Sell My Business | Broker Near Me | California

If you say, “Sell my business with a broker,” then hire Rogerson Business Services in Northern California to help you navigate the valuation and selling a business process smoothly in California, list your business confidentially, and get the most out of your business sale.

Work with a trusted and experienced business intermediary who can maximize your business value before listing it for sale.

Let’s dive in!

What is the Process for Selling a Business?

Many businesses in California are owned by baby boomers looking to retire and exit their business ownership successfully. However, choosing the right business broker will determine the sale of your business on your terms.

To get started on the process of selling your business in California, here are five main steps that will get you to the finish line as a winner.

Step One: Define the reason to sell your business

Many entrepreneurs wait until the last minute to determine the fate of their business. Some simply choose to do nothing until it is too late. However, if you want to do this right, a transition plan should be in place that defines all the steps involved in transferring the business to new owners.

Once you understand why you are selling your business, the next step is to prepare it for sale.

Step Two: Get Your Business Ready for Sale

However, first, here is some background on exit planning with a business broker near you, before we tackle the to-do list.

A recent Business Enterprise Institute (BEI) study states, “79% of business owners plan to exit their businesses in the next ten years.

However, the survey reveals that most business owners have not identified all the necessary steps to exit their businesses successfully, and even fewer have created written Exit Plans.

Despite understanding the importance of planning for a successful exit, most owners have not identified all the necessary steps to ensure a successful exit from their businesses.

Fewer still have:

  • Hired and/or trained employees to take over business responsibilities.
  • Obtained a business valuation, critical to a successful business exit, regardless of the chosen path.
  • So, if you are a few years away from implementing your exit strategy, now is the time to start planning, obtaining a valuation, and preparing the company for sale to maximize the sales price. See the sample valuation!

 

Now for the tactical steps: If you plan to sell now or in the near or distant future, get the best and most experienced business broker to help you maximize the value of your business and help you with the “need-to-do list” in the next few months.

First, plan your tax returns now with your accountant to ensure you are among the first to complete your tax returns.

    • Buyers and bankers typically prefer to see tax returns for the most recent year and do not give full weight to internally generated profit and loss statements (P&Ls).
    • So, plan early, consult with your accountant, and complete yours early—don’t get caught in the March/April rush with everyone else. By all means, DO NOT plan on filing an extension. And a bonus corollary: while the 2018 Tax Cuts and Jobs Act expanded the number and types of companies eligible to use the cash method of accounting for filing taxes, weigh that choice carefully.
    • Here’s why: tax returns are the primary source of information (as opposed to internal P&Ls), and the accrual method is the preferred method for buyers, bankers, and valuations, as it provides a more accurate representation of a company’s financials and profitability.
    • If you are already using the cash method for your taxes or plan to switch, ask your accountant for a cash-to-accrual reconciliation or conversion to accompany your tax returns. Alternatively, have them include the cash-to-accrual conversion directly on the M-1. This step will provide the roadmap, via the balance sheet, of how the two methods relate.

 

Second, don’t Give Up $2 to save 30 cents by expensing unverifiable, undocumented personal expenses that we (business brokers) won’t be able to add back to your cash flow calculation. Certain types of personal expenses are expected and quickly added back (health insurance, life insurance, disability, charitable contributions, personal cell phone, some personal use of a car, some travel (e.g., for corporate board meetings with minutes), etc.) – but they share two common traits:

They are quickly identified, verified, and documented.

They generally comprise less than 25% of the total Seller’s discretionary earnings. Other personal expenses are not easily added back and directly reduce the company’s value (without even delving into the tax law/accounting questions).

      • These include various expenses, such as groceries, personal meals, unverifiable or undocumented travel, household expenses, and sporting equipment.
      • Here’s the math: assume a 30% marginal tax rate (on both income and the sale of the business), although this is probably a little high for the sale of the company, as much of it will be taxed at capital gains rates.
      • For illustration, also assume that buyers are willing to pay a company an amount equal to $2.85 for every $1 of Seller discretionary earnings (smaller, less profitable, or lower-margin operations with stagnant revenue or less desirable locations will be valued less).
      • For every dollar of personal expense that the owner runs through their company, they save a few cents in taxes. However, when entrepreneurs go to sell their companies, every $1 of expenses that can’t be added back reduces their income and Seller’s Discretionary Earnings by $1, thereby reducing the purchase price by $2.85. Assuming a 30% tax rate on the sale (which is probably high), they are giving up after-tax proceeds of $ 1.40.
      • So in one year, entrepreneurs give up $2 to get 30 cents. Almost a 7:1 negative trade.ž
      • To prevent this, let’s say baby boomers’ business owners kept the personal stuff out of their books for 3 years (which would be ideal). They would gain $2 by giving up 90 cents in cumulative tax savings—a 2.2:1 trade, not a bad return in anyone’s eyes.

 

Third, now is NOT the time to aggressively manage your year-end taxes, especially if you accelerate expenses and defer revenue recognition.

  • This is more detrimental to your overall financial gain than Giving Up $2 to save 30 Cents. In this situation, you are only saving the net present value of the interest income from a year’s delay in paying the inevitable tax. Still, you could substantially decrease your company’s valuation and gross proceeds.
  • At this stage of your exit strategy, your financials should accurately reflect the business’s fundamental earnings capacity, enabling potential buyers to assess the cash flow and profitability opportunities.
  • Except for contributing to retirement accounts, paying for health, life, and disability insurance (all of which are easily documented and added back), and perhaps a few other items, have an in-depth discussion with your accountant and business broker. Also, leave the tax and accounting gymnastics out of the equation.

 

A corollary to this is the opposite approach of accelerating revenue and delaying expenses to minimize the impact of potential future tax increases. While the proposed increases have a long way to go, they will only affect most sellers at the margin. For those with capital gains over $1 million, there are reasonable and time-tested ways to mitigate those taxes.

So, while accelerating revenue and delaying expenses may sound like a good idea to avoid higher future tax rates, think about what that will do to the YTD comparisons for the rest of the current year and, if still for sale in the next year, the current-year comparison to the previous one.

In an extreme case, it might make the sale transaction unbankable. In a more modest case, you may end up not Giving Up $2 to save 30 Cents, but giving up $2 to save only 19.6 cents.

The more straightforward course is to submit your application and hopefully receive forgiveness before your closing date.

Step Three: Get a deal team on your side

California has many more regulations, permit requirements, local ordinances, and other laws. If California were a country, it would rank number 5 worldwide, having just overtaken the UK as it stumbles through its Brexit complications.

Some of these regulations show up in the industries of the businesses that Andrew Rogerson, Certified Business Broker, based in Northern California, mainly serves business owners in Sacramento and all over the state of California, enjoys selling.

For example, the businesses in the Construction Industry where industry specialty requires its own contractor’s license as required by the California Contractor’s State License Board, be it an:

HVAC,

Roof repair,

landscape gardening,

floor tiling business, etc.

 

Manufacturing businesses are a little less restrictive unless you intend to expand or have EPA issues. Logistics and Transportation companies must navigate the rules and regulations of the California Department of Transportation and the California Department of Motor Vehicles. Other industries where Rogerson Business Services is involved include wholesale distributors and Professional or Business Services.

If you want to own and operate a Medical Practice in California, the owner must be a doctor with a valid California Board of Medicine license.

There are many different Business Service companies in California. If there is a rule or regulation, you can bet the State of California has found a way to generate a fee to help fund both the State and local governments.

Therefore, if having the right deal team around you is critical, and you are serious about selling your business in California, here are several key items to address in the successful sale of the company. A certified business broker’s role is to see the challenge and then reach out to the correct team member to have it addressed. Attorneys handle a wide range of legal matters, including contract preparation and related matters. Accountants are responsible for ensuring the quality of the financial statements, which is a critical issue for the Buyer, particularly if the Buyer is obtaining finance from a third party. It is one of the reasons we suggest that a Seller in a large business have a Quality of Earnings Report done before going to market. Hence, the Buyer and lender are comfortable with the financial statements.

Each transaction always includes a tax negotiation for the Buyer and Seller, so the correct tax professional needs to be part of the team.

As you have guessed, California does things differently. One additional layer of protection for a Buyer is using an escrow company to transfer money, ensure compliance with bulk sale laws, obtain clearances from California State and Federal agencies, and more.

When you are ready to sell your business, ensure you have the right team to protect your interests and responsibilities.

Andrew Rogerson of Rogerson Business Services has been doing this since 2006. Rogerson has the right team members available, as I want to ensure the sale of the business is booming for both the Seller and the Buyer. You can email him at support@rogersonbusinessservcies.com or call him Toll-Free at (844) 414-9700

Step Four: Get a business valuation to maximize your business value

You can take several steps to create value and make your business more appealing to potential buyers.

Let’s go over and discuss four key areas to focus on:

  1. Financials
  2. Growth Potential
  3. Brand and Reputation
  4. Operational Efficiency

Financials:

The first and most obvious area to focus on is the financials. This includes everything from ensuring that your books are accurate to having an accurate financial picture of the business. It also means taking a close look at your margins and profitability.

  • Are there areas where you can cut costs or increase prices?
  • Can you negotiate better terms with suppliers?
  • Are there other ways to increase revenue?

Benchmarking:

Your financials compared to those of similar businesses will give you a good idea of where you stand and what potential buyers might be willing to pay. This is called “benchmarking.” There are several ways to benchmark your business:

  1. Look at businesses in your industry and compare their sales to their revenue or profit.
  2. Use an online tool like BizBuySell’s Business Valuation Wizard. This tool uses data from recent business sales to generate a valuation range for your business based on its size, location, and industry.
  3. Work with a business broker or experienced and certified intermediary who can help you compare your business to others that have recently been sold.

 

Once you have established a benchmark for your company’s value, you can begin developing strategies to enhance it.

There are several ways to increase your company’s value, and the best method for your specific situation will depend on it.

If you’re looking for ideas on how to create value for your company, here are a few to consider:

 

  • Invest in marketing and sales: Growing your top line by increasing revenue is one of the most direct ways to improve your company’s value.
  • Focus on profitability: Increasing your bottom line by becoming more efficient and cutting costs can also significantly impact your company’s value.
  • Build a strong management teamA talented and experienced management team will make your company attractive to potential buyers.
  • Create a niche market: Specializing in a specific industry or customer segment can help you command a higher price when you sell.
  • Diversify your revenue streams: Having multiple revenue streams makes your company more valuable and less risky for potential buyers.

 

Whatever strategies you decide to pursue, remember that increasing your company’s value is a process that takes time.

If you’re patient and consistent in your efforts, you’ll be well on your way to maximizing your company’s value when it comes time to sell.

 

Have you ever sold a business?
What tips would you add on how to increase company valuation?
Let us know at support@rogersonbusinessservices.com!

Marketing and Sales:

Marketing and sales are crucial for driving revenue growth and enhancing company valuation. Often, a company’s value is based on its potential future earnings. This is why it’s necessary to have a strong management team that can grow the company and increase its profitability.

Creating a niche market or specializing in a specific industry can also help increase company value. Diversifying revenue streams is key to making your company more valuable and less risky for potential buyers.

By following these tips, you’ll be on your way to increasing your company’s value.

Do you have any additional tips on how to increase a company’s valuation?
Let us know at support@rogersonbusinessservices.com!

Growth potential:

Another crucial area to focus on is its growth potential.

  • What are the areas where your business could grow?
  • Are there new markets you could enter?
  • What new products or services could you offer?
  • What would it take to scale up your business?

 

Potential buyers should focus on this area, as they will be examining how they can grow the business.

Show them your growth plan and how they can achieve it.

This will help to increase the company’s valuation in their eyes.

Brand and reputation:

Brand and reputation are also important factors in increasing your business value.

  • Do you have a strong, recognizable brand?
  • Are you recognized for providing high-quality products or services?
  • What is your customer satisfaction like?

 

These are all things that potential buyers will be looking at.

A strong brand and reputation can significantly increase a company’s value.

Operational efficiency:

Focus on operational efficiency. This includes everything from how your business is run daily to the efficiency of your processes.

  • Are there areas where you can streamline or automate?
  • Are there ways to improve communication and collaboration?
  • Can you reduce waste or unnecessary spending?

 

Improving operational efficiency can directly impact your company’s bottom line and, consequently, its value.

Strategic thinking:

Of course, no matter how efficiently your business is run, it won’t be worth much if there’s no demand for what you’re selling.

That’s why it’s essential always to consider the future and how to position your company to capitalize on emerging trends.

  • What new products or services can you offer?
  • What new markets can you enter?

 

By thinking strategically, you can ensure that your company continually grows and evolves, which will help increase its value.

These are all things that can increase the value of your business.

Focusing on these four key areas can increase the value of your business and make it more attractive to potential buyers.

Step Five: Get your Financial and Due Diligence House in Order

Stay focused on the process. Review your business model, your financials, and other pertinent details. When conducting your due diligence with your broker, your goals are as follows:

  1. Ensure your historical financials are accurate,
  2. Support your future projections,
  3. Determine whether your business supports growth.

 

Here are some best practices for conducting due diligence when selling a business.

Describe the Organization of Your Company

Gather your articles of incorporation and bylaws. Describe who owns your company and who has vested control. Include stockholders, voting decisions, and all other irrelevant information.

  1. Review all of Your Financials with your Business Broker.
  2. Review your annual sales and profits and all finance-related matters, including accounts receivable, business taxes, current investors, and a synopsis of your debts.
  3. Review the financials comprehensively, which will help all parties involved. Additional information on financial due diligence can be found here.

Review All of Your Legal Matters

Legal matters should never be overlooked, as they significantly impact the riskiness of your business. Gather your legal records and keep them on hand. These documents should include lists of past or present litigation and government investigations.

Regulations and Compliance

These documents include permits, environmental matters such as site assessments or audits, and inspection dates. This is an excellent resource for a comprehensive exploration of these topics.

Compile Intellectual Property

Intellectual property includes trademarks or copyrights. List your intellectual property rights here as well. Include information about your IT department as well. Protecting your intellectual property is essential.

Gather Appraisals or Certificates from your Business Broker

It is also a good idea to include human resources policies in this section. It would also serve you well to keep track of your tax and marketing information. Read more at this site for the Due Diligence Report Done by Your Business Broker for a comprehensive breakdown of the due diligence process.

After completing your best practices checklist, proceed to your due diligence report. This report is paramount to selling your business, and working with your business broker can do the heavy lifting for you.

A due diligence report typically includes pertinent corporate records, copies of audited financial statements, details of any outstanding debt, all related real estate, any agreements the company has entered into, employee and customer information, and copies of relevant legal documents or licenses.

It has a solid and structured due diligence report if you’re selling your business and planning to retire. K is essential to your topics being simple. This template provides a comprehensive checklist. Your due diligence report should include the following topics:

  • The Executive Summary: Outline your key items and issues.
  • Your Quality of Earnings (QoE): QoE works with the working capital portion of your due diligence report. Your QoE is where you will place non-recurring events and items that fall outside the day-to-day operations of your business.
  • Your Working Capital (or Net Working Capital): Report your business’s operating cash flow.
  • Income Statement: Reports your losses and profits.
  • Balance Sheet: Outline your total assets. Your assets are financed through either your debt or your equity. simple balance sheet includes your total assets, liabilities, and shareholders’ equity.
  • Supplemental Analysis: Detail your operations and distinguish yourself from your competition. Use this topic to explain your business identity, what you stand for, and what makes you valuable.

Is Selling My Business Right for You?

Some businesses are cash-strapped and struggle to stay afloat. However, some of these businesses are rich in assets. If this is the case, a viable option is to manage the assets to keep the business running or obtain the best possible price.

Remember that business buyers are not excited about buying and managing a business that is already a smaller company. We have written an article that answers a typical business owner’s question: ” Should I Sell My Business?”

Types of Businesses for Sale

There are mainly three business-for-sale categories. However, we will focus on two categories that Rogerson Business Services specializes in.

First: Mainstreet Businesses

A Mainstreet business is typically worth under $1 million. Rogerson Business Services works with business owners who want to sell their Main Street business, which is worth between $ 500,000 and $1 million.

Second: Lower Middle Market Businesses

A lower middle-market business is worth between $5 million and $50 million. According to Forbes, there are about 350,000 companies in this segment, compared to 25,000 companies with revenues between $100 million and $500 million (the middle market) and only a few thousand companies with revenues above $500 million (the upper-middle market).

Please visit this link to view a list of current businesses for sale. How Much Will Selling My Business Be Worth?

Rogerson Business Services offers a complimentary seven-step business valuation plan to provide you with a general idea of your business’s value. You can activate that program by clicking here. Since this is the first step in selling your business, it is a great place to start.

Suppose the process of valuing your business seems a bit complex. If you don’t have the time to do it yourself or need a more formal business valuation, such as the one your potential Buyer will require to seek financing, contact us today.

The Steps in Selling a Business

There are definite steps you can take to find the right deal when selling your business. Hiring a business broker can make selling a business a smooth and pleasant journey for any business owner considering selling their business and is motivated to proceed with all the steps from start to finish.

The more prepared you are, the more likely you are to profit. It is ideal to prepare your business for sale a year or two in advance of the auction to get things in order and secure the highest possible price.

You will profit the most if you get things in order and sell your business for the most value if you hire a good business broker in California, sell it at the right time, and have a good reason for selling it.

Here are the four steps:

1.     Step One: Hire a qualified and experienced broker to value and sell your business

  • When trying to sell your business, you’ll want to find a knowledgeable, trustworthy, certified, and qualified broker.
  • The general rule of thumb is that when it’s time to sell the business, you need a lawyer to handle the legal part and a business broker to handle the valuation and the selling process.

2.     Step Two: Get a proper business valuation to know what your company is worth

  • Many resources, including online valuation tools, business broker databases, and business broker associations, can help with this process. When researching valuation options, it’s essential to consider several factors, including your company’s financial worth, comparables in your industry, and the current market value.

3.     Step Three: Price your business for maximum profit

  • You’re asking for the offer price from the people buying your business.
  • The offer price may differ from the amount you expect to receive for the business.

4.     Step Four: Market your business for sale

  • You must conduct thorough research to ensure you’re correctly valuing your company.
  • As soon as your company is ready for sale, you must start marketing it (confidentially). This will enable you to inform your prospective buyers about the services your business offers and its value.
  • While marketing your company to find the right Buyer, remember that selling your business is an investment.
  • Finally, your business is sold once you find a motivated Buyer willing to pay your asking price.

Final Words: Hire a Broker to Sell My Business

When deciding to sell your business, you will likely have some questions in mind. Here are just a handful of many other questions that come to mind.

  1. What is the value of your business?
  2. What should be the price at which you sell it?
  3. How can you find a Buyer?
  4. How can you find a Buyer who is interested in buying your business?

The answers to these questions will largely depend on the experience and network of contacts of your chosen business broker.

So, choose a qualified business broker wisely to sell your business in California.

Finally

Selling your business is a life-changing event, so it’s essential to plan for it carefully.

If you’re listing a business for sale in California, you’ll want to find a reliable business brokerage firm. At Rogerson Business Services, a team of experienced professionals works to plan and execute the buying and selling business processes in California.

You can also consult Andrew Rogerson for guidance on increasing your overall value.

List of Resources That You Might Find Helpful

  1. Selling your business
  2. Get a business valuation 
  3. Selling your medical practice 
  4. Selling your manufacturing business
  5. Selling wholesale distribution business
  6. Selling a professional services company or firm
  7. Selling a construction company
  8. Selling a trucking company

Final Take: Broker to Sell My Business

While we’ve presented plenty of helpful tips on selling your small business in California, contacting a business broker near you or preparing a business exit strategy can be the difference between selling your small business and almost selling it. It is estimated that only 25% of privately held small companies sell. Enhance your chances by engaging a professional business broker to assist you.

Mainstreet businesses refer to smaller companies considering selling or exiting their business. Examples of a leading street business exit planning include:

  • The Seller is looking to retire or move into another venture.
  • Several buyers may bid against each other, elevating your business’s value.
  • You’re more likely to negotiate a higher price when you sell to a competitor as opposed to an outside party.

Using a Mainstreet business broker can help give you a competitive edge in the market and eliminate or reduce friction points or roadblocks in the selling process.

Is your business worth $3 million and above? See how to exit/sell a business in the lower middle market category.

Let’s contact if you’re considering an exit strategy for your small business. We’ll kick-start the business valuation process to walk you through it.

If you are considering valuing and selling your business or medical practice within the next six to twelve months, don’t hesitate to contact Andrew Rogerson, a certified business broker based in Sacramento, California. You can reach him toll-free at (844) 414-9700 or email him at support@rogersonbusinessservices.com. He services the whole state of California.

This is part of the tips for selling my business in California series ->

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