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Insider Secrets For Buyers and Sellers of Indiana Businesses

 




Both Indiana business buyers and sellers want a return on their investment essentially. Beyond this fact, their desires are often contrary in ways that are productive, but also in ways that are detrimental. The seller's asking price could be unreasonably high; the buyer's attorney could instruct them to go for the 'best deal' instead of the 'fair deal'; and the seller could purposely fail to expose the full picture in regards to revenue and operating data. 

Such outcomes occur frequently which brings us to the first insider secret - deals die all the time. We uncovered in Why 'Holding Paper' to Complete the Sale of Your Indiana Based Business is a Good Idea the fact that 99% of business buyers never end up buying a business. While true, it is also a fact that 25% of available businesses end up being sold. That means that 75% are actually never sold. Although that number is slightly 
subjective due to personal experience, it seems to be the average if nothing else. Here are some more pertinent secrets for buyers of businesses for sale by owner in Indianapolis.

1. Sellers May Stretch the Truth

This isn't an indictment on Indiana business sellers because most people have good intentions. They legitimately want to do good business. It's essentially in the best interest of the seller to make the business look as attractive as possible. This causes some to try to cut serious corners with income statements and balance sheets. If the operating history of the business is erratic, is it because of neglect or is it an attempt to hide income? Are motivations to sell really true? Buyer due diligence is extremely important.

2. The Issue of Cold Feet

It's bound to happen but it's not necessarily a deal killer. Someone is bound to get rather nervous because of the nature of such a life-changing transaction. Whether you're the buyer or seller of a Indiana business, expect this to happen, especially before closing.  As long as both parties followed an orderly discovery process and prioritized communication, this issue can be easily rectified. Plus now you know that it's bound to happen, then you can plan a pre-emptive strike.

3. A Business is Worth its Stream of Earnings

Point blank, Indiana businesses for sale are worth what a buyer is willing to pay for it; to take things even further, a buyer is most interested in today's value of future profits or how much money the business earns for its owners. Absent this, the business essentially has no value. Yes, there are generally assets, but if you examine things further, the assets are just a means to generate income. It's all about the capitalization of net profit.

This is by no means exhaustive but should give buyers and sellers an idea of what's in store should they choose to transact. These should serve as a short, solid guide for buying and selling an Indiana based business. 

If you are selling a business or looking to buy a business in Indiana, send me an inquiry about your situation and we can talk about what to do next.


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