– a deep pit; hole in a road which may cause damage; something to be avoided.
On the deal path for the sale of business, there are potholes. Every deal, like every road, has them. Some are small and cause a minor bump or irritation. Others are large and swallow the deal whole, never to be seen again. With a little attention, most potholes can be either eliminated or avoided with proper planning, substantially increasing the value of a business.
Over the last 25 years, Beacon Equity Advisors identified many common potholes which cause a deal to collapse, cost the owners money or increase the business owners’ risks in a deal by forcing the seller to accept a deal with less cash at closing, typically not desirable.
Some of these potholes include:
- Real estate leases – Do you want a long term lease or not?
- Equipment leases – What is the cost of this method of financing if there is a sale
- Permits to operate
- Cash – need I say more
- Quality of financial statements – Better statements often result in better deals for the seller
- Trusting the Inventory number – More buyer trust = more cash at closing
- Ratios / Inventory turn
- Discretionary expenses
- Family members
- Brain Drain
- Second Tier Management
- Business Name – so many issues here
- Do you own the IP
- Trends
- Investment in business
- Customer relationships
- Customer contracts
- Industry
- To patent or not to patent
- Curb appeal
Beacon Equity Advisors has prepared a program to assist business owners with identifying the potholes in their businesses and suggesting a course of action to repair these issues prior to the sale of the business in order to maximize value.
David Humphrey, CPA, CVA, President of Beacon Equity can speak about these topics and the role their CPA plays in helping the client maximize the value of their business in a sale to CPA firm sponsored functions for their clients – Mr. Humphrey brings real life stories and examples from nearly 20 years of business appraisal and dealmaking to make this presentation interesting and practical.
