We Can Sell Your Washington DC Business
Is it time to retire? Are you ready to jump into something new? If you’re a business owner considering a change, it may be time to sell your business. CGK Business Sales sells businesses in the greater Washington D.C. and Virginia areas. While there are many mergers and acquisitions advisors and Washington D.C. business brokers, CGK Business Sales is unique. Nationwide, less than 20% of businesses sell. We sell 85% plus.
Selling a business can be difficult, but we can help. We can determine the value of your business, help find the right buyer, and help close the sale, allowing you to move onto whatever the future holds. If you’re ready to sell your business, no matter the reason, let our team of experts help make sure the sale goes smoothly.
Start With a Business Valuation
The very first step is to determine what your business is actually worth. The business valuation or business appraisal is done so you can determine what the business is worth and so buyers can see what the “true” cash flow is, if they purchase the business. To do this, please gather all financial documents for the business. This includes the last three years of business tax returns and a year-to-date income statement (P&L) and balance sheet. Later, we will also need a list of assets, including their approximate market value, once we go to market. We go through all of this information, make sure the finances reflect the correct Seller’s Discretionary Earnings (SDE) for smaller businesses or adjusted EBITDA for larger businesses, and determine the full value of your business. Once you know what the business is worth, and we get an idea of the industry and it’s qualitative aspects, we can start to search for a buyer.
Consider Who the Buyer Will Be
Who is going to purchase your business? There are generally three types of buyers; high net-worth individuals, companies, and private equity firms. High net-worth buyers may be looking for a company to own if they want to be their own boss or aren’t ready to retire yet. These buyers want to get out of the corporate rat race and have a desire to own a business instead of being an employee. They might feel like they can run their own business, and control their own destiny, instead of having someone else control their work hours, or the way things are done. Most of these types of buyers are going to have some funds from their savings to use for the purchase but will likely need to get financial help from a bank to purchase the business. They may or may not have experience as a business owner, but will likely have experience in the industry and know what it takes to be successful.
Companies also buy businesses in their industry to spur quicker growth. While this is who the typical business owner believes will buy their business, this is actually rarely the case for smaller businesses. Smaller businesses also rarely understand the mergers and acquisitions market and are sometimes unwilling to pay market prices. Once a business grows into the lower-middle market or middle market, businesses tend to be more understanding of M&A and acquisitive. While we love when another business buys one of our businesses, as this typical cuts down on questions and post-closing training, we have to be prepared that this may not be our buyer.
The third type of buyer is private equity. This may also include venture capital, on occasion. Typical private equity buyers are sophisticated. They have gone to the best schools and learned to buy, run, and sell business. They dive deep into due diligence and do lots of research on an industry. They are generally savvy negotiators. Since PE firms use leverage (bank loans) to juice their equity returns, PE firms need a deal to work under the confines of a bank loan. PE buyers have become a larger part of the marketplace over the past decade.
Since no one can be sure who will ultimately buy your company, we have to prepare the marketing materials to appeal to all three types of buyers. From speaking with thousands of buyers over the years, we know their likes and dislikes. You will want to put your best foot forward or risk losing a solid buyer or, potentially, not get the kind of deal you want.
Know What the Buyer Will Want
The main thing buyers want is cash flow. They want to make sure the business is going to be profitable. They also want to make sure there is adequate cash flow post-closing, so they can start working on improving the business right away. Depending on the size of the deal, it may or may not include working capital from the Seller. Generally, the new owner will spend some time learning your specific business, even if they have direct, industry experience. Prior to closing, though, buyers will want to know about the current inventory, the debts, the customers, and anything else that will have an impact on the current cash flow as well as profits now and in the future.
This is why it’s crucial to have as much information as possible ready before going to market. The business for sale must be prepared, or risk losing solid, early buying candidates. Buyers will want to look at everything to make sure the business is viable, to ensure they’ll be able to be successful, and to see why they should consider buying this business instead of a different one. The buyer will review all of the information in the Confidential Information Memorandum (CIM), ask detailed questions surrounding the valuation, as well as ask other qualitative questions about the business and industry, to make sure it’s the right one for them. For this reason, it’s crucial to be prepared to answer questions about the business. We help you answer those questions the right way. These answers are not always as obvious as they may seem.
Make the Business More Attractive
How about the rare business Owner that wants to improve aspects of his business, well before a sale, to make it more attractive to potential buyers? We can help. If you’re not ready to sell your business for the next three to five years, you have time to make the necessary changes. Quick fixes in personnel or financing engineering are not what a buyer wants to see, right before going to the market. Buyers will inspect the “human capital” surrounding the businesses to make sure the business isn’t completely dependent on the Owner. In other words, is the Owner wearing too many “hats”? Buyers want to see a layer of capable management, so that they can spend their time thinking about and deploying strategy, not necessarily changing lightbulbs. If the business is dependent on equipment, they will inspect that equipment to make sure there are not large capital expenditures waiting for them, when they take over the business. In summary, make sure the business is not too dependent on the current business Owner, remove any personal items on the balance sheet that’s not going to be included in the sale, keep the proper amount of inventory in stock, and replace or fix equipment well in advance of a sale. In general, put yourself in the Buyer’s shoes and act accordingly.
Start Looking For A Buyer
Once you have everything ready, it’s time to find a buyer. We can help you find the right buyer for your business. Often, we have multiple buyers for our businesses. This let’s you choose the buyer who is the best fit. That may not necessarily be the highest bidder. It might be the buyer that treats your employees and the legacy that you’ve built, the best. If you’re looking for a buyer who will care for the company, we can find one. If you’re looking to get the best price for the sale of the business, we can help find a buyer who is willing to pay a little more for the right opportunity. Our experts have connections with local, national, and international buyers, so we can find the right person, company, or PE firm to buy your business.
What to Look for When Buying a Business
Along with helping sell businesses, we help buyers as well. If you’re considering moving into a new industry or purchasing a new business, let us help you find the right one. We’ll discuss what you’re looking for and connect you with businesses for sale that meet your needs. Some of the things to consider or look for include how long the company has been in business, how long the current owner has owned it, why they’re selling, and the potential for the business. Each of these is important and allows you to find a business to purchase that meets your needs exactly.
We really enjoy helping other businesses buy a business in their industry (horizontal integration) or buy businesses in their supply chain (vertical integration). This often results in synergies (cost savings) that will make the purchase price more appealing to you and your company. Please let us know if we can help.
Our team of experts lives in Washington DC, so we know the area. We also understand the market for businesses in Washington DC and how to help you buy or sell a business. We know the buyers well, including a huge list of local buyers, both businesses, PE firms, and high net-worth buyers. We know what sellers are looking for and what buyers might need, and we can close any sale correctly. We almost always pay for ourselves through some unforeseen aspect of the deal. Though only 20% of businesses on the market end up selling, we sell more than 85% of the ones we work with. We know what to do to sell any profitable business. Contact us today to learn more about selling your business or to talk about a business valuation.
How do we do it?
- At CGK, we’ve learned the best practices from years of working at higher levels of finance at private equity, investment banking, hedge funds and we’re bringing that experience to your small or medium-sized business.
- We have buyers are from the mid-Atlantic, across the United States, and even international buyers.
- What do we do that is better than other Washington D.C. business brokers or other M&A advisors? We understand what it takes to sell a small to medium-sized business better than others. It is not as simple as merely finding a buyer. As a business owner, you need an advisor that can help you through the process from start to finish.
- This includes marketing the business to qualified buyers and leading the process through due diligence, legal, and banking. We also run our process differently from almost everyone at this level. We create buying interest and run a bidding process to ensure that you get the highest price and the best terms.
- Having completed numerous complicated deals, we understand what needs to happen to get a deal done. That’s why we sell over 85%+ of our businesses, compared to an industry average of less than 20%. The only ones we don’t sell unexpectedly struggle after we start the sales process.