View Full Version : Selling a Business...Suggestions ??
THATJEFFGUY
06-14-2005, 01:22 PM
Have any of you guys sold or bought a small business in the past ? What's the rule of thumb concerning price ? How much would you be willing to pay for a successful small business..or how much would you sell yours for ? Just looking for some input.
UltraStealth
06-14-2005, 01:27 PM
Why you selling it? What type of business?
Focker
06-14-2005, 01:31 PM
Have any of you guys sold or bought a small business in the past ? What's the rule of thumb concerning price ? How much would you be willing to pay for a successful small business..or how much would you sell yours for ? Just looking for some input.
its usually based on EBITAD
USUALLY 2 TO 3 TIME THIS CALCULATION BASED ON THE TYPE OF BUSINESS AND CASH FLOW
THATJEFFGUY
06-14-2005, 01:35 PM
Why you selling it? What type of business?
Well, I haven't decided if I'm selling just yet..but thinking about it. I manufacture custom shade canopies & prop covers.
Rock-A-Bye-Baby
06-14-2005, 01:39 PM
its usually based on EBITAD
USUALLY 2 TO 3 TIME THIS CALCULATION BASED ON THE TYPE OF BUSINESS AND CASH FLOW
EBITAD?
Mandelon
06-14-2005, 01:40 PM
It is a portion or multiple of the revenue it brings in....it depends on what it is, and how "good" of a business it is....
THATJEFFGUY
06-14-2005, 01:51 PM
EBITAD?
Earnings Before Interests Taxes Amortization and Depreciation
Have a business valuation done and go from there... Service businesses, like landscaping or pool routs, are a little different. You buy accounts for between 3 or 4x their monthly fees..
Wonderboy
06-14-2005, 02:02 PM
I was around when my father bought a small fab shop. It's actually pretty difficult to come up with a price. Things like customer lists, vendors and what not have to come into consideration and there is no way to put a price on things like that. The price for those things generally get pulled from "thin air". Basically it just boils down to how much you "feel" is appropriate and what the potential buyer will pay.
submakr
06-14-2005, 02:13 PM
You could also use the pro forma method. It has a revenue multiplier in it but I don't believe in it!! You could go to bizben.com and see what other business's go for.
Good luck
burtandnancy
06-14-2005, 02:14 PM
Jeff, you will get so many suggestions it will drive you nuts. Your attorney will tell you one thing, your CPA another. Every type of business will have a different formulation; manufactureing, distriblution, service, etc. I got lucky, my partner bought me out. I also know business's where the kids took over and kept the old man on a generous salary and expense account (thats one of the best ones). Anyway, you've got a lot of thinking to do, don't let it keep you up at nite...
CA Stu
06-14-2005, 02:28 PM
Put it on eBay. :rollside:
Cheers
CA Stu
SoCalOffshore
06-14-2005, 02:33 PM
businesses are priced all over the ballpark, dependent upon the type of business, revenue, years of being in business and the true earnings. Smaller, personal business's generally get poor sales prices as the people buying usually dont have allot of money and are dependent on the future revenue stream from the business to pay off the previous owner. Typically better off bringing someone into the business and have them pay you a percentage of the future income over a period of time. But, could the business support someone running it and paying you off at the same time? Some businesses have no sales value as they are all personal services and without the owner, there is no business. Good luck.
UltraStealth
06-14-2005, 02:49 PM
Well, I haven't decided if I'm selling just yet..but thinking about it. I manufacture custom shade canopies & prop covers.
Sounds like a pretty good business. I didn't see any prop covers on your site, how much are they?
Holland
06-14-2005, 03:20 PM
its usually based on EBITAD
USUALLY 2 TO 3 TIME THIS CALCULATION BASED ON THE TYPE OF BUSINESS AND CASH FLOW
Smart man there... That is absolutely a great place to start...
Good job focker... I just had to say that!
SCUBA STEVE
06-14-2005, 03:28 PM
I guess I should get around to ordering my SC canopy soon! :D
THATJEFFGUY
06-14-2005, 03:43 PM
Sounds like a pretty good business. I didn't see any prop covers on your site, how much are they?
Nope the prop covers aren't there...my website guy flaked out on me and disappeared. Another reason to sell out - flaky employees !! They are $28 plus tax/shipping. You can do a search on the boards and you will see some pics of them.
B-RAD
06-14-2005, 04:04 PM
Wow watch out Jeff. I curently have someone who will not expose him/herself trying to buy me out. they (trough a bussiness broker) Want to look at my books befor they offer a price. Fair? I did not offer "for Sale" they sought me out. I don't know who it is and won't show my books. Told them to offer based off what is public record, Give up some erest money and I'll show my papers. Again whoever it is I don't have a clue possibly comp? If they want to buy me out and a no compete contract guess they will retire me. this a verry tough desision good luck let us know how it turns out.
SHAKEN Not Stirred
06-14-2005, 04:31 PM
Really......
You can do all the calculating you want........
But you most likely have a number in mind.....
It's worth what some ones willing to pay for it.......
Later,
CJG
:smile:
buy me out and a no compete contract
Standard practice...
B-RAD
06-14-2005, 05:45 PM
Standard practice...
Yes I know, guess I should give alittle history. 42 year old industrial electric motor company started by my father who died 9 years ago. I Have worked here Seeming from birth with the exeption of school and now own it. I have over come many problems since pops died and I'm verry passionate about the place and so when they want to buy me out It put some thoughts in my head that aren't exactly heathy for buisiness (Like full time lake rat) so thats why I thought Jeff could use a little moral support. I say you have a price in your head though it on the table. They will counter if its enough take it. Oh and buy us a beer at the lake when you see us. Or, at least thats my intention :rolleyes:
I would value on past earnings off the P&L and look close at EBIDA.
Focker
06-14-2005, 07:47 PM
Smart man there... That is absolutely a great place to start...
Good job focker... I just had to say that!
thanks
its what I find I do a lot the last few years
Boozer
06-14-2005, 07:48 PM
Jeff I tried sending you a PM. I have an interested party. Call me
(909) 524-5924 Danny
Focker
06-14-2005, 07:50 PM
Wow watch out Jeff. I curently have someone who will not expose him/herself trying to buy me out. they (trough a bussiness broker) Want to look at my books befor they offer a price. Fair? I did not offer "for Sale" they sought me out. I don't know who it is and won't show my books. Told them to offer based off what is public record, Give up some erest money and I'll show my papers. Again whoever it is I don't have a clue possibly comp? If they want to buy me out and a no compete contract guess they will retire me. this a verry tough desision good luck let us know how it turns out.
no intelligent person will purchase a business without doing Due Diligence.
which means show me your books let me recreate your financial statements and see if my statements match your statements. if they match we buy if they dont lets solve the discrepancy
Focker
06-14-2005, 07:54 PM
My business is for sale on bizben.com... Most business selling brokers use
3 times what the Principal/Owner takes out each year, which in reallity counts as income. Salary, cars, perks, ect. or any fee's or BS paid out that the PERFECT new owner wouldn't ever think of doing or paying.
Remember everyone that buys a business is thinking they are going to be rich overnight, so in their mind they can do no wrong.
I have had my business sold 2 times, in escrow... but then with getting payments that I know the new owner can't make, and on top of that what would I do, I said no thanks... I want my payday if I sell and I want all of my money out of the business NOW...
Most all business brokers are trying to make their commission, they don't care how much you settle for or get up front, they get paid out of escrow. They all tell you that you will need to carry a note for the new owner.
So wait, i'm going to sell/give my business to someone and then they use the business to pay me? I can pay myself monthly payments and still keep the business...
you are so right
never sell a business unless you get your full sell price upfront from a reputable bank. if they cant afford to buy it 100% upfront in cash or loans they get they cant afford to manage or pay you
FASTERDAMITT
06-14-2005, 09:01 PM
Started a florist for the wife two years ago. Business took off almost overnight, but working too much she had no time for the family. ( She wanted me to work weekends to help out:mad: ) We tried managers but customers always complained unless she worked. So one of the emplyees asked I we would sell. We named a price that would cover a couple years salary for her and the employee found an investor to pay cash. Done deal. Kids love having thier mother back.
B-RAD
06-15-2005, 01:36 PM
no intelligent person will purchase a business without doing Due Diligence.
which means show me your books let me recreate your financial statements and see if my statements match your statements. if they match we buy if they dont lets solve the discrepancy
I agree fully. But I don't know who the person is. could be comp fishing or something. If they are serious through out some earest money and I'll give up the books.
B-RAD
06-15-2005, 01:37 PM
NO bank or SBA financing... If the person buying the business can't get a personal loan or... why would I finance them and hold a note? I'm not Bank of America or The Money Store. They need to get the money or financing on their own and then look for a business, after all they are the big shot going to light the world on fire... right.
I would rather be audited by the IRS than go through some SBA financing, with some morons from the bank which have no idea on earth what it takes to start a business let alone run one.
YUP!
Blown Spectra
06-15-2005, 01:53 PM
here is the link 11 things to remember when selling/buying (http://www.sunbeltfresno.com/sell/000013.html)
11 things to remember when selling/buying business
its like this, what ever it make in on year put 50% on top of it and let it go.
just my input. good luck.
eric
SHAKEN Not Stirred
06-15-2005, 02:53 PM
its usually based on EBITAD
USUALLY 2 TO 3 TIME THIS CALCULATION BASED ON THE TYPE OF BUSINESS AND CASH FLOW
It's EBITDA .......
Well....That's my .02.......
Later,
CJG
:D
It's EBITDA .......
I thought it was A DEBIT :confused: :220v: :D
Norseman
06-15-2005, 03:15 PM
no intelligent person will purchase a business without doing Due Diligence.
which means show me your books let me recreate your financial statements and see if my statements match your statements. if they match we buy if they dont lets solve the discrepancy
But you don't show everything to anyone. It's a good way to give all the information about your business for a competitor, then they don't have to buy it.
Make sure you get some ernest money up front. And a very good contract and commitment to buy after they see everything.
Just mt 2 cents.....
Bob
Blown Spectra
06-15-2005, 03:20 PM
But you don't show everything to anyone. It's a good way to give all the information about your business for a competitor, then they don't have to buy it.
Make sure you get some ernest money up front. And a very good contract and commitment to buy after they see everything.
Just mt 2 cents.....
Bob
this is very important rule #8 from the link i posted
eric
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