Despite these tough economic times, there are good reasons for sellers to sell their businesses now and good reasons for buyers to buy a business now. We have articles that focus on each side of the transaction in this issue.
In other news:
- We're repeating our free webinar "Grow Your Company through Acquisition" on May 19. You can can register at https://www3.gotomeeting.com/register/883933566.
- Did you know we have a web-based financial dashboard (and monthly coaching service)? Our tool can help you monitor your cash flow and other important trends from information that's buried in your accounting reports. The dashboard is optimized for IT service companies but can help almost any service business. You can read about the tool below - and there's a FREE version of the financial dashboard available to qualified IT service companies through the end of 2011.
If you know anyone who is thinking about buying or selling a business, or needs to optimize their financial performance before they go to market, we'd be glad to help them. Your referrals are appreciated. Sincerely, 
John Austin & Bob Dale
Austin Dale Group
512-327-0427
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Why Sell My Business Now?
During troubled financial times, when the independent business world may seem a safer bet than the corporate world, why would anyone want to sell their business? Here are two arguments to consider:
It's a seller's market.
Prospective buyers are plentiful during tough financial times. Corporate employees who have fallen victim to downsizing, perhaps more than once, are quick to see the advantages of being in business for themselves. It isn't just the money they are dreaming of -- in fact, they understand that profits from the early days of business ownership will usually fall short of their former paycheck. The chief attraction is the desire for more control of their business future.
Selling from strength adds value.
Multiple factors can weaken the strength of the sale of a business. Burnout and its resulting consequences is an often seen factor. Personal problems (divorce, death in the family, poor health, etc.), shortage of capital or outright failure of the business, and the lack of heirs to take over are a few other examples. Instead of falling prey to unfavorable conditions, potential sellers should consider putting the business on the market while the picture is still bright. The ability to present a healthy operation, with an energetic owner as a role model, is an advantage in getting the best price for a business and in successfully completing its sale. |
Snapshot of ADG-Corelytics Financial Dashboard (see article to right)
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Buying a Business in a Recession, part 1 of a series
Adapted from an article by Matt Joyner, a partner in the law firm of Bishop, Dulaney & Joyner, P.A. in Charlotte, NC.
Buying a business is a major undertaking in the best of times. In the current weak recovery from a recession, it becomes an even more complicated proposition. Here's one critical difference: In good times the business seller is selling because he wants to, is happy to be selling, and is looking forward to leaving his business. In a weak economy, however, the seller frequently is selling not because he wants to, but because he has to. This difference in motivation affects the purchase transaction in many ways. There are four important considerations when buying a business in a recession or weak recovery period:
1. Public record search on the owner
2. Public record search on the business
3. Buyer protection in seller-financed deals
4. Non-competition and non-solicitation agreements
We will cover these considerations in future newsletter articles. |
M&A Activity Up and Down in Q1
Adapted from Zephyr Quarterly M&A Report for North America
The dollar value of business acquisitions in North America in the first quarter of 2011 rose to its highest level in 18 months. The deal value was up 62.6% over Q1-2010 and 4.3% over Q1-2009. However, the number of deals in Q1-2011 was down 22.5% vs. Q1-2010 and down 2.9% vs. Q1-2009. That means the average size of each deal has gone up. Most analysts expect overall M&A activity to increase in 2011-2, with small-to-medium sized business transactions lagging behind larger company M&A. |
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Grow Your Company through Acquisition
Join us for a free webinar on
May 19 Most business owners want to grow, but they're focused on their internal growth. Highly successful companies often complement that growth by strategic acquisitions. This combined approach is well-known to large corporations, but is suitable for some small to mid-sized businesses. In this webinar we'll discuss why growth through acquisition can complement your organic growth and drive up the value of your business, the steps involved in buying another business, and the risks that buyers may encounter and how to manage them.
Date: Thursday, May 19
Time: 11 AM - 12 PM Central
Click to register, seating is limited.
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The Power of a Financial Dashboard
Understanding your financial results and focusing on parts of your business to improve - these are two powerful skills for owners and managers. So powerful that they can increase your ability to generate more cash and grow in value. In short, you want to understand the meaning behind the numbers on your reports, and you want to measure the results of your efforts in critical parts of your business.
A financial dashboard can help you sharpen both skills. It shows you - graphically - your leading indicators based on information that may be buried in your accounting system. It can also help you track important financial goals, view staff contributions to the bottom line, and see trends and forecasts. An important feature is to highlight potential problem areas, such as future cash flow problems based on cash, A/R, and revenue trends. Business owners often ignore the various drivers of cash flow because the monthly financial statements don't make them easy to see.
Most business owners look at net income and believe that if they're making money then they're generating cash. But profits do not equal cash flow. You have to look at all the cash flow drivers, not just the income statement. Even if your company is profitable, you may be losing money in one or more parts of the business. A financial dashboard can also help you measure and compare your lines of business and which ones need attention.
We offer the CorelyticsTM Financial Dashboard to our clients. It's a great tool for IT and other service companies to help improve their their cash flow and tune up parts of their business. Check out our dashboard and coaching services. If you own an IT service company, contact us to learn about our FREE financial dashboard offer. |
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Contact Us
Austin Dale Group
512-327-0427 Connect with Us Visit us online. |
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