What Are The Advantages of Buying an Existing Business?
The main advantage of buying an existing business, versus starting one from scratch, is that there is existing cash flow (presumably, positive cash flow). Beyond that, there are existing processes, people and resources in place from day one. While these aspects may be improved by an incoming buyer, the fact that they exist in some fashion accelerates the possible ROI opportunities. Additionally, existing businesses are typically easier to finance. One should also consider the potential of buying a franchise, whether existing or new. For insights on that, we recommend reading our Buying A Franchise 101 whitepaper.
How Are Most Main Street Business Transactions Financed?
Business transactions typically entail a mix of buyer’s equity, seller financing, and third-party financing. Which mix is right depends on your personal investment capability, the specific business’ dynamics, and economic trends. Small Business Administration (SBA) loans are frequently used, as are retirement funds. Many people don’t realize they can use their retirement funds such as 401ks, IRA’s, Company Pension Plans, etc, without penalty, to start a business – contact your local Sunbelt office to learn more about 401k business financing and other sources of lending.
How Do I Find Out About Middle Market Businesses For Sale?
Some businesses valued at $2+ million never even get advertised on the internet. In lieu of mass internet marketing, these businesses typically target select groups and individuals across the country (or even the world). Sunbelt Business Brokers maintain databases of buyers looking for substantial businesses, and utilize our vast global office network for further reach. If you are looking to buy a business valued at $1+ million or for a strategic acquisition, we highly recommend you connect personally with your local Sunbelt office.
How Do I Find Out About Main Street Businesses For Sale?
Most business buyers begin their search process online, and many websites exist that advertise businesses for sale. Sunbelt’s website is the world’s largest proprietary database of businesses for sale, representing a wide variety of industries and sizes – from $50k to $50m. Good businesses go fast, so to ensure you get a look at the best business for sale, we recommend 1) signing up for a BizBuzz email alert and 2) connecting personally with your local Sunbelt office owner. Once your Sunbelt broker understands what you are looking for in a business, s/he can present you with opportunities before they even go online.
What Is The Difference Between a Main Street (MS) and a Middle Market (MM) Business?
While these terms are widely used within the industry, they do not have a standard definition. At Sunbelt, we generally classify businesses valued at less than $1m as Main Street, and greater than $1m as Middle Market. However, there are other factors that distinguish MS from MM. For example, in MS transactions, all the parties (seller, buyer, broker) are local; in MM, your right buyer may be in another state or country, and may be an individual, private equity group, or institutional investor. Additionally, while most MS transactions are asset sales, many more deal structures are typically contemplated with MM business sales.
What Is My Business Worth?
Ultimately, any business is worth what somebody else would be willing to pay for it. While seemingly an obvious and simplistic statement, many business owners (especially Main Street) are challenged to objectively view their business in this manner. How that market value is established and the right asking price is determined can be subjects of complex formulas, depending upon the size and nature of the business. The two main factors that determine worth: cash flow and risk. To learn more, we suggest visiting our Business Valuations section.
What Is A Confidential Business Review (CBR)?
A CBR, sometimes referred to as a Sales Memorandum or simply “the book” is one of the marketing pieces that will be prepared for your business by your Sunbelt business broker. It provides comprehensive information about your business to prospective buyers who have signed a non-disclosure agreement. CBR quality varies widely within the business brokerage industry.
Why Should I List My Business For Sale With A Business Broker?
The quick answer, better results. Business brokers and intermediaries specialize in preparing, pricing and marketing businesses for sale. Additionally, they are connected with a pool of potential buyers. You can focus on running and improving your business, while your business broker is finding and screening the buyers, and guiding the process to a successful closing. Given this expertise and focus, you are far more likely to sell at an optimal asking price and optimize your net proceeds, all in a shorter period of time.
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