Adding Value To Your Business

If you’re looking to sell a business, it’s critical to look at the value of the business.  A typical business really has two values.  The “academic” value is the one determined by a professional business valuation.  The other is the “true market” value.  The academic value is arrived at with a formula based on the firms’ hard assets, cash flow, industry averages and multiples.  The fair market value also takes those items into consideration, but then considers what buyers are really willing to pay.  For many small and mid-sized businesses hard assets like equipment, vehicles, land, buildings, and inventory may be limited.  For some small businesses there may be no hard assets at all.  Instead, their value is based on intangibles like employees, business processes, customer lists, location and business relationships. To maximize the fair market value of your business, it’s vital that you capitalize on those intangible assets.

Keep these important intangible assets in mind if you’re looking to sell your business.  They convey a value that financial statements alone do not.  If you are looking to sell, make a plan.  Start working on the intangibles well in advance of putting your business on the market.  For many business owners, they reach a point where they burn out and psychologically retire early, before a sale is made.  It’s important to work to keep your focus right until the sale is complete. Finally, when the time to put your business on the market arrives, consider lining up key specialists who will help you make the most of the sale – an attorney for legal advice; an accountant for preparing financial statements; and a business intermediary for packaging, marketing and selling your business. Remember, you only have one chance to sell your business, so you want to do it right.

“Buying or selling a business is, in most cases, one of the largest decisions people will ever make in their life,” states Michael Naprawa, owner of Sunbelt Business Brokers in Nanaimo, BC.  “In saying that, the business intermediaries at Sunbelt do everything in their power to enable both buyers and sellers to make the most educated decision possible.” 

 Sunbelt Business Brokers is the largest global business brokerage with over 300 licensed offices, 15,000 businesses for sale and 1,400 business consultants worldwide.  To see some of Sunbelt’s businesses for sale or if you are considering the sale of  your business, see www.sunbeltnetwork.com/vancouverisland or call our office at 250-751-7917 or toll free 1-877-289-0969.

Take it to the Bank: Buying and Selling a Business

Some of the first questions potential buyers ask a business brokerage specialist are: “How much is it?” “How much can I make?” And then, “How much money do I need to buy it?” Many sellers expect, or at least want, an all-cash sale. Interestingly, when asked if they paid cash when they purchased the business, most respond with a “no”. Most business sales are financed either by an outside source, by the seller or most often both. ‘Seller Financing’ also known as ‘Vendor Take Back’ has several pluses:

1. There is a better chance the business will sell.

2. Sellers usually receive a much higher price when willing to finance a portion of the sale.

3. Interest realized from a seller-financed note can substantially increase the total paid for the business.

4. Seller financing may provide a higher rate of return than conventional investing.

5. Positive tax consequences are, in some cases, another benefit of seller financing.

6. Financing the seller tells the buyer—and the bank—that a seller has sufficient confidence in the business.

7. Without vendor take back, many banks will not agree to finance, or will fund only a fraction of what they would otherwise.

Other than needing the cash to purchase another business, the biggest obstacle to seller financing is the seller’s concern that the new owner can pay off the loan from the profits of the business. Some sellers check the buyer’s work history, obtain personal references and a credit report. Creative financing can also be helpful. Example: a toy store does 40 percent of its business in October, November and December. Make financing payments higher in those months and lower in the summer. Seller financing or vendor take back has been the mainstay for many successful business sales.

How the sale is structured is important to the best deal for the buyer and seller. A professional business broker can be the key player in accomplishing this goal. Business brokers can’t provide legal advice, but their deal-making knowledge and experience can greatly assist in ensuring a win-win transaction.

If you are interested in exploring business opportunities or are contemplating the sale of your business, feel free to contact our office.

Selling Your Business?

Any business owner who has sold a business on his or her own will tell you it’s a long, tedious and stressful process.  It consumes time and distracts you from daily operations. When your focus should be on maintaining the value of your business, much of your time is directed to the sale process. That’s where an experienced Business Broker can pay huge dividends. Even after commission, owners that use Business Brokers sell their business for better value than those who don’t.  Here’s 7 ways how a business broker’s expertise pays ($) off:

Valuing Your Business—Putting a value on a business is far more difficult and complex than valuing a house.  Each business has hundreds of variables that have an impact on the value.

Reaching Potential Buyers—Business Brokers have the tools and resources to reach the largest possible base of buyers who are then screened for their suitability. Experienced Brokers even have an existing database of Buyers looking to acquire.

Marketing—a Business Broker can present your company in the best light to maximize the sale price. They can also identify changes that can lead to a better selling price.

Confidentiality—a Business Broker will protect the company’s identity and only qualified buyers will receive detailed information.

Business Continuity—the Owner can maintain focus on business operations while the Broker is working on the sale.

Closing a Deal—Business Brokers lower the risk of employee problems, customer defection and predatory competition.

Balance of Experience—Most corporate buyers have acquired multiple businesses while business owners usually have only one sale. Experienced business brokers can level the playing field for a business owner making his one and only business sale.

Utilizing the services of an experienced, professional business broker allows the owner to focus on running the business reducing the risk of business erosion during the sale process.  A sale facilitated by a business broker helps maximize sales proceeds by involving a large universe of buyers in a confidential, competitive bidding process. If you’re thinking of selling, contact Sunbelt at 1-877-289-0969—we can help. Or visit our websites, www.bcbusinessbroker.ca, www.sunbeltnetwork.com.

Thanks to Sunbelt, Good Company Steakhouse Finds Perfect Buyer



From left to right: Steve and Cynthia Shann (Former Owners);
 Michael Naprawa, President of Sunbelt Business Brokers in Nanaimo;
Francis Hoogendoorn and Edwin van Duist (New Owners)



From the Netherlands to Canada! A successful European restaurateur embraces the beauty of Vancouver Island. Edwin van Duist is the previous owner of the renowned river-floating pancake restaurant on a ship and the new owner of Good Company Steakhouse in Duncan. It was a fairy tale transaction but the happy ending didn’t come without a few bumps in the road.



Edwin and his family originally made the continental voyage for another business, but the deal fell through. After months of searching, Edwin contacted Sunbelt Nanaimo. Here’s where the story accelerates. “Early one Saturday morning, I received an inquiry from Edwin about one of our business listings,” says Michael Naprawa of Sunbelt. “We met that morning spending two hours discussing his needs & skill set…it was clear that the business he had first inquired about was not a good fit. But I knew of a potential match—only a couple weeks earlier we had a call from a Duncan restaurant owner who wanted to sell, but the listing process had not even begun! By that Friday, an offer was prepared, accepted the week after, and the entire transaction closed within 7 weeks of that first meeting!”

Michael Naprawa who is the owner of Sunbelt Nanaimo says that after five years in the business brokerage industry, Sunbelt has established relationships with a pool of qualified buyers. Their “matchmaking” process between buyers and sellers of businesses makes timely transactions like this one increasingly common. “We were prepared to wait 1-2 years for the business to sell and couldn’t believe it sold so fast,” says Steve & Cynthia Shann of Good Company Steakhouse, who are exceedingly pleased with how Sunbelt handled the smooth transaction. Both parties describe their experience with Sunbelt Nanaimo as “very efficient” and highly recommend Sunbelt Nanaimo for selling or buying a quality business.

As for Good Company Steakhouse, the original owners will stay on during training and transition and business will continue as usual. Drop in for a good meal and experience a warm Dutch welcome from the new owner, Edwin! This is just one of the many success stories that buyers and sellers have had with us.

If you are contemplating the sale of your business, or considering small business ownership, contact the Sunbelt Nanaimo office at 1-877-289-0969.





Waiting to Sell? Don’t Wait Too Long…

As the Baby Boomers continue to enter retirement, our economy faces one of the most dramatic demographic shifts in history.  A sellers’ market and an aging baby-boomer population is causing many entrepreneurs to consider exiting. 

Many business owners wait until retirement to sell, and as baby boomers are getting older, the numbers of businesses for sale is rising. In fact, 57% of business owners identify their age as the main motivation for considering a sale. Over 30% of all business owners in BC are already over the age of 60.  “There’s a whole generation of owners that will need to convert their businesses into cash,” says Michael Naprawa, President of BC Business Brokers, a Vancouver Island-based business brokerage firm.  Fortunately for business owners, the market is ripe.  Mergers and acquisitions is a cyclical industry, and we're in one of the largest sellers' markets that has ever occurred. The current combination of low interest rates and favourable capital gains taxes is making it easier to acquire than grow organically, which means buyers are eager.

Yet business owners tend to procrastinate during the good cycles. According to a recent survey of business owners, 35% held off from selling their business because they anticipated continued growth. Unfortunately, waiting too long is probably the single biggest factor in reducing the proceeds from the sale of a privately held business.What the majority of business owners don’t realize is that you can’t outgrow interest rates, and you can’t outgrow capital gains. The time to sell is when the market is flush with buyers – and the market is flush now. 

If you are interested in selling your business and would like more information, contact our Nanaimo office at 250-751-7917 or 1-877-289-0969 or email us at nanaimo@sunbeltnetwork.com.