Best Business Description Ever?

Here’s a quick FAQ to provide a heads up to potential business buyers and sellers.

When looking at the current listings being marketed by the brokerage firms you are considering be wary of excessive superlatives. If every other listings sounds like the best business ever you might want to turn your “BS” meter on.

Do the listing titles include words like “Perfect”, “Stunning”, “Unbelievable”, “Booming”, “Thriving”, “Amazing”, “Awesome”, “Incredible” and my favorite “Recession Proof”?

Sometimes one of these is appropriate, but if you see these superlatives being over used you should be extra cautious when reviewing financials and other materials produced by the broker.

If the business broker and seller are willing to exaggerate the first information viewed by potential buyers there is a good chance that other important information has been exaggerated as well – potentially having a material impact on the true value of the business.

The best business description ever is one that accurately presents the information about the company for sale to prospective buyers. No business is perfect. It’s important that the business description be accurate and provide enough detail to attract prospective buyers.

December 28th, 2012|

Newbie Business Brokers?

Have you seen some of the new “business broker” websites popping up? It appears there are a new crop of individuals calling themselves business brokers out there. You can identify them by the lack of listings. Some don’t even have a real contact person’s information.

People come in and out of industries all the time, but what scares us is the lack of training and experience we’re seeing and individuals claiming they are “experts” in areas that they aren’t and connected and networked in industries that they are not.

Why so many so quickly? We suppose it’s because many people have been professionally displaced and see business brokerage as an easy way to make a quick buck. (We assure you it isn’t) and that is proven by the generally accepted stat that ~80% new business brokers start with little or no training and ~50% of business brokers wash out in the first 12 months and ~80% of newbie business brokers never make it to year three! (Source: franchised and independent business brokerage / merger and acquisition practices and industry associations.) This combined with less successful offices reaching further and further to stay in business.

You don’t want your business brokerage firm […]

December 28th, 2012|

I received a letter from a broker claiming “I have buyers for your business”. Is this for real?

It’s very unlikely. This is a trick used by brokers trolling for new listings. Everyone gets the same letter and they wait to see who bites.

Most times the broker has a generic buyer that they use liberally as being interested then mass mail to hundreds if not thousands of business owners without regard to location, industry or price point. They are buying a list and rolling the dice.

Those that respond are asked to sign an exclusive representation agreement. When the ‘buyer’ doesn’t work out they have you committed to a 12 month exclusive agreement.

If they really had a legitimate buyer for your business wouldn’t you expect them to call you directly and set up a meeting? After all we”re talking about a transaction of hundreds of thousands if not millions of dollars.

I love to call back and ask “What industry is the client you wrote me about interested in?” I’ve never once had a broker be able to answer this question because they don”t really have a buyer. They flounder around with “lots of buyers”, etc. etc. They are always embarrassed when they realize they don”t even manage their direct mail list well enough to remove “ENLIGN BUSINESS BROKERS”!

ENLIGN has […]

October 29th, 2012|

Who should sign a NDA or CA (Non-Disclosure Agreement or Confidentiality Agreement)

The below article offers a good perspective on confidentiality agreements. In summary if the individual is not familiar to you and poses a competitive risk or if you are in the patent process an NDA/CA is appropriate. If the individual is a professional advisor (Attorney, CPA, Business Broker, Venture Capitalist, Angel Investor) it is generally innappropriate. Another consideration is if they are coming to you a written agreement is more appropriate. If you are going to them it is less appropriate. An experienced business broker will ALWAYS secure an NDA/CA from prospective buyers or discuss with you in advance of releasing any of your confidential information.

When is a Non-Disclosure Really Required?

Entrepreneurs often get the advice from their lawyers and friends to always get a Non-Disclosure Agreements (NDA or CDA) signed before disclosing anything about their new venture. Most investors and startup advisors I know hate them, and refuse to sign them. Who is right?

Let me try to put this question in perspective. If you are totally risk-averse, then push to always get signed NDAs. Chances are the most experienced and valuable contacts will choose to pass.

June 23rd, 2012|

How long does it take to sell a business? How much does it cost?

The non-answer – answer.. “It depends”. Okay, on what?

The time required to sell a business depends upon the industry, location, price, size and yes which firm you select to represent you.

Business Brokerage Press annual survey of business brokers in 1992 found the average time to sell a business was 4.8 months. In 2013 survey results were 12 months. Note that this only accounts for businesses that sold. The increase in time is likely attributable to perceived difficulty in buyer financing. Note “perceived”.

ENLIGN’s 2013 is heavily concentrated around 6 months, with outliers from 1-14 months.

The cost. Virtually every business broker and business brokerage firm charges a commission at the time of closing based upon the purchase price. The industry likes to call this charge a “Success Fee” – presumably because it sounds better than a “Commission”. However, that’s what it is – a fee paid to the broker for managing a transaction through closing.

The percent ENLIGN charges is 10% on transactions up to one million dollars. That represents a $100,000 commission for the sale of a million dollar business. Sound outrageous? It’s not really. For two reasons. The first is the doctor analogy. When you go to see a doctor you […]

June 20th, 2012|

What is an M&AMI? CBI? ABI? IBBA? ABBA? Why all the letters?!

These are the all imprtant designations that you should not only look for, but EXPECT that the broker who represents you has completed.

ABI = Accredited Business Intermediary. This is an entry level designation provided by the ABBA = American Business Brokers Association. Total cost approximately $1,000. Total time approximately 4 intense training days.

CBI = Certified Business Intermediary. This is the most recognized business brokerage designation provided by the IBBA = International Business Brokers Association. Total cost approximately $7,000 and then $2000 per year. Total time approximately 2 years/two conferences plus ongoing continuing education.

M&AMI = Merger and Acquisition Master Intermediary. This is the most prestigious designation provided by the M&A Source which is a sister organization to the IBBA. In addition to the costs and requirements of the CBI designation, M&AMI requires additional 300 and 400 level middle market courses and completion of a requisite number of transactions over $1,000,000.00US. Application fee is $250 and annual dues are approximately $500.00.

Do you really want a broker who is either too cheap (or can’t afford) or not smart enough to realize that to represent one of your most valuable assets (your business) for sale that they need to invest their own […]

June 20th, 2012|

How long has ENLIGN been in business? Does it matter?

The firm was founded in August of 2003 by Jeff Snell.

One might assume that time in business doesn’t matter. However, being known in the marketplace as the ‘go-to firm’ when it comes time to buy or sell a business is important when attempting to sell your business at the highest market value in a reasonable amount of time. Having a Rolodex of buyers, lenders, underwriters, transaction attorneys, tranaction accountants and business valuation experts as well as buy-side brokers is a real asset.

As of this writing ENLIGN has over 2300 subscribers to the monthly eNewsletter that features new listings and industry information.

Sometimes it’s not what you know, but who you know and knowing who to contact for specific transaction requirements makes a huge difference not only in time required to complete a transaction, but the overall total transaction value as well.

Review the ADVISORS tab above for a list of our most active connections.

June 20th, 2012|

It looks like ENLIGN has more business brokers than any other firm in North Carolina. So why so few listings?

This is a great question and the reason isn’t obvious.

The answer is two-fold. First, ENLIGN is the only firm in the region that charges a retainer from business sellers. We beleive this creates a self selection scenario where sellers that don’t beleive their business will sell never list with us because they don’t want to spend good money after bad – and that’s fine with us! (we credit the retainer back at closing so it doesn’t cost any more to work with ENLIGN). So, for that reason we start with fewer (but, higher quality) listings.

The second reason is BECAUSE WE SELL THE LISTINGS WE HAVE! We don’t accept every listing (even if the owner is willing to pay the retainer). We have refunded retainers in cases where the owners representations turned out to be “less than reliable” or Sellers became unrealistic about the value of their business.

We only engage with businesses and business owners that we feel have a high probability of receiving offers and qualifying for financing.

In short it’s because we start with fewer higher quality listings and are able sell them – in most cases quickly. So far in 2013 we have sold 3 businesses before they […]

June 20th, 2012|