My Plan to Fix a Big Problem for Business Sellers and Buyers

This is one of the biggest problems my clients face when selling their business. My plan to fix this problem and how you can be part of it today. Secure link to video here or YouTube below.

Thanks,
Josh

Sign up for this blog here if you want tools to increase the value of your business or want a refreshing view on business valuation from a recovering CPA. I’m Josh Horn, CPA, CVA of Horn Valuation. I value businesses for owner exits with a focus on HVAC and trade contractors. I also assist litigation and divorce attorneys as a business valuation consulting or testifying expert. My clients are business owners and attorneys. If you’d like more information, email me at [email protected], or call me at 217-649-8794.

I’m a licensed Certified Public Accountant (CPA) and credentialed in business valuation (CVA). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and advised small family-owned and multimillion-dollar companies. You can connect with me here on LinkedIn, Facebook, Twitter, YouTube and Instagram.

“Once-in-a-lifetime events demand an expert.”
Josh Horn, CPA and Certified Valuation Analyst

Hi Josh,
Regarding your post on selling a business, your comments on getting the seller’s business ready is good. Some owners will do this and yet most won’t. See Pepperdine quarterly report sponsored by the IBBA about how many sellers did exit planning (almost none). You’ll also want to check with your state regulatory agencies to determine if you need a license to sell a business. About half the states have that requirement.

A professional business intermediary does the work you are proposing. Some charge a flat fee upfront (if they can get it) but those brokers are generally not motivated to work very hard for their client and just prepare the “book” and never market the business. Most do a contingent fee because then the seller and the broker’s values are aligned. If/when the sale happens, both get paid!

Good intermediaries have a process like you describe. The brokers you mention may or may not have the necessary skills to effectively sell a business. And perhaps you’re in an area with few businesses or a lack of buyers. Lots of brokers don’t have a financial background which doesn’t help the owner or the buyer. I can tell you that even with a business that has good earnings, clean books, a positive story, and is financeable, it is still NOT easy to get all the parties across the finish line. The intermediary “earns” her fee when dealing with all the issues that come up AFTER getting the buyer to make an offer. Due diligence and financing are where deals die and where the communication of buyer and seller can break down. A good intermediary keeps it together and becomes “counselor” as well as “financial explainer” and “peacemaker” as needed between all parties including the lender, CPA, attorney or any other advisors!! From my perspective, as an experienced broker, CVA, and former commercial banker, the upfront work (valuation, preparation of marketing and financial details) is the easy part. The hard part is successfully managing the human emotions that come up.

In my experience, the challenge is not finding a buyer, it is generally getting the owner to understand the buyer’s (and lender’s) concerns and to property structure the deal to get both parties to close the deal.

P.S. I’ve sold businesses long enough to know that even when I think a business is sell-able, there may not be a buyer. Conversely, there have been businesses that I thought may not be of interest to many buyers but I have been proven wrong.

Those are my thoughts. I’ll be interested to hear how things work out for you.

2 thoughts on “My Plan to Fix a Big Problem for Business Sellers and Buyers”

Sheila Spangler
December 9, 2020 at 4:23 pm
Hi Josh,
Regarding your post on selling a business, your comments on getting the seller’s business ready is good. Some owners will do this and yet most won’t. See Pepperdine quarterly report sponsored by the IBBA about how many sellers did exit planning (almost none). You’ll also want to check with your state regulatory agencies to determine if you need a license to sell a business. About half the states have that requirement.
A professional business intermediary does the work you are proposing. Some charge a flat fee upfront (if they can get it) but those brokers are generally not motivated to work very hard for their client and just prepare the “book” and never market the business. Most do a contingent fee because then the seller and the broker’s values are aligned. If/when the sale happens, both get paid!
Good intermediaries have a process like you describe. The brokers you mention may or may not have the necessary skills to effectively sell a business. And perhaps you’re in an area with few businesses or a lack of buyers. Lots of brokers don’t have a financial background which doesn’t help the owner or the buyer. I can tell you that even with a business that has good earnings, clean books, a positive story, and is financeable, it is still NOT easy to get all the parties across the finish line. The intermediary “earns” her fee when dealing with all the issues that come up AFTER getting the buyer to make an offer. Due diligence and financing are where deals die and where the communication of buyer and seller can break down. A good intermediary keeps it together and becomes “counselor” as well as “financial explainer” and “peacemaker” as needed between all parties including the lender, CPA, attorney or any other advisors!! From my perspective, as an experienced broker, CVA, and former commercial banker, the upfront work (valuation, preparation of marketing and financial details) is the easy part. The hard part is successfully managing the human emotions that come up.
In my experience, the challenge is not finding a buyer, it is generally getting the owner to understand the buyer’s (and lender’s) concerns and to property structure the deal to get both parties to close the deal.
P.S. I’ve sold businesses long enough to know that even when I think a business is sell-able, there may not be a buyer. Conversely, there have been businesses that I thought may not be of interest to many buyers but I have been proven wrong.
Those are my thoughts. I’ll be interested to hear how things work out for you.
josh
December 10, 2020 at 4:42 pm
Thanks Sheila. I really value your experience and feedback in this area. I’m not looking to replace intermediaries but instead help establish connections. There are certainly other issues that come up after both parties are introduced and get serious. However, I find some sellers simply can’t get out of the batter’s box even with good cash flow. There’s no robust intermediary community near me which means most sellers are trying to find a buyer themselves. That can be a daunting task. If I can help make that easier, that’s great even if I’m not hired to help with valuation or consulting.

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