Buying & Selling a Business

Whether you’re ready to take on the exciting venture that is buying a business, or you’re looking to begin preparing for retirement by putting in place a plan to sell, the sale of a business is a big transaction that both sides should be thorough about. Now is definitely not the time to take any shortcuts! To help you get a better understanding of everything that goes into the buying and selling process of a business, we reached out to some of the knowledgeable experts that you can find right here in Lincoln.

Solutions for Buyers and Sellers

Selling your business by yourself can be very difficult. Transworld Business Advisors (tworld.com/locations/lincoln) can help you plan an exit strategy to get the most out of the investment you’ve made. It may be difficult to keep the prospect of selling private (so as not to lose business or employees) while also looking for the right buyer. The job of Transworld is to take that burden off the seller and confidentially find a buyer so that you can continue to run your business successfully.

“Before an interested buyer can receive even the name of the business, they must sign a non-disclosure agreement that keeps private the information that is shared,” explained Christine Dwinell, owner/managing broker. “Once the seller decides to work with us, we create an opinion of market value based on several valuation methods, and then, together, the broker and seller come up with a listing price. My business partner and I own Transworld Business Advisors locally, but are part of a global franchise, so we can reach hundreds of thousands of potential buyers and businesses for sale, instantly.”

With over 40 years of experience, Transworld’s business brokerage is the largest in the world, having successfully sold
over 10,000 businesses. When you sit down to talk to them about creating an exit strategy, it’s truly a no-obligation consultation.

On the buying side of things, Transworld can help you find the right business by gathering detailed information about you to establish your financial capabilities, skills and experiences, and your personal life goals. This information helps them determine the best types of businesses to pursue. Once this is completed, they start your search using Transworld’s considerable market basket of resources.

“The biggest impacts on businesses today are increased costs of labor, fuel, and slow supply chains,” shared Christine. “With regards to labor, the cost of recruiting and retention are on the rise as employees move from one employer to another. These increases can be observed in downtime, training, and the increased unemployment insurance costs of a newly hired employee. That being said, the businesses we’ve reviewed have stable earnings. Entrepreneurs are great at creating efficiency solutions to streamline operations. Buying a business is a great investment alternative during this time of market instability. Buyers can find deals that build equity and generate income. I encourage prospective buyers to look for opportunities within a business. We can help you consider possible efficiency solutions, additional retail or service opportunities, or strategic partnerships.”

Building Relationships for Nearly 50 Years

Greenleaf Commercial Real Estate (greenleafcommercial.com) is a full-service commercial real estate company with roots dating back to 1973. They believe in building relationships, and they strive to understand each client’s objectives and develop a strategy to meet their specific needs.

“Most businesses find it challenging to find the perfect space,” shared John Linscott, president and director of asset management. “An essential element of finding that location is building relationships. At Greenleaf Commercial Real Estate, we strive to understand each client’s unique circumstances and objectives to tailor a strategy designed to accomplish your goals. Throughout the process, we emphasize communication and accountability to earn each client’s trust and confidence. Our experienced group of professionals is here to help you reach your goals for your business and community.”

Take advantage of their brokerage service and receive professional support through all the phases of property or site acquisition, disposition, and tenant representation. Greenleaf Commercial Real Estate also offers consulting and development services, as well as property management, which includes both facilities and asset management. Their team can offer to you extensive knowledge for whatever industry your business falls in, whether it’s in office, retail, warehouse, or industrial.

Do Your Homework!

Rob Cruise, president of Cruise & Associates (cruise-associates.com), understands the excitement that comes with buying a business, but cautions that a buyer should ensure they are well educated before they dive in.

“Before you get too excited, slow down and do your homework. It is always important to weigh the pros and cons,” advised Rob. “Be sure to have a business valuation completed to determine how much the business is worth. A good idea might also be to shadow the business for a period of time to make your own assessment of what it is worth. If you are about to buy a business, you’ll want to know exactly why the business is up for sale. It could be something as simple as they just want to retire or something more worrisome like there is a problem with the business.”

Cruise & Associates can help a potential business buyer with properly interpreting financial documents and guiding the buyer to determine the full costs of purchasing and operating the business. He says to remember the need to review documents, including the letter of intent, confidentiality agreements, contracts and leases, financial statements, tax returns, and sales agreement. Finally, after reaching a purchase price, make sure you understand the written agreement before signing.

“Don’t leave any ambiguities that could cause trouble at closing or even after the sale has gone through,” said Rob. “Choosing to buy an existing business is a valuable entrepreneurial feat and will impact your life for years to come. With the right connection and a lot of hard work, you can be the perfect person to turn a good business buying opportunity into a great future.”

If you enjoy running your own business, selling it may be the furthest thing from your mind. However, the reality is that eventually an opportunity to sell will come, whether due to your own life changes or a perfect buyer walking in the door. Planning, often years in advance of the sale date, is necessary to get the most value for the love, sweat, and tears you’ve invested.

“It’s important to assemble a great team to help you prepare for selling your business, including an accountant, a lawyer, and a trusted business broker,” said Rob. “You’ll also want to develop your exit strategy with your advisory team, and spend some time cleaning up your financials. In addition, you’ll need a plan to improve sales; the worst time to sell is when sales are declining – even if it’s just a temporary or seasonal dip.”

Mind What Matters

Lutz (lutz.us), the business solutions firm for people seeking a partner to help energize and heighten financial and organizational success, shared some information regarding Lutz M&A. Lutz M&A is a mergers and acquisitions advisory firm that, as a sell-side advisor, typically represents companies with annual profits greater than $1 million (though they consult with businesses of all sizes on M&A matters). When it comes to buying a business, their services include bid preparation, financial due diligence, investment analysis, and negotiation support. Mark Otte, M&A manager, shared his advice for both buyers and sellers.

“As a buyer, once you have identified a target business and determined the funding sources for the purchase, be sure to complete thorough due diligence. There are numerous types of buy-side due diligence, which helps to ensure the financial information the buyer is relying on is accurate and that pertinent risk items are identified,” said Mark. “Through due diligence, buyers can gain comfort over the true earnings or free cash flow of the business, which provides greater certainty on paying a fair price for the target. We recommend focusing your due diligence on the most important items, as due diligence levels can vary based on the industry and risks identified. It is worthwhile to approach the transaction with objective professional skepticism, which is where Lutz M&A can assist. Lastly, getting an experienced M&A attorney involved early on will help to streamline the buy-side process from start to finish.

“If you’re looking to sell your business, I recommend identifying the ideal type of buyer early on in the sale process,” Mark continued. “Business owners should engage Lutz M&A in discussions on transition plans years in advance of the actual transaction. Is maximizing the sales price most important to you? If so, a strategic buyer (i.e., a competitor) will most likely be able to offer the highest bid. Are you most concerned about your employees post-deal? If this is the case, a strategic buyer may not be the best fi t if headcount reductions would be identified as a deal synergy. Do you want to stay involved with your business post-transaction? The list goes on and on.

“There are many questions we ask sellers to understand what a successful outcome would look like, which starts with identifying quality potential buyers,” concluded Mark. “It is important to gain an understanding of the different types of buyers for your business and the typical advantages and disadvantages of each. The most common types of buyers include financial (private equity), strategic (competitors), management, family members, or a sale to an ESOP.”

Accounting for Buyers and Sellers

The prospect of buying into a business or selling a company you’ve grown can be an exciting time, and SP Group, P.C. (spgrouppc.com) is here to offer a helping hand to keep that from feeling like an emotional rollercoaster. They can be that objective advisor during these major life cycles of your business. SP Group’s impact is felt through due diligence and assisting business owners to make thoughtful decisions regarding tax and financial consequences.

“A specific item to be aware of is proper financial documentation during the buying/selling process,” shared Rachel Clymer, CPA. “Accurate and up-to date financial statements are crucial for business sellers as both parties use them to determine the value of a business. As a seller, your accountant should review the books and financial statements to identify any issues before the business is put on the market. Buyers should enlist their accountant to review the books to help them understand the financial shape of the potential purchase. Past performance is no guarantee of future results but is a good indicator of potential outcomes which can help determine the value of the business and the purchase price.”

Rachel also shared that an area that can be overlooked but is vital is the allocation of assets. SP Group can use their expert knowledge for asset classification to help the new business owner capture depreciation and amortization most effectively in the early years of ownership. Sellers have a different set of facts that make asset allocation important for their tax obligations on the sale of the business. Another aspect of a sale to get professional advice on is if you should choose to have the proceeds paid out via lump sum or installment over a period of time.

“Seasoned business owners will know and new business owners will be fast to find out that trusted advisors are a crucial arm to support a business,” Rachel concluded. “SP Group wants to bring our experience to you with advice on legal entities, minimize the regulatory headaches of business ownership, and provide guidance to make smart tax choices along the way.”

Qualities of a Strong Commercial Lease

At Guiderock Commercial Realty, LLC (guiderockrealty.com), their primary focus is helping business owners make the best decisions they can about commercial real estate. Cathy Kottwitz, CPM, explained why her business is a great option to help your own.

“We have experience working with both businesses selling real estate alongside their operations, as well as entrepreneurs buying businesses who may need to negotiate a new lease for the business,” Cathy explained. “And if the business you bought has grown and needs more room or another location, we can help you find the right fit.”

New business owners who have taken over the lease of the business should keep in mind some key items that should be standard practice and that will help keep their new commercial lease running smoothly. This includes renewal reminders, which are a great way of keeping track of when to renew the lease or decide to look for another space; triple net (NNN) audits, which are useful for both the tenant and the landlord to keep each other accountable for certain costs; certificates of insurance; and open communication between the tenant and landlord.

“Signing a new lease on top of purchasing a business can combine to create a lot of stress,” explained Cathy. “Guiderock is here to help with any questions you have about your lease so that your main focus can be your new business.”

Solutions for Accounts Receivables

When buying a business, a big aspect that you must evaluate before committing to your investment is the company’s receivables. If you are looking for real answers that yield real results, visit the team at AR Solutions (arsolutionsinc.com). They can help you analyze the assets and liabilities that you are considering purchasing and determine what those liabilities are, along with the likelihood that you will collect them.

“As a collection agency, AR Solutions can have a different skillset to offer to you compared to other accounting professionals when evaluating a business,” shared Founder Aaron Newell. “We will work closely with sellers to determine the reason for any nonpayment of receivables and find out how that business has communicated with the customers to collect. Then we’ll help figure out what you might expect to bring in from them.”

For potential business purchasers, it’s important to understand that not all of the billings a business sends out are going to be paid, and it’s good to know that up-front and create a policy for handling those cases of nonpayment. In addition, AR Solutions is happy to consult with clients to help them set up their receivables process in a way that increases their in-house collections or to prevent future issues.

“We will act as an extension of your new company and conduct direct communication with your clients,” said Aaron. “Our competitive fees are also contingent upon collection, so you do not pay unless we collect.”

Cyber Security

Buyers, have you considered yet how you are going to provide cyber security for your business? We suggest speaking with Darren Lichty, owner of Panology Tech Solutions (panologyinc.com). Panology is a tech company devoted to the development of small- and medium-sized businesses. They utilize Cylance, which finds current threats and issues in technology better than the traditional antivirus products. With CylancePROTECT, Panology is able to up the security of your business with a unique artificial intelligence (AI) approach that predicts and protects against known and unknown malware, fileless attacks, and zero-day payload execution.

Even though outsourcing is a great opportunity to save some money, always be careful. A common problem in the online security world is people who believe whatever the IT person tells them to do and end up paying for systems they don’t need.

“You never want to partner with an IT expert who just tells you what box to click,” Darren warned. “To learn more about technology, you need to ask questions and you need to find a partner who is willing to answer those questions and educate you from the perspective of your own business, not from the perspective of someone trying to hit a sales quota. For example, if one of my clients is asking about security, then I would explain antivirus software to them or an endpoint detection response (EDR), and then I would talk about all the risks and benefits. To learn about anything in the technology industry, you need partners who will tell you not just what to buy, but why.”

Secure Solutions for Employees and Business

You’ve bought a business – now it’s time to make sure that it and its employees are covered. At UNICO Group (unicogroup.com), they employ a unique process where they’ll help you fi nd complete solutions to protect your employees and your business. Their exceptional service and attention to detail will save you time and hassle – so you can focus on other aspects of your business and life. Plus, you can rest assured that their industry experts have the knowledge and experience needed to create the best plan for your unique circumstances.

From design and administration to communication, the UNICO team will lead you to a custom tailored plan that retains valued employees and attracts qualified candidates, all while helping you stay within budget. As your trusted group benefits advisor, UNICO will continually analyze your employee benefits data to determine whether your current plan continues to meet your needs.

Their unique approach enables them to develop a true partnership aligning their services with the needs of clients while establishing clear expectations.

Ready to dive into the sale? These local experts are happy to be a part of the ride. Reach out to them today to ensure that your commercial buying or selling experience is a smooth transition into the next chapter of your life.