Top 5 Stumbling Blocks to Negotiating a Deal

top-5-stumbling-blocks-to-negotiating-a-deal

The decision to buy or sell a business can be very exciting yet overwhelming at the same time. Here are the top 5 stumbling blocks that may arise during negotiations when buying or selling a business. Learn how to prepare yourself for a smooth and successful negotiation.

1. Financials

More often than not, business owners are over-confident in the knowledge they have of their business. In reality, these individuals lack a solid system or have failed to take the time to fully digest their data. Experience has revealed that once analysts peel back the layers of the business, they end up knowing more than the business owners themselves. It is imperative that vendors get into the habit of drilling down into their financials instead of simply doing a high level analysis.
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Business Transitions – Management Buyout (MBO)

Business Transitions – Management Buyout (MBO)

Another means of exiting from a business is to pass on the leadership and ownership by selling the business to the current management team or employee group.

For the Seller – Keep Top of Mind

It is a way to ensure continuity of the business with the team that they put in place. Furthermore, the management group are starting with a great deal of inside information regarding the strengths and weaknesses of the business, negating much of the sales “pitch”.
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The Solution To What Can Be A Very Expensive Problem

the-solution-very-expensive-problem

Over the past few years I have met with a lot of business owners who were very confident in the financial performance of their companies, only to eventually realize that there were many gaps. Typically, facing a cash crunch, going through a major restructuring or growth that was proving more difficult to handle than planned (or not planned adequately).
Surprisingly many of these owners ended up spending a lot of time and money to address their concerns with very little results.
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Business Transitions – Valuation vs. Evaluation

valuation-vs-evaluation

The only true measure of the value of your business is what a third party buyer will pay you for it.

How will you determine the value of the business?

Books, articles, presentations, courses and careers have been based on devising ways to determine the value of a business. There are many well trained professionals available to review, analyze and dissect your business, evaluate the marketplace and give you a dollar figure on what they think the business is worth. In cases where there are shareholder disputes, marital conflict at the owner level, or for estate purposes, these valuations will be extremely useful.

An important measure for you as the owner is whether you have done everything you could have done to improve the value to a prospective buyer. Long before a prospective buyer approaches you, you should have the answers to the following questions. If you can’t answer them you are probably not going to get the price you expect.
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