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Justification for taking a vacation

Factors Affecting Business Saleability, Increase Your Business Value
A recent survey by The Sellability Score found companies that would perform well without their owner for a period of three months are 50 percent more likely to get an offer to be acquired when compared to more owner-dependent businesses. There is no better justification for taking a blissful, uninterrupted holiday than to see how your company performs in your absence. The better your company runs on autopilot, the more valuable it will be when you’re ready to sell. To gauge your company’s ability to handle your absence, start by taking a vacation. Leave your computer at home and switch off your mobile. Upon your return, you’ll probably discover that your employees got resourceful and found answers to a lot of the questions they would have asked you if you…
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The Hierarchy of Recurring Revenue

Uncategorized
How to make your company irresistible to potential buyers   One of the biggest factors in determining the value of your company is the extent to which an acquirer can see where your sales will come from in the future. If you’re in a business that starts from scratch each month, the value of your company will be lower than if you can demonstrate the source or sources of your future revenue.  A recurring revenue stream acts like a powerful pair of binoculars for you – and your potential acquirer – to see months or years into the future; creating an annuity stream is the best way to increase the desirability and value of your company.   The surer your future revenue is, the higher the value the market will…
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CAUTION: DO NOT POKE THE GIANT 

CAUTION: DO NOT POKE THE GIANT 

Deal Structure, Factors Affecting Business Saleability, Preparing to Sell Your Business
On June 1, 2011, both Floyd’s Coffee Shops in Portland, Oregon were busier than usual. The regulars were elbowed out of the way by new customers visiting the store for the first time to redeem their coupon and get $10 worth of coffee for $3. This tempting offer was made because Floyd’s had been picked as the first-ever Google Offers “deal.” Google Offers is the company’s first baby step into the world of “social buying” style promotions where a special, limited time offer is made by a business hoping that the deal will spread virally and thereby introduce a new legion of customers to their business. Google, of course, did not invent the deal-of-the-day category; they were goaded into it after their generous $6 billion dollar offer to buy Groupon…
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8 Questions You’ll Be Asked When Selling Your Business

8 Questions You’ll Be Asked When Selling Your Business

Exit Planning and Its Benefits, Factors Affecting Business Saleability, Preparing to Sell Your Business, Sale Process
One of the most intimidating aspects of selling your business can be facing the barrage of questions during the various management presentations you’ll be doing for potential acquirers. Be prepared to be grilled on all facets of your operations.  Of course, every meeting will be different, but here are some questions you can expect to be asked when you’re in the hot seat: Why do you want to sell your business? It's a slippery question because if your business truly does have a bright future—and you want the buyer to believe that's the case—the obvious question is:  “Why do you want to sell it, and do would you want to sell it now?” What is your cost per new customer acquired? The potential acquirer wants to find out if you have…
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7 things to do before signing a Letter of Intent

7 things to do before signing a Letter of Intent

Buyer, Sale Process, Transition
You may be years away from selling your business, but it’s never too early to understand what the process involves. If you have ever promised your child a treat in return for good behavior, you know all about negotiating leverage. When selling an attractive business, you also have leverage—but only up to the point where you sign a letter of intent (LOI), which almost always includes a “no shop” clause requiring you to terminate discussions with other potential buyers while your newfound “fiancé” does due diligence. After you sign the LOI, however, the balance of power in the negotiation swings heavily in favor of the buyer, who can then take their time investigating your company.  At the same time, with each passing day, you will likely become more psychologically committed to…
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Blog Post Title

Blog Post Title

Uncategorized
What goes into a blog post? Helpful, industry-specific content that: 1) gives readers a useful takeaway, and 2) shows you're an industry expert. Use your company's blog posts to opine on current industry topics, humanize your company, and show how your products and services can help people.
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9 Warning Signs You’re a Hub-and-Spoke Owner

9 Warning Signs You’re a Hub-and-Spoke Owner

Exit Planning and Its Benefits, Factors Affecting Business Saleability, Strategy, Uncategorized
If you were to draw a picture that visually represents your role in your business, what would it look like? Are you at the top of a traditional Christmas-tree-like organizational chart, or are you stuck in the middle of your business, like a hub in a bicycle wheel? If so you are a hub and spoke owner. As anyone who has tried to fly United when O’Hare has been hit by a snowstorm knows, a hub-and-spoke model is only as strong as the hub. The moment the hub is overwhelmed, the entire system fails. Acquirers generally avoid hub-and-spoke managed businesses because they understand the dangers of buying a company too dependent on the owner. Here’s a list of nine warning signs you’re a hub-and-spoke owner and some suggestions for pulling…
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What Does a Due Diligence Look Like

What Does a Due Diligence Look Like

Due Diligence
The value almost never increases during due diligence and it is typically the inadequate preparation for due diligence by the seller that causes this. The typical seller, and even the most broker, dreads the due diligence phase.  You are not going to successfully sell the business without enduring due diligence, so you might as well embrace it.  You've received an offer and a successful closing is just around the corner if you have adequately prepared and handle due diligence appropriately. Historically, many transactions fall apart during due diligence because negative surprises arise. Trust Issues from Inadequate Disclosures before Due Diligence, the key to surviving the process is to eliminate foreseeable setbacks by disclosing any negative issues early, before due diligence ever begins.  Disclosure allows you to present not only the problems faced…
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Four Traps to Avoid When an Acquirer Comes Calling

Four Traps to Avoid When an Acquirer Comes Calling

Buyer, Deal Structure
You may be eager to sell your business, and happy to have an acquirer comes calling and is at your doorstep, but what’s it like when an acquirer starts looking inside every inch of your business? Most professional acquirers will have a checklist of questions – both objective and subjective – that they need answered before getting serious about buying your company. Examples of objective questions include: When does your lease expire and what are the terms? Do you have consistent, signed, up-to-date contracts with your customers and employees? Are your ideas, products and processes protected by patent or trademark? What kind of technology do you use, and are your software licenses up to date? What are the loan covenants on your credit agreements? How are your receivables? Do you…
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