OConnor Business Insights

Goodwill and Business Valuation: Why Buyers Don’t Pay Extra Just Because You Think They Should

Fri, 12 Dec 2025 20:49:19 GMT

A clear view of how goodwill actually shows up in valuation.

Introduction

Owners often believe goodwill should add a significant premium to their business valuation. After years of building a reputation, nurturing customer relationships, and strengthening brand presence, it feels natural to assume goodwill has standalone value. Goodwill does matter in the marker, but its influence appears differently than most owners expect . Understanding how goodwill is evaluated helps support more accurate expectations when preparing to sell a business.

How Goodwill Shows Up in a Business Valuation

Goodwill does not appear as a separate line item in most small and medium-sized business valuations. Instead, it is embedded within the company’s earnings. When buyers apply a market multiple to normalized earnings, they are already paying for the strength of the relationships, brand loyalty, and reputation that support those earnings.

Strong goodwill contributes to strong performance, and strong performance increases value. If customer loyalty, brand recognition, and service standards generate consistent cash flow, those strengths are already captured in the valuation.

This is why goodwill does not sit outside the valuation framework. It is inside it, reflected in the stability and transferability of earnings .

Why Buyers Focus on Transferable Goodwill

Buyers are purchasing future earnings, not a seller’s history or personal reputation. Their priority is determining whether goodwill will transfer successfully after the owner exits. This is a major factor in business valuations, and a key reason brokerage professionals emphasize risk reduction.

Prospective buyers evaluate goodwill by asking:

Will customers keep buying after ownership changes?
Does the team maintain the service quality customers expect?
Is demand generated by the brand, or by the owner?
Does the business have a stable, diversified revenue base?

Goodwill that transfers smoothly reduces perceived risk, which allows the market to support a stronger multiple when determining the asking price for a business.

When Goodwill Strengthens Value

Goodwill lifts valuation when it shows up in metrics such as recurring revenue, strong margins, stable earnings, customer retention, documented processes, and strong online reviews. These indicators create confidence in the business future, which is why they matter to buyers looking to purchase a business.

Examples include:

Multi-year customer relationships supported by staff
A brand presence that consistently attracts new inquiries
A well-trained team that delivers reliable results
Positive reviews and reputation that continually drive sales
Consistent service standards backed by documented processes

In these cases, goodwill helps justify a stronger valuation multiple because it meaningfully impacts future performance.

When Goodwill Does Not Increase Value

Goodwill does not increase value when it is tied primarily to the owner personall y, such as personal relationships, hands-on involvement, community status, or the owner’s individual reputation. While these elements matter operationally, they do not strengthen value unless they can transfer to the buyer .

Goodwill loses value fast when earnings are inconsistent, margins are thin, or the business can’t function without the owner present every day. In fact, those “inconsistent” earnings are often a sign that the business is overly dependent on the owner and is something that typically shows up as declining revenue in the years leading up to a sale, when the owner starts stepping back or thinking about retirement. Strengthening goodwill before you hit that stage is critical, and we outline exactly how to do that later in this post.

The market rewards transferable goodwill, not sentimental goodwill.

Why the Market, Not the Story, Sets the Multiple

An earnings-based business valuation reflects industry benchmarks, risk, buyer expectations, and market reality. The story behind the company adds context but does not determine value. Goodwill enhances value only when it strengthens future earnings in measurable ways.

This is why a reputable business brokerage firm will always guide sellers toward understanding how goodwill fits into the valuation framework. It is part of the market multiple, not an addition to it.

Strengthening Goodwill Before Selling

Owners planning to sell can increase valuation by improving the transferability of goodwill. Steps that strengthen market confidence include:

Shifting customer relationships to the team
Expanding documentation and processes
Improving online reviews and brand presence
Diversifying the customer base
Delegating more responsibility to staff

These actions reinforce the business beyond the owner and help improve valuation outcomes.

Conclusion

Goodwill carries value, but not as a separate item added on top of a valuation. Instead, it is woven into the business performance that supports earnings and influences the market multiple. When goodwill strengthens stability, reduces risk, and transfers effectively to a new owner, it strengthens value. Understanding this framework helps owners prepare with clarity as they plan to exit and capitalize on the business they built.

Ready to learn about how your business goodwill affects the value of your business? Reach out to OConnor Business Brokers today to learn more about our valuation process, and how we can help you prepare to sell your business!

Why Great Businesses Don’t Look Perfect on Paper

Fri, 14 Nov 2025 20:29:59 GMT

What savvy buyers understand that others miss

When evaluating a business for sale, it’s natural to want something that feels solid, organized, and ready to run. Many prospective buyers enter the process looking for flawless financials, seamless operations, an experienced team, an absentee owner, and limitless business opportunities.

If your buying criteria are too rigid, you risk overlooking companies with real-world value and long-term stability. Some of the most profitable businesses available today come with minor imperfections that do not reflect the strength or viability of the business itself. Prospective buyers need to understand that acquiring a business is not a passive, consumer-style process . It requires initiative, analysis, and the ability to look beyond surface details.

A business broker’s role is to present qualified opportunities and support the transaction process, not to convince you of what’s already in plain sight. The most successful buyers are the ones who ask the right questions, seek advice when needed, and act decisively when a great business is in front of them.

The truth is, many people miss out on exceptional businesses simply because they fail to recognize the opportunity. They wait for perfection instead of evaluating value. In this market, that hesitation can cost you a deal. Most truly great businesses do not look “perfect” on paper. They have quirks, inconsistencies, and areas for improvement. And that’s often where the opportunity lies.

The Illusion of a “Perfect” Business

First-time buyers often evaluate businesses the same way they would shop for a house or a car. But this mindset overlooks the essential difference: you’re not just acquiring something for personal use. You’re investing in a living, evolving company that generates income and supports jobs.

Real businesses are run by people, not systems. That means their financial reporting might be inconsistent, operations might depend on the owner’s involvement, or the branding might feel outdated. These issues do not necessarily signal a bad investment. In fact, they can highlight valuable opportunities to improve and grow .

What “Imperfection” Often Signals

Let’s take a closer look at some of the most common red flags for buyers and what they might actually mean.

Unrefined Financials

Small businesses often lack robust financial systems. If the books aren’t pristine, it doesn’t mean the business isn’t profitable. It just means the owner has prioritized running the company over reporting. This can be resolved with proper due diligence and better accounting practices post-acquisition.

Owner-Dependent Operations

Businesses where the owner plays a central role may seem risky, but this also means there’s room to add value. With the right systems and leadership, new owners can improve efficiency, delegate responsibilities, and reduce reliance on any single individual.

Minimal Marketing or Online Presence

Many small businesses for sale, especially those run by older owners, have built a strong customer base without digital marketing. This lack of online strategy is often one of the clearest opportunities for a new buyer to increase sales and visibility.

Outdated Branding or Premises

Curb appeal matters, but it shouldn’t drive your decision. A successful landscape company for sale, for instance, might not have flashy branding, but could have steady contracts and reliable crews. A fresh coat of paint or website upgrade is easy. A loyal customer base is not.

What Experienced Buyers Look For

Savvy entrepreneurs and investors look beyond surface issues to focus on the fundamentals. These are some of the signals they prioritize:

Consistent revenue and positive cash flow
Recurring customers or long-term contracts
Long-standing vendor relationships
Low employee turnover or skilled subcontractors
Clear pricing that reflects actual performance

In many cases, the best business opportunities are hiding behind the kinds of imperfections that deter less experienced buyers.

Why Working with a Business Broker Helps

Business brokers are trained to see past cosmetic issues and identify what makes a company truly valuable. We help buyers focus on real strengths, not just appearance.

A qualified broker can:

Guide you through the due diligence process
Highlight value-add areas others might miss
Provide industry comparisons and context
Assist in realistic deal structuring and negotiation

Why a Skilled Broker Is Essential—But Not a Shortcut

Business brokers are here to guide, not to chase. Our job is to present qualified opportunities, help you assess risk, and support the negotiation and due diligence process. But we are not obligated to educate buyers on every detail of a business that isn’t theirs to see yet . Confidentiality is a central part of every sale. Most sellers are extremely cautious about what is disclosed, and rightly so. They do not want staff, competitors, or customers to know they are considering an exit.

Prospective buyers need to earn access by showing serious intent, asking smart questions, and respecting the process. If you wait around expecting the perfect business to be delivered fully unpacked and explained before you’ve taken a single step forward, you will miss out.

A strong broker will help you uncover where the real value lies, but you have to bring the ability to recognize it . Many profitable businesses are overlooked simply because buyers expect polish instead of potential. Don’t let a rigid mindset or lack of understanding keep you from a great opportunity that’s right in front of you.

At OConnor Business Brokers, we specialize in connecting serious buyers with profitable businesses for sale across a wide range of sectors. Whether you’re seeking a manufacturing business for sale, a car wash business for sale, or an online business for sale, our listings include strong opportunities that may not look perfect at first glance, but have the right foundation for growth.

Conclusion

It’s easy to be drawn to polished branding or clean QuickBooks reports. But if you want to buy a small business that has the infrastructure, customer base, and earnings to support your goals, you’ll need to think beyond appearances.

The best business for you may not tick every box on the first review. Look deeper. Ask the right questions. And work with professionals who can help you see the full picture.

Ready to find a business that’s right for you? Contact OConnor Business Brokers today to explore profitable, real-world opportunities in today’s market.

The Top 5 Most Important Things When Selling a Business

Fri, 10 Oct 2025 18:26:19 GMT

(And Why a Broker Makes All the Difference)

Deciding to sell your business is one of the biggest financial decisions you'll ever make. Whether you're a long-time owner ready to retire or an entrepreneur looking to move on to your next venture, the process can be overwhelming and filled with unknowns. From setting the right price to finding qualified buyers and maintaining confidentiality, there’s a lot at stake.

That’s why working with experienced business brokers can make all the difference. Here's a look at the top five most important things to consider when selling your business, and how a broker can help you get it right.

1. Proper Valuation of Your Business

One of the most common questions owners ask is, “How much is my business worth?” Valuing a business accurately is part art, part science—and it’s critical to a successful sale. Pricing too high might scare off qualified buyers. Pricing too low could leave money on the table.

Business brokers bring expertise and objectivity to the valuation process. They analyze financials, assets, market conditions, and industry benchmarks—whether you’re selling a plumbing business for sale, a food manufacturer for sale, or a car wash business for sale. With a business broker’s help, you’ll land on a fair market price that attracts serious buyers while maximizing your return.

2. Confidentiality Throughout the Sale Process

When you're selling your business, confidentiality is key. If customers, employees, suppliers, or competitors catch wind that the business is for sale, it could create instability and reduce the value of the company.

Professional commercial business brokers have systems in place to market your business discreetly. They screen potential buyers, require signed NDAs, and only release sensitive information to vetted prospects. Whether you’re listing a restaurant business for sale or looking to sell businesses in the industrial sector, an experienced business broker protects your interests while getting the word out to the right people.

3. Reaching the Right Buyers

Finding a buyer isn’t just about casting a wide net—it’s about casting the right net. Many high-quality buyers aren’t browsing public listings for “online business for sale” every day. They often rely on business broker networks to alert them to serious business opportunities.

The most successful business brokers have access to a large pool of qualified buyers actively looking to purchase small businesses, whether it’s a manufacturing business for sale, a bookkeeping business for sale, or even tropical or resort businesses for sale. They also know how to position your business in the best light, showcasing the opportunity to buyers looking for established, profitable, and streamlined operations.

4. Preparing and Packaging Your Business for Sale

Before you list your business for sale, preparation is essential. Clean books, operational documentation, and a clear picture of revenue streams and expenses all matter to buyers. A sloppy presentation can drive down your business’s perceived value or stall a deal entirely.

A broker guides you through this preparation. They'll help you compile the necessary documentation, polish your marketing package, and craft a compelling narrative—turning your company into the best business in the eyes of a buyer. Whether it’s a landscape company for sale or a consulting company for sale, packaging matters.

5. Negotiation and Closing the Deal

Negotiation is one of the trickiest parts of the selling process. Terms, timelines, financing, and contingencies all need to be negotiated—and it’s easy for emotions to get in the way. One misstep could lead to a deal falling through.

Business brokers act as skilled negotiators, keeping the conversation professional and focused on value. They serve as a buffer between buyer and seller, helping to avoid conflict and keeping the deal on track. From initial offers to due diligence and final contracts, they manage the entire process with expertise—whether you’re selling a gas station business for sale, a franchise gas station for sale, or international companies for sale.

Final Thoughts

No matter the size, sector, or location—whether you're listing a construction business for sale, a marketing company for sale, or industrial companies for sale—selling a small business or medium sized business is a major undertaking. Having a seasoned business broker by your side provides the expertise, confidentiality, and network needed to navigate the process smoothly and successfully.

So if you've been asking yourself, “Should I be selling my business now?” or “Where can I list my commercial business for sale?”, start by connecting with a trusted and experienced business broker. They’ll help you unlock the full value of what you’ve built and ensure a successful transition to the next chapter.

Ready to take the next step? Whether you’re exploring the market or already thinking “I’m ready to start selling my business,” reach out to OConnor Business Brokers today to get the guidance you need.

If You’re Waiting for the Perfect Business, You’ll Miss the Right One

Mon, 08 Sep 2025 19:16:01 GMT

Don't Miss Out on a Great Opportunity

Buying a business is one of the most exciting steps an entrepreneur can take, but it can also be one of the most overwhelming. You're not just selecting a storefront or reviewing numbers; you're deciding how you want to spend your time, energy, and future. It's a big move, and for many, that uncertainty leads to hesitation.

Too many prospective buyers miss out while waiting for something that doesn’t exist: a flawless business with zero risk and perfect financials. They browse listings, ask for confidential information, take meetings... and then pause. “Maybe something better will come along,” they tell themselves.

Weeks pass. Then months. And in the meantime, real business opportunities are getting scooped up by buyers who know how to move.

The truth is that if you keep waiting for the perfect business, you’ll miss the right one.

What Buyers Think They Want vs. What Actually Works

It’s natural to want a business that feels like a perfect fit. Something that aligns with your interests, has immaculate books, runs without the owner, and is priced just right.

But most businesses that check every single box are either:

Already sold,
Not on the market, or
Priced for perfection, with little room for upside

The most valuable opportunities often don’t look ideal at first glance. They might need a few process improvements, fresh marketing, or stronger leadership, but they have the foundation you need to succeed.

Perfectionism Is Just Procrastination in Disguise

Endless research, analysis, and “what if” scenarios can feel productive, but they often mask a deeper fear: the fear of making a mistake.

And while it’s smart to be cautious, it’s also important to be honest. Are you analyzing to understand the business, or stalling to avoid making a decision?

In business buying, time is a factor. Great opportunities don’t sit on the market for long. A prospective buyer can make an offer at any point in the process, and many will do so after reviewing just the CIM. When you’re stuck waiting for perfection, another buyer might be preparing an offer on the right deal.

The Right Business Is the One You Can Grow

Ask any seasoned buyer or broker, and they’ll tell you: the “right” business is one with good bones and clear opportunity. It doesn’t need to be flawless. It needs to be:

Profitable or close to break-even
In an industry you understand, or one you can learn quickly
Supported by loyal customers or recurring revenue
Priced realistically for what it is today

From there, it’s your vision, leadership, and strategy that will turn it into something bigger.

What Success Looks Like for Smart Buyers

Some of the most successful entrepreneurs we’ve worked with didn’t buy the business that looked best on paper. They bought the one that made sense for their skills and ambitions.

They saw untapped opportunity—maybe an underutilized space, a weak digital presence, or a business owner who was just tired. And they took action while others hesitated.

Success rarely comes from waiting. It comes from working with what’s available and making it better.

How to Avoid Decision Paralysis

Clarify Your Criteria: Know your must-haves versus nice-to-haves.
Define Your Timeline: Set a realistic deadline for making a purchase.
Trust Expert Guidance: Work with a broker who can help you evaluate deals honestly, not emotionally.
Be Open to Imperfection: Focus on growth opportunity, not cosmetic flaws.
Don’t Chase Unicorns: Understand that no business is flawless, but many are viable.

Conclusion: Find the Right Business, Not the Imaginary One

You don’t need the perfect business. You need the right one for your goals, skills, and your future.

Ready to take the next step and act now?

Contact OConnor Business Brokers to explore businesses that are strong, profitable, and full of opportunity - the perfect one for you is waiting.

Why Pricing Your Business Correctly Leads to a Faster Sale

Fri, 15 Aug 2025 20:13:52 GMT

(And Why It’s Often Lower Than You Think)

Selling your business can be a highly emotional and complex process. After years—maybe even decades—of hard work, it’s natural to want to get top dollar for your business. But here’s a key insight that many business owners overlook: a business priced correctly will almost always sell faster than one priced too high.

While it’s understandable to have high expectations when it comes to the value of your business, pricing is a delicate balance. And when your business is priced too high, it can quickly lose momentum in the marketplace, causing prolonged stress, wasted time, and, in many cases, a lower final sale price.

The Importance of Correct Pricing

Getting the price right from the start is the most important factor in a successful business sale. When a business is priced realistically, it attracts the right buyers quickly. Buyers are often drawn to businesses that appear fairly priced, and they tend to move forward faster if they believe the owner is serious and the price is aligned with market realities.

Here’s why businesses that are priced correctly sell faster :

1. Buyer Perception

Buyers know the market. They are familiar with industry averages, sales trends, and the profitability of businesses similar to yours. If your business is priced too high, buyers will likely bypass it in favor of other opportunities that are more aligned with their budget and expectations. A fair price creates the right perception—it signals that you are realistic and serious about selling, encouraging buyers to take action.

2. Faster Offers Lead to Faster Negotiations

The sooner a buyer expresses interest, the sooner you can enter into negotiations. When you price your business competitively, you are more likely to get multiple interested buyers. This competition often leads to quicker negotiations and can even drive the final sale price higher than if you were to wait for a single buyer at a high price.

3. Avoiding the “Stale” Business Syndrome

Businesses that sit on the market for too long without serious offers can become “stale.” Over time, buyers may start to wonder why a business hasn’t sold and begin to question its value. If you start with a realistic price, you avoid the pitfalls of a long listing period, which could ultimately result in a price reduction and a loss of leverage in negotiations.

Why You Might Think Your Business is Worth More Than It Is

It’s only natural to believe that your business is worth more than what others might be willing to pay. After all, you’ve built it from the ground up, invested years of hard work, and nurtured it to success. So why wouldn’t it be worth top dollar?

The truth is, emotion often plays a big role in how business owners perceive their company’s value. While you may feel your business is worth more because of your personal connection, buyers are focused on the financials , market conditions , and industry trends —all of which contribute to what your business is truly worth in today’s market.

Here are a few reasons why your business may be priced higher than market value:

Emotional Attachment : You’ve put in years of hard work, and naturally, you want to see that reflected in the sale price. However, your emotional attachment to the business may cloud the realistic price.
Overestimating Market Conditions : Many business owners mistakenly overestimate the growth potential of their business or fail to account for broader market trends, leading to inflated valuations.
Top-Line Revenue vs. Profitability : Revenue is important, but buyers are more concerned with profitability. A higher price based on revenue, without considering expenses and margins, can lead to overvaluation.

Why a Business Broker Can Help

This is where an experienced business broker comes in. A broker brings objectivity to the process and can help you assess your business’s true market value. They’ll provide a comprehensive valuation, factoring in your industry, financials, competition, and recent market trends. More importantly, they know how to price your business correctly to ensure it moves quickly and efficiently through the sales process.

A business broker can also handle the marketing, buyer negotiations, and paperwork, freeing you up to stay focused on running the business until it’s sold. Brokers also have access to an extensive network of buyers, ensuring that your business is exposed to the right audience.

The Bottom Line: Price It Right, Sell It Fast

Pricing your business correctly is one of the most important steps you can take when selling. A well-priced business attracts the right buyers, leads to faster negotiations, and often results in a smoother transaction overall.

While it may be tempting to price your business higher than market value based on the hard work you’ve put into it, the reality is that businesses that are priced too high tend to sit on the market longer and ultimately sell for less than if they were priced correctly from the start.

If you're considering selling your business, working with an experienced business broker ensures you get the correct valuation and a smooth, efficient sales process. A business broker understands the market, knows how to position your business effectively, and can guide you through every step of the sale, all while maximizing your sale price and minimizing stress.

Contact us today for a free consultation and find out how we can help you sell your business quickly, efficiently, and at the right price.

New to Buying a Business? Start Here.

Fri, 01 Aug 2025 19:41:24 GMT

As a first-time buyer, there are things you need to know.

Buying a business can be one of the smartest decisions you’ll ever make, but if you’ve never done it before, the process might feel overwhelming. You might be asking:

Where do I even begin?
How do I know if a business is a good fit?
What should I be looking for in a listing?

The good news? You don’t need to have it all figured out from day one. What you do need is a willingness to learn, a basic understanding of the process, and the right mindset for business acquisition. That’s where this guide comes in.

This article is your starting point and it’s designed for first-time buyers who want to explore business ownership the right way.

First, Understand: Every Deal Is Different

Unlike real estate, where transactions tend to follow a predictable path, buying a business is highly situational . There are different industries, ownership structures, lease terms, staffing needs, and financial models. Some deals close in weeks. Others take months. Some sellers are hands-on, others are fully absentee. Some businesses are run on paper napkins, others have detailed monthly financial reports.

There’s no such thing as “one size fits all” in business buying. The best thing you can do is approach each opportunity with curiosity and flexibility, not a checklist of perfection.

Step-by-Step: What the Process Looks Like

Here’s a simplified look at how first-time buyers typically move through the process:

1. Get Clear on Your Goals

Before you ever inquire about a listing, ask yourself:

What kind of business do I want to run?
How involved do I want to be in day-to-day operations?
What’s my risk tolerance?
What’s my budget (including working capital after the purchase)?

Having a basic buyer profile will help you screen opportunities and communicate clearly with brokers.

2. Start Watching the Market

You can start exploring listings online to get a feel for pricing, industries, and the types of businesses that interest you. Pay attention to recurring themes; for example, what gross revenue ranges fall within your budget? How common are seller transition periods?

This is where you’ll begin to recognize what a good business opportunity actually looks like in your price range. At OConnor Business Brokers we also offer the chance to join our email marketing list, which we send out to alert prospective buyers to new opportunities that have come to market.

3. Connect with a Business Broker

A professional business broker can save you a lot of time. Not only do they know what’s available, but they can also give you insight into how deals are structured, how sellers typically operate, and what red flags to watch for. Brokers are also bound by confidentiality, which protects both you and the seller.

Tip: Come prepared. Brokers are not here to “teach you business” from scratch. Do your homework. Understand the basic terminology, financing options, and what you’re looking for.

4. Sign an NDA and Review the CIM

Once you find a business you're interested in, you'll be asked to sign a non-disclosure agreement (NDA) before receiving confidential materials. This is standard and required. Once signed, you’ll get access to a Confidential Information Memorandum (CIM) that outlines the business’s key details — financials, staffing, operations, and opportunities for growth.

Important: Just because you sign an NDA doesn’t mean the seller or broker is obligated to share everything. Confidentiality is paramount, and sensitive information is often shared gradually as buyers become more serious.

5. Ask the Right Questions

After reviewing the CIM, this is your time to:

Ask clarifying questions
Assess the owner’s role
Understand customer relationships
Explore what transition support is offered

A good buyer digs deep but stays respectful of the seller’s time and privacy.

6. Do Your Due Diligence

If you move forward, you’ll have time to fully verify the business’s financials, contracts, leases, and legal standing. This is typically after an accepted Letter of Intent (LOI) has been presented and signed by both parties. You may need the help of an accountant, lawyer, or industry expert to complete your diligence.

7. Negotiate and Close

Once everything checks out, the final purchase agreement is negotiated. This includes the purchase price, training period, seller financing (if any), and deal terms. After closing, the business is officially yours.

Working With a Broker: What You Should Know

A business broker is a facilitator. They work to bring qualified buyers and sellers together while protecting confidentiality, managing communication, and helping move the deal toward a successful closing.

Here’s what a broker can do for you:

Identify listings that fit your needs
Help you assess whether the business has long-term opportunity
Guide you through the disclosure and diligence stages
Clarify the value drivers behind the asking price
Provide insight into how sellers typically operate in your market

But remember — a broker is not your personal advisor . They won’t spoon-feed you information or make the decision for you. It’s your responsibility to learn how buying a business works, assess risk, and determine fit. The more prepared and realistic you are, the more seriously you’ll be taken.

Real-World Imperfections Are Normal

If you're waiting for the "perfect" business to appear, with spotless financials, a fully trained staff, absentee ownership, and unlimited growth, you may never buy anything at all. Most great businesses don’t look perfect on paper. Instead, they come with manageable challenges, steady income, and the opportunity to improve what’s already working.

The best buyers look for substance, not sparkle; recurring revenue, loyal customers, and strong operational bones.

Final Thoughts

Buying a business isn’t just a transaction. It’s a career move, an investment, and a major life decision. Start with clarity, come prepared, and be open to real-world opportunity. You don’t need to be an expert on day one, but you do need to be an engaged, informed buyer.

Want to explore your options? Contact OConnor Business Brokers to start a confidential conversation and see what’s currently on the market. We’re here to guide you — not just to the next listing, but to the right opportunity.

5 Do’s and 5 Don’ts When Selling a Business

Fri, 11 Jul 2025 18:13:39 GMT

What Every Business Owner Needs to Know Before Listing

If you're a business owner considering a sale, you're likely wondering how to get it right—and avoid the common pitfalls that can cost time, money, and peace of mind. Whether you're preparing to retire, pursue a new opportunity, or simply feel like it’s time to move on, the process of selling a business involves more than just finding a buyer.

Here are five important do’s and five avoidable don’ts to help you plan a smoother, more successful exit—and why working with a professional broker can make a meaningful difference.

DO #1: Get a Market-Based Valuation (Not Just an Accounting Estimate)

It’s natural to turn to your accountant to understand your financials—but when it comes to pricing your business for sale, market knowledge is just as important as the numbers on paper. Accountants are great at interpreting balance sheets and tax returns, but they often lack the transactional insight to understand how the market values your business.

Professional business brokers combine financial analysis with real-time market data, buyer behavior, industry trends, and comparable sales. They don’t just look at what your business earned—they assess how buyers will perceive risk, opportunity, and value. That makes a huge difference in setting a price that attracts serious interest without leaving money on the table.

DO #2: Prepare Your Business Before You Go to Market

You only get one chance to make a first impression with a buyer. Well-organized financial records, clearly documented operations, and clean facilities can make your business far more attractive.

Take the time to clean up your bookkeeping, address any legal or HR issues, and systematize your processes. Whether you’re selling a service company, a manufacturer, or a small retail operation, buyers want to see a business that runs smoothly— not one that looks like it’s held together with duct tape.

The more turnkey your business appears, the more confidence it inspires—and the better your chances of receiving strong offers.

DO #3: Protect Confidentiality

One of the biggest mistakes sellers make is sharing too much, too soon. If employees, customers, or competitors find out you're planning to sell, it can create unnecessary anxiety, risk, and even revenue loss.

That’s why maintaining confidentiality is so important. A reputable broker will help you market the business discreetly—qualifying interested parties, using non-disclosure agreements (NDAs), and controlling the release of sensitive information. This protects your business while still moving the sale process forward.

Confidentiality becomes even more critical in industries where customer trust or contract stability is key—such as professional services, healthcare, or recurring revenue models.

DO #4: Work With a Trusted Advisor

Selling a business is one of the most complex and emotionally charged transactions you'll ever be involved in. Between marketing the opportunity, screening buyers, negotiating terms, and managing due diligence, it's easy to feel overwhelmed or make costly decisions out of emotion or inexperience.

That’s where a business broker becomes your most valuable asset. Not only do they help you prepare and position your business, but they also manage the entire process—from marketing to closing—with professionalism and objectivity. Their goal is to maximize your outcome while minimizing your stress.

Think of it like selling a house—only with a lot more moving parts, and higher stakes.

DO #5: Be Selective With Buyers

Not every interested party is the right fit. Some may lack the financial means, others might be shopping for deals without a clear plan. And sometimes, the buyer who offers the highest price isn’t the one best positioned to close.

Take the time to understand who your buyer is, what their intentions are, and whether they can follow through. A broker will help with buyer qualification, financing discussions, and negotiating fair terms that work for both sides—not just in dollars, but also in timeline and structure.

DON’T #1: Wait Until You’re Burned Out

Many owners wait to sell until they’re completely burned out or their business has started to decline. While this is common, it can hurt your value and your bargaining power.

The best time to sell is when the business is still stable or growing—and you still have the energy to be involved in the process. Buyers want to step into something healthy, not something they’ll need to rescue.

If you’re thinking “I’ll sell one day,” it’s worth starting conversations now, so you’re prepared when the time is right.

DON’T #2: Try to Sell It All Yourself

Selling a business is nothing like selling a car or even a house. It involves financial due diligence, legal contracts, tax implications, and complex negotiations. Trying to manage all of this on your own can be overwhelming—and risky.

Without the right guidance, it’s easy to make costly errors, waste time on unqualified buyers, or settle for less than your business is worth. If you want to protect your investment, have someone in your corner who’s done this before.

DON’T #3: Disclose Sensitive Info Too Early

Buyers are naturally curious—but not every question should be answered up front. Sharing financials, customer data, supplier contracts, or employee rosters before a buyer is vetted and under NDA puts your business at risk.

There’s a process for how and when to disclose sensitive information. A broker will ensure that only serious, qualified buyers gain access—and only at the appropriate stage of the sale.

DON’T #4: Overlook Presentation and Perception

The way your business looks —in person and on paper—matters. Outdated branding, neglected equipment, or messy records can signal poor management, even if your financials are solid.

Invest a little time in sprucing things up. A fresh coat of paint, a clean workspace, and polished marketing materials can go a long way toward building buyer confidence.

DON’T #5: Fall in Love With the First Offer

It’s exciting to receive an offer—but don’t jump at the first one without looking at all the terms. Price is just one part of the deal. Payment structure, contingencies, financing, transition plans, and timelines all matter too.

Patience pays off. With the right advisor, you’ll be better equipped to evaluate each offer on its full merits—not just the number at the top or bottom of the page.

A Smart Sale Starts With the Right Plan

Selling a business is a major life decision, and it's worth doing right. Whether you're just starting to explore your options or already thinking “I’m ready to sell my business,” a professional business broker can help you prepare, protect your interests, and achieve a successful outcome.

Want to talk confidentially about what your business might be worth, or how to take the first step? We’re here to help.

The Advantages of Buying an Established Business

Thu, 12 Jun 2025 20:45:13 GMT

6 Less Risky Ways to Become an Entrepreneur

For many aspiring entrepreneurs, buying an established business offers a smarter, less risky path to business ownership. Whether you're considering a gas station business for sale, a plumbing business for sale, or even a bookkeeping business for sale, there are several key advantages to purchasing an already-operating business instead of starting one from scratch. Here are the reasons why buying an established business is often the best business choice for many.

1. Lower Risk and Proven Track Record

Starting a new business can be risky—especially when it comes to generating revenue and building a customer base. But when you purchase an established business for sale, you're stepping into a business that already has a proven track record. This might include a restaurant business for sale, a landscape company for sale, or even a small business for sale that has built a loyal customer base over time.

With an established business, you benefit from an existing customer flow, established marketing strategies, and a reputation that will give you a solid foundation to grow from. Whether it's a commercial business for sale or an industrial business for sale, buying an existing operation significantly reduces the risks associated with starting fresh.

2. Easier Financing

When it comes to securing financing, business lenders prefer businesses with a proven record of profitability. Whether you're buying a franchise business for sale, a car wash business for sale, or any other type of profitable business for sale, an established business makes it easier to get the funding you need. Lenders and investors are far more likely to approve loans for businesses that are already generating steady cash flow.

The track record and history of the business make the financials more predictable, which reduces risk in the eyes of lenders, allowing you to move forward with confidence.

3. Ready-to-Go Operations

One of the biggest advantages of buying an established business is that it’s already set up and ready to go. From existing employees and vendor relationships to operational systems, the hard work of setting up the business is already done. Whether it’s a manufacturing business for sale, an IT business for sale, or a landscape business for sale, you’ll be able to hit the ground running without having to worry about permits, licenses, or the initial challenges of getting the business off the ground.

With an established operation, the business is already functioning smoothly, and you can focus on expanding or improving existing processes rather than building from scratch.

4. Immediate Cash Flow

Unlike starting a new business, where revenue may take months or even years to build, purchasing an existing business means you’ll immediately benefit from cash flow. Whether you’re purchasing a gas station business for sale, a construction business for sale, or any other type of business, you’ll be walking into an operation that already generates income. This immediate cash flow helps cover operating expenses and gives you the financial stability to invest in the future growth of the business.

5. Established Reputation and Brand Recognition

An established business often comes with an already-recognized brand and a strong market reputation. Whether you’re buying a restaurant business for sale, landscape company for sale, or even a commercial business for sale, the reputation and brand equity that comes with an established business can be invaluable. You don’t need to worry about building trust and recognition from scratch; you’ll have customers who already know and trust the business.

6. Proven Systems and Marketing Methods

When you buy an established business, you get access to proven marketing strategies and business systems. Whether it’s a property business for sale or a manufacturing business for sale, the systems for generating leads, managing customers, and optimizing operations are already in place. This means you don’t have to waste time reinventing the wheel or testing out unproven methods.

Conclusion

Buying an established business offers a wealth of advantages, including reduced risk, immediate revenue, and the ability to leverage existing systems, staff, and reputation. Whether you're considering a landscape business for sale, a car wash business for sale, or a plumbing business for sale, the opportunity to step into a business with a proven track record is an ideal path to entrepreneurship.

If you’re interested in exploring business opportunities in Winnipeg and Manitoba, contact OConnor Brokers today to learn about available businesses that could be the perfect fit for you.

The Importance of Business Valuation

Fri, 28 Mar 2025 18:24:48 GMT

Why Business Owners Often Overestimate Their Business's Worth

When it comes time to sell a business, one of the most important steps is determining its true value. A well-executed business valuation provides clarity on your business's worth and sets the foundation for a successful sale . However, many business owners, despite their deep knowledge and dedication, may unintentionally overestimate their business's value. This can complicate the selling process and potentially impact the final sale price.

Why Valuation Matters

Whether you're selling a small business for sale, a manufacturing business for sale, or a more specialized commercial business for sale, understanding your business’s actual value is crucial. Business valuation is an in-depth process that considers a range of factors —assets, earnings, market conditions, and industry trends—helping you arrive at a fair and realistic price.

An accurate business valuation helps you to:

Set a Competitive Asking Price : Pricing too high can scare off potential buyers, while pricing too low may leave money on the table.
Attract Serious Buyers : A realistic price backed by a solid valuation reassures potential buyers and encourages serious inquiries.
Negotiate Effectively : With a clear understanding of your business's worth, you can confidently enter negotiations with prospective buyers.

Why Overvaluation Happens

It’s not uncommon for business owners to feel that their business is worth more than the market will bear. After all, building a business takes significant time, effort, and often personal sacrifice . This connection can lead to an inflated sense of its market value. Here are a few reasons why business owners may overestimate their company’s worth, even with the best intentions:

1. Emotional Attachment

Many business owners have an emotional connection to the company they’ve built. This attachment can sometimes make it difficult to view the business from a purely financial perspective. While this connection is natural, it can sometimes lead to overestimating the price.

2. Overlooking Market Realities

Owners often focus on the intrinsic value of their business without considering external market factors. Industry trends, economic conditions, and comparable sales all impact a business’s value, but these can sometimes be overlooked in favour of what the owner perceives as the business’s potential.

3. Focusing on Top-Line Revenue Instead of Profitability

While revenue is important, many business owners place too much weight on top-line sales figures, not fully factoring in profitability, cash flow, and debt. An accurate valuation considers the bottom line and the long-term sustainability of the business, not just its sales numbers.

4. Optimistic Future Projections

Business owners often have great faith in their company’s future success, which is a key reason why they may overestimate its value. While growth potential is an important aspect of a business, it must be backed by solid data and industry trends rather than optimistic projections.

The Risks of Overvaluation

Overpricing a business can create several challenges:

Extended Sales Timeline : If your business is priced too high, it may linger on the market longer than you’d like, resulting in reduced buyer interest.
Missed Opportunities : A business that remains unsold for too long may lose momentum, forcing you to lower the asking price, which can lead to a less favourable sale.
Diminished Credibility : An inflated asking price may also signal to potential buyers that you’re not serious or realistic about the sale, which can harm your reputation as a seller.

Getting a Proper Valuation

To avoid the risks of overvaluation, it’s essential to work with experienced professionals. A business broker can help you arrive at a fair market value by analyzing your company’s financials , assessing industry comparables, and factoring in current market conditions. The process involves various methods, such as earnings multiples, asset-based valuation, and market comparisons, to ensure a comprehensive and accurate valuation.

Conclusion

Valuing your business correctly is vital for a smooth and successful sale. While it’s completely natural to feel attached to your company and its potential, it’s important to set a realistic and data-backed price that reflects its true worth in the market. Working with a professional business broker ensures that you arrive at the right price , maximizing the likelihood of a fast and profitable sale.

If you’re considering selling your business, don’t leave the valuation to chance. Reach out for professional guidance today, and make sure your business is priced right from the start.

Ready to gain clarity on the value of your business? Contact OConnor Business Brokers today to learn more about our assessment services and how we can help!

Unraveling Business Goodwill: The Unseen Asset in Enterprises

Wed, 01 May 2024 19:37:35 GMT

Unraveling Business Goodwill: The Unseen Asset in Enterprises

Introduction

In the realm of business, there exists an intangible asset that can significantly impact a company's value and success - business goodwill . In this article, we delve into the concept of business goodwill, shedding light on what it is and why it plays a pivotal role in the corporate world.

Understanding Business Goodwill

Business goodwill is a non-material asset representing the intangible value of a company's reputation, brand, customer loyalty, and positive associations in the market. It's the essence of what makes a business more than just its physical assets or financial performance. Essentially, business goodwill encapsulates the public's perception of the company, its products or services, and its commitment to ethical and responsible practices.

The Significance of Business Goodwill

Business goodwill can make or break a company's long-term success; a strong and positive reputation can attract customers, partners, and investors, while a weak and negative reputation will deter them. It fosters customer loyalty, which translates into repeat business and referrals. Moreover, it can help a company weather challenging times, as loyal customers are more likely to stand by a brand they know and trust. High levels of business goodwill also enhances a company's ability to command premium pricing for its products or services.

Cultivating Business Goodwill

Building and nurturing business goodwill demands consistent effort and commitment. Delivering high-quality products or services, maintaining transparent and ethical practices, and engaging in corporate social responsibility initiatives are all key to cultivating a positive reputation. Establishing a strong brand identity and consistently delivering on promises can solidify goodwill over time, which means companies should actively seek customer feedback, address concerns promptly, and adapt to changing market trends to preserve and enhance their overall goodwill.

The Role of a Business Broker

Managing business goodwill can be complex, and this is where a business broker comes into play. A qualified business broker understands the intricacies of goodwill valuation and can help business owners leverage this asset effectively. They have the expertise to identify and maximize the goodwill associated with a company, making it more appealing to potential buyers or investors. A broker can also guide businesses through mergers and acquisitions, where assessing and transferring goodwill is critical.

Leveraging Business Goodwill

Once accrued, business goodwill can be leveraged to boost market presence and competitiveness. Companies with strong goodwill can expand their customer base, attract top talent, and enter new markets with greater ease. It serves as a valuable asset during mergers and acquisitions, as buyers often pay a premium for a target company with robust business goodwill.

Conclusion

Business goodwill is a hidden treasure that can significantly impact a company's fortunes. Understanding its importance and actively investing in its development can result in a more resilient, competitive, and valuable business. In today's interconnected and discerning business world, the value of business goodwill cannot be overstated. With the guidance of a knowledgeable business broker, this asset can be effectively harnessed for growth and success.

Ready to uncover your company’s goodwill, and maximize your brand and market presence today? Contact OConnor Business Brokers today to learn more about our services and how we can help!

What is M&A? (Mergers and Acquisitions)

Fri, 17 Nov 2023 15:08:14 GMT

What is M&A?

Introduction

Mergers and acquisitions (M&A) represent essential corporate activities that present an opportunity to reshape industries, transform companies, and drive economic growth. Keep reading to learn more about what M&A is, and to gain a better understanding of its concepts, processes, and significance.

Understanding Mergers and Acquisitions

Mergers and acquisitions (M&A) refer to the consolidation of companies which can involve the combination of assets, resources, and operations. M&A can take various forms, including mergers, where two companies merge to form a new entity, and acquisitions, where one company purchases another. The primary objectives of M&A include achieving strategic growth, expanding market share, diversifying business operations, gaining access to new technologies or markets, and improving financial performance.

The Process of Mergers and Acquisitions

The process of M&A involves several stages, starting with strategic planning and target identification, followed by due diligence, negotiation, and deal structuring. Many of these steps are made easier with the involvement of an intermediary, like a business broker or M&A advisor. After obtaining regulatory approvals and shareholder consent, the integration phase begins, aiming to combine the operations, cultures, and systems of the merging entities. This process requires careful planning, effective communication, and strong leadership to ensure a smooth transition.

Benefits and Challenges of Mergers and Acquisitions

M&A can offer several benefits, such as enhanced competitiveness, increased economies of scale, improved market access, and accelerated innovation. It can also provide opportunities for cost savings through synergies and increased shareholder value. However, M&A transactions are complex and present various challenges, including cultural clashes, integration difficulties, regulatory hurdles, and financial risks. Poorly executed M&A deals can lead to value destruction and negative consequences for all parties involved.

Trends and Outlook for Mergers and Acquisitions

The M&A landscape is continuously evolving, influenced by economic conditions, technological advancements, and market dynamics. Recent trends include a focus on digital transformation, cross-border deals, and sustainability-driven transactions. Going forward, M&A activity is expected to remain robust as companies seek growth opportunities, adapt to changing business landscapes, and navigate competitive pressures.

Conclusion

Mergers and acquisitions play a crucial role in shaping the corporate landscape and driving economic development. While M&A transactions offer numerous benefits, they also come with challenges that require careful consideration and execution. Understanding the intricacies of M&A empowers businesses and investors to make informed decisions and capitalize on opportunities for growth and value creation.

Make your merger and acquisition smoother today by contacting OConnor Business Brokers !

What is a Business Worth? Approaches to Value (Introductory)

brad@oconnorbusinessbrokers.com (Brad Oconnor) — Fri, 06 Oct 2023 17:25:12 GMT

What is a Business Worth?

Approaches to Value (Introductory)

Introduction

When it comes to assessing the worth of a business, the process can be both intricate and multi-faceted. Understanding the value of a company is crucial for various purposes, such as mergers and acquisitions, investment decisions, or determining a fair selling price. Read on to learn more about some common approaches to value, including the benefits of utilizing a business broker, and some of the methods used to determine a business’s actual worth.

Market-Based Approach

The market-based approach, also known as the comparative approach, is based on the principle of ‘supply and demand’. This approach determines a business's value by comparing it to similar companies in the market that have recently been sold or are publicly traded. By analyzing financial ratios, market multiples, and benchmarking against industry standards, experts can estimate the value of a similar business. However, even with thorough research, it can be challenging to find precise and up-to-date market data, which is where a business broker can play a valuable role.

Income-Based Approach

The income-based approach focuses on the present and future earning potential of the business. This approach involves assessing the company's historical financial performance, projected cash flows, and risk factors associated with its industry. While this method provides insights into the profitability and sustainability of the business, accurate projections and determining appropriate discount rates can be complex. Again, a business broker's expertise can be advantageous in navigating these intricacies.

Asset-Based Approach

The asset-based approach determines the value of a business by considering its tangible and intangible assets. Tangible assets include physical properties, equipment, and inventory, while intangible assets comprise intellectual property, brand value, customer relationships, and goodwill. This approach involves assessing the fair market value of the assets, deducting liabilities, and arriving at the net asset value. However, accurately valuing intangible assets can be subjective and require specialized knowledge, which a business broker's experience and insights can prove beneficial.

Hybrid Approach

In certain situations, a combination of multiple valuation approaches is necessary to arrive at a comprehensive and accurate business valuation. This hybrid approach leverages the strengths of different methods while mitigating their respective weaknesses. By considering various factors, such as industry dynamics, company-specific attributes, market conditions, and investor preferences, analysts can craft a holistic view of a business's worth. Here is also where a business broker can provide valuable guidance and expertise.

Using a Business Broker

One crucial resource that can greatly benefit business owners in the valuation process is a business broker. Business brokers offer a range of advantages, including their industry knowledge, access to networks and buyers, confidentiality, and negotiation skills. They possess deep insights into market trends and can access industry-specific data, enabling a more accurate valuation. Their extensive network of potential buyers and investors can attract qualified parties who may be willing to pay a premium for the business's value. Furthermore, business brokers maintain confidentiality and act as intermediaries, facilitating smooth negotiations between buyers and sellers.

Conclusion

Determining the value of a business is a complex task that requires careful analysis and consideration of various approaches. The market-based, income-based, asset-based, and hybrid approaches each bring unique perspectives to the valuation process. In embarking on the journey to assess the value of a business, the benefits of utilizing a business broker is essential. Their specialized knowledge, industry connections, and negotiation skills can significantly enhance the accuracy and efficiency of the valuation process.

Are you ready to leverage the expertise of a business broker to determine the worth of your business? Contact OConnor Business Brokers today!

Debunking the Myths of Business Brokerages

Fri, 11 Aug 2023 14:43:50 GMT

Myth or Fact? Read on to Learn More About Business Brokerages and the Common Myths Associate With Them

Introduction

When it comes to buying or selling a business, many entrepreneurs and business owners turn to business brokerages for assistance. However, misconceptions and myths surrounding these intermediaries can cloud perception, resulting in missed opportunities for those businesses. Read on to learn about some common myths associated with business brokerages and, in their debunking, learn about the valuable role a business broker plays in the business transaction process.

Myth 1: Business Brokers are Only Necessary for Large Businesses

One common misconception is that business brokerages are only relevant for large corporations. In actuality, business brokers serve businesses of all sizes; from small startups to medium-sized enterprises and more. They possess the nuanced expertise to navigate the complex web of the transactions, and help ensure smooth sailing for both the buying and selling process. Even for a smaller business, engaging a business broker can be highly beneficial, as they bring market knowledge, negotiation skills, and the ability to connect buyers and sellers effectively.

Myth 2: Business Brokers Only Help with Selling Businesses

Contrary to popular belief, business brokers are not solely focused on selling businesses. While their expertise is exceptionally valuable during the selling process, they can also assist in buying businesses. For aspiring entrepreneurs looking to acquire a business, business brokers can provide crucial guidance, as well as helping to identify suitable opportunities, evaluating the financials and market potential, negotiating deals, and facilitating a successful acquisition. Whether you're selling or buying a business, a reputable business broker can be a valuable ally throughout the entire process.

Myth 3: Business Brokers Are Expensive

Another myth surrounding business brokerages is that their services are unaffordable for most business owners. Business brokers do charge a fee for their services, but it’s important to recognize the value they bring to the table. A skilled business broker has an extensive network of contacts, access to potential buyers or sellers, market knowledge, and expertise in negotiation. Their involvement can significantly increase the chances of a successful and profitable transaction. Furthermore, many business brokers work on a commission basis, aligning their interests with the client's success. Ultimately, the cost of engaging a business broker is an investment that can yield substantial returns.

Conclusion

Business brokerages play a pivotal role in facilitating smooth and successful business transactions. Understanding the misconceptions associated with these intermediaries is essential for entrepreneurs looking to buy or sell a business. Regardless of the size of the business or the type of transaction, business brokers bring expertise, market insights, and valuable connections to the table. They guide clients through the intricacies of buying or selling, increase the chances of securing favourable deals, and save time and effort. By understanding the true value of business brokers, entrepreneurs can make informed decisions and maximize the potential of their business transactions.

Ready to engage the services of an experienced business broker? Contact OConnor Business Brokers today!

Business Assessment: Due Diligence Explained

Fri, 16 Jun 2023 17:07:42 GMT

Due diligence is a crucial part of buying and selling businesses, but what exactly is involved? In this article we’ll take a deep dive into the process, to help get you started.

First things first, what exactly is due diligence? Simply put, it is a thorough review of a company’s financial records, legal issues and market positioning before the acquisition takes place. The process typically starts once the buyer has found a business that they’re interested in purchasing, but before any definitive purchase agreements are signed. This extensive research process helps to avoid any unpleasant surprises for either party after the deal is complete.

Step 1: Make a plan

Tackling due diligence is a big job, and one you don’t want to start without a plan. The business acquisition process usually starts with a letter of intent, signed by both parties. This letter outlines the framework for completing the deal, and will include provisions for due diligence on behalf of the buyer. The provisions will include a timeline (one to two months is typical in this scenario) as well as a process for the seller to provide access to relevant information. The seller should provide access to records, premises, and in some cases it might be valuable to review key employees as well. Records should include financial statements and tax returns, budgets and financial projections, as well as articles of incorporation, bylaws, and ownership information. Once this framework is in place, it’s time to hire the right people for the job.

Step 2: Hire the right team

Buying a business is a big financial investment, and you want to surround yourself with the best, most qualified people to assist you with the due diligence process. It’s recommended to hire an accountant who specializes in business acquisitions to look over the financial records, and a corporate lawyer to review any legal issues affecting the company. It is also advised to hire a professional business broker to act as a middleman throughout the negotiations and provide guidance every step of the way. You can also look at hiring market experts, IT professionals, or any other qualified professional that specializes in due diligence for business acquisitions.

Step 3: Do your research!

Once you’ve assembled your team of experts, it’s time to start the research process! The specialized accountant that you’ve hired should now go over the financial records you received from the seller. They should review tax returns, financial statements, budget and other documents to make sure the numbers add up, and the company is actually worth the price you’re proposing. The financial review can also uncover other issues, such as tax liabilities or high employee turnover. Following that, your lawyer will review all legal documents, to ensure all licenses and permits are up to date, there are no external liabilities or potential lawsuits, and client/staff contracts are sound. Once the accounting and legal due diligence have been completed, we recommend you fully analyze the market environment of the business. This involves a comprehensive review of any assumptions made behind projections and future risk, which can help if you have doubts about the sustainability of the business model.

Ready to get started? Contact us today, and one of our experienced business brokers will be in touch with you as soon as possible.

What is a Business Broker, Anyways?

Fri, 27 Jan 2023 17:55:20 GMT

What is a Business Broker?

At OConnor Business Brokers, our mantra is to connect buyers with sellers. This seems simple enough in concept, but there is so much more to being a business broker, and there are many who do not know what it is to be one. Keep reading to learn about what a business broker is, and see how one might be able to help you when the time comes to sell your business.

So what is a Business Broker anyways?

A business broker is a trained intermediary who assists someone with buying or selling a business.

It is not required by law to utilize a business broker in the sale of a business in most parts of the world, but these individuals are highly trained professionals, and understand the steps involved in the process whereas the seller or buyer might not.

The process for buying or selling a business can be lengthy (typically around 6-12 months), but quite often much longer than this. An experienced business broker will create marketing materials that are specifically catered to appealing to as many potential buyers as possible. Reputable brokers generally have a vast, pre-existing network of contacts through which they can source a buyer from a trusted and well-known pool of candidates. An experienced business broker will have the experience to effectively filter through the candidates and source a legitimate buyer. While going through the process of sourcing a buyer, the broker will maintain confidentiality to ensure the business continues to run smoothly and is not negatively impacted in any way until a buyer is sourced.

Once a buyer is sourced, and after the signing of a Letter of Intent, the buyer will perform its due diligence, and if necessary reach out to lenders in order to obtain the required business financing to facilitate the purchase of the business. The seller and buyer will continue to negotiate the finer details throughout the process, eventually resulting in the signing and execution of a definitive purchase agreement The most experienced business brokers will remain involved throughout the entire business sale process, acting as the intermediary and advisor for both parties, and resolving issues as they arise.

Real Estate Agent versus a Business Broker

Despite what some people may believe, a business broker is not a real estate agent. Real estate agents have the training and experience to sell real estate, whereas a business broker has the training and experience to sell businesses. While some business sale transactions include real estate as part of the sale, the process of selling a business is far more complex, and requires additional skills such as valuing a business, negotiating, understanding the legal, accounting and technical aspects of the transactions, and maintaining the utmost level of confidentiality.

Additionally, a business broker will also aid their clients with ensuring financials are in order, going through escrow, and closing the sale. Business valuations, marketing, prospect interviews, negotiation, and due diligence are just some of the critical tasks that business brokers handle.

Why do I need a Business Broker?

At minimum, you need a business broker to help with the long and complex process of selling a business. There are a number of steps, many with specific types of documents and paperwork, all of which a business broker has seen before. By engaging the services of a reputable and experienced business broker to handle the sale of a business, the business owner is able to focus on what matters most: running the business to ensure it will fetch the best price, while continuing to run smoothly and profitably.

In conclusion

The team at OConnor Business Brokers is professional, has over 15 years of experience in the industry, and can help you sell your business, or find one to purchase. Contact us today to learn more!

Sources:

https://www.investopedia.com/terms/b/business-broker.asp
https://en.wikipedia.org/wiki/business_broker

Photo Credit:

https://https://stocksnap.io/author/brucemars https://stocksnap.io/auth

https://stocksnap.io/author/brucemars

The Manitoba Provincial Nomination Program (MPNP)

Fri, 28 Oct 2022 13:00:01 GMT

What is the MPNP?

Are you considering immigrating to Canada, and would like to buy a business? Well, the MPNP program might be what you are looking for!

The MPNP

The Manitoba Provincial Nominee Program (MPNP) is the immigration program for the province of Manitoba, and it offers three streams, each with their respective pathways. For this blog, we are focusing specifically on the Business Investor Stream (BIS). So far this year, the province has received 13 applications for the BIS.

As a qualified business investor and/or entrepreneur, the Business Investor Stream is for those with the ability and intent to start or buy a business in the province of Manitoba. Within this stream, there are two pathways: The Entrepreneur Pathway (EP) & The Farm Investor Pathway (FIP).

The Entrepreneur Pathway (EP)

The Entrepreneur Pathway is specifically for those who may be seeking to start a business within the province, or would like to buy an existing business. With this program, Manitoba is able to recruit and nominate those from around the world who fulfil specific qualifications, and who are interested in immigrating to the province. [1] The program targets those who wish to undertake an entrepreneurial investment in Manitoba, specifically foreign nationals with entrepreneurial experience. [2]

Eligibility

Eligibility for the program can be found here , and is based on the following criteria: business experience, official language proficiency, education, age, business investment, business research visit, adaptability, net worth, and business performance agreement.

Who Cannot Apply?

In addition to the above listed eligibility criteria, there are federal standards for immigration that can make a person inadmissible. The reasons can include: posing a security threat, having a history of criminal behaviour, or having a medical condition that poses a threat to public safety. [3]

According to the immigration website for Manitoba, the following are not eligible to submit an application to the MPNP:

Refugee claimants, or individuals involved in a federal appeal or removal process
Live-in Caregivers currently living in Canada
Temporary foreign workers currently working and residing in a province other than Manitoba
Spouses of Canadian citizens or permanent residents
Individuals who have been refused by the MPNP within the last six months and who are not able to address the reason(s) for refusal
Individuals who have an active immigration application with any other provincial immigration program or federal immigration program in Canada. Note: an Express Entry profile is not considered an immigration application.

Additionally, the website also states that, “If you or your spouse already have an active MPNP application, you are not eligible to submit an additional application to any other stream/pathway of the MPNP.”

Application Process

There are six steps to complete when applying to the Entrepreneur Pathway.

Self-Assess Eligibility & Conduct Business Research
Submit an Expression of Interest
Receive Letter of Advice to Apply (LAA) & Submit Completed Application
At this stage you must also pay the processing fee, which is $2,500.00 CAD. This processing fee is non-refundable. [4]
Application Assessment, Sign Business Performance Agreement (BPA), and obtain a work permit
Establish a business & Fulfill the BPA
Final Recommendation

It should also be noted that the MPNP reserves the right to refuse any application for nomination. [5]

Should you be successful, and are deemed to have successfully fulfilled all of requirements by the MPNP, a recommendation will be made to nominate the candidate, and they will receive a Confirmation of Nomination.

Once someone has received their nomination, they are now considered a ‘Provincial Nominee’, and must then complete an Application for Permanent Residence. [6]

In Conclusion

Are you ready to buy a business in Manitoba? Let the experts at OConnor Business Brokers connect you with the business you are looking for. Contact us today!

Sources:

https://immigratemanitoba.com/immigrate-to-manitoba/bis/entrepreneur/
https://en.wikipedia.org/wiki/Provincial_Nomination_Program#Manitoba_Provincial_Nominee_Program
https://immigratemanitoba.com/wp-content/uploads/2022/09/bis-entrepreneur-stream-guidelines-final-may-2022.pdf

How Important is Cash Flow of a Business to be Purchased?

Tue, 08 Feb 2022 16:15:03 GMT

When it comes to business, the old adage that “cash is king” still holds true. If you are considering buying a business, do not make the misstep of paying more attention to its profit statement than its cash flow statement. Otherwise, you might make a mistake that you will soon regret because so-called “profitable businesses” go bankrupt every day. Why you ask? Because they did not have the cash flow needed to sustain their operations.

Here is why knowing a business’s cash flow is so important before purchasing it.

Understanding What Cash Flow Is

Before proceeding, let’s review what cash flow is. Plain and simple, it is the amount of money leftover from what is coming into a business (think accounts receivable and customers paying their invoices in a timely manner) and what is going out of a business (accounts payable, think paying utilities bills, and purchasing inventory).

A positive cash flow gives businesses the ability to pay their debts. When a company takes out a business loan to purchase inventory or equipment, it needs to have enough future cash flow to make those monthly loan payments. A healthy cash flow also affords the ability to invest in the growth of a business.

A cash flow statement allows for:

Insight into how actual cash is spent
Planning for the short-term and long-term
Focus on activities that can increase future cash-flow
Better understanding of the actual costs of doing business
Analysis of working capital
Crisis management in the event of a future cash crunch

Businesses that cannot provide a positive cash flow statement could have issues under the hood, such as problems with suppliers or vendors who are unwilling to work with them to provide goods, supplies, or services. This could mean an uphill climb to rebuild business goodwill, which will affect someone who is considering buying the business, especially if the damage is already done and has trickled down to its customers.

Why Can’t an Income Statement Be Trusted Completely?

It is great when a business can show that it is profitable. However, a profit and loss statement (also known as an income statement) cannot adequately represent its financial standing. A business can be profitable on paper, yet at the same time have negative cash flow and unable to purchase inventory or supplies. The business may not be able to pay its operating expenses like its electric bill or rent, and these unpaid expenses are unlikely to show up on an income statement.

Once a business is unable to replenish its inventory, sales are going to suffer. It may take a little time, but eventually it will catch up to them. It is easy and perfectly legal according to generally accepted accounting principles (GAAP) to manipulate an income statement. GAAP allows businesses to use depreciation and amortization, both non-cash expenses, to offset capital expenditures.

An income statement represents sales income, but not the actual revenue received from those recorded sales. It fails to consider the existence of credit sales that could take 60 to 120 days for payments to hit account receivables. Meanwhile, if the business’s cash on hand is inadequate, there may not be enough money to cover operational costs until those payments come in. Having enough cash flow, realistically at least three months’ worth of operating expenses, is critical to covering the realistic cash gap that exists between AR and AP.

Lenders Look for Cash Flow

Cash flow matters to lenders. If you are seeking funding to help finance the purchase of an existing business, lenders are going to look at much more than your business plan. They will look at the big picture and yes, if you are purchasing a business with existing cash flow problems, you may need to make a substantial investment to set the ship right and get it back on course with a positive and stable cash flow.

Cash flow statements are important business tools that you can learn a lot from in regard to buying a business or running your own in the future. They allow you to project actual real profit and help you prepare for times when you may need more cash or credit to keep operations going.

For assistance and guidance in buying a business or preparing your business for sale, contact the experts at OConnor Business Brokers and Consultants today.

Boosting a Business’s Value Via Strategic Acquisitions

Wed, 26 Jan 2022 22:44:25 GMT

A Brief Guide

Alphabet (Google’s parent company) had a market capitalization of less than $200 billion in 2005. This figure rose to about $274 billion in 2006, just a few months after acquiring mobile software developer Android for $50 million. Today, Android is the most popular mobile operating system, and Alphabet has a market capitalization of about $1.95 trillion.

Undoubtedly, Android has been instrumental in Alphabet’s growth. It is also one of the best examples of how a business can boost its value through strategic acquisitions. Here is a brief overview of how any business (including yours) can do the same.

How Can a Strategic Acquisition Boost a Business’s Value?

There are two types of mergers and acquisitions: financial and strategic. A financial acquisition offers quick solutions to a company’s financial needs. However, a strategic acquisition offers solutions to problems of a different nature – essentially, fundamental problems that hinder the company’s growth.

As such, a strategic acquisition can offer a wide range of benefits and unlock opportunities that can help drive a business’s growth and expansion. Here is an overview of four ways this can happen:

1. Leveraging Synergies

Synergy refers to two or more entities coming and working together. An acquisition creates opportunities for two types of synergies: cost synergy and revenue synergy.

Cost synergies involve cutting operating costs by consolidating overlapping operations and resources. It is also worth noting that cost synergies can also boost the company’s bargaining power because of its larger budget. On the other hand, revenue synergies may involve many components, including reducing competition, expending the company’s customer base, and opening up new territories.

2. Acquiring Talent & Intellectual Property

Many companies are struggling with an acute shortage of talented and experienced professionals to fill open positions. This shortage has also been exacerbated by the COVID-19 pandemic, which has triggered mass resignations .

Acquiring another company is one way of acquiring new talent. Additionally, an acquisition will make your company larger, and larger companies are more appealing to talented employees looking for the best opportunities.

Acquiring another company also automatically gives you ownership of that company’s Intellectual Property (IP). IP has been described as the new currency for doing business, but it is notoriously difficult and expensive to buy (yes, you can buy Intellectual Property nowadays).

3. Filling Gaps in Client Listings & Service Offerings

What happens when things change so drastically that it is almost impossible to keep up? This was the case for most defense contractors after the 9/11 attacks. Companies that couldn’t keep up with the changing rules and regulations were either bought up or shut down.

A strategic merger and acquisition is an efficient solution to critical gaps in a company’s offerings and client listings. Such an acquisition puts your company in a better position to respond to intense changes in the industry or marketplace.

4. Adding New Offerings & Entering New Markets

Google search engine was Alphabet’s most notable source of revenue before Android’s acquisition. However, Alphabet can now sell mobile applications and other related products and accessories to 70% of smartphone users worldwide , thanks to its acquisition of Android.

As explained earlier under the revenue synergies section, an acquisition creates opportunities for the company to sell a new line of product or enter a new market. It also saves the company the time and work that would be spent on the learning curve if it decided to start that new product line or venture into that new market by itself.

Conclusion

These are just some of the ways that a strategic acquisition can help boost a business’s value. It is also worth noting that a strategic acquisition can go wrong if executed poorly. As such, it is advisable to analyze all potential mergers and acquisitions thoroughly before diving in. A credible and experienced mergers and acquisitions advisory firm should be retained to assist with the process. Get in touch today to learn how OConnor Business Brokers and M&A Advisors can help.

Should Sellers Care About Financial Ratios Before Selling?

Tue, 25 Jan 2022 16:15:03 GMT

As a business owner, you work hard to start, establish and grow your business. However, there may be a time when it makes sense to consider selling your business and move on to other business opportunities. It would be best if you made several considerations before enlisting the services of a professional business broker to find a buyer for you.

One of the essential aspects you should consider as you put your business up for sale is financial ratios. Financial ratios constitute crucial business data that will factor into the sale of any business.

What are Financial Ratios, and Why Are They Important?

Financial ratios are vital metrics formulated from business financial statements that serve to provide meaningful insight into the business. The numbers on a business's financial statements, including cash flow statements, income statements, and balance sheet statements, are utilized to analyze and assess several vital aspects of a business qualitatively. These aspects include profitability, leverage, margins, rates of return, growth, and valuation (most important for selling your business at the highest possible price).

Financial ratios are essential since they serve several key purposes. First, they provide valuable business insights. Analyzing financial ratios will offer vital information on the performance of a business. This information is helpful to management, investors/shareholders, financial institutions, and vendors. A potential buyer will consider business insights before purchasing, including liquidity, debt and asset management, and profitability.

Looking at financial ratios over a number of periods helps with trend analysis. Tracking notable changes in the values of financial ratios is important to track emerging trends in a business. For instance, a debt-to-asset ratio that’s increasing indicates a business's debt burden and the eventuality of defaulting risk.

Financial ratios also help with competitive business comparisons. You can use financial ratios to compare the performance of your company performance against competing organizations. Comparing key financial ratios against major competitors enables you to analyze how your business performs relative to average industry performance.

For instance, a return on assets ratio analysis between businesses can help a buyer determine the business which is using its assets most efficiently. A potential buyer and commercial business broker will conduct a thorough comparative analysis with other options in your industry to get the best value out of a business for sale. As a seller, you must take note of these metrics if you seek to land the highest possible price on the sale of your business.

The Most Important Financial Ratios to Consider Before Selling

1. Profitability Ratios

Profitability ratios help a business owner understand the company’s profitability which will help to negotiate the best price with potential buyers. The most important profitability ratios to consider when selling your business include:

Gross Margin – Also referred to as the gross profit margin ratio, it indicates how well you utilize your business assets to generate profit. It is useful for pricing decisions.
Net Profit Margin – Indicates the earnings percentage against the percentage going back into business operations.
Return on Investment – Evaluates your business investments' potential return or performance.

2. Financial Leverage Ratios

Financial leverage ratios help analyze the amount of capital sourced from debts to determine how well your business utilizes and manages debt. Financial leverage ratios are crucial metrics for potential buyers to be eligible for business financing. These ratios include:

Debt to Asset Ratio – This is a measure of the business assets financed by debt rather than business equity. It determines the total business debts relative to the assets the business owns. Potential buyers use this metric to gauge how financially stable a business is. The higher the ratio, the more economically risky it will be to purchase the company.
Debt to Equity Ratio – This is a measure of the relative proportion of the shareholder’s equity and debt utilized to finance the assets of a business.
Working Capital – This is a measure of liquidity indicative of whether a company can pay current obligations. It is the relative proportion of the existing current assets of a business to its current liabilities.

Conclusion:

Overall, a sustainable business needs effective financial management and planning. If you are a business owner planning on selling your business, it's crucial to conduct a thorough analysis of your financial data to determine the true worth of your business.

This process can be daunting and cumbersome. It is advisable to enlist the services of a reputable business broker who will advise you on how to sell a business. Financial ratios constitute vital information that entrepreneurs looking to buy a company will analyze to evaluate the purchase.

7 Things you should know before selling your business

Wed, 19 Jan 2022 21:49:48 GMT

Essential Factors to Consider When Selling Your Business

The joy of any entrepreneur is in growing and scaling their business. When you're starting out, you likely have a vision for where you see the venture in the next year, five years, and decade. Throughout your entrepreneurship journey, you may decide to sell the business.

Some of the top reasons that could influence you to sell your business include making a profit, retiring, and pursuing other ventures. Regardless of the reason, when you're putting your business or franchise for sale, there's a right way to do it and ensure you get the best value.

Numerous growing business owners decide to sell their companies for varying reasons. However, a small business for sale doesn't necessarily attract the big names in the industry. If you want to get the best deal possible when you sell your business, you'll have to consider various factors.

For starters, you should understand that selling a business is never a simple or easy process. Fortunately, with the right help, you can sell your company to the best buyer and reap the rewards from this life-changing experience.

Factors to consider when selling your company

Making these considerations will ensure your business is in the right hands and you are rightly compensated for your efforts and dedication to growing the company.

What is the potential selling price?

When you first decide to sell your business, you may either overvalue or undervalue it. This could be because you are emotionally tied to the enterprise. To avoid getting into the trap of overvaluing your business and lacking any substantial interest from buyers, or undervaluing it and making less money than you should, you should bring a professional on board.

For instance, if you have a business for sale in Winnipeg, you can find a quality business broker or accountant to analyze your business's worth, and advise whether a share sale or an asset sale is the best option for you. If you accrued debt buying business equipment, for example, you may choose to sell your assets separately and recover your investment.

A tax accountant or experienced business broker will find effective ways to structure the sale and help you reduce any taxes you have to pay, consequently increasing your profit.

What will happen to your employees?

Your staff is an essential part of your business, and their welfare should be considered in the event of a sale. If you have had long-term employees working for you, you should consider securing their job security in the sale agreement.

Moreover, the staff is considered part of the company's assets. When selling the business, the time and resources used to train your employees should be considered an asset. In almost all circumstances, it is advised that a buyer retain the current staff.

What is your role in the business after selling it?

In most cases, business owners wish to sell the company and move onwards. However, you may be considering stepping aside from the day-to-day operations while still retaining a consultancy position to help with the transition.

Draw an agreement outlining your role in the business after the sale. In addition, after someone decides to buy a business from you, they will ask you to sign an agreement of noncompetition.

What assets are you overlooking?

Most business owners overlook certain assets when they decide to sell their business. Some of these assets include vendor relationships, customer lists, and seasoned employees. These assets could drive up the value of your business, and are often represented in the category of goodwill, which is in fact the driver of the company’s revenues and profits.

Additionally, you may consider a sale of certain assets in some cases instead of selling the business as a whole. For instance, if you own the space your business operates in, you may wish to consider retaining ownership of the premises and collecting rent from the new business owner.

Ultimately, there are numerous factors to consider with the sale of a business. As the owner, you may not understand everything or know how to go about the pedantic details. Fortunately, whether you are looking to sell a business or buy a business, Oconnor Business Brokers & Consultants can help you get the best value.

Ready to get started? Contact us today , and one of our experienced business brokers will be in touch with you as soon as possible.

Succession Planning or Exit Strategy

Tue, 30 Nov 2021 00:52:04 GMT

Whenever you launch or buy a business in Canada, it's advantageous to have an exit strategy in mind. Businesses typically don't last forever, as even large corporations can eventually get broken up or absorbed by another entity. Here are insightful steps to take for planning your business exit strategy.

1. Consult with Business Transition Experts

Before you market your business or franchise for sale, it's helpful to consult with business experts who have handled plenty of other company transactions. You'll need to consult with an accountant and attorney about tax implications. In order to determine the fair market value of your firm, you should turn to an independent third-party auditor. For the highest return on your investment, you'll need a reputable commercial business broker.

2. Review Canada's Tax Laws

Discuss Canada's tax laws with your attorney and accountant regarding business for sale by owner transactions. Tax laws are complex and often require comprehensive review by business experts. If you have a franchise for sale, you may be following a different tax structure than a small business for sale.

There are different types of taxes as well when you just want to sell business assets for capital gains or reorganization. You may be eligible for a capital gains reduction when selling certain corporate shares. Find out if you qualify for the Lifetime Capital Gains Exemption (LCGE).

If your business includes commercial real estate property, it's imperative that you understand the government regulations and requirements that will be applicable in your market. When you eventually sell your business you'll need to notify your tax services office of the ownership change.

3. Evaluate Your Company's Assets

One of the most critical steps in how to sell a business is estimating its fair market value. You'll need the help of an external accountant to present an objective and transparent financial analysis for potential buyers who expect to review your records.

There are different approaches to determining FMV, such as Asset based Valuation or the Discounted Cash Flow method. Business-savvy professionals will immediately want to know about earnings, cash flow and liabilities.

The main components of company value are tangible assets including inventory, and intangible assets such as intellectual property and business goodwill. Both operational efficiency and the quality of your workforce factor into FMV as well.

4. Consider Increasing Company Value

Once you get an objective professional estimate on your company’s value, either from an experienced business broker or a CPA, you should put yourself in the mindset of entrepreneurs looking for business opportunities. In other words, a successful seller must understand what serious buyers are looking for. Business investors will want maximum returns for minimal risk.

So reduce their risks by upgrading and improving your operation before placing your business for sale on the market. Make the enterprise more competitive with new technology for the highest return. Another option if you're trying to liquidate quickly is to sell the firm as is for a lower return.

5. Devise a Strategic Plan for Selling

A critical step when placing your business for sale is to hire an experienced business broker who specializes in bringing entrepreneurs together. Business sales go much more smoothly when you work with a capable team that regularly engages with a community of business investors looking for profitable investments.

Remember to maintain active communication with your business advisors to maximize the return on the sale of your business. If you care about the future of your company, you should also care about who buys it to build from your legacy.

Ready to get started? Contact us today , and one of our experienced business brokers will be in touch with you as soon as possible.

Selling a Family Business

Tue, 30 Nov 2021 00:38:01 GMT

Selling a business is a big step, and that’s especially true of a family business. If you own a family business, you may view it as a large part of your identity and have invested your time, effort, and passion in it through the years. You may find it somewhat difficult to sell your business, but with the help of a commercial business broker, you can make the process as easy as possible.

The following are some steps to take when you’ve decided to sell your family business:

Prepare and plan well in advance of the actual sale.

Once you make the decision to sell your business, everyone involved should know what’s going to happen and have an approximate timetable for when changes will occur. That way, you’ll be able to keep your focus on your business’s day-to-day operations which will help maintain its value.

Decide what you’ll do next.

Many family business owners feel as though their business is an important part of their identity. That’s why you should plan the next stage of your life before you actually sell your business. You’ll need to have a plan in place for after it sells to help your mental well-being and to maintain your sense of purpose. Selling your business is one of the most important life decisions you will make.

Organize your finances.

Anyone who’s interested in buying your business will expect to have access to the last three to five years of financial statements, which should be in good order. You should also be prepared to discuss them in detail and to easily answer any questions a prospective buyer may have.

Determine what your business is worth and what your asking price will be.

A business valuator or experienced business broker can help calculate how much your business is worth. As it’s not an exact science, the valuator’s experience and knowledge - combined with various calculations - can help you determine a realistic asking price. The valuator will consider your business assets, which can be tangible (like real estate, equipment, and inventory) or intangible (like client lists and contracts). Several different methods of business valuation can be used to come up with an asking price, including one that’s based on the fair market value of your tangible assets, and one that is based on your earnings.

Identify any non-negotiables you may have - but be prepared to be flexible.

Selling a family business is often an emotional process as you will feel a certain closeness to the company and your customers, as compared to other business owners that may not be as involved in the day-to-day operations of their business. Your business may also play a special role in the community. As such, you may have some non-negotiables you’d like to include in the sale of your buisness. For example, you may want the current workforce to be retained, or you may want the company to remain in the area. Just be aware that you may need to be flexible during the business sale process and may have to compromise on some of these points.

If you’d like to sell your family business in Winnipeg, Manitoba, or beyond, contact us at OConnor Business Brokers & Consultants to learn more and to receive a free business consultation.

Business Valuation: Buyer vs Seller

Tue, 02 Nov 2021 02:00:30 GMT

Determining the value of a business is a crucial step for buyers and sellers alike. Arriving at that number can be a tricky process, with many possible approaches. In this article, we will highlight three of the most common methods for business valuation, as well as some prominent differences between buyers and sellers.

Method #1: Market Based Approach

The market approach to business valuation works best in circumstances where there are fewer parameters to consider, such as in Real Estate. In Real Estate, the parameters are fairly consistent by region, which makes it simpler to determine a reasonable value. When it comes to small or medium-sized businesses however, there is often not enough data to be able to compare similar companies; there are simply too many variables and moving parts. The market approach could also be well suited to public companies that have large amounts of available data to examine.

Method #2: Asset Based Approach

To determine the value of a business using the asset approach, the company’s assets should represent most, if not the entire value. This calculation takes all net tangible assets: the machinery, equipment, furniture, fixtures etc. and determines the fair market value replacement cost. The asset based approach to business valuation is used by the seller if the business has minimal profitability, or if the owner is no longer concerned with the continuation of the company. An industry or strategic buyer might also use this approach if they are looking for a company to buy cheaply to acquire certain assets.

Method #3: Income Based Approach

This final approach is the most common method for valuing small and medium-sized businesses. As indicated by the name, the income approach is based on company earnings and revenue.

One method is known as the Multiple of Discretionary Earnings Method, which is defined as the net operating income + necessary adjustments + the owner’s salary. The Multiple is the inverse of the capitalization rate, which is determined by a company analysis. Another income approach, the Discounted Cash Flow method, is based on a reasonable five to ten-year projection, and uses a discount rate to calculate the present value of the future cash flows. Different types of buyers and their advisors will have different approaches to business valuation, but most will include some variation of the Income Approach. For example, buyers who are focused on future profits will likely look at the discounted cash flow approach when it comes to the valuation of the company, whereas a buyer who is looking for growth by acquisition might look at the Multiple of Discretionary Earnings method of valuation instead.

This is where we at OConnor Business Brokers can help. Our certified business brokers have many years of experience with all types of business valuation, and we work with you to find the best fit. Want to learn more? Contact us today, we can’t wait to connect with you!

Can I get a business loan to buy a business? – 5 ways to finance a business purchase

Wed, 18 Aug 2021 14:54:11 GMT

Most business acquisitions are financed in one way or another. Sometimes, it’s possible to purchase a business using two or three different types of financing. There are many ways to secure funding for this big purchase, and here are our top five picks!

1. Use your savings

This is one of the most common ways to finance a business purchase, by using money that you have already saved. This helps you minimize your debt and reduce the financial risk. However, not everyone is able to save up enough cash to purchase a business, which is totally okay! There are many other ways to secure funding for a business acquisition.

2. Traditional Bank loan

A traditional bank loan might seem like a simple solution, but getting approved for one can sometimes be tricky, especially for business acquisitions. If you are looking to obtain a bank loan to finance your business purchase, you must have a very good or excellent credit score and existing personal assets with significant value.

3. Seller Financing

First of all, what IS seller financing? Seller financing is a special type of loan where the individual selling the business accepts a portion of the purchase price in installments, in order to facilitate the sale process. In a similar way to a bank loan, the terms of the agreement, including interest rate and timescale need to be officially documented in a legally binding contract. If you find a business that you would like to purchase that is offering seller financing, a down payment would be made, followed by monthly payments at the previously agreed upon rate until the purchase price is fully paid. If a seller is willing to offer financing, it can be seen as a sign that they believe in their business as well as its long-term growth prospects.

4. Leveraged Buyout

Choosing to purchase a business using this method involves leveraging the assets of the business that you are buying to help finance the purchase. Assets could be anything from inventory to equipment and property and can be used as collateral to make funding the purchase more feasible. This allows you to pay back the purchase amount more slowly, over a longer period of time.

5. Find a passive investor

If you cannot afford to purchase the business on your own, finding an investor who does not wish to be involved with daily operations is another option to explore. Finding a passive investor would allow you to buy and operate the company, while you pay a percentage of ongoing profits to your investor. This is very similar to seller financing, but in this scenario, you aren’t in debt, and payments are based on the continued success of the company.

There are many ways to finance a business purchase, so it is important that you do your research to determine the best fit. If you have any questions about buying or selling a business, contact our office today!

5 ways to save money when making an offer to buy a business

Thu, 29 Jul 2021 20:37:05 GMT

Congratulations! You have found a business to purchase, done your research and initial due diligence, and are ready to make an offer. Buying a business is a big financial decision, and one that should not be taken lightly, but there are ways to make the process easier and more affordable. Before you make an offer to buy a business, consider these tips to help you save money.

1. Never agree to the first price

When buying a business, always treat the asking price that the seller presents as a starting point for negotiations. The asking price should give you an indication of the affordability of the prospective business, and not much more. The price should be reflective of its valuation, but negotiations are expected – use that to your advantage.

2. Challenge the seller by asking what if questions

Once you open negotiations with the seller, you can challenge their price by asking “What If” questions. For example, “What if key employees leave the company after the sale?” or “What if the business’s largest client goes bankrupt? “. Asking questions such as these may make the seller think about their asking price, and can help you save money if you’re able to negotiate the price down as a result.

3. Open negotiation at the lowest price possible

When you begin negotiating the price of the business, you will want your initial offer to be low without being unreasonable. Some sellers may dismiss offers that are too low without a second thought, so make sure that your offer is fair and justifiable. Once you have made this initial offer, you have a price range to work within, and you can work toward reaching a fair agreement with the seller.

4. Waive some contingencies

Contingencies such as those for appraisals, loans or inspections are a standard element in a purchase offer when buying a business. However, if you have consulted your attorney and feel comfortable risking your deposit, you may want to consider waiving some of the contingencies. This strategy can be risky however. For example, if you waive an inspection contingency for a brick-and-mortar business, and post-purchase you discover the building needs massive repair, it is entirely your responsibility. An inspection could have avoided this, so it is important to be cautious when using this strategy. Waiving contingencies can make your offer more appealing than a competitor’s, as long as it is executed with caution.

5. Offer to close quickly

Most sellers wish to sell their business as quickly as possible. Their desire to close the sale quickly may outweigh their desire to maximize profit. When buying a business, if you can offer the seller a shorter and more expedient closing, then that will make your offer more appealing.

Buying a business can be a tricky and complicated process, but we are here to help. For more money-saving tips, or for assistance with your business buying endeavour, contact us today!

3 warning signs not to buy a business

Thu, 29 Jul 2021 20:13:39 GMT

Purchasing a business is a big decision, and one that should be made carefully. There is a lot of due diligence required before you sign anything, to ensure that this large purchase is a safe, smart decision. Here are 3 warning signs that you can look out for when you are buying a business!

1. How honest is the current owner?

Honesty is an important quality in a business owner. Unfortunately, not everyone is, and it can be hard to tell if someone is lying. There are a couple clauses and agreements that you can ask the current owner to sign that will help protect you against any shady deals. One of these is a disclosure agreement. This requires the current business owner to share key information pertaining to the business. Some things to ask about might be any debt, lawsuits, issues with vendors, issues with employees, or any other current issues that you think are important. Ensuring that you are as informed as possible will help you avoid any scary surprises after you sign the deal.

2. Funny finances

If the business financials do not add up, that is one of the biggest red flags you will find in a business deal. When you look into your potential new business’ financial records, it is a good idea to go back at least three years, but five is best if you can. Be sure to compare the company’s internal financial records with tax files, and make sure that all the numbers line up. As soon as there is a discrepancy, that is a sign of some shady dealings, and a warning sign that you should not buy this business. You should also review the business’ tax returns, to make sure that they are up to date with their taxes. Pay specific attention to sales tax; some businesses under report their income to avoid paying higher sales taxes. Conducting a thorough examination of the financial records is complicated, consider hiring a CPA firm to conduct the audit to be certain that no issue gets missed.

2. Old/broken equipment

When you are conducting your research, be sure to take a look at all of the equipment that is included with the business purchase. Inquire about the age and inspect the quality of equipment. Old, poor quality or broken equipment can be very costly to replace, and you do not want to be unpleasantly surprised after the purchase is complete Another aspect to consider when it comes to equipment is ownership. Does the business own the equipment they use, or is it leased? Ownership is typically the better option, so there is no concern about having to make payments. The bottom line here is to ensure that you will not have to repair or replace the equipment right after you purchase the company.

Buying a business can be an incredibly fulfilling experience if done properly, but it is important to be careful and do your research. Have any questions about purchasing a business in Manitoba? Contact our office today, we would love to hear from you!

Is my business worth selling? 5 steps to determining whether or not your business has value

Thu, 29 Jul 2021 20:04:04 GMT

Selling a business is a tricky process with a lot of moving parts. Before you decide to sell, there is a great deal of research to be done. One of the main aspects to consider is the current value of your business, and whether now is the right time to sell. Here are five tips to help you determine if your business is worth selling.

1. DON’T: Rule of Thumb

You many have seen or heard of a Rule of Thumb for quickly estimating the value of a small business, but the truth is that business valuation is much more complicated than that. There is no one formula to obtain an accurate value. There are many aspects to consider that are not included in the typical Rule of Thumb, such as business debt, owner’s compensation, inflation and more. When evaluating a business, it is essential to take all figures into account, so that the valuation of the business is as accurate as possible.

2. Talk to an Expert!

You are an expert in your industry, and we are experts in ours. Let us help you every step of the way! Certified and experienced business brokers have the market knowledge and expertise to guide you through the valuation of your company. We can help you find value within your business and suggest strategies to help increase your sales value. Working with an expert gives you peace of mind that the value of your company is being evaluated properly, with your best interests at heart.

3. Asset-Based Valuation

Asset based Valuation is one of the more common approaches to determining the value of your business. This type of assessment takes into consideration the book value and the liquidation value of your company. The book value is the net worth of the business, which is calculated by subtracting liabilities from assets, and can be shown in your financial statements. The liquidation value of a company is when it sells off all its assets, pays all its debts and taxes, and distributes the remaining among shareholders. This method is simple and easy to use and will provide a quality valuation of your business.

4. Valuation Based on Earnings and Cashflow

Another strategy for determining the value of a business is conducting an evaluation based on the business’s earnings and cashflow. This type of business valuation takes into consideration the business’s discounted cash flow and a going concern value which is a number based on the company’s future cashflow. The discounted cash flow methodology predicts future earnings and discounts them at the valuation date. The going concern value is a comparison based on your business’s current cashflow and predicted future influx.

5. How well does your business operate?

A couple of non-financial aspects to consider when determining the value of your company is the efficiency of daily operations, and the quality of your team. Dedicated staff members are an incredible asset for a small business; people who communicate well, work hard and genuinely care about the success of the company are inherently valuable. In addition to your team, consider the operations of your business. Take a look at the effectiveness of your company structure, and the potential for growth. Keep in mind that not all value is monetary; a business with a solid team that is well-rounded in its operations is an attractive option to buyers.

Ready to get started? Contact our office today!

5 things you need to know when choosing a business broker

Wed, 28 Jul 2021 22:23:42 GMT

Hiring a business broker to assist you with buying or selling a business is a great way to simplify the process. With that being said, you will want to find a broker who is experienced, honest and who understands your needs. Here are five things that you need to know when choosing a business broker.

1. What are their credentials?

When meeting with a business broker for the first time, it is important to ask about their background and accreditation. First and foremost, ensure that they are properly licensed. Following that, find out which organizations, local chambers and business groups they are involved in. This second part is not necessary, but it will provide you with some insight as to how active and connected your broker is within the business community. When selecting a commercial business broker, you will want to find someone who is adequately qualified, experienced, and motivated to help you with your business transaction.

2.. Is the broker genuinely interested in learning about you and your business?

A good business broker will take a genuine interest in you, and your business. They will want to learn everything they can about your company to help guide you on the right path. Additionally, getting to know you as a person helps the business broker understand your motivations as a business owner, which in turn allows your broker to provide you with the best service possible.

3. Is the broker a team player?

Whether you are looking to purchase or sell a business, there are many moving parts, and often many people involved. A good business broker will have no issue with having your attorney, accountant, or other professional advisors involved in the sale. They will not shut out other people in an effort to control the transaction, but will instead work with everyone involved to ensure the successful completion of the purchase or sale.

4. Communication and Leadership

When meeting with your broker for the first time, ensure that they are open and honest with you. Make sure that they listen to your needs and are responsive to your input. It is also important to establish a clear understanding of how and when your broker will communicate with you throughout the process, since business transactions can take months to complete.

5. Trust your gut!

You can do loads of research and preparation, but at the end of the day, you want to hire someone that you enjoy working with! When choosing a commercial business broker, look for personality and character traits that you appreciate. Take your time, and find someone that you respect and trust.

Doing your research and asking the right questions can help you feel confident in your choice of business broker. Are you ready to take the next step and connect with an experienced business broker? Contact our office today, and we’ll be in touch very soon!

5 tips to maximize the sales value of your Business

Fri, 16 Jul 2021 15:32:48 GMT

You have officially made the decision to sell your business. Congratulations! One of the first steps to consider in the sales process is determining the value of your business, which is the dollar amount that your business is worth. As the owner, you want to look for ways to increase the value of your company. This article will give you a few tips that can help you maximize the sales value of your business and in turn increase your profit!

1. Ask for help!

You are an expert in your industry, and we are experts in ours. Let us help you with every step of the way! Certified business brokers have the market knowledge and expertise to guide you through the valuation of your company. We can help you find value within your business and suggest strategies to help increase your sales value. Working with an expert gives you peace of mind that every aspect of the sale is being managed properly, with your best interests at heart.

2.. Lower expenses and increase revenue

This is a common business growth strategy, but actively working to lower your expenses and increase your revenue before you start the process of selling your business is a smart idea. There might be areas within your business where you can reduce spending; figure out what they are and make the necessary adjustments. You can also work on increasing your revenue by exploring ways to encourage your customers to buy more frequently or to spend more with each transaction. If you are able to make positive changes in both of these areas, the result will be an increase in the sales value of your business.

3. Make a Plan!

Creating a detailed, cohesive business plan allows you to provide your company’s new owner with a roadmap to continued success. Providing a plan with goals and the framework to succeed shows potential buyers that you care about the future of your company. Having a business plan increases the credibility of your business, which in turn will increase the business valuation.

4. Develop Repeatable Processes

What does this mean? A repeatable process is a system within your business that can be replicated and executed by your employees. Simply put, you want to ensure that your business can operate without your input. It is so important to fully educate your staff. This will help them feel confident under new ownership, and decrease the rate of employee turnover. Educated and empowered employees are a huge asset to any business, especially if you are looking to sell.

5. Stand out from the Crowd

What makes your business special? Having a strong, distinguished brand will not only set you apart from your competitors when you are running your business, but it will also help to increase the value of your business. If you own a business, you most likely have a branding strategy, but it can always be strengthened. Explore avenues where you can improve customer loyalty, cohesiveness and consistent messaging – these three elements are the key to standing out when selling a business!

There are many different strategies you can implement to maximize the sales value of your business. Ready to get started? Contact us today!

4 best resources to find a local business for sale

Thu, 27 May 2021 14:47:57 GMT

Are you looking to dip your toes into the world of business? Or perhaps you would like to purchase a company to add to your extensive portfolio. Either way, one of the first steps in purchasing a business is finding one that is the right fit for you. There are some great resources available to those who are searching for a company to buy, and here are a few of our top picks!

1. Contact a business broker!

We are the trusted experts in this industry. We know ALL the ins and outs of purchasing a business, and we have connections within our network to help you find the business that is the best fit for you! Our job is to guide you through every step of the process, and to help you find the right company to buy. We discuss your financial ability and budget, industry preferences, past experiences, retirement goals, and your wants and needs to ensure that we find the right business for you to buy.

2. Talk to business owners in your area

Stop by the local businesses in your area and make a connection with the owners! The small business community is tightly knit, and one is likely to know of an owner who wishes to sell their business. Plus, you cannot have too many business connections! Another option to explore would be to reach out directly to specific business owners in a particular industry of interest.

3. Stay connected with your network!

Every person within your network may know of someone who is looking to sell their business, and all you need to do is ask! Even if you talk to people who are not involved in business themselves, it is possible that they know of someone who is. This approach works especially well if you reach out directly to accountants, lawyers, and bankers. Focus on professionals that work with large number of business owners on a day-to-day basis, as they will be more likely to know which business owners are looking to sell a business.

4 Online Marketplaces

Another resource that you can utilize to find the right business to buy is right at your fingertips! There are multiple websites that are nothing more than lists of available businesses for sale, and they allow you to filter, search and browse all the different options from the comfort of your home. However, it is important to use caution when browsing these sites, and the advice and guidance of a professional business broker is always recommended when you are looking to buy a business.

Are you looking for assistance or guidance in your business search? Our experienced business brokers are always happy to help or answer any questions you may have!

Give us a call today!

7 mistakes buyers make when buying a business

Wed, 26 May 2021 14:55:40 GMT

Buying a business is a lengthy complicated process that involves a lot of moving parts and paperwork. Mistakes do happen, but arming yourself with knowledge can help you understand these business buying mistakes, and will also help you to avoid making them. Here are 7 of the most common mistakes buyers make when buying a business.

1. Trying to do it alone

There are a lot of small details that need attention when buying a business, and if you try to do everything by yourself, there is a much higher chance that you will miss something. Hiring an experienced business broker to work with you through the process will ensure that everything is taken care of and no details get missed.

2. Not doing enough due diligence

Before you buy a business, it is important to undertake extensive research into its records. The purchase of a company is a big investment; you want to know exactly what you will be paying for, and what kind of value and return you can expect to gain from your purchase.

3. Buying for the wrong reasons

Why do you want to buy this business? This is a large investment that you will carry for many years. It is imperative to reflect on your intentions before you sign the papers, to ensure that you are moving forward for the right reasons.

4. Waiting too long to involve your bank

Some entrepreneurs will not approach their bank for financing until they have found a business to buy. This can put the deal in jeopardy, because you will not know how much financial backing that you qualify for until you talk to your financial advisor. Once you have made the decision to buy a business, reach out to your financial advisor to determine how much you can afford to spend BEFORE you start negotiating a deal.

5. Signing documents in your own name

This is a common mistake, especially with smaller businesses that tend to be registered as sole proprietorships or partnerships. When you buy a business, or sign a business contract or document in your own name, you are likely assuming personal liability. By incorporating your business, you can avoid personal liability, protect your personal assets, and realize certain tax advantages.

6. Not understanding why the business is for sale

It is important to know why the business that you are looking to purchase is for sale. The owner could be looking to sell a business due to hidden, underlying issues, and if you do not do your proper research, you could get stuck with significant unexpected expenses or headaches down the road.

7. Making changes too quickly

Once you have made your purchase, it might be tempting to start making changes and improvements right away! Don’t! Give your new team time to get used to you as an owner or manager, and learn as much as you can about the current systems BEFORE you decide to change it up.

Are you ready to get started? Give us a call today!

Franchise or Established Local Business – Which is a better buy?

Fri, 21 May 2021 14:59:06 GMT

Once you have made the decision to buy a business (that’s so exciting, congratulations!), the next step is to determine what type of business you might like to own. There are two main types of businesses that you can purchase: you can buy a franchise, or you can buy an established local business. There are advantages and disadvantages to both business models. Here are a few key takeaways to help you decide which type of business you should buy!

The Franchise: Tried and True

One of the more significant advantages to purchasing a franchise is that the entire system is laid out for you. The system has been tried and tested, and customers will be familiar with and trust your brand before you even open your doors. Even if they have not shopped at your location, customers are already confident in the quality of products and services that they can expect from you.

On the other hand, the main disadvantage to buying a franchise over an established local business is the lack of freedom that you have when it comes to modifying policies or operations. As you you are buying a tried and tested system and are required to follow the policies, there are limits to the executive power that you hold within your business. Your expansion goals are also severely limited, and fully dependent on the Franchisor’s long-term plans and territory availability. In addition, when you buy a franchise, you are required to pay ongoing royalites and advertising fees that typically range from 6% to 12% of your gross revenues.

The Established Local Business: More Creative Freedom

When you buy an established local business, you will be taking over every aspect of the operation. The decisions become entirely yours, and you have the freedom to implement policy changes as you wish. As an independent business owner, you have total freedom when it comes to your business; you get to decide how you would like the business to run, right down to every last detail. This is an exciting and fun challenge for many entrepreneurs who love being able to tweak and improve every aspect of their business.

The potential risk to purchasing an established local business is that you are on your own. Compare this to the franchise option, where all aspects of the operation have been developed for you, marketing strategies are provided, and the system is PROVEN to work. Being an independent business owner forces you to come up with creative solutions to everyday problems on your own, without the backing of a large company. To some people, this idea is terrifying, and to others, the excitement at the prospect of creating their own systems and shaping their own business is what gets them up in the morning.

Before you choose the type of business that you would like to buy, consider the type of person that you are and the work environment that you are looking for. If you are the kind of person who would love the opportunity to let your management skills shine, a franchising option might be more suited to you. However, if the idea of buying and building up something that is entirely your own is exciting and appealing, then you might want to look for local businesses for sale instead. Also, and perhaps most important of all, as an independent business owner, there is no limit to your expansion goals. Both business models have the potential to be very successful, and you just need to find the right fit for you!

5 Signs that it’s time to sell your business

Mon, 17 May 2021 20:37:04 GMT

Making the decision to sell your business is one of the most difficult things to do as a business owner. Your company is not just your job, it is your baby, and parting with your baby can be a challenging and emotional process. Even if you do not plan to sell your business anytime soon, you will not own your business forever, so it is important to have an exit strategy and to keep an eye out for the signs that it’s time to sell your business.

1. Are you burnt out?

Running a business takes an incredible amount of time and energy, and that can catch up to you over the years. The life of an entrepreneur can be physically and mentally draining, and there is no shame in stepping back and slowing down to take better care of yourself. You will not be doing yourself, your family, or your business any favours if you try to power through the burnout; it is much wiser to know when to call it quits and sell your business.

2. Falling behind in your industry

Are you starting to feel like you are falling behind what’s new and trendy in your industry? Success in business occurs when you are on the cutting edge of what is exciting and popular, and if you fall behind, slowly but surely the success of your business will decrease. The world of business moves so fast, and if you can no longer keep up, or you find yourself no longer WANTING to keep up, you will want to consider selling your company. If you feel your passion is gone, it is time to move on.

3. Increased Business Value

You have worked for years building your company, and if you have kept a close eye on costs while managing to increase revenues and earnings, your business will have increased in value. The greater the value of your business, the higher price it will command. Selling your business when it is thriving will help you cash in on all your hard work and pass the baton to somebody else!

4. Sometimes life gets in the way (and there is nothing you can do about it!)

Occasionally, circumstances in your life can shift and change until it is no longer feasible to continue running your business. This is not something you can control or predict, and it does not make you a failure as a business owner. It is important to recognize when circumstances no longer allow you to operate your company profitably, and this is when you must plan an exit strategy.

5. You are ready to retire!

You have devoted countless hours to building your business, working hard to thrive as an entrepreneur, but now your priorities have shifted, and you are ready to slow down. Perhaps you want to dive headfirst into a hobby, spend quality time with your family, travel, or purchase a vacation home in the Caribbean. There are many reasons why it could be time for you to sell your business and move on.

No matter your reasoning, selling a business in Manitoba can be a complicated process, and our qualified business brokers can help! Ready to get started? Give us a call today.

Top 10 List of Reasons Why you Should Use a Business Broker to Sell your Business

Wed, 21 Apr 2021 15:12:26 GMT

Selling a business can be a challenging, time-consuming, and overwhelming process for business owners; thankfully business brokers are here to make the process as simple as possible for you! Yes, there is a cost when using a business broker but only when your business sells, and the result will be a quicker sale and a higher return on investment.

There is an endless list of reasons why hiring a business broker is a great idea when you are looking to sell your business. Here are the top 10!

1. Great Market Understanding

An experienced business broker will have worked with business owners from all industries and sectors, and will understand the nuances of your market. This deeper understanding will give you useful insight into the process of selling your company.

2. Marketing Skills

Marketing a business is a skill that requires expertise and finesse, and a business broker will come equipped with all the tools and knowledge for you to bring your business to market in an effective way.

3. Price

Listing your business at the right price is crucial. A price that is too low will cost you money, while a price that is too high may lead to no sale at all. Seasoned Business Brokers will be able to provide you with a market valuation, and offer you tips on how to increase the value of your business, and to maximize your return on the sale of your business.

4. Middle man

Emotions can run high during a business transaction, so it is imperative to have a business broker acting as the intermediary. Buyers and sellers also need to work closely together after the transaction to finalize all the details of the sale, which can get stressful. Having a Broker involved to manage any tensions that may arise is a very smart idea.

5. Show off all your best angles!

Business Brokers know how to present your business to interested buyers in the most appealing way, by focusing on the positives, while being forthright about the flaws and presenting ways to make corrections and improvements.

6. High quality profiles

If a buyer is interested in buying your business, they will be required to sign an NDA which will allow them to view a confidential business profile about your business. A business broker will prepare a high-quality business profile to entice your potential buyers.

7. Buyer Screening

Your business may attract a lot of interested buyers. A business broker will screen potential buyers to eliminate those who are “just looking” or who have an insufficient budget, saving you the time and energy of going back and forth with someone who is not committed.

8. Less Paperwork – Need we say more?

Selling a business involves a HUGE amount of paperwork and time. As a business owner, you already have a lot on your plate and do not need to fill your days with any more paperwork. Hiring a Business Broker to manage all the documents allows you to keep your focus on your business, so it can thrive until you find a buyer.

9. Confidentiality

Selling a business requires a great deal of discretion and confidentiality. Business Brokers are able to effectively present business for sale opportunities to potential buyers without breaking confidentiality, and are familiar with the world of NDAs, helping you navigate with ease.

10. Peace of Mind – We’ve Got You!

At the end of the day, you have a lot on your plate, and being able to work with a business broker that you can trust will offer a peace of mind like no other – that you and your business are being taken care of through every step of this transaction.

Are you ready to get connected with one of our experienced Business Brokers? We cannot wait to help you!

How to buy an existing business with limited funds

Wed, 14 Apr 2021 15:02:59 GMT

Buying a business does not have to break the (Piggy) Bank

Buying an existing business is a great way to make a debut in the world of business, or to expand your portfolio. Purchasing a company that is already operational has many benefits, including a loyal customer base, a well-established product or service, and staff that already know the business.

Having limited funds does not necessarily limit your business buying abilities; here are a few tips for business buying on a budget!

Timing, timing, timing!

Timing just might be the most crucial part of this transaction. In this case, we are not talking about your own personal timing, but rather the timing of the business owner in question. When you do your research, you want to look for business owners who are ready to exit their business. They may be ready to retire, or just looking to move on to new opportunities. If you can be in contact with the right person at the right time, it could lead to you getting a good deal. Retiring business owners likely present the better opportunity here, as they have more incentive to sell quickly and thus may be willing to give you a break on the price.

Find a business that’s offered with seller financing

First of all, what exactly is seller financing? Seller financing is a special type of loan where the individual selling the business lends money to the buyer to facilitate the sale process. In a similar way to a bank loan, the terms of the agreement, including interest rate and timescale need to be officially documented in a legally binding contract. If you find a business that you would like to purchase that is offering seller financing, you would make a down payment, followed by monthly payments at the previously agreed upon rate. If you are able to find a seller who is willing to lend you the money to buy their business, this means that they believe in their business, and they also believe that you will manage it well.

Find a passive investor.

If you are not able to afford to purchase the business yourself, finding an investor who does not wish to be involved in the day-to-day operations is another option to explore. If you can find a business whose owner wishes to retire, and an interested passive investor, this would be an avenue to consider. Securing a passive investor would allow you to buy and operate the company, while you pay a percentage of its income to your investor. This is similar to seller financing, but in this case, you aren’t in debt, and payments are based on the continued success of the company.

Be creative!

Buying a business with limited funds means that you need to be flexible, resourceful and creative! It might also mean that you need to work harder to make sure the transaction is a successful one. Perhaps you would like to offer sweat equity in exchange for lower loan payments, or come up with alternative financing solutions to make it work. Entrepreneurship is all about being resourceful, and when money is tight, creative strategies become extra important.

Just because your funds are limited, does not mean that your business buying options are. All it takes is timing, creativity and a little bit of perseverance. Ready to get started? I can help. Contact me today!

5 Errors Business Owners Make When Valuing Their Business

Wed, 07 Apr 2021 15:41:20 GMT

A fair valuation builds trust and helps with selling.

So, you have made the decision to sell your business. How exciting! An important step in the sale process is a thorough valuation of your business, and an inaccurate valuation can result in the sale falling through, so you want to be extra careful with your information.

You may have watched Dragons Den or Shark Tank and noticed that the hosts always complain that the valuation presented seems to be far from what the hosts thought appropriate. Don’t get me wrong, a buyer and a seller may valuate a business quite differently but you should know why you value a business at a certain price. To help you get started, here are 5 common mistakes that business owners make when valuing their business, and how to avoid them!

Mistake #1: Trying to do your valuation by yourself

Determining the value of a company is a complicated, involved process, and trying to value your business alone will certainly result in missed details. Nobody understands the business sales market better than an experienced business broker. One can help you determine a fair market value for your business, or even suggest ways to increase the value! Using a commercial business broker for the sale of your business allows you and your management team to maintain 100% focus on your company, so that it remains profitable and is appealing to potential buyers. Compare this with a real estate broker who knows what houses are worth in a certain market and what the market in general is like at a given point in time. The insights of a business broker are invaluable.

Mistake #2: Unrealistic Projections

This is one of the most common mistakes made when selling a business. As a business owner, you most likely have high expectations when it comes to the value of your company. This can be for many reasons, such as unrealistic expectations for growth and cashflow, a poor understanding of the target buyer, or maybe you just don’t understand how businesses are valued. That’s okay, this is why you hire an expert! A seasoned business broker can help you manage your expectations and help you to arrive at a fair market value for your business.

Mistake # 3: Comparing your business to others!

While finding a comparable competitor’s business may help with the value of your company, it can be tricky to find a business that is truly comparable. It is important to consider hidden factors such as reputation, intellectual property and patents, customer portfolio, plus management experience and many other factors within that company. The age and growth phase of a business is also a factor when it comes to value. A younger, evolving business is likely to have a lower value than an established business with comparable cashflow. Your business is unique, your circumstances are unique, and there are more accurate and proven methodologies to evaluate your business without trying to compare yourself to others!

Mistake #4: Not defining EXACTLY what is for sale

In the valuation of a business for sale in Manitoba, it is very important to define exactly what is being offered for sale. A lack of clarity in this area can lead to confused buyers, who are not sure what they would be getting if they bought your business. You will need to determine whether the assets or shares are being sold. You will also need to consider many other factors, including company debt, inventory value, working capital, surplus property or assets that are held within the company, capital gains exposure, and on and on…. It is important to determine exactly what you are going to sell and what will be held back before valuing your business.

Mistake #5: Expecting a fixed value

Valuation of a business is not an exact science. A common misconception is that valuation will provide an exact value, but there is no one magic number that everyone in the market will accept. Your business broker will provide you with a price range that the company is likely to sell for, but it is not uncommon for this figure to be different than the final transaction price, and it is important to understand that there may be some variation in price throughout the sale process. A good business broker will source a number of interested buyers, and this will increase the likelihood of realizing maximum value on the sale of your business.

Your business broker can help you through every step of the valuation process, and will often value a business via several different models, to provide you with the most accurate valuation! Ready to get started? Contact us today!

The secret to successfully selling your business in Manitoba

Wed, 31 Mar 2021 15:35:45 GMT

Whether you are looking to retire, or move on to other endeavors, selling your company is never an easy decision. There are many steps to consider, and it is not an easy thing to think about, but doing some planning ahead of time will help the sale process flow smoothly and maximize the sale price. Here are some tips to help you get started and on the right path to a successful business sale!

Is now the right time to sell?

No matter how you look at it, selling a business is a complex process, and often an emotional one. Doing some market research can help you decide when the time is right to sell. This is not a process that you want to rush, as with selling a house, if you are in a hurry, you may not receive the return you were hoping for. On the other hand, the time you invest in increasing the value of your business will result in a higher sale price. Take the time to evaluate the state of your business, and the current market conditions to decide when the time is right for you to sell your business.

Consulting with a business broker can help you with this step, to provide helpful market insights, advice on how to increase the value of your business, and tips for the timing of your sale.

Increase the Value

When you are looking to put your business up for sale, you will want to increase its value as much as possible so you can maximize your sale price. The first thing you can look at when evaluating your business is operational efficiency. In which avenues can you cut costs and/or increase sales? Look at ways to increase loyalty and recurring sales with your current customers or tap into new markets.

Develop Systems and Processes

Another important aspect to look at is developing repeatable processes within your company and empowering your employees. It is crucial to the future success of your business that your processes are repeatable and teachable, so that your company will continue to thrive without you at the helm. Your staff is just as important as your processes, do not forget about them! Paying special attention to your employees, and working to resolve any internal conflicts that arise helps keep employee turnover rate low, and creates a strong team. A professional team that is loyal to your business increases its value almost as equally as tangible assets.

Hire an Expert

No one knows more about the world of buying and selling businesses than business brokers, so hiring an expert to help you navigate this tricky process is the key to success! Commercial business brokers have years of market research to help you break down how your business will be valued, and insights to help you increase the valuation of your company. Business brokers are well versed in marketing, and are able to successfully bring your business to market in a way that will attract qualified, interested buyers. Having a business broker on your side offers peace of mind that every detail is taken care of, right down to the finalization of the sale.

Selling your business can be daunting, but it is also an exciting process that can be very rewarding. Ready to get started on the sale process? Reach out to us!

The Simple Way to Buy a Business in Manitoba

Wed, 24 Mar 2021 14:41:18 GMT

Why make it difficult when there is an easy way?

If you are new to the entrepreneurial world, the idea of starting your own business can seem quite daunting.

In the majority of cases, buying an existing business poses less of a risk than starting one from scratch. When you buy an existing business, you are benefitting from an established customer base, reputation, and employees who are already familiar with operations and procedures. You would be taking over an operation that is generating cashflow and profits from day one, which also makes it easier to acquire financing. Buying a company in Manitoba is a complicated process, but here are some ways to help simplify your business buying experience!

Selection Process - Make the RIGHT choice

The first step to more easily buying a business in Manitoba is to find one that is the right fit for you. You might want to start by looking at an industry that you understand, or that you have experience in. Spend some time thinking about the type(s) of business(es) that interest you and best match your skills. Acquiring a business in an industry that is familiar is easier than starting fresh in a new industry, as you can carry over your experience and skills into your new endeavor!

Sources for Available Businesses

A google search reveals that there are different sources for finding available businesses for sale, but in most cases the listings from a local broker like OConnor Business Brokers is your best source. The sellers are motivated to sell and have been vetted by the broker to be a solid opportunity for a buyer. If you are serious about buying, you can save a lot of time and effort selecting from your local business broker listings.

Do your Due Diligence

Once you have found a business to buy, but BEFORE you make the purchase, do your research! Due diligence for purchasing a business in Canada normally includes a thorough review of your target business’s market positioning, legal issues, and financial records. This may seem like an obvious step, however skipping this important part can lead to costly post-purchase surprises down the road. Here is where your business broker can help you. It is vital to have someone with experience in the industry conduct this thorough research of the company’s records. For example, in addition to your business broker you might want to consider also hiring an accountant who specializes in business acquisitions to analyze the financial records, and a lawyer to examine any legal issues that affect the company. You wouldn’t want to buy a house without an inspection, and the same goes for buying a company! A knowledgeable business broker can assemble a team that includes accountants and lawyers experienced with these transactions.

Hire an Expert

Regardless of whether you are just getting started, or you are a serial entrepreneur, life is busy, and hiring a business broker will ensure that all the details are taken care of and nothing gets missed! Commercial business brokers have years of market experience and provide valuable counsel to help you navigate the complicated world of buying a business in Canada. Business brokers will guide you through every step of the buying and selling process, from pre-screening businesses and navigating financial negotiations, to expert marketing and business valuation. If you want complete peace of mind when buying a company, hiring a commercial business broker is the way to go!

Buying a business can be an exciting and lucrative endeavor, and these tips can help streamline the process. Ready to level up or get started on your entrepreneurial journey? I can help. Contact me today!