How Do You Make Your Company Sale-Ready from the Beginning

When starting a company your goal is to eventually grow and sell it for more money than you could ever imagine! That is the goal of many entrepreneurs, to make their companies sale-ready, and yet very few make the needed changes to achieve that goal. The most common mistake is failing to lay the groundwork for the company to survive without you. The key is to make your company sell ready from the very beginning. Regardless of when you sell the company, there are active steps that you can be taking to make sure your business can be sold at any time. The following tips are just a few ways that you can make sure that when you do place your company for sale, you will be able to achieve your dreams.

Buyers are looking for several key attributes in a company that is listed and ready for sale. They are interested in profitability, the culture, the management, how competitive your business is, and ultimately, how well the company can be scaled. Incurring large sums of debt is a bad policy to live by personally so why do so many businesses do it? If your company is in debt this will detract from the profitability and will likely scare off investors. Does your company for sale have a competitive edge? If your business is simply providing commodities that can be purchased elsewhere then you are not making an attractive business for perspective buyers.

Is growth a possibility with your business? Most prospective buyers are not looking to be painted into a corner. If the business has no potential for growth, then the buyers are not going to waste their time. Make sure you are building your business with growth in mind for it to be successfully sale-ready. Finally, do your employees understand the fine details of the business? If the team is poorly trained, or if you are simply poorly staffed, buyers are not going to find your business as attractive as they could.

There are also several “technicalities” involved with the business model of trying to build it for future sale. Are your employees classified correctly? If they are not then you could be opening your buyer up to potential tax issues. If you are leasing a space for the business, has the landlord approved the transfer of the lease into another name? if not, and the business must move, is this going to be a workable solution? How are the long term contracts of the suppliers that you use? Many times these contracts are based on personality and any unsettling movements in the business landscape could cause major ripples. Has the business handled the proper tax liability?

If you are looking to the future, then you are probably already planning to have your company ready for sale at some point. Make sure you have examined these aspects of business life to assure that you are doing all you can now to prepare for the future. The decision to place your company for sale is not something to take lightly. Setting the groundwork for future sale is going to require a bit more research and legwork but the benefits will far outweigh anything you could imagine.

Are you considering selling your business? We can help you. Contact us anytime at http://www.newgatecapitalpartners.com/contact/

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How to Exit a Company Successfully

exit a companyMany people will say, “I want to sell my company”, and yet they have no idea the amount of legwork and research that must go into this transaction. Selling a business is hard work and demands that a team of professionals is on board. There are thousands of businesses for sale all over the world but only a handful will ever sell. The keys to exit a company with a successful sale are not so much in the asking price but in the health of the company and the financial reports that need to be up to date. Just as you would never leap into a pool without first looking for a landing place, you must never jump headfirst into a sale without first doing your due diligence. Not only is this a legal term but it is a practical piece of advice. Examine the health of your company and then proceed to the next step.

From a legal position, there are many hurdles and bureaucracies that need to be handled before the sale of your business can take place. Issues associated with taxes and pensions must be addressed. You must take the time to have the business properly audited from top to bottom. Every account must be looked at and every penny must be accounted for in the company before exiting. In addition, there are tax issues that must be understood. Whether it is a shared sale or an asset sale, the tax implications are enormous and they must be met. This is why a knowledgeable attorney should be sought out. It is preferable to seek out a lawyer that has experience in handling acquisitions. If proper due diligence is not carried out it will only serve to hinder the sale, slow the sale, or it could cost the sale altogether.

Taxes are always a part of life and they are always a part of a business. There is no escaping this fact. Embracing the reality will make the transition much easier. Simply saying, “I want to exit and sell my company”, will not make the tax collectors go away. As tax laws are ever changing this is another reason for you to seek out the help of a skilled tax lawyer as well as an accountant. This will also be the time when an accountancy review of the business should be handled as it will establish the baseline price of the business in the future.

When you exit a company there could also be implications on your retirement plans or pension plans. These laws and requirements are also changing every day and you need to have a properly trained associate that can lead you through this process. There are no simple answers and there is nothing “sexy” about the process. Selling your business is hard work and it demands proper care and attention.

“I want to sell my company!” that is a great idea to have but there are practical implications that must be dealt with first. The best approach to take is to start your business with an end game in mind. Make yourself replaceable and make sure that you have a healthy business before you try to sell. Following through on this will make the process much less complicated and it could result in a much higher payout for you in the end.

Are you considering selling your business? We can help you. Contact us anytime at http://www.newgatecapitalpartners.com/contact/

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Buying and Selling Business: An Overview

buying and selling business dealOver 250,000 businesses change hands every single year. The majority of these businesses are small but a few are mid to large companies. The small business sales never make the news but we tend to hear about the billion dollar acquisitions of the fortune 500 firms. You do not have to be a billionaire to become involved in the buying and selling business, but you do need to be driven, competent, and willing to work. Here are a few examples of things to keep in mind if you are interested in selling your business, buying a business or simply flipping a business for a profit.

Purchasing A Business

The purchase of a business can be a very daunting task. There are thousands of papers to look at and untold amounts of time with the lawyers. No matter what kind of business you have or may be looking at there is always someone interested in buying. However, the actual selling of the business will require much work behind the scenes. All legal notices and disclaimers must be met. There must be a clear identification of the buyer and seller of what is expected and when it is expected.

It is also important to determine whether or not you are interested in a franchise or a stand-alone business. Buying and selling a business is all about managing your risk and your reward. Franchises have inherited benefits but they come with strings attached. Stand alone businesses are much more prone to failure but they have a potentially higher ceiling in the long term.

Selling A Business

If you are looking to sell a business, then you too have much work to do. Lawyers call this due diligence. This process will require that you understand the in’s and outs of your business. You are going to be asked for all financial records and to disclose all clients. When selling your business, you should consider it a very thorough medical examination. The prospective buyer wants to know all the gory details before they sign the dotted line. Take the time to prepare all the paperwork beforehand and be able to justify your asking price for the business.

Selling and  buying business models or businesses all together can be a very rewarding and profitable venture if you have the ability to spot a good deal, as well as the foresight to see how you can improve an established business. Many of the success stories that we have heard are very rare. While it can be possible to sell your company for millions or billions, this typically does not happen overnight. Success is possible but it rarely happens in an instant. The Self Employed has a great article on flipping a business.

If your long term goals include buying and selling in the business world then you need to familiarize yourself with those that are already in the business. Take the time to network and grow relationships. These relationships will benefit your career and they could make it much easier for you to do business in the future. The buying and selling business can be yours if you put the work in.

Are you considering selling your business? We can help you. Contact us anytime at http://www.newgatecapitalpartners.com/contact/

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3 Reasons You Should Sell Your Business

photodune-7448303-business-sMany business owners and entrepreneurs have found themselves asking the question of should I sell my company? It is a hard question to answer because so much goes into the building, growing, and structuring of a company. When it does come time to sell your business there are so many variables that the process can often become very murky and very difficult to traverse. There are millions of reasons that a person could sell their business but there are only a handful of good reasons. This advice is only going to list 3 of the most common reasons that are given for selling a business. So the next time you are wondering if you should sell, think back to this and see how it stacks up.

The Time is Right

Timing is important in everything. If a car is not timed correctly it will not run. If a baseball player does not time a fastball they will strike out. If an owner does not time their business sale perfectly they will miss out on a great payday. The markets typically dictate when to buy and when to sell. If your business has been established and you have a great reputation, you are halfway home to a great sell off. Timing is key due to the amount you receive but also based on risk. The longer your business is in operation and the larger it becomes, the more risk is involved and it becomes more likely that a spectacular fall could occur. Remember, a business has great value but it has no liquidity until a transaction has been completed.

The Risk is Too High

Another reason CEO’s and founders give for selling the business is that they are simply tired of the risk. Running a successful business is a very risky venture. You are attempting to judge the markets and seek to fill a demand before it actually becomes a demand. The chances of failure are sky high and the number of failures versus successes is staggering. Many business owners are simply tired of the grind and the worry associated with the constant risk taking. Much like the blackjack player has to know when to walk away, so must the company owner. Should you sell your business? Only you can answer this question, but if you have been paying close attention to your business the chances are you will know when the time is right to remove the risk from your life.

Burn Out

Perhaps the most commonly used reason for selling the business is that the owner/founder simple ran out of steam. Many business owners invest 15, 20, maybe even 30 years in their business. At some point, retirement begins to sink in and they start looking for a way out. For others, they simply realize they are bored or that they need to follow another opportunity. This is very common.
Ultimately you need to remember that you are the owner and you have the final say. If you are considering selling the company do not simply ask, should I sell my company. Be prepared. Have a plan. Make sure that you are the one dictating the terms of the engagement and not the buyer.

Are you considering selling your business? We can help you. Contact us anytime at http://www.newgatecapitalpartners.com/contact/.

 

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06- Jul2016
Posted By: Joe
25 Views

Possible scenario(s) of the future of various industries

Imagine                                                                                          

 

Change is inevitable. I imagine some of this will not turn out quite as planned, but it’s interesting to think about, just the same.
In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide.  Within just a few years, their business model disappeared and they went bankrupt.

What happened to Kodak will happen in a lot of industries in the next 10 years – and most people won’t see it coming. Did you think in 1998 that 3 years later you would never take pictures on film again?

Yet digital cameras were invented in 1975. The first ones only had 10,000 pixels, but followed Moore’s law. So as with all exponential technologies, it was a disappointment for a long time, before it became way superior and got mainstream in only a few short years. It will now happen with Artificial Intelligence, health, autonomous and electric cars, education, 3D printing, agriculture and jobs. Welcome to the 4th Industrial Revolution. Welcome to the Exponential Age.

Software will disrupt most traditional industries in the next 5-10 years.

Uber is just a software tool, they don’t own any cars, and are now the biggest taxi company in the world.  Airbnb is now the biggest hotel company in the world, although they don’t own any properties.

Artificial Intelligence: Computers become exponentially better in understanding the world. This year, a computer beat the best Go player in the world, 10 years earlier than expected.

In the US, young lawyers already don’t get jobs. Because of IBM Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans.  So if you study law, stop immediately. There will be 90% less lawyers in the future, only specialists will remain.

Watson already helps nurses diagnosing cancer, 4 times more accurate than human nurses.

Facebook now has a pattern recognition software that can recognize faces better than humans. In 2030, computers will become more intelligent than humans.

Autonomous cars: In 2018 the first self-driving cars will appear for the public. Around 2020, the complete industry will start to be disrupted. You don’t want to own a car anymore. You will call a car with your phone, it will show up at your location and drive you to your destination. You will not need to park it, you only pay for the driven distance and can be productive while driving. Our kids will never get a driver’s license and will never own a car. 

It will change the cities, because we will need 90-95% less cars for that. We can transform former parking spaces into parks. 1.2 million people die each year in car accidents worldwide. We now have one accident every 60,000 mi (100,000 km), with autonomous driving that will drop to one accident in 6 million mi (10 million km). That will save a million lives each year.

Most car companies will probably become bankrupt. Traditional car companies try the evolutionary approach and just build a better car, while tech companies (Tesla, Apple, Google) will do the revolutionary approach and build a computer on wheels.  Many engineers from Volkswagen and Audi; are completely terrified of Tesla.

Insurance companies will have massive trouble because without accidents, the insurance will become 100x cheaper. Their car insurance business model will disappear.

Real estate will change. Because if you can work while you commute, people will move further away to live in a more beautiful neighborhood.

Electric cars will become mainstream about 2020. Cities will be less noisy because all new cars will run on electricity. Electricity will become incredibly cheap and clean: Solar production has been on an exponential curve for 30 years, but you can now see the burgeoning impact.

Last year, more solar energy was installed worldwide than fossil. Energy companies are desperately trying to limit access to the grid to prevent competition from home solar installations, but that can’t last. Technology will take care of that strategy.

With cheap electricity comes cheap and abundant water. Desalination of salt water now only needs 2kWh per cubic meter (@ 0.25 cents). We don’t have scarce water in most places, we only have scarce drinking water. Imagine what will be possible if anyone can have as much clean water as he wants, for nearly no cost.

Health: The Tricorder X price will be announced this year. There are companies who will build a medical device (called the “Tricorder” from Star Trek) that works with your phone, which takes your retina scan, your blood sample and you breath into it. It then analyses 54 biomarkers that will identify nearly any disease. It will be cheap, so in a few years everyone on this planet will have access to world class medical analysis, nearly for free. Goodbye, medical establishment.

3D printing: The price of the cheapest 3D printer came down from $18,000 to $400 within 10 years. In the same time, it became 100 times faster. All major shoe companies have already started 3D printing shoes.  Some spare airplane parts are already 3D printed in remote airports. The space station now has a printer that eliminates the need for the large amount of spare parts they used to have in the past.
At the end of this year, new smart phones will have 3D scanning possibilities. You can then 3D scan your feet and print your perfect shoe at home.  In China, they already 3D printed and built a complete 6-storey office building. By 2027, 10% of everything that’s being produced will be 3D printed.

Business opportunities: If you think of a niche you want to go in, ask yourself: “in the future, do you think we will have that?” and if the answer is yes, how can you make that happen sooner?   If it doesn’t work with your phone, forget the idea. And any idea designed for success in the 20th century is doomed to failure in the 21st century.

Work: 70-80% of jobs will disappear in the next 20 years. There will be a lot of new jobs, but it is not clear if there will be enough new jobs in such a small time.

Agriculture: There will be a $100 agricultural robot in the future. Farmers in 3rd world countries can then become managers of their field instead of working all day on their fields.

Aeroponics will need much less water. The first Petri dish produced veal, is now available and will be cheaper than cow produced veal in 2018. Right now, 30% of all agricultural surfaces is used for cows. Imagine if we don’t need that space anymore. There are several startups who will bring insect protein to the market shortly. It contains more protein than meat. It will be labeled as “alternative protein source” (because most people still reject the idea of eating insects).

There is an app called “moodies” which can already tell in which mood you are in. By 2020 there will be apps that can tell by your facial expressions, if you are lying. Imagine a political debate where it’s being displayed when they are telling the truth and when they are not.

Bitcoin may even become the default reserve currency. Of the world.

Longevity: Right now, the average life span increases by 3 months per year. Four years ago, the life span used to be 79 years, now it’s 80 years. The increase itself is increasing and by 2036, there will be more than one year increase per year. So we all might live for a long long time, probably way more than 100.

Education: The cheapest smart phones are already at $10 in Africa and Asia. By 2020, 70% of all humans will own a smart phone. That means, everyone has the same access to world class education.  Every child can use Khan academy for everything a child learns at school in First World countries. We have already released our software in Indonesia and will release it in Arabic, Suaheli and Chinese this Summer, because I see an enormous potential. We will give the English app for free, so that children in Africa can become fluent in English within half a year.  Boom!

  (Author unknown)