Saddle up for a ride into the wild, wild West of buying and selling a business
Posted On August 18, 2018
Say you’re a business owner who is ready to retire. You don’t have anyone in the family to pass the business along to, and you’re looking to sell.
Do you know where to start?
Or say you’re in the market to buy an existing business. How would you go about it?
Buying and selling businesses isn’t like a normal real estate transaction, where a realtor puts a sign in your yard and lists your home on MLS. In most cases, you wouldn’t want your employees or your competitors finding out the business is up for sale until a deal is in place.
Our guest in this week’s episode of “What’s Working with Cam Marston” specializes in brokering transactions involving the buying and selling of businesses. Dock Reed, founder and CEO of The Reed Group, Inc., has closed over 120 such transactions in his 25-plus years in the business and has some tips on how to go about it.
“This is kind of the wild, wild West,” Reed says. “There aren’t too many books written on it.”
There’s more than the price to consider: the expertise and goals of the buyer, and the objectives and emotional attachment of the seller. Respect on both sides is important – a seller doesn’t want to turn over a business he’s spent his life building to someone he doesn’t respect or someone he doesn’t believe can help it thrive and grow.
But for both sides, the bottom line still comes down to money. For buyers, it’s how much liquid capital they have for a down payment. For sellers, it’s the financial statements.
“Every deal I’ve ever been involved in is a byproduct of the financial statements,” Reed says. “Patience is the key, and preparation is the key. … Preparation should be 75 percent, execution only 25 percent – same as business.”
So saddle up, pardner, and join us for a ride into the wild, wild West of buying and selling a business.