e- book - contents
Cover page
Authors’ disclaimer & your legal rights
About the authors
Introduction
How to use this book
Chapter One – The Decision to Sell Your Business
Why would you want to sell?
The decision to sell
A wrong reason to sell your business
Can I sell my own business DIY?
How long will it take to sell my business? 7
Points to consider for a successful sale
When a business doesn’t sell
Chapter Two – Valuing Your Business
The key drivers of business value
Business risk factors – comprehensive list
Business risk factors – condensed list
The different methods of valuing a business
Valuation techniques
Some common business valuation mistakes
Practical small business valuation
Chapter Three – Preparing Your Business For Sale
Getting organized
Is your business in a state of fitness?
Is your business eco-sustainable?
Check-List for preparing your business for sale
Confidentiality Agreements
The Information Memorandum
The Summarized Information Memorandum
Pre-inspection Check List
Buyer’s due diligence
Employees
Business planning
What advisers do you need?
What about tax?
Chapter Four – Identifying & Managing Buyers
Some potential buyers
What do buyers want and look for?
So how are you going to market the business?
Designing your advertisement
Qualifying the buyers
Some questions to ask a prospect
Why some buyers don’t move ahead
Meeting the buyer at the business premises
Chapter Five – Offer and Acceptance
Offer and acceptance
Negotiating and closing the sale
Some useful things they teach in sales school
When to get the lawyers involved
Offers
Help the buyer to buy
Vendor finance
The Letter of Intent
Check list for the sales contract
Keeping the sale together
Buyer’s remorse
Seller’s remorse
Handing the business over
Change of ownership
Wrap Up
Appendices:
Sample valuation using included software
Business fitness assessment form
Preparation for sale checklist
Buyer inspection check-list
Buyer enquiry form
Glossary of business terms

The key drivers of business value are:

• Margin – The greater the positive difference between all business costs and sales, the more valuable is a business.
• Growth – A business that is growing has a higher value than a business that is static or declining.
• Asset utilization – A business that uses the least amount of assets and uses them efficiently is more valuable.
• Financial engineering - A business that actively seeks to optimize its weighted average cost of capital (WACC - the mix of equity & more valuable.
• Relative business risk – A business that is comparatively less risky when assessed against the following ‘business risk factors’ is more valuable:

'Business risk factors' (the comprehensive list used for valuing larger businesses)

1. The length of time the company has been in business
2. The length of time under current ownership.
3. Number of employees
4. The quality/appropriateness of the business location
5. Condition & quality of plant and equipment
6. The tenure and security of occupancy
7. Working capital needs to fund growth
8. Threat of debtor defaults
9. Business sales growth (past and future)
10. Future industry growth potential
11. Desirability of the business (is there a demand for this type of business)
12. The management control systems in place
13. The documentation of systems, jobs, procedures, policies
14. Customer base and customer retention
15. Level of competitor rivalry
16. Need for advertising
17. Geographical scope
18. Supplier power
19. Buyer power
20. Threat of new entrants
21. Threat of substitutes
22. Degree of market focus
23. Threat of litigation
24. Customer ownership
25. Government regulation
26. Owners’ working hours
27. Owner dependency

For smaller businesses a lesser number of risk factors can be considered to arrive at an approximate business valuation. This small business valuation software uses the following risk factors:


1) The time the business has been in existence
2) The quality & consistency of earnings
3) Industry growth / expected growth
4) Business sales growth over the last 3 years & expected future growth
5) The degree & intensity of competition
6) Suitability of the business location
7) Supplier concentration (relying on just a small number of suppliers is very risky)
8) Buyer concentration (relying on just a small number of buyers is very risky)
9) The difficulty of entry for new competitors
10) Employee quality & stability