger or the purchase of an existing business, the review of documentation and the answers to your due diligence questions are critical. There’s no doubt it is a complex process that can be time-consuming. But with so much on the line with any merger or acquisition, you don’t want to make a decision without all of the information. You want to be sure everything is reviewed and all questions are answered to your satisfaction.
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As a business owner, and part of the baby boomer generation, you’ve seen your share of ups and downs in the business world. The time is coming to step back and take life in a different direction. You’ve decided it’s time to seriously consider selling your business. Where do you turn? 

Many business owners in similar circumstances look first to their accountant or their business attorney, people they’ve worked with and have developed a relationship with. But the fact of the matter is they aren’t experienced in selling a business, just as you probably would not ask them to sell your home for you (which is much easier). No doubt, you’ll consult with them as you prepare to sell your business. But an initial step should be to enlist the help of a professional business broker or intermediary. 
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Are their benefits of buying a business versus starting a new business? This is an article for business buyers. But it also helps the seller of a business understand what a buyer should look for when acquiring a business.

So you want to be your own boss. Consider the options – work as an independent contractor…start your own business…buy an existing company. Certainly there are pros and cons to each option. If you do a careful analysis, you’ll learn what many seasoned entrepreneurs have discovered…the risk-to-reward ratio is tipped in your favor when you purchase an existing business.

Admittedly, as an independent contractor, your risk is minimal. The up front investment and overhead costs are limited. However, without the ability to leverage the work of an employee base, the returns are limited by your own personal capacity.
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If you’re looking to sell a business, it’s critical to look at the value of the business. But a typical business really has two values. The “academic” value is the one determined by a professional business valuation. The other is the “true market” value. The academic value is arrived at with a formula based on the firms’ hard assets, cash flow, industry averages and multiples. The fair market value also takes those items into consideration, but then considers what buyers are really willing to pay.

For many small and mid-sized businesses hard assets like equipment, vehicles, land, buildings, and inventory may be limited. For some small businesses there may be no hard assets at all. Instead, their value is based on intangibles like employees, business processes, customer lists, location and business relationships.
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You wouldn’t think that now is a good time to buy or sell a business. However, even in the midst of a recession the timing might be just right, creating opportunity for small business owners looking to retire and inspiring entrepreneurs looking to control their future.

Why it’s a great time to buy

More sellers are willing to consider seller financing. If you have had difficulty getting a traditional bank loan to buy a business, seller financing could be an option to discuss with your broker and the business owner. Seller financing differs from a traditional SBA loan because the seller essentially extends credit to the buyer against the purchase price of the business. This allows more flexibility with payment options, which is good news for the buyer.

Baby Boomers are retiring. For many boomer business owners it is retirement that is driving them to sell, not the economy. In fact, sellers looking to retire are choosing to sell while their business is showing a profit – showcasing that despite the economy, their business is going strong.
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There are many attributes that make a successful and strong entrepreneur. Here’s a look at some of them.

• Vision – The first attribute of an entrepreneur is vision. What made you start the journey of being a business owner? Make sure you haven’t moved away from that. If you have, find it again and re-focus your long term goals.
• Plan – When was the last time you revisited your business plan, sales and marketing plan, communication plan and productivity plan. Too many plans? Most businesses take seven to 10 years to be “successful.”
• Keep it real – and in perspective. It’s not your imagination that sales are down, customers don’t seem as happy as they used to be, employees are worried but as an entrepreneur “keep it real” till the dust settles and you can get back to it.

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Here are five more things to consider when hiring a Business Broker or Sales Agent or third party to represent you in a transaction, whether you are buying or selling a business.

1. Association memberships

Accreditations are good; keeping up with the accreditations is better. To see if a Business Broker or Sales Agent is a member of their industry association, check the International Business Brokers Association (IBBA) at http://www.ibba.org or the California Association of Business Brokers (CABB) at http://www.cabb.org or find an organization or chapter of a brokers association in your state.

Communication

Selling or buying a business requires dealing in financial, legal, industry and other forms of jargon. Are you able to communicate easily and clearly with your Business Broker or Sales Agent and understand what they are talking about?

Network of professionals

Selling a business often brings together different professionals such as Accountants, Attorneys, Property Management Companies, Landlords, Escrow officers, Appraisers, Tax Agents, Lenders, Franchisors and Financial Planners. Does your Business Broker or Sales Agent have professionals he can introduce you to if your business requires that expertise?
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