26 February 2024: We Need Sellers

Are you a business owner? How about a business broker? Or even a real estate agent that knows business owners and would like to help them sell their business?

Are you a member of a business group such as a local Chamber of Commerce chapter or the Rotary Club? Are you running a business association for small manufacturers, convenience store owners, landscaping companies, distribution businesses or any other industry association?

(One of the people who’ve taken our Flagship Course is the executive director of an association of hardware store owners. His association has roughly 9,000 members. Every one of those members will eventually sell their hardware store and this association director now offers his members the benefit of helping them sell and saving them a TON of money when they do.)

But even if you’re none of these and are reading these blog posts simply for the scintillating writing, the fascinating insights or the occasional bit of humor, you need to here this.

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Next month’s calendar of events on The Brokers Roundtable℠ will be posted tomorrow in the Announcements section. But we’re adding more events regularly so be sure to check back weekly so you don’t miss Office Hours (“Ask Me Anything”), any workshops, Live Streams, Thursday Specials and more.

REALTORS: The Announcements space has news you can use!

If you’re not yet a Member of The Brokers Roundtable℠, you can find out what other benefits Members enjoy – and join us – here. 

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We receive inquiries daily – sometimes multiple inquiries per day – from buyers looking for opportunities to buy a business in a broad range of industries.

Many of these inquiries come from small private equity investors and search firms. But we also hear from individual family offices, family office management companies (companies that manage the capital and assets of multiple families) and high-net worth individuals, all trying to find one or more businesses to acquire – to put capital to work.

Some are doing roll-ups, others are focused on a strategic acquisition. But simple financial acquisitions are common, as well.

Courses! Courses! Courses!

Many of you have asked if our Flagship Course, “Learn How to Value and SUCCESSFULLY Sell Businesses“, could be made available on a module-by-module basis. Instead of enrolling in the complete course, could you enroll only in the module(s) you wanted? We’re happy to report that this is now possible.

We’ve broken our Flagship into six separate modules (or module groups) to give you all the flexibility you need to learn only what you want to learn – and we’ve moved them all over to the new Brokers Academy in The Brokers Roundtable℠ . The Flagship is still available but the modules are now available individually.

You don’t need to be a Member of The Brokers Roundtable℠ to access any of these courses but if you are, you’ll receive a 20% discount on any course you enroll in. If you’re not yet a member of The Brokers Roundtable℠, you can learn more – and get access to all the talent and resources – here. 

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In the nearly quarter century since launching Worldwide Business Brokers in 2001, we’ve rarely seen such a high level of activity. And though a great deal of this demand focuses on the United States, if is hardly limited to the U.S.

From the U.K. and Central America to the Land of OZ, we’re seeing buyers clamoring for opportunities.

Now to be clear, most of the buying types mentioned above are looking for businesses with certain performance minimums.

In our own business, we focus on businesses with valuations of between US$250,000 and $25 million; the Main Street and Lower Middle Markets. The high demand we see is in the lower Middle Market – businesses with a couple million dollars in revenue.

Now, don’t get me wrong. There’s plenty of local demand for Main Street businesses – those with revenue of a few hundred-thousand dollars or so. But the demand for slightly larger businesses is such that most buyers are looking on a broad geographic basis – regional or even national. For instance, in the North American market, buyers are stipulating geographic interest as everything from “in the southwest” to “the U.S. mainland” and even “North America” so that we include Canada in our searches.

It is a similar situation in the U.K. where buyers have specified everything from southeast England (London and environs) to the U.K. as a whole.

Click on through to “Businesses We’re Looking For” in The Brokers Roundtable℠ to see some of the types of businesses we’ve recently been asked to find, the financial minimums and the geographic scope the buyers have established.

The Inventory

For several years now, we’ve written about the so-called Silver Tsunami, the phenomenon of the Baby Boomer generation reaching the end of their productive lives and selling businesses they started as much as 40 years ago. Here are some startling facts that we dug up back in about 2019 as we were getting ready to launch our training courses:

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Our course, “Learn How to Value and SUCCESSFULLY Sell Businesses“, teaches you how to accurately value and successfully sell businesses.

Well, you might ask, “What’s the problem? With this tsunami of Boomers, how can there be a shortage of businesses available to buy?” The answer, at least as it appears to us, is that many small business owners are unaware that professional business brokers and M&A specialists exist or how we can help them.

Many business owners ask their accountant or attorney for help and advice when it comes time to sell. But those professionals generally limit their efforts to the names in their personal contact list, hardly giving the business the wide exposure necessary to get the best possible price.

Granted, the owners of larger businesses – with valuations of, say, $5 million, are more aware of the professionals out there and how we might be able to help. But we’ve seen many business owners seek advice and assistance from their real estate agent – a move that is almost guaranteed to result in a disaster.

The types of business buyers mentioned at the start of this journalistic tour de force have heretofore been looking for certain financial minimums that have made some businesses unsuited for such buyers. But over the past 18 months or so, we’ve seen those minimums fall.

Until a couple of years ago, we rarely – if ever – saw a minimum EBITDA or Discretionary Earnings requirement lower than $1 million. But we’re seeing more and more of them now. The first step-down on this all-important metric was to $750,000. Once that occurred, we began to see other buyers drop their requirements to match.

Not long after, we received our first inquiry with a minimum EBITDA requirement of $500,000. This reduction opens more and more businesses up to a wider range of buyers.

The Bottom Line

The types of business buyers mentioned in this post are, for the most part, professional and relatively sophisticated. They know what they’re looking for and how to value what a seller or broker has to offer. They are generally well-funded and can pull the proverbial trigger and close a deal quickly eliminating the dithering, uncertainty and fear that is prevalent when dealing with less sophisticated buyers.

(If you’re a Member of The Brokers Roundtable℠, listen to the Live Stream replay of our recent conversation with one of our Member brokers describing his experience dealing with a couple of private equity firms as he’s working on the sale of a $4 million [revenue] distribution business.)

But, of course, this ability to move fast means that the price expectations of the seller must be closely correlated with the business’ value. This is doubly important of you’re a broker trying to sell a business. If sophisticated buyers see that you bring businesses to market asking for significantly more that the business is worth, that will quickly become your reputation and such buyer won’t bother wasting their time contacting you about ANY of the businesses you’re engaged to sell.

I’d like to hear from you. What topics would you like me to cover? How can we tailor these posts to be more useful to you and your business. Let me know in the comments box, below, or email me at jo*@Wo*******************.com.

If you have any questions or comments on this topic – or any topic related to business – I’d like to hear from you. Put them in the comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast.

I’ll be back with you again next Monday. In the meantime, I hope you have a safe and profitable week.

Joe

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Searching For…

NOTE TO READERS: Our “Searching For…” feature has been moved to our online community, The Brokers Roundtable℠. It will appear there exclusively from now on.

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#business #businessacquisition #sellabusiness #becomeabusinessbroker #businessbrokering #businessvaluation #MergersandAcquisitions #buyabusiness #sellabusiness #realtor #realestateagents

 

The author is the founder, in 2001, of Worldwide Business Brokers and holds a certification from the International Business Brokers Association (IBBA) as a Certified Business Intermediary (CBI) of which there are fewer than 600 in the world. He can be reached at jo*@Wo*******************.com