by Tim Ajayi | Dec 17, 2019 | Business Broker, Selling Your Business
How do I sell my company? This is a popular question asked by almost every single business owner. Many times it is easier to start the business than it is to sell the business. Yet there are some things that you can do to help in the process. It is always important to start early and lay the groundwork for a potential sale. Positioning your company for sale is something that many talk about but few ever follow through. The object here is to make a profit and to do so without having to spend a fortune in the process. While it does take money to make money and you will almost always get what you pay for, there are some steps that you can take to better position your company for a sale in the future.
The best way to position your company for a future sale is by building a strong, profitable company. Substance over form is a great thing to remember. While you might be able to whitewash the exterior, a keen business mind will be able to tell if your business is as strong as you say it is. Take the time to build a business that has a solid reputation and a sterling character. Provide the best service or product around and do it at a fair price. These are trademarks of a great company. If you are still asking how do I sell my company, then keep the following tips in mind.
Experience Matters
Most buyers are more experienced than the sellers are. They are used to taking advantage. Surround yourself with valuable people such as lawyers and other business leaders. Make sure you have experts from the field in your corner to guide you along the way.
Know The Market
Put yourself in the shoes of the buyer. What would you want if you were in their position? Further, take the time to get to know your perspective buyer. The more you know the stronger the relationship can become.
Know What You Want
Indecisiveness is a terminal cancer in the world of business. You are wavering or unwilling to commit then the buyers will walk away.
When asking, how do I sell my company?, many people fail to place themselves in the shoes of the buyer. A company that barely skates by is not an attractive investment. A company that is riddled with debt is not an attractive investment. A company with a poor reputation or a history of bad financial decisions is not an attractive investment. If your goal, as a business owner, is to sell your company for a large sum of money then you must position the company, from the start, to be great.
Make sure that you are positioning your company to be competitive in the market that you are involved with. If the competition does not know who you are then there is little chance to sell your company. If you are truly committed to selling your company then you will follow these simple truths and you will quickly find that success is already a part of your future.
Are you considering selling your business? We can help you. Visit our Sell Your Florida Business page to learn more about what we can do to help you.
by Tim Ajayi | Dec 17, 2019 | Business Broker, Selling Your Business
Selling a business is not an easy thing to do but it could be a great way for a business owner to cash out and pocket a large sum of money. However, it is prudent that the right advice is followed or else severe financial ramifications could occur. Most people start with a simple question such as, how much can I sell my company for? This is typically the question asked when the owner needs an influx of cash. An outright sale is usually the simplest way to handle this issue but it is not always the most beneficial. When it comes to cashing out of the business the options before you are numerous. Here are a few to keep in mind.
There are two ways that an owner can cash out of the business. The owner can sell all the assets associated with the company or they can sell their stock in the company. In most cases the sale of stock will benefit the seller whereas the sale of the assets will benefit the buyer. Asset buyers are purchasing all of the business. This would include the real estate, customers, and the equipment. However, stock buyers are assuming control of the company and are exposed to all the liabilities that come with it. If a lawsuit is brought against the business the new owner would be liable.
If you are asking how much can I sell my company for, then you are probably looking for a way to pocket cash. If this is the case, then you could consider the benefits of an ESOP. The Employee Stock Ownership Plan is a way to reward hard work and loyalty. This option will allow you to set up an independent trust that holds a stock for the employees for as long as they work in the business. The company buys the owners stock and places the stock in the ESOP. If an employee leaves then they are entitled to cash out their stock option. This option requires cash on hand in the event that an employee leaves. This option benefits the owner by paying them for their stock and it benefits the employees.
If an owner is looking to sell the business in the future but does not want to step away immediately they could look at something such as preferred stock or even debt. Preferred stock is something that is sold to a perspective buyer. It places cash in the pocket of the owner and allows the stockholder to learn about the business and gradually assume control. If the business is healthy and capable of taking on debt it can also secure a loan and buy the stock of the owner.
There are several methods that an owner can use to cash out of the business if they so choose. However, the best options depend on the long term and short term goals of the owner. If the owner is simply curious about how much they can sell their company for, then they are typically looking for a cash infusion and thus they do not need to sell off the company entirely.
Are you considering selling your business? We can help you. Visit our Sell Your Florida Business page to learn more about what we can do to help you.
by Tim Ajayi | Aug 22, 2019 | Selling Your Business
So you’ve just made the decision to sell your business. That’s a huge step for someone like yourself that has poured their heart and soul into their company for years while growing it into a successful venture. Now there’s just one remaining question left in your head, a question that every founder in your shoes has asked before.
What steps do I take now to sell my business? (What do I do now?)*
Helping business owners answer this question is why Newgate Capital was founded 20 years ago. We specialize in helping you through every step of the process, from the initial ideation all the way to the final signatures closing the sale.
With this post, we are going to step you through the key categories that every business owner must not only thoroughly examine about their company but also polish up before they begin to see serious offers come their way.
Every one of these categories are areas where we work directly with our clients to help them get in order.
Internal Operations and Management Team
One of the most critical aspects of a business is how well its management team supports the day to day operations of the company. When a prospective buyer is gauging whether or not they would be willing to purchase your company a key piece of information that they are going to look at is if the Founder (you) leaves the day to day running of the business, will the business continue to operate effectively?
The ability to show that your business runs in a completely “hands-off” way is going to be a huge asset when it comes time to convincing potential acquirers that your company is an attractive offer.
Not only will this showcase that upon your exit of the company that it will continue to function and produce the same returns that it has been to date, but it will also show that there will be the ability for a much smoother transition period following the sale.
Anyone who buys your company would much prefer being able to keep the current team in place, avoiding the headache that would be having to restaff and retrain an entirely new management team.
If you can show that your business will operate with the same efficiency under new ownership as it has with you running the ship, then you will see an increase in value for the company, as well as a faster and smoother sale process.
Financial Statements and Accounting
Having 3-5 years of audited financial statements available as well as interim financial reports is going to be a requirement for any potential acquirers.
This information being available to potential buyers directly from the moment they ask for it is going to get you started off on a great foot. On the opposite end of the spectrum, if you are not able to provide this information to someone who is interested in purchasing your business, or the information that you provide is obviously, outdated, incomplete, or worse, completely tampered with, then you are going to irreparably damage the potential lead from that moment.
No matter how clean and audited your financial statements are there are always going to be questions and clarifying statements that must be made between the parties. Examples of common questions are the following:
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- How reliable are these projections?
- How reliant are these projections on just a small number of clients?
- Are your financial margins improving or getting worse?
- What are the key financial ratios that your line of business tracks? And how have those been performing over the last 3 years?
- Are the relationships that affect these ratios the most able to be taken over by a new team if needed?
- Do you have an accounting system in place, and how quickly can you generate reports about your business?
Among many others. At Newgate Capital, we have gone through this process countless times and are confident in our ability to prepare Founders for this process.
Only you know exactly how your business operates day to day, so being able to coherently and succinctly explain those operations and where they affect certain areas of your financial statements is going to be crucial. You need to make sure that not only your CFO/Treasurer can speak to this, but having the Founder being able to answer these questions will also go a long way in showing a buyer that you truly do know every aspect of your business, and will set their mind more at ease.
Business Valuation
Business valuation is one of the trickiest areas to deal with, especially if you have no one helping you along the way. Every business owner is going to want to get as much value for their company as they can when it comes time for a sale, and that is to be expected. Often a problem that is run into though, is that current founders have a much higher “dollar value” in their head when they personally start to value their company than what the company is actually worth.
This can cause two major problems.
1.The first problem occurs when it comes to down to negotiations with potential acquirers. On one hand, you want as much as you can get for your company, on the other the buyer wants to pay as little as they possibly can. This dance back and forth can be tricky, and it will become even more complicated if you come out of the gate with a valuation for your company that doesn’t resemble the actual reality of what it is worth.
Having an independent valuation of your business done by non-biased professionals before you get to this point can make the negotiation process go much smoother. This allows you to have a more realistic view of what your company is actually worth, and it also helps the potential buyer understand that the price that you are mentioning is based on impartial advice from a professional that does not have the same emotional connection to the business that the Founder does.
2. The second issue that arises is that if you are valuing your business at a level that is completely beyond what the current market is dictating for companies in your position, you will not receive any interest in a sale whatsoever. In the same way that putting your house on the market for more than others are worth in your area will lead to no one being interested in purchasing your home, the same will go for your business if you are not able to realistically set a price.
At Newgate Capital not only do we have experience in valuing companies across many different industries and verticals, we also have connections to other industry professionals that are able to give unbiased valuation advice, and this is always a crucial component of the work that we do with our clients.
Client Base
Clients are the lifeblood of your business. Potential buyers always want to know what the customer base looks like and how diversified it really is. No one wants to purchase a company that is based only on a single large relationship where the bottom line could be adversely affected due to damage occurring to that relationship. Having a broad mix of different sizes, and types of clients will help ease the mind of acquirers that the loss of a single client will not bring about the downfall of the business.
In addition to this, making sure that the staff that will be retained after the sale has strong relationships with your current client base is going to be a consideration at the top of a buyers’ mind. This goes hand in hand with what we discussed earlier about the management team of the company being a focus for buyers. Making sure that as soon as the company changes hand that client relationships and their business moving forward will stay intact is going to definitely be a focus for a buyer.
Here at Newgate Capital, we specialize in being able to find where in each of these categories your business excels, and working with you on figuring out the best ways in which we can highlight those categories to buyers. In addition, we are adept at identifying where your current business is lacking, and advising you on how to go about fixing those shortcomings before we put your business on the market.
At the end of the day the work that we do is always to help you figure out how to best position your company every step of the way leading up to the sale. Making sure you have the right information, as well as the right strategy, will help create an environment where your business transaction runs smoothly and you end up very profitable.
Are you considering selling your business? We can help.
by Tim Ajayi | Dec 7, 2018 | Business News, Portfolio
LocatorX Looks To Be Found
LocatorX develops innovative GPS technology to provide location tracking services. Scott Fletcher, a 30 year IT veteran has just been named the new CEO. Scott has worked in IT for large multinational companies and has also played an instrumental role in building and leading startup tech companies – both large and small. His previous work history includes: Shell, PeopleSoft (currently a part of Oracle), Dun & Bradstreet Software and more.
Mr Fletcher will lead LocatorX as they continue to develop the next generation of GPS which incorporates the world’s first Solid-State Atomic Clock microchip.
As CEO, Mr. Fletcher will lead the company through the following undertakings:
- bringing the LocatorX’s first product to market
- commence microchip production
- launch the company’s major marketing campaign
- pursue additional technology patents
- continue the push forward for SEC Reg A+ Direct Public Offering.
The full official announcement from LocatorX can be read here.
by Tim Ajayi | Dec 7, 2018 | Angel Investing, Business Broker, Business News, Mergers & Acquisitions
As we near the end of 2018 (my, my what a year this has been), we would like to provide a brief overview of a few of the exciting partner companies in our portfolio (in no particular order). As you can see, we are industry agnostic so our portfolio ranges from the highest of high-tech to a delicious line of Rum. We have additional companies in our portfolio as well as multiple businesses for sale that we will cover in future newsletters.We are very fortunate and grateful that a boutique firm like NewGate Capital is able to attract such quality deals.
LocatorX plans to disrupt the $27 Billion GPS location services market through their partnership with Oxford University which provides exclusive rights to the University developed Solid-state Miniature Atomic Clock. Once scaled, the patented Global Resource Locator will enable real-time tracking of any asset – both indoors and outdoors – at a low per-unit cost, without the need of installing expensive beacon systems.
As the Internet of Things (IoT) continues its rapid growth, the Global Resource Locator will seamlessly integrate into any device or product to enable accurate and timely location tracking. While the Global Resource Locator is being developed for mass production, LocatorX is creating a suite of products to improve product and tracking information which will commercialize the back-end functionality of the final product and generate near term revenue.
ThreatLocker has developed an application whitelisting solution that allows businesses to control exactly what is running on their systems while giving them complete visibility. The ThreatLocker solution stops users from running unknown applications (i.e. viruses, malware) without explicit permission from the I.T. department. This results in the virtual elimination of malware and cyber breaches. Unlike traditional whitelisting solutions, ThreatLocker is easy to deploy, requires little management, and easy to permit new software when it is needed. ThreatLocker is fully developed and is in the market with customers and revenue.
A passion for Caribbean culture, coffee and rum. RumJava is a line of artisan crafted rums (4 dark rums and 2 rum creams) distilled in Florida from Florida cane and other natural ingredients. The rums, infused with five Java’Mon Coffee blends, are positioned in the growing flavored rum category and they compete with premium sipping rums. RumJava was awarded 3 Gold Medals at the Miami RumFest and was the highest selling rum at Miami RumFest, UK RumFest and the London Spirits Show. Created in 2017, RumJava has sold 24,000 bottles in 8 states, the UK and the Virgin Islands and is increasingly cashflow positive.
SecureAire has developed and commercialized today’s most advanced air purification systems to combat the growing problem of indoor air quality. SecureAire’s patented Particle Control Technology is able to filter out critical contaminants including viruses, bacteria, mold, VOCs and dissolved gasses (CO2). SecureAire technology has been proven through several supervised pilot projects in hospitals and commercial buildings. SecureAire is currently manufacturing and selling units for commercial and residential applications.
SuperCooler Technologies focuses on precision refrigeration and beverage supercooling. They hold numerous patents for chilling, storing and serving beverages. SuperCooler’s flagship product keeps liquids just below their freezing point to offer a perfectly cooled beverage with an instant slush. A version of this product is being offered in partnership with Coca-Cola branded as Artic Coke. Two of the first Artic Coke Supercoolers in Florida have been placed in Disney Springs at the Coca-Cola Store.
Rentivity is developing the first end-to-end digital marketplace for single-family rentals. A highly automated single point of entry SaaS platform integrates all users, streamlining the entire asset lifecycle. Originated from experience, Rentivity is designed to scale while mitigating risks, improving rents, reducing vacant time on market, and controlling costs. The Rentivity platform is fully developed, has completed testing, a pilot launch and will be fully released with live customers before year’s end.
GeoToll has created a mobile phone app that replaces the window stickers and other devices used for electronic toll collection. Not only easier to use than SunPass, EZ-Pass, Peach Pass, and all the other toll passes but your one GeoToll app can handle them all. GeoToll has you covered whether you are driving locally, cross country or in a rental car.
GeoToll technology has been proven through multiple pilot tests and is now entering two go-to-market launches in California. The Bay Area Toll Authority (BATA) and the LA County Metropolitan Transportation have awarded GeoToll exclusive contracts and have committed over $350k to proving customer acceptance and operational benefits.
We want to wish each and everyone of you a wonderful Holiday and a very prosperous New Year.
