Does Size Matter? (When selling a Business?)

Well, this question often comes up as there are quite a few one-man business brokerage firms that sell small businesses. These one-man shows are all about trying to list and sell businesses anywhere from very small (100k sell price) businesses up to $5 to $10 million in sale price. This can be a very confusing process.  Sometimes these “one-man” firms have a nice website and come across very competent. So does it really matter if it is a one-man firm or a firm that has 5, 10 or even more professionals?

Candidly, let me explain why a one-man show is not typically the right solution for most businesses. First let me be honest. I sold my business with a small business brokerage firm and what I’ve learned since I’ve got into actually selling businesses is I got Screwed. Sorry to be so crude but bottom line is I literally got half of what I should have received when I sold my business through a one-man business brokerage firm. Why? Well it’s very simple. He had no resources.

Industry statistics show that Business Brokerage offices with only one broker on average sell just a little over one business per year. When a business brokerage firm that has an average of five brokers per office will sell 20 businesses per year! Think about that! That’s four businesses per broker. What is the difference? Well it’s certainly resources. I’m not talking about financial resources as much as I’m talking about people resources. There is something very powerful about having five people sitting around a conference table discovering the best customized strategy to sell your business. Not just selling a generic business but a business sales firm that understands the complexities of your company. Just as every person has a different finger print, also every business is different. Even if a firm has sold 10 businesses in your industry, they have never sold YOUR particular business. Therefore, there are complexities about your business that require a customize sales process. This means it is critical that you have multiple people strategizing and searching to find the right buyer for your business.

I believe that you’re wasting your time, wasting your efforts, wasting everything that you’ve put in your business if you go with a one-man show.  I’m sorry to be so passionate but I did when I sold my business and I got screwed and I would hate for you to as well. In my opinion, there is no doubt that you are going to get a “bad deal” if you go with a one-man business brokerage firm that only has one agent or one broker in the entire office. It is actually doing you the business owner a big disservice. After you’ve put your blood, sweat and tears into this business you run the risk of throwing money in the trash. So my concern can be boiled down to one statement… Don’t put all of your eggs into one basket!

When you are looking to sell a business there are a number of areas that you should focus on when interviewing a business broker.  Hint Price is NOT one of them.  But I digress.  While there are MANY business brokers that have the education that is required to sell a business.  Most do not have the expertise to be successful at actually the art of selling a business.

In a recent team planning meeting we discussed the topic of the common characteristics that are required for a good business broker (M&A guy, Business intermediary or whatever your preferred terminology). While the top business brokers (based on actual productivity) in the country were in that room, you might be surprised at what the FINAL list was:  

1. Honesty and Integrity – Yes this is a given but we couldn’t have made a list without at least putting this on it. But to be honest there are unsuccessful business brokers that are Honest.
2. Candidness – It is crucial for a good business intermediary that can confront either the business purchaser or the business seller on issue that will ultimately kill the deal. The process of selling a business is complicated and there is good news and there is bad news.  If you don’t have a business broker that can tell you the bad news then you don’t have a business broker that can sell your business.
3. Manage Expectations – As I mentioned it earlier if you are ONLY focused on finding a business broker that will tell you a price that you want to hear you are headed down the wrong track.  A good business sales professional will ALWAYS tell you the truth and not give you promises that they can’t deliver on.
4. Creative Problem Solver – There is certainly a trend in this list SO far.  But understand that there is no such thing as a easy sell of a business. There are always problems.  In fact,  the saying goes “every deal dies 3 times”. This is often the reason why For Sale by Owner is never successful.  If every deal dies 3 times (or more) then you need someone that has been here before that can have a team of professionals that will pull from their other experiences and creative thinking to develop strategies to get the deal back on track.
5. Understands Team Concept – I recently wrote an article on “Does Size Matter” “One Man Shows”.  In this article you can clearly see why having a team approach is critical to your success.
6. Good Listener – If your business sales professional doesn’t hear you or the buyer when they talk… How can you expect to have a business transaction that meets your goals?  The don’t even know what your goals are….
7. Follow thru & Work Ethic – The sell of a business is a long process and to be successful you must have a business intermediary to follow-up with every buyer and follow the process tirelessly.  If your business broker works 3 days a week then you maybe should find someone that is sells businesses for a living instead of one that is doing this job in place of working at Walmart.
8. Has the Seller and Buyer’s best interest at heart – If the business broker is just after the commission check then they will never be able to focus on the important aspects of getting a deal done.
9. Understanding the Psychology of the “Deal” – Well I am sorry to say that you will have to wait on the book for this one.  This is a topic that is one of our trade secrets that sets us apart from the other brokers.  I am even talking about the other good brokers that are successful.  Let’s just say that the Psychology of the deal means that the sell of a business is more than numbers. More than a P&L and Balance Sheet. YOU MUST UNDERSTAND this point.

Buying a business and selling a business is a very complicated process.  This is why not many people are successful at the task. If you can find someone that can help you that First understands the principles and has the education and the Second has the above 9 characteristics.  Then you have found the right team to help you sell your business.

Business owners, upon entering into a formal purchase agreement with a buyer to sell his/her business, will immediately be introduced to a process known as due diligence.  Due diligence is the activity that a buyer performs consisting primarily of an investigation of the seller’s records to ensure a complete understanding of the transaction before it is consummated.  It can create a high level of anxiety amongst sellers due to the vast amount of information buyers generally seek.  Sellers are often presented with a checklist consisting of several pages that will encompass an extensive array of requested documents/information (e.g., financial statements, customer/product/competition detail, sales and marketing data, employee/payroll information, etc.) and its chief objective is to provide the buyer with the information necessary to fully assess the risk of the acquisition before concluding the transaction.

Huntington Business Group has long recognized that sellers have little appetite for such overwhelming projects.  We therefore, in the early stages of the engagement and well ahead of any of any interaction with a buyer, educate those sellers who have not experienced the due diligence process.  Huntington Business Group, in fact, works with the buyer and his/her advisors in order to mitigate the time consuming impact that due diligence can have upon sellers.  Furthermore, we assist the seller in collecting and organizing the information requested by the buyer.  If certain requests are deemed to be unreasonable then we communicate with the buyer and/or the advisors to explain and justify our position.  Many of the checklists that a buyer will present to the seller are downloaded and, as such, are not tailored for the size or type of the business that our client is selling.  We have, in fact, seen due diligence requests for small businesses that are more comprehensive than those that are submitted in connection with $25 million plus transactions.

Mindful of  the potential frustration that can be associated with due diligence and the consumption of time required to fulfill due diligence requests we, as noted above, advise our clients how to be prepare for the process.  The VentureXchange™ system, designed and created by Huntington Business Group and available exclusively to our clients, outlines every detail of selling a business to include navigating through this often lengthy due diligence process.  Specific tools are available to guide our clients through a preliminary procedure wherein our clients are able to put their company through a review process that anticipates what a buyer will be evaluating during due diligence.  A review of operational, marketing, personnel, technology, legal, regulatory, environmental, insurance, contractual, credit and financial/accounting issues before a buyer enlists his professional advisors to do the same is the focus of this exercise and is an immensely valuable undertaking.  It will not only ease the future burden, but will also demonstrate to the buyer that he/she will be taking over a business that is well organized and efficiently operated.

FOR IMMEDIATE RELEASE

DALLAS, Tex. – VR Business Sales, Mergers & Acquisitions announced today that Dallas-based Huntington Business Group, Inc. finished 2010 ranked as the No.1 VR office in the world.

Annual office rankings are based on total gross revenue for the calendar year, and of the 125 VR offices worldwide, HBG has achieved rankings of 3rd in 2009 and 4th in the three years prior to that, but this is its first No.1 ranking.

HBG president Scot Cockroft has enjoyed his share of individual accolades over the years, being named VR’s Most Valuable Intermediary in 2008 and a Dallas Business Journal Dealmaker of the Year in 2010, but the overall No.1 office ranking is a goal that has eluded him up to this point.

“I’m absolutely thrilled with this honor because it represents the collective effort and success of everyone in our organization, not just the owner or an individual agent,” Cockroft said. “Those individual awards are great, but this office achievement is something we can all hang our hats on and be proud of together.”

For VR president Peter King, Dallas’ No.1 ranking came as no surprise. Ever since meeting Cockroft for the first time in 2004, he has expected great things out of the Dallas office.

“Scot burst on to the scene with success right out of the gate,” King said. “He had a fresh and unique way of looking at this industry and how businesses changed hands, and implemented new ideas and strategies that made Dallas an immediate top office. Under his leadership, Huntington has been on an unprecedented streak of success over the past several years, so it’s fitting they finally landed at No.1.”

Cockroft is the first to admit that the past few years have proved challenging due to the recessionary issues facing businesses in Dallas and across the country. However, he credits his organization’s dedication to the core principles of their proprietary VentureXchange™ system with excelling during these difficult times.

“VentureXchange™ is all about understanding our clients’ true objectives and motivations, and then using our own unique processes to achieve the results that make the most sense for them,” Cockroft explained. “The nature of the world we’re operating in today has forced business owners to take a much harder look at major decisions like selling their companies – we understand this, which is why our entire process is built around helping shed light on that decision for our clients and then assisting them in whatever direction they determine is best to take.

“Without question, it’s this commitment to our clients that has been the foundation to our success, not only in 2010 but ever since we opened this office almost a decade ago.”

Huntington Business Group, Inc. (www.vrbigd.com) has consistently been recognized as one of the top business sales organizations in the world. Since 2005, HBG has finished as a top-five office six times and been home to 14 top-10 agents. HBG specializes in assisting the owners of privately-held companies to value, market and sell their businesses, as well as assisting buyers with locating suitable acquisition opportunities.

VR Business Sales, Mergers & Acquisitions (www.vrbusinessbrokers.com) has sold more businesses in the world than anyone®. Its principle office is located in Ft. Lauderdale, Fla. There are approximately 125 VR offices worldwide, making it one of the largest global business sales organizations in the world.

FOR IMMEDIATE RELEASE

Dallas, Texas – VR Huntington Business Group of Dallas assisted in the successful sale of Sweet Land Tree Farm last week from Wintters Realty, LLC to HHH Nurseries, LLC.

Todd Wintters, president of Wintters Realty, LLC, acquired the farm three years ago from the founder. Sweet Land became a division of his engineering company, but as his core business evolved, it became a priority to move away from the tree business and find a suitable buyer for the farm.

“When it came time to sell the farm, I had two routes to consider,” Wintters said. “I could list the property with a real estate broker or try using a professional business intermediary. In the end, choosing VR Huntington was the best decision I could have made. The farm benefitted greatly from being marketed as an operating business rather than just a piece of property.”

HHH Nurseries, LLC was formed by brothers Blake and Jason Hearnsberger, along with their father, Roy. The group has real estate interests in other parts of the state and Sweet Land provided them an opportunity to expand their operation into East Texas as well as into the wholesale tree business.

“Having acquired other agricultural properties previously, our objective was to expand those holdings with an income-producing opportunity,” said older brother Jason. “This business was a bit further from the Houston area than we were looking to go, but based on the quality of the operation and the amount of detail readily provided by VR Huntington, Sweet Land became a viable option for us.”

Wintters gives VR Huntington credit – not only for generating significant interest in his business and producing multiple offers but also for the expertise they provided in evaluating each buyer individually.

“VR produced four offers on my business,” Wintters said. “The buyers were all qualified and motivated to make the purchase, which puts a lot of pressure on the owner to make sure and choose the right person. With VR’s guidance I selected an offer, and it turned out to be the best buyer I could have hoped for.”

Sweet Land Tree Farm (www.sweetlandtreefarm.com) offers wholesale customers access to a variety of Texas’ most popular hardwood landscape trees, including red oak, live oak, Chinese pistachio, pond cypress, cedar elm, lacebark elm and many others. The farm sits on 20 acres of prime property in Grand Saline, Texas. Contact Sweet Land at 903.962.3986.

The sale was facilitated by Jeremy Furtick, Senior Business Intermediary, with VR Huntington Business Group Inc. a VR Business Sales firm in Dallas.

The VR network was established in 1979 and is the oldest professional business brokerage in the nation with more than 125 offices and 800 agents worldwide. VR Huntington Business Group (www.vrbigd.com) is based in Dallas and has finished the last four years as one of the top VR offices in the world. VR Huntington specializes in assisting the owners of privately-held companies to value, market and sell their businesses, as well as representing buyers interested in professional assistance in their business searches.

FOR IMMEDIATE RELEASE

DALLAS, Texas – VR Huntington Business Group of Dallas assisted in the successful sale of two Pump It Up franchise locations from Advanced Cycling Concepts, Inc. to John D. Ruchman Enterprises, LLC.

Carol Welch, president of Advanced Cycling Concepts, Inc. opened her first Pump It Up location in Dallas in 2004. Then in 2007 she started a second location in Plano under the “Junior” concept, which caters to smaller children. After dedicating countless hours to opening and operating the two locations, Welch decided it was time to move on and let a new owner with new enthusiasm take over the business.

“I loved every minute of starting and operating both Pump It Up locations,” Welch said, “but there finally came a time where I decided it was a good idea to move on – I was burnt out. So we started interviewing business sales professionals, and ultimately chose VR Huntington out of several options.”

John D. Ruchman Enterprises president, John Ruchman, first became interested in Pump It Up four years ago while attending a birthday party at the Dallas location with his family. Years later when he became aware that the operation was available for acquisition, he dedicated himself to making this venture the next move of his professional career.

“I can still remember being at the Dallas location and my wife telling me, ‘You ought to buy this business someday’,” Ruchman said. “I was absolutely thrilled when I saw this listing go on the market and came to find out the Dallas location was available.”

Welch and Ruchman both had high praise for VR Huntington.

“It’s no secret that the past year has been difficult for good businesses to find qualified buyers,” Welch said. “We are extremely grateful to VR for sticking with us through this tough year and also for being able to negotiate a deal for our business that we never thought we would be able to get in this economy.”

“VR Huntington did a great job of helping me through this process,” Ruchman said. “I felt like I was working with people who actually cared about more than the ‘sale’.”

Pump It Up (www.pumpitupparty.com) is an indoor inflatable party center franchise operation with more than 175 locations nationwide, including 10 locations in Dallas/Ft. Worth. The Dallas location is at 9201 Forest Ln., and Plano is at 4101 E. Park Blvd. Both locations can be reached by dialing 972.792.9663.

The sale was facilitated by Jeremy Furtick, Senior Business Intermediary, with VR Huntington Business Group Inc. a VR Business Sales firm in Dallas.

The VR network was established in 1979 and is the oldest professional business brokerage in the nation with more than 125 offices and 800 agents worldwide. VR Huntington Business Group (www.vrbigd.com) is based in Dallas and has finished the last four years as one of the top VR offices in the world. VR Huntington specializes in assisting the owners of privately-held companies to value, market and sell their businesses, as well as representing buyers interested in professional assistance in their business searches.

DALLAS, Tex. – CKS Transport, Inc., a FedEx Ground line haul contractor domiciled out of the Hutchins terminal near Dallas, was acquired by The Perham Group, Inc. of Arizona last week with the assistance of VR Huntington Business Group in Dallas.

Prior to acquiring this FedEx Ground operation in 2007, CKS president Colin St. Clair actually considered acquiring a different business with VR Huntington. Although he went a different direction with his decision, he always remembered the way VR Huntington Business Group presented businesses for sale and the way he was treated as a buyer. So it was only natural when it came time to sell CKS that he called VR.

“As a buyer, I met with several Dallas area business brokers looking for purchase opportunities,” he said. “Not one organization provided the level of professionalism, knowledge and access to data that VR Huntington did. As a seller, I wanted to make sure my business had those same advantages, so listing with VR was an easy decision.”

Bob Perham, president of The Perham Group, Inc., was actively searching for a suitable acquisition opportunity in the FedEx Ground system. He researched dozens of opportunities around the country, but in the end no available business fit his criteria as well or was presented as effectively to him as CKS.

“When I started researching FedEx listings to acquire, I discovered several that appeared to be what I might be looking for, but I was discouraged by the lack of response and information I was able to get on these operations, “ Perham said. “At the end of the day, VR Huntington was the one organization what was able to deliver the quality and depth of detail I needed to actually review the business and ultimately make an offer.”

VR Huntington not only assisted St. Clair in the marketing of his business and the qualifying of potential purchasers, but they were also deeply involved in every detail of the sales process – from negotiating the purchase price and the asset purchase agreement, to coordinating closing and funding, VR Huntington was critical to this transaction being a success.

“There’s no question that without VR Huntington and my agent that this transaction would have never closed,” St. Clair said. “There were several occasions where the deal stalled and I thought we might have hit a dead-end, but my agent never got frustrated – he was always there with a new solution, and ultimately that’s what helped make the difference.”

VR was established in 1979 and is the oldest professional business brokerage in the nation with more than 125 offices and 800 agents worldwide. VR Huntington Business Group (www.vrbigd.com) is based in Dallas and has finished the last four years as one of the top VR offices in the world. VR Huntington Business Group specializes in assisting the owners of privately-held companies to value, market and sell their businesses, as well as representing buyers interested in professional assistance in their business searches.

FOR IMMEDIATE RELEASE


Dallas, Texas – VR Huntington Business Group is pleased to announce the strategic sale of Wash-A-Go-Go Car Wash in Arlington, Texas, to George Kramerov a local entrepreneur. Terms of the transaction were not disclosed.

“Huntington Business Group was very knowledgeable about the sales process and my business…” said Randy Fisher former owner of Wash-A-Go-Go. “They made me feel very comfortable with the entire process – from finding a qualified buyer to helping secure financing and then working to close the deal. I was able to focus on my business because they kept me fully informed about what was going on throughout the entire transaction.”

“Car washes and similiar types of “absentee-run” businesses are typically very popular with buyers,” said Mike Cockroft, Senior Business Broker with VR Huntington Business Group. “However, in today’s down economy we’re finding more and more buyers are looking for these types of businesses because they require very little management and are a great way to earn supplemental income.”

VR Huntington Business Group is Texas’ largest and most successful VR office. HBG specializes in assisting the owners of private companies to value, market and sell their businesses and has been in operation since 1979. For more information about VR Huntington Business Group visit our website at www.vrbigd.com or call us at 972.792.0100.