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Many M&A experts believe that the highest price may not be the most important factor in putting a deal together. Here is one such expert’s opinion of the most important factors:

• The assurance that the sale will close promptly.
• The deal terms, e.g., cash, stock, notes, all cash at closing, earnouts, contingencies, etc.
• Total price and/or consideration.
• Legal issues.

In many cases, the legal issues can make or break a deal. The expert mentioned above feels strongly that the Representations and Warranties requested by the buyer should be submitted along with the Letter of Intent. He feels that the business should not be removed from the market until there is basic agreement on the Reps and Warranties; this negotiation may be more complex than the price, especially if the buyer is not willing to bend.

Here at American Business Acquisitions, we dedicate ourselves to assisting business sellers in determining their highest priority. We discuss the desired timeline and needed outcomes to achieve their goals. In many cases, our business seller clients are relocating from Illinois or Indiana and purchasing another business or a new home elsewhere, which requires proceeds from the current business sale to complete that transaction. As M &A advisors and business brokerage professionals, we seek to achieve a win-win outcome for the parties involved and, importantly, to happily conclude the sale on their behalf. Setting priorities and expectations upfront help with this process.

Copyright © 2023 American Business Acquisitions, Inc. 

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Serious buyers want to look at the financials of a company with forethought as well as all the other considerable aspects of the Business. Nonetheless, there are some other areas that the serious buyer will heavily consider that sellers may pay no attention to.

The Industry – The serious buyer will want to take a significant look at the industry itself, the competition, the suppliers, the patronage, etc. This research will cover the strengths, weaknesses, threats from the opposition, and opportunities of the possible acquisition. With the expansion of the “big box” retailers, much power has shifted from the manufacturer to the retailer. A manufacturer may want to raise prices, but if big retailers say no, it’s a very strong no that has a large impact on others.

Discretionary Costs – Some sellers will cut down their expenses in nonobligatory areas with a goal of freeing up funds that can be used for other purposes. Some of these purposes include reinvestment in the company, paying down debt, or repurchasing shares of stock. However, these cuts will hinder the future bottom line, and smart buyers will take recognition of this.

Obsolete Inventory – This is also an area that buyers take a serious look at and that can cause a change to the purchase price. You can reduce the amount of obsolete inventory by selling it at a discounted price or giving it away for free. Another option is donating the obsolete inventory to charity so that it will be put to good use instead of taking up space in your store or being thrown out because no one wanted it. The best way to know if your inventory might go obsolete soon is by keeping up with trends and changes in.

Wages and Salaries – A company may be paying minimum wages or offering little to no benefits. These cost-saving decisions may seem like a good idea at the time but could cause detrimental issues in the future. Some of these issues include employee turnover or quiet quitting. If the target company is to be consumed by another, compensation issues could be critical to making the business a success.

Capital Expenditures – The no-nonsense buyer will take a very close look at machinery and equipment to make sure they are functioning, up to date and as good or in better condition than the competitors. Buying new equipment can modify projections and could have an affect on the offering price. Although it seems like a large expense in the moment it can have an even greater impact in the long run.

Cash Flow – Serious buyers will diligently review the cash flow statements and what affects them. The buyer wants to be sure that the business will continue to bring in a positive cash flow after the acquisition (i.e.: after paying off the debt and after paying a reasonable salary to the owner or general manager, as well as other employees).

Other areas that sellers overlook, but that the serious buyer does not include: internal controls/systems, financial agreements with lenders, governmental controls, anti-trust issues, legal matters and environmental concerns.

Please feel free to contact American Business Acquisitions for a free consultation on selling a business in Illinois or Indiana.

Copyright © 2022 American Business Acquisitions, Inc. 

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A Brokerage Professional Can Help Tell Your Story

It’s extremely common that sellers don’t usually know the true story of what their business actually is because they tend to lack the proper perspective as they are too deeply involved. Business brokers and M&A advisors serve a great function as a third party who can look at the story from a different perspective because in reality, sellers may be burnt out or haven’t taken time to really think about what the story of their business truly is. Now it goes beyond these professionals just being numbers people, as they can see your business as a story to be told. And they can help you control that storyline for optimal results.

Embracing the Human Element

When it comes to telling the story of your business, it’s necessary that your M&A advisor completely understands your business from the ground up. Communication is key here and this will play into why a buyer is going to want to buy your business. After the interview process, these professionals will go to the lengths to properly arrange all relevant information to support the story in such a way that the buyer can digest it and see the potential within the business. This is so a prospective buyer can understand that value and envision him or herself as the hero.

It Goes Beyond the Financials

Brokerage professionals will want to interview you to learn how to weave together your story. A part of this process will involve business brokers and M&A advisors in order to help sellers determine the price and work as advisors on pricing. Because the financials and the facts are going to be the front page of each business story. In the end, every story has a moral and pulling all of these elements together to make an engaging story that will ultimately inspire and motivate a buyer to buy the business.

Storytelling Leads to Successful Deals

Selling a business isn’t just about all of the financial variables. Of course it’s important to consider the numbers, figures and facts, but it is also about the people. When buyers open their minds to the story being told, they are able to envision the future potential of the business and why it is going to be a valuable opportunity.

Please feel free to contact American Business Acquisitions for a free consultation on selling a business in Illinois or Indiana.

Copyright © 2022 American Business Acquisitions, Inc. 

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While brokerage professionals are working to sell your business, it’s important for you to keep your daily operations running as smoothly as possible. Sellers often make the common mistake of becoming distracted during the selling process and allow things to fall by the waist side. You’ll want to make sure everything remains the same, as prospective buyers will otherwise start to become nervous. Operating hours, inventory levels, and tasks such as keeping the premises in prime condition should remain unchanged. If any changes like revenue or sales decrease, that will raise a red flag for buyers.

Business brokers , M&A advisors, Attorneys and CPAs – anyone professional who may be involved during the sales process – will help tremendously with various details and events. This way, you can focus your energy on running your business, and they will continue to assist with the process from beginning to end.

Get Professional Advice on Pricing

You may have a ballpark figure of what your business is worth and an estimated amount you expect it to sell for. However, the truth is that you will only receive what the market will allow. Always obtain a professional valuation before providing a listing price. Over pricing the value of your business will certainly derail the process and potentially halt it all together. You want to strive towards successful results, not set backs.

Keep Things Confidential

Confidentiality will be an extremely important piece of the puzzle during this process, especially until your sales transaction has fully concluded. If your vendors and employees know that you are selling, it could lead to circumstances that are detrimental to the value of your business. Employees may begin to pick up on what is going on behind the scenes and opt to seek employment elsewhere. Similarly, vendors may catch wind of what is happening and choose to terminate their contracts if word were to get out.

Decide On Your Strategies

Think about how willing are you to stay for a designated period of time after your business sells. Weighing this decision tends to help increase the amount you receive for your business, as many buyers will hold you as a valuable asset as a reduction in their risk and often increase their offer. Another thing to consider is offering seller financing. Similar to sticking around, buyers will view financing as a sign that you believe in the future success of the business.

Prepare in Advance

It’s always best to prepare when you are not experiencing external pressures. Unfortunately life is unpredictable and any event could cause you to sell at an unexpected time. Factors to consider are making sure, years in advance, that your bookkeeping and paperwork is kept up with. This would include organizing documents or handling any litigations and environmental issues. As mentioned above, selling a business can be highly distracting for business owners.

A prime reason for business owners is to start talking to an M&A advisor or a business broker a few years in advance. That way they can make sure everything is optimized for positive results.

Copyright © 2022 American Business Acquisitions, Inc. 

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When sellers get ready to put their businesses on the market, they often wonder what buyers are really looking for in an effort to make their businesses as attractive as possible.

The answer to this question can seem mysterious when you are on the other side of the bargaining table. So, what are buyers typically thinking about when they make the decision about whether or not to purchase a business for sale in Illinois? It should come as no surprise that much of this is tied into earnings and stability.

Guarantees of No Surprises

Earnings that are sustainable are very attractive to buyers. After all, it allows them to know what to expect. Buyers can then factor in if they can advance the business in a way in which it would grow faster than the current pace.

If not, they at least would have the confidence to know that the business will proceed at the same rate. Of course, no buyer would want to acquire a business only to find that it only had high earnings temporarily due to a one-time contract.

Accuracy of Information

Along the same line of avoiding surprises, buyers will want to verify the information they receive about a business. Anything involving past, present, or future legal issues will be scrutinized along with other issues, such as pending product returns. The due diligence process is when you can expect the buyer to really dig into the details of your business. You can expect that he or she will often do so with the assistance of an attorney and accountant.

Oftentimes, accountants or appraisers add back one-time expenses or non-recurring expenses. Buyers will want to look at the earnings and have proof of expenses that are non-recurring, such as fees for a lawsuit or heavy repairs to a building. Since this process inflates earnings, it can make it difficult for buyers to understand the actual earning potential of a business. Otherwise, those expenses would obviously throw off the true earning potential of the business.

In Closing

These are just a few of the critical considerations made by business buyers when looking at a potential acquisition. There are numerous other considerations that a buyer will make, and it is important to be prepared to address those questions and potential concerns a buyer may have up front, or they will quickly lose interest and move on to other potential acquisition opportunities. Put yourself in the shoes of a potential buyer and think about the kinds of assurances you would want before buying a business.

Working with Business Brokers in Chicago or Mergers and Acquisitions Advisors can be tremendously beneficial in this regard. These professionals have worked with many buyers in the past, and therefore easily see things from a buyer’s point of view. They will not only be able to help you get prepared up front when buyers begin looking at your business, but easily identify and point out areas of concern that a potential buyer may have in order to keep the journey to closing on track.

Copyright © 2022 American Business Acquisitions, Inc. 

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When it comes time to sign on the dotted line while buying or selling a business in Chicago, you only have one opportunity to get it right. Many owners misvalue the worth of their business or don’t take the time to fully understand the process and preparation that goes into it. You may know a friend or even a relative who is able to help you navigate the waters, but it’s always to your benefit to seek professional help and advice. Here are some common mistakes.

Not Prioritizing Confidentiality & Financial Information

There are hundreds of Chicago businesses for sale, and at the top of the list are competitors wanting to gain access to valuable information, so keeping your confidentiality intact is detrimental to the successful sale of your business. Trying to endure the process on your own may make you susceptible to sharing your personal information with the wrong parties. Or in a worst case scenario, accidentally alerting employees, suppliers and customers that the business is up for sale. It’s critical these errors do not occur as to retain employees and not have the scoping out new job opportunities because the sale is taking place or to a rumor thereof, especially if it will not be affecting them. Should these occur, it could jeopardize the sale of the business and deface reputation. It’s equally as important to ensure you trust the parties that are assisting you in selling your business. If any of said parties lack experience, someone may accidentally omit preparing critical paper work or neglect to have financial records properly audited, which could negatively impact your numbers. This could lead to lower offers and less interest from prospective buyers.

Failing to Involve Key Parties

Owners have spent countless hours and tons of energy building their business into a thriving, salable entity. Successful business owners never cut corners on their way to this point, and it’s not time for them to start doing so now. In order to ensure that their sale goes smoothly and that they reap the benefits of their hard work, it’s essential to hire sell-side advisory services. Business Brokers in the Chicago area could likely tell you horror stories of the damage inexperience in the industry has done. Understanding the importance of bringing in key parties should again, not be overlooked by any means. When a business owner is guided by those who are not trusted professionals, there can be many miscommunications in involving key parties. While an error like this one might not necessarily kill the deal, it could lead to delays and complications.

The bottom line is that when it comes to a large transaction like selling your business, it is time to rely upon trustworthy professionals. There are countless protocols that go into ensuring a deal moves along and satisfies smoothly. Experienced business brokers and M&A advisors will make sure that all the best practices are followed and that you come out ahead in the end.

Copyright © 2022 American Business Acquisitions, Inc. 

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Creating a Better Workplace Culture

There’s no question that employees are an integral part of operating a thriving business. Which is why keeping employees happy plays such a huge role in improving workplace culture, retention, and overall productivity. According to a study by the University of Warwick, happy employees are 12% more productive, which allows them to put forth better work quality and even increase their creativity. When your employees are feeling not only satisfied, but also valued, they will be more likely to keep your clients satisfied too. For each happy employee you have, the focus and engagement will continually increase, projecting onto your customer base. Of course, there is also an opposing side to this. If some of your team members feel frustrated and angry, their actions can drive away your customers and clients. If you are looking to sell or operate your business for maximum revenues, it is a good idea to also maximize employee satisfaction levels as well.

Employee Benefits & Retention

It goes without saying that employees will be more likely to feel satisfied when they feel that their salary and benefits are fair for the work they do. If they are resentful about the compensation they are receiving for their work, this will ultimately impact their performance. Employees who report higher levels of stress are more likely to be absent from work, take longer breaks during their shifts, or even quit their jobs altogether. Listening to employee concerns and consistently conducting one on one meetings to check in with them is extremely important in keeping the lines of communication open. This way your people will be more likely to come to you when they’re stressed or facing a problem. When you think about some of the most successful companies, you realize that many of them invest substantially in supporting their employees to cultivate higher levels of employee satisfaction. For example, Google is well-known for offering a wide range of perks from parental leave and paid time off to free lunches and fitness facilities. Putting forth this extra effort will really go a long way when it comes to retraining not only employees in general, but especially the most talented ones.

The Customer Experience and Company Longevity

Happy Employees = Happy Customers. Those who feel valued are more likely to exhibit happiness and deliver great customer service. When you exhibit good leadership and act as a positive role model, your employees will likely follow suit. When you know your team members are struggling, provide them with resources such as training in resiliency, mindfulness, and cognitive-behavioral techniques and don’t forget to recognize a job well done! Employees should be acknowledged and rewarded on a regular basis. In some cases this may be a financial bonus, but even sending them a personalized note or acknowledging their work within a team meeting will go a long way in cultivating a positive company culture while boosting morale. This will ultimately contribute to your company’s overall ongoing growth and development for the future.

Copyright © 2022 American Business Acquisitions, Inc. 

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