So you think you want to sell your business. How much do you know about the process

1. What You Need to Know About Selling Your Business Don’t think you can win at football by playing with badminton rules Presented by: Matthew Waymire CPA United Business Brokers Phone: 702-932-0992 Email: Matt@UnitedBusinessBrokers.com

2. We work for you We do not “dual agency” any deal in this office Duties owed

3. Things you need to Understand about selling your business in order to actually sell the Business It has to make sense for the buyer to buy Understanding buyers is the key Why would a buyer buy this specific business? What are the characteristics of someone who would buy this specific business? Why would a buyer pay this amount? Why would a buyer buy with these terms? Selling a Business is tough

4. Understanding Buyers

5. To Sell your Business You Need to Anticipate Where Your Potential Buyer is Coming From For most business with Seller’s Net Cash Flow (SDE) under $500,000 you will be dealing with a financial buyer For businesses with Seller’s Net Cash Flow over $500,000 you may begin to deal with Strategic and Investment Buyers.

6. All Financial Buyers Need: A reasonable salary Money to pay the acquisition loan A cash return on the down payment Many are forced Entrepreneurs. They are buying a Job

7. What Financial Buyer’s Mentally Want: Control over destiny Job for life Will not be downsized Opportunity to make more Earning potential Build value in an asset Maybe the buyer will sell in several years?

8. All Investment buyers want: Very high rate of return on their money As low risk as possible On-going management

9. All Strategic Buyers Want Vertical or Horizontal Integration Economies of scale

10. Buyer’s Questions a Seller Must Answer In Order to Sell the Business If this is such a good business why are you selling? How much money has the business made How much can the business make? How did you come up with the price? Why would a buyer spend cash to purchase your company rather than taking the same cash starting a similar business from scratch?

11. Questions a Seller Will Have to Answer In Order To Sell The Business Will the Seller Carry Paper? Can the success of this business be transferred to a new owner? Does this business need to have an on-site owner or are there sufficient competent employees in place who can run the company? Is the Lease transferable? Are there customer or vendor concentration issues?

12. Toughest Decision a Financial Buyer Will Make (after deciding who to marry) Even after a thorough due diligence the buyer can never get 100% comfort At some point in time they need to make a leap of faith Many times they are maxing out their borrowing ability and hocking their home to the max Many times they are risking their entire retirement savings

13. Selling Your Business is Tough Nationwide average time to sell 181 days Nationally an average of 15% of all business sell About 50% of all sellers carry back paper – In today’s market % greater

14. The 1 In x Facts About Buyers 1 In 50 have Purchased a business before Need to be guided through the buying process 1 in 10 are all cash buyers Need to either get SBA or Seller Financing Banks say they will lend but they really don’t If they have the cash they will most likely want to leverage 1 in 20 of all leads purchase This is one of the toughest decisions to make 1 in 20 of all purchasers buy the business they first call in on Allot of tire kickers 1 in 10 of all buyers are entrepreneurs – the rest are risk adverse Need to develop comfort in making the decision

15. Reasons Owners Sell Their Businesses Life Happens Illness (you/your family) Accident Health/Slowing Down Divorce Partner Disputes Need to pay non-business debts Spouse is transferred Homesick for a different region/state/city Children decide they don’t want to follow in parent’s footsteps Heirs don’t have the skill-set to manage the company Market Changes Need to add new locations Need to add new skills Well capitalized competitor moves into market Success Happens Growing too fast Out pacing management ability Business has maxed out it’s value Working capital needs It is time Burnout Boredom Overworked Frustration New interests New hobbies New investment opportunities Retirement/Semi-retirement Contact me, Matthew Waymire CPA (United Business Brokers) at 702-932-0992 or email me at Matt@UnitedBusinessBrokers.com

16. Defective Reasons to Sell I am losing my shirt I am near bankruptcy Legal problems – etc.

17. Selling a Business is Not At All Like Selling Real Estate REAL ESTATE Low Confidentiality Easy Established Financing No physical meeting of Buyer and Seller Moderate level of negotiating BUSINESS High need for confidentiality Average Banker will not lend for acquisition Buyers and Sellers will meet and should develop a high level of rapport Very high level of negotiating

18. Financial Statements It won’t sell with squirrelly books I won’t take a listing with unorganized books Number one reason properly priced listings don’t sell is they can’t get through the due diligence process

19. Even though we screen, buyers are flakey Miss appointments Nothing goes smoothly Even though we take a lot of the sting out of the process – the process is not easy

20. Seller’s Conflicting Goals Highest Price Quickest Time Frame Most Cash