Category Archives: Buying a Business

Why OIB MN?

Why Hire Opportunities In Business? What Sets Us Apart?

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Selling a business is complex. 

From determining a sale price and knowing how to market your business to finding a qualified buyer and tying up the loose ends to close the sale, there are seemingly thousands of details to address. It’s a process that requires careful planning, often years in advance.

That’s where a business broker like Opportunities in Business (OIB) comes in.

Working with an experienced, trusted business broker like OIB could mean the difference between selling your business at a fair price with a smooth transaction and struggling through the process, only to lose money…or worse, not selling at all.

Read on to learn more about what OIB does and why our clients choose to work with us again and again.

What Role Does OIB Play in a Business Sale?

Expertise in running a business doesn’t necessarily translate to expertise in selling it. While some owners may succeed in selling their business on their own, the vast majority don’t have the expertise or knowledge needed to do so.

Having an experienced business broker by your side can make for a smoother, more successful (and, often, more lucrative) sale. A professional broker brings valuable skills to the table, including: 

  • The resources and expertise for accurate business valuation 
  • Effective marketing skills 
  • A firm understanding of current market conditions
  • Exposure of the business to a wide market 
  • The connections and expertise to help a buyer obtain financing
  • Experience closing business sales transactions

Hiring a business broker like OIB to handle your sale allows you to stay focused on what you do best: running your business.

When you work with OIB, we provide the services needed to bring your transaction to a successful close, including: business valuation, material and record coordination, marketing plan implementation, buyer qualification, sale negotiation, and transaction closing. We will also secure the advice of other qualified professionals—such as lawyers, accountants, and financial consultants—as needed. 

More Than 40 years of Experience

Established in 1981, the OIB team has more than 40 years of business brokerage experience. 

Over those four decades in business, we’ve participated in the sale and purchase of hundreds of businesses. 

Working with an experienced business broker like OIB gives you an advantage in selling or buying a business. As a seller, we’ll help you determine the value of your business, prepare it for sale, market it nationwide, negotiate the sale, and bring it to a close. And if you’re buying, we can help you find the business you’re looking for, negotiate a fair price, assist you in obtaining financing, and ensure a smooth closing.

Experts in the Business Sales Process

At OIB, we have broad business sales experience—there isn’t a single type of business sale we haven’t facilitated! \

We are experts in the process. From business valuation and preparing a business for sale to closing the transaction, we are involved every step of the way. We can even help buyers find financing options (including SBA and conventional loans), and connect our sellers with qualified buyers. Ultimately, there isn’t an aspect of the business sales process we can’t help you with.

And whether you’re buying or selling, we understand and respect the need for discretion and confidentiality that comes with a business transaction.

Knowledge in a Wide Range of Industries

We also work to become experts in every vertical we work in. As you can imagine, the operational intricacies of one industry can be vastly different from that of another. The sale of each business, therefore, will also look very different. 

Our team has helped clients from a broad range of industries buy and sell businesses. We’ve made successful sales in industries from wholesale manufacturing to credit card processing firms to foodservice…and many more. 

With each new account, we dig deep into their business and the wider industry, gathering information and asking questions to fill in any gaps in our knowledge. This due diligence allows us to learn the ins and outs of each industry so we can speak the language of that particular market segment and ensure a smooth sale.

Hundreds of Satisfied Customers

We have worked with hundreds of clients, and have earned a reputation for excellence in our industry. In fact, a significant portion of our business can be attributed to positive reviews, referrals from past clients, and satisfied clients returning to us for multiple transactions.

We have dozens of five-star Google reviews from happy past clients. Here’s what a few of them have had to say about working with our team: 

“Working with Mac not once, but twice, was a seamless process. Was always available when I needed to talk. Provided step by step process and details so that I could understand what was happening.”

“Peggy gets a solid 10 out of 10 rating from us. She was so helpful helping us sell our business and also extremely helpful to the buyers. She always answered her phone and responded to emails very quickly. She had the answers to any questions we had and gave us great advice through the process. Thank you Peggy!!!”

“Bill did a fantastic job helping me sell my restaurant. He worked with me to determine a fair price for the business and helped me navigate the sale even when things got a little rocky. Bill kept the buyers on track even when the usual cold feet came into play. He assured them of the quality of the business and helped them see and remember the reasons why they were looking to buy a business in the first place. Bill was extremely professional, but never pushy. I would recommend Bill to anyone who is looking to buy or sell a business!!!”

“We’re so glad we had Jim E. of Opportunities In Business involved in the sale of our liquor store from beginning to end. He dealt with prospective buyers professionally, represented our best interest and made certain all ‘t’s were crossed and ‘i’s dotted. He answered all of our questions while guiding the buyer through the paperwork and necessary approvals so that our sale went through correctly and swiftly. I highly recommend him!”

“We were referred to Peggy because of her experience in selling small businesses. With her expert guidance our business sold in about 6 months. She walked us through every step, was very knowledgeable and was a delight to work with. We are extremely grateful for her support and highly recommend her.”

“First class experience all the way around! Mac really set the bar in terms of knowledge, connections, experience, and overall professionalism. Highly recommend 🙂”

If you’re looking to buy or sell a business this year, or if you’re curious about the value of your business, Opportunities in Business would love to help. Contact us to discuss buying, selling, or a business valuation today!

Business Valuation

How COVID-19 is Affecting Business Valuation

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The recent COVID-19 outbreak is creating an atmosphere of uncertainty across the globe. No business is completely sheltered from its effects. While some businesses are pivoting their business models and innovating to meet changing consumer demands, the majority of businesses are struggling in some capacity, making it nearly impossible to forecast six months…one year…three years into the future. Present challenges and future uncertainty directly affect business valuations.

What is fair market value?

According to the International Glossary of Business Valuation Terms, “fair market value” is defined as “the price expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm’s length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of relevant facts.”

How is business valuation determined?

A fine-tooth assessment of cash flow, growth and risk factors allows a person to determine the fair market value of their business.

Cash flow: The impact of COVID-19 has resulted in the temporary closure of many businesses. Other “essential” businesses remain open but a vast percentage of consumers are concerned about contracting the virus and are choosing to limit their interaction with these places of business or avoid them altogether. As their revenue decreases, their profit margin decreases, reducing cash flow.

Projected growth: Another facet of business valuation is the company’s growth forecast for the foreseeable future. In the case of the current pandemic, and fueled by layoffs, pay cuts and job loss, both projected industry growth and national economic growth naturally decrease, directly impacting business valuation.

Risk factors: Both internal and external risk factors directly impact business valuation.

  • Internal risk factors: These include earnings history and expectations, cash reserves, customer and employee satisfaction and supply-chains.
  • External risk factors: Coronavirus or anything else that a company cannot control that affects the well-being of a company, is considered an external factor. They can be industry-specific or related to the local, regional or national economy. 

If you’re thinking about buying or selling a business right now, let us provide you with a solid business valuation so you can confidently navigate these uncertain waters. Reach us at 612.331.8392 or by email at info@oibmn.com.

Tips for Buying a Business During Uncertain Times

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Maybe you’ve thought about buying a business but in light of world events and the current economic crisis, you’re thinking about putting that dream on hold. We’re here to tell you that, equipped with the right resources, this may be an excellent time to make that purchase.

Investigate recession-proof businesses

Unfortunately, many businesses are hurting right now. In light of the quarantine and shelter-in-place orders, business owners are laying off workers and closing their doors. Many are afraid they may not be able to outlast the current crisis and that their businesses will fold. For every tragic story of struggling businesses, there is a story of hope – businesses that are thinking outside-the-box and businesses that are flourishing, despite the economic downturn. When it comes to purchasing a business, recession-proof businesses are excellent choices. They span many industries including food, home maintenance, auto maintenance, legal services and eldercare.

Do your research

Set yourself up for success by doing thorough research into the industry, market comps and the company’s books before entering into negotiations with a potential seller. Consider hiring professionals – a broker, an accountant and an attorney – to make sure no stone is left unturned. This may be the single biggest purchase of your life so investing in the research process is highly advisable.

Focus on tangible assets

Intangible assets include but are not limited to brand names, trademarks and customer base. Especially in a recession, the value of these assets may be largely irrelevant. The value of tangible assets, however, is easier to nail down, allowing the buyer to hone in on the actual value of the business regardless of the current economic situation. Ask the seller to itemize both the tangible and intangible assets to the best of their ability so you know precisely what you’re looking at. In a recession, make sure you’re paying the going rate for tangibles and substantially less for intangibles. This will prepare you to write a solid offer.

Operate with cash

During good times and uncertain times, one thing stays the same – cash is always advantageous. During rocky financial times, lenders may raise interest rates to mitigate their risk. The less you have to rely on financing, the better off you are and the stronger your offer appears.

Want to learn more? Check out our tips for savvy buyers!

If you’re in a good position to make a business purchase, don’t shy away in light of current events. This may be your moment. Contact us at 612.331.8392 or by email at info@oibmn.com.

Writing a Bullseye Business Offer

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Selling a business is an extremely personal experience for the business owner. After pouring themselves into the company day after day, month after month, year after year, they’re finally ready to pass the torch.

For the seller, choosing the right buyer and entering into a contract is much more than just a numbers game. When it comes to purchasing a business, it’s important for the interested party to respect the owner’s journey and speak to their sense of volition, wisdom, and purpose.

Volition: Starting up and operating a business requires a strong sense of autonomy and the thought of giving it up in that capacity can be scary. Consider how you can encourage the owner’s volition when you write up your offer. One way you can approach this is through monetary compensation. Monetary compensation can help secure the owner’s financial future and keep their options open so they are able to embrace new adventures.

Wisdom: Acknowledge the owner’s hard-fought wisdom by offering to keep them on in some capacity after the sale of the business. For example, you can write a consultant role in your offer that allows the owner to stay involved in the business and utilize their wisdom and experience.

Purpose: The overarching challenge for a business owner in the process of selling their business is maintaining their sense of purpose. You can honor the owner and acknowledge this challenge by appealing to their purpose. Keeping them on as a consultant or offering an earnout provision are two effective ways to do this.

Do you want help writing up an offer that addresses more than just the bottom line? We can help you speak to the seller and write a powerful, all-encompassing offer. Reach out to us at 612.331.8392 or by email at info@oibmn.com.

Crucial Questions to Ask Before Hiring a Business Broker

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Selling a business is no small beans. It’s a process that requires careful planning years in advance. Diomo Corporation reports that, at any one time, there are 15 prospective buyers on the market for every one business listed for sale. While this statistic is favorable for sellers, 50% of all transactions agreed to between the buyer and seller fall apart during the due diligence stage and never close.

Having a trusted business broker in your corner could mean the difference between selling your business for a fair price and not selling it at all. When it comes to finding the right broker for your business, there are a handful of questions you must be asking.

What’s your experience selling businesses like mine? How many have you sold?
The operational ins and outs of the restaurant business are vastly different from the ins and outs of an insurance company. For this reason, the sale of these two businesses will look very different and having a broker with the right experience is crucial. Don’t hesitate to ask your broker about their experience selling businesses within your industry including how many similar businesses they’ve sold.

Is business brokerage your full-time occupation?
It’s important that the broker you choose is dedicated to the sale of your business. Be wary of working with a broker who divides their time between a couple of different professions. Finding a buyer for a business and facilitating that transaction takes a tremendous amount of time and dedication. A broker working another job likely won’t be able to give your sale the attention it requires.

How many listings do you have right now?
If your business broker has a copious number of listings, they may be spread too thin. Conversely, if your broker has no listings, it could indicate a lack of motivation, possibly related to another source of income. A manageable number of listings for a full-time business broker is 3-7. Use this range as a benchmark for brokers you’re interviewing.

How many qualified buyers do you have?
When it comes to choosing the right broker for your business, it’s perfectly acceptable to ask each broker how many qualified buyers they have in their back pocket. You want to make sure brokers know their qualified buyers personally and aren’t just relying on a generic email list. Personal connections to qualified buyers and sellers are one of a broker’s biggest assets.

Do you help with contract preparation?
Structuring deals and drafting legal agreements are skills any experienced broker should possess. However, a good broker should also advise you to have your paperwork carefully examined by an attorney before details are finalized. Involving an attorney to review legal agreements helps reduce the liability for all involved parties.

The question isn’t: Is hiring a business broker a wise choice when it comes to selling my business? but how do I hire an experienced business broker who is motivated to represent my interests? Taking the time to interview potential brokers is a huge investment in the sale of your business.

Set Your Company Up for Success: What Top Business Leaders Do to Succeed

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Success is the result of careful planning. Here are some important tips from top business leaders for growing a successful company:

Tip #1 – Be the tortoise, not the hare

Slow and steady growth is a much more sound approach than bursts of growth. Many companies scale too quickly and collapse because their infrastructure is unable to accommodate it.

Tip #2 – State your goals

This might sound obvious but its importance cannot be underestimated. Write down your company goals and delineate your plan for achieving them. Communicate these goals and strategies to your employees and revisit the conversation often, keeping everyone up to speed on where the company is at in the process of achieving them. This will remind your employees that their position fits into the bigger picture and it will motivate them to do their best work.

Tip #3 – Build trust through transparency

Being open about your company goals and strategies is one way to cultivate transparency within your organization. When transparency is a priority, you create an atmosphere of trust which leads to improved morale, increased connection and productivity and better employee retention – all keys to running a successful organization.

Tip #4 – Practice good financial reporting

Paying close attention to company financials is a must. The use of a financial dashboard gives you a visual sense of where your company stands in many areas and helps you better comprehend and interpret performance metrics. The up-to-date information allows you to set practical implementation strategies that keep the health of your company priority one.

Tip #5 – Focus on the big picture when hiring

Promoting internally motivates employees to work hard and produce quality work. When you interview candidates for entry-level positions, ask yourself if the candidates fit the company culture and if they possess the skills and drive necessary to take on greater roles within the company down the road. Hiring with the big picture in mind sets your organization up for both short-term and long-term success.

Want help with the purchase of your next business? You can reach us at 612.331.8392 or by email at info@oibmn.com.

Primary Components of an M&A Purchase Agreement

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It’s important to familiarize yourself with the ins and outs of an M&A purchase agreement so you can go into your next transaction prepared.

Think of a purchase agreement as a more detailed LOI. While it contains the same terms as the LOI, it also includes additional terms and conditions and goes into greater depth.

Here are the primary components of an M&A purchase agreement:

Definitions: Before agreeing to the terms in a purchase agreement, it’s important to clarify the terms so everyone is on the same page. Many terms in a PA can seem ambiguous and up to individual interpretation. Taking the time to define these terms can clear up confusion upfront and is one more step towards ensuring a smooth transaction from start to finish.

Indemnifications: This part of the purchase agreement helps to protect the buyer from any issues that may arise after closing and draws a clear line of responsibility in the sand. Often heavily contested and litigated, indemnifications address which actions are covered, how long the indemnification period lasts, financial caps on damages, etc.

Representations, Warranties and Schedules: This is where the seller states what is true about the business at the time of sale. This can include up-to-date financial statements, any current environmental liabilities, ongoing litigation and employee benefits.

Execution Provisions: What money is being exchanged and in what forms? Are there any purchase price adjustments, escrows or earnouts? This is where all financial details relating to the purchase are spelled out.

Covenants: These are agreed upon behaviors between buyers and sellers. They can address the hiring of new employees as well as bonuses and raises instituted by the seller between the signing of the purchase agreement and the closing. They can also address post-closing behaviors such as non-compete agreements and D&O insurance.

Closing Conditions: This is the part of the purchase agreement where you detail requirements of both the buyer and the seller between the purchase agreement and the closing table. These requirements are specific to the transaction and can include special financing conditions, provisions stating that all representations and warranties are met, material adverse change clauses, etc.

If you want help creating a thorough M&A purchase agreement, we’d love to assist. We can be reached at 612.331.8392 or by email at info@oibmn.com.

What Not To Do When Submitting an Indication of Interest

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When submitting an Indication of Interest, it’s important to put your best foot forward. Price range, financing details, a due diligence timeline, a proposed closing date…these are just a few items typically submitted with an IOI that assist in creating a solid case for business acquisition. Conversely, if you’re seriously considering an acquisition, there are also some things you must not do. 

Do not overlook the due diligence process

Instead, reach out to the banker with all of your questions. This demonstrates a high level of interest and responsibility – two important components of the business acquisition process. Communicating with the banker shows that you’re doing your homework and that you’re a serious contender for the purchase. 

Do not submit a weak offer

Instead, submit a well-calculated, competitive offer. If you’re trying to hone in on a ballpark offer, talking with the banker on the seller’s side can help. They can’t give you a number but they can inform you more about the seller’s situation and general market trends. 

Do not skimp on the details

Instead, write out your unique advantages in your offer letter. Similar to a letter a buyer encloses when they submit an offer on a private purchase, writing out your “selling points” can lead a seller to choose your offer over another competitive offer. Be sure to include information about your timeframe, financials and company culture. And the more information the better! This information can increase banker and seller confidence, reduce their uncertainty and minimize perceived risk.

Do you want help navigating the business acquisition process? We’d love to partner with you! Contact us at 612.331.8392 or by email at info@oibmn.com.

How Buyers Evaluate Risk

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When it comes to purchasing a business, evaluating risk on every front is paramount. This risk assessment, known as due diligence, can take anywhere from 30-90 days or more and is comprised of assessments on multiple fronts. 

Areas to assess

Operations: Investigate answers to the following questions:

  • What is the growth trajectory of this company? 
  • Is the revenue sustainable? 
  • What is the company’s product image and how does it line up with competitors’ product images? 

IT: Evaluate security vulnerabilities and assess the ownership and setup of any custom software. Also, take an inventory of all IT devices among the company’s employees.  

Legal: Hire a lawyer to review all organizational documents, contracts, leases, past litigation, etc. for the purpose of addressing possible legal liabilities. 

Accounting: Conduct an assessment of the seller’s financial statements to help predict the company’s future earnings.

Environmental: Conduct an assessment of all business sites to determine any possible environmental contamination and litigation risks. 

Documents to evaluate

During the due diligence process, you’ll want to explore all the documents you can get your hands on in order to flush out all possible risks. These documents may include but are certainly not limited to licenses and permits, information on any past and current litigation, articles of incorporation, insurance coverage and information concerning any recent claims, employee contract details, information on company assets, tax records and financial statements. 

Take your time with this process. It’s not possible to be too thorough. If, after you’ve evaluated the risks, you determine you’re ready to move forward, it’s time to draft and sign a formal agreement. Should you dredge up current or potential risks that you’re not willing to assume, you can part ways with the seller, thankful you did your due diligence and avoided an unhealthy business transaction.

If you’re thinking about buying or selling a business, we would be happy to connect with you. We can be reached at 612.331.8392 or by email at info@oibmn.com.

Differentiation Defies Simple Price Concerns

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Let’s talk about the “commodity trap”: Basing your competitive position purely on pricing considerations. It’s the first step in a race to the bottom. While it’s true that price is often the top concern expressed by customers, it’s crucial to dig a little deeper.

Bain and Company, a global management consulting firm, surveyed B2B consumers of IT infrastructure products. Their analysis, described in an article in the March/April 2018 issue of The Harvard Business Review, demonstrates that these B2B customers identified cost reduction as their stated priority, but their responses to a series of questions indicated otherwise.

Bain identified 40 factors which mattered to customers. “Product quality, expertise, and responsiveness emerged as the strongest predictors of customer loyalty,” the article states. “Cost reduction was not even among the top 10.”

The 40 factors Bain cited represent a complex assortment of qualities which range from the very rational and objective (such as price and performance) to much more subjective and emotional factors (such as aesthetics, reputation and social responsibility). Bain grouped them into five categories: Table stakes; functional; ease of doing business; individual; and inspirational. Next, they assembled these considerations into a five-level pyramid in which strictly objective value forms the base and elements increase in subjectivity as they ascend the pyramid, in the style of psychologist Abraham Maslow’s iconic Hierarchy of Needs.

Pyramid of Value Spanning Five Categories

The bottom layer, the foundation of any product, are simply “table stakes,” meaning the bare-bones basics. This foundation depends on “meeting specifications at an acceptable price in compliance with regulations while abiding by ethical standards.”

Level two includes functional elements, and businesses often focus much energy here. These factors relate to economic or product performance needs, such as cost reduction and scalability.

At level three, we start seeing subjective considerations. Along with objective goals like time savings, reduced effort, simplification, organization, we find subjective judgments from buyers, such as a good cultural fit and a seller’s commitment to the buyer.

Level four is increasingly subjective, including elements of taste (appealing design and aesthetics), big-picture concerns (increased marketability or network expansion) and personal considerations (reduced anxiety).

Level five crowns the pyramid with suitably lofty notions: Vision, social responsibility, and hope.

Buyers and Sellers Must Compete on All Levels

As business brokers, OIB considers this information to be of prime importance. It is (or should be) a game-changer to parties on both sides of a transaction.

If you’re selling a business, accept that savvy buyers recognize a business can’t thrive by simply dominating the bottom layer of the pyramid. You’ve got to work on identifying, quantifying and competing on the more subjective items in the pyramid. The good news is: This will make your business more attractive to buyers precisely because it’s a crucial strategy to build customer loyalty, so your efforts will be doubly rewarded.

If you’re shopping to buy a business, do your due diligence. When evaluating a prospective business, study whether the executive team recognizes the importance of appealing to customers on every level of the pyramid. If a business settles for competing strictly on table stakes, they’re missing the boat. True, these elements are simple to measure and fairly transparent. It’s easy and tempting to simply compete on these, and they should not be neglected. However, today’s battle for differentiation takes place higher up the pyramid.

Admittedly, it’s harder to evaluate a business based on those increasingly subjective and intangible factors, just as it’s harder to actively pursue them. The fact remains that they matter enormously to customers, so they should matter enormously to you.