Personal Goodwill has always been a fascinating subject, impacting the sale of many small to medium-sized businesses – and possibly even larger companies. How is personal goodwill developed? An individual starts a business and, during the process, builds one or more of the following: • A positive...
Mass Mutual Life Insurance Company provided the following survey results based on family-owned businesses. Although the survey was conducted several years ago, the results are still quite revealing, and still applicable. • Four out of five companies are still controlled by the founders. • 30% of family-owned companies will...
New accounting rules may require that acquirers and acquiring companies report earnout agreements as liabilities. Joel Johnson, president of Orchard Partners Inc., in his article, “Earnouts,” published by Valuation Strategies, states: "In a given year, 2% - 3% of announced mergers and acquisition agreements involve earnouts. ...
The following are situations where the price was not the deciding issue in the successful sell of a business. The ultimate buyer may be the only one who really understands the situation. A business intermediary really understands the issues and can lead the buyer and...
Basically, there are three major negotiation methods. 1. Take it or leave it. A buyer makes an offer or a seller makes a counter-offer – both sides can let the “chips fall where they may.” 2. Split the difference. The buyer and seller, one or the other, or both,...
Due diligence is generally considered an activity that takes place as part of the selling process. It might be wise to take a look at the business from a buyer’s perspective in performing due diligence as part of an annual review of the business. Performing...
A solid, factual and compelling offering memorandum maximizes the chances of not only selling a business, but obtaining the highest possible price. An offering memorandum is also referred to as the selling memorandum, a confidential descriptive memorandum, or simply as “the book.” The memorandum, regardless...
Important questions to ask when looking at a business...
A January 2004 survey conducted by the DAK Group/Rutgers found the following breakdown of why businesses are for sale: Reasons To Sell Risk reduction 44% Competition or market changes 41% External pressures 27% Lifestyle factors (age, health, etc.) 14% Lack of capital 9% Ownership/management issues 07% Note: Multiple responses allowed; Source: DAK Group/Rutgers It is interesting to note that...
The closing is the formal transfer of a business. It usually also represents the successful culmination of many months of hard work, extensive negotiations, lots of give and take, and ultimately a satisfactory meeting of the minds. The document governing the closing is the Purchase...
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