Everyday small business owners (retailers) make drastic mistakes when selling their business and lose thousands of dollars in the process. All their hard work and long-term investment goes down the drain. These mistakes are often easily avoidable. As entrepreneurs, they had once dreamed of owning their own business and building it to success—to reap the rewards in the form of a successful business sale. Sounds like a great plan! But making the sale is not as easy as it may appear.
Succession planning is a major misstep by retailers. Even if you do not have a successor who is a relative, you are still thinking like a succession planner. The person "succeeding" you needs to be set up for success. If they see you have been planning and considering this for quite some time and that it's not a quick "I've had enough" sale, your price will be much higher. Add to that the confidence the buyer will have in a retail store purchase if they see there was a strategy for the sale and that it's not driven out of desperation.
A major catalyst behind the Great Merger Movement was the Panic of 1893, which led to a major decline in demand for many homogeneous goods. For producers of homogeneous goods, when demand falls, these producers have more of an incentive to maintain output and cut prices, in order to spread out the high fixed costs these producers faced (i.e. lowering cost per unit) and the desire to exploit efficiencies of maximum volume production. However, during the Panic of 1893, the fall in demand led to a steep fall in prices.
AOL Inc. (originally America Online) is the most publicized online service of its time, and often extolled as "the company that brought the internet to America." Founded in 1985, by the height of its popularity in 2000 AOL was the United States' largest internet provider. Meanwhile, the media conglomerate, Time Warner, Inc. was being decried as an "old media" company, despite its tangible businesses like publishing, and television, and an enviable income statement.
You will see the term ‘multiple’ used a lot. A multiple can be applied to a number of financial metrics in a business (such as EBITDA, net earnings, gross revenue etc.) to determine how much the business will be worth at sale. We calculate the multiple for the business in question based on profit, using SDE — seller’s discretionary earnings for business.
Negotiation:[45] “Yes” may not be synonym that the parties have reached an agreement. Getting immediately to the point may not be considered appropriate in some cultures and even considered rude. The negotiations may continue to the last minute, sometimes even after the deal has been officially closed, if the seller keeps some leverage, like a minority stake, in the divested entity. Therefore, establishing a strong local business network before starting acquisitions is usually a prerequisite to get to know trustable parties to deal with and have allies.
Whether you’re moving on to another business or retirement is calling your name, the process of selling your business isn’t just a sales transaction--it’s a life transition, and it should be treated as such. Sigma’s DealMap selling approach minimizes unwelcome surprises during the sales process and ensures we find a buyer who checks all of the boxes, not just the financial ones. Find out more about what makes Sigma’s process different.
Companies acquire target companies as a growth strategy because it can create a bigger, more competitive, and more cost-efficient entity. This synergy -- the idea that the two companies together are more valuable to the shareholders than they are apart -- is elusive, but it is the idea used to justify most acquisitions. A well-executed acquisition can be the crowning jewel of a CEO's career.