Monday, 20 August 2012

Top 7 Ways Business Brokers Add Value

Business brokers act as an intermediate agent between buyers and sellers of businesses. Their main role is to set up the initial contact and then negotiate the best deal for both parties. 

Axis Partnerships are specialist business brokers with many years of experience in helping buyers and sellers broker business sales.

When it comes to buying or selling, specialist business brokers are often the first place to look for help and guidance. But do you really need specialist business brokers if you are buying or selling a business? What value do they add to the process? Could you do it all yourself? In this article we look at the top 7 ways specialist business brokers add value to the buying and selling of a business.

1. Confidentiality
One of the highest priorities when buying or selling a business is confidentiality. Business brokers are able to make initial enquiries without revealing identities. Confidentiality is vital in the early stages to avoid speculation and unease amongst staff, suppliers and customers. The complete confidentiality business brokers can give you also stops rival firms getting to hear of any potential sale or purchase as this information could lead to aggressive marketing to poach custom or a hostile takeover from a large company.

Business brokers can keep the identities of buyers and sellers confidential until the point that each side is ready to enter negotiations. They can arrange discreet meetings off site for seller to discuss their requirements or visit in the guise of a bank manager or insurance broker so as not to arouse suspicion within the company.

Business brokers offer all round general confidentiality in all discussions with sellers and buyers, by using private email accounts and sending all written correspondence to home addresses.

2. Accurate Valuations
Getting an accurate valuation on a business is vital to both a buyer and a seller. Business brokers can offer a no obligation service that can give an accurate assessment of a business’s worth in the current marketplace. For a buyer, knowing a business has been professionally valued gives an assurance that the valuation is based on an objective assessment. And for a seller, having the business professionally valued can help to give realistic information that can be used for planning the owner’s next move.

The industry standard method of valuing a small or medium business is EBITDA, which stands for Earnings Before Interest, Depreciation and Amortization. This ascertains a business’s ‘true’ profitability to potential buyers.

However there are also several non-monetary areas that can help to achieve more well-rounded and accurate valuations.

Business brokers will take many things into consideration when valuing a business and this gives a much truer picture of a business’s worth than if the owner had just put a monetary value on the company based on turnover alone. Past performance as well as projected growth and trends in business are all taken into account. Business brokers know the pertinent questions to ask about customer relationships and client base, competitors in the area, marketing, brand image and future technology in the field to get the most accurate overall assessment of a business’s worth.

3. Market Knowledge
Business brokers will have a wealth of experience in not only buying and selling businesses but often in working within business themselves. They also have areas of expertise where they specialise and this gives them a great deal of knowledge. Business brokers with previous experience in a particular sector will be in touch with what buyers are looking for and this helps them match buyers to sellers more accurately.

4. Pre-sale Assistance
Preparing a business for sale can be as important as negotiating the sale itself. Specialist business brokers can offer this service and advise a seller on the best way to present their business in the market place. This can involve making sure all paperwork and accounts are up to date, there are no legal or staff issues pending that may put a potential buyer off, and that the client base is as broad as possible.

For a buyer, pre-sale assistance includes helping to clarify their requirements and any special features a buyer is looking for in a potential company. Specialist business brokers can discuss with a buyer the kind of business they wish to purchase, whether it is to add to an existing portfolio or to diversify into a niche area.

5. Discreet Marketing

There is a fine line to be drawn when it comes to making the business world aware that you wish to buy or sell a business. Buyers and sellers need to advertise their intentions but discretion is the watchword here. Making your intentions too obvious could cause staff unrest, a dip in share prices or speculation about the financial health of a business.

Business brokers can make discreet enquiries on behalf of both buyers and sellers by marketing out of an area so that employees and competitors are not aware until the owner is ready to reveal their plans.

6. Buyer Contacts
Experienced business brokers will have a network of contacts to call upon when marketing a business. This network of contacts will include a list of interested buyers. This gives a seller immediate access to prospective interested parties.

As a specialist business broker Axis has a list of registered buyers and offers a retained buyer service where companies are researched to match the requirements of registered buyers and approached on their behalf to enquire about a sale.

Buying or selling a business can be a very time consuming job, so by using a business broker who has contacts already in place, this can put you at a great advantage and releases your time to work on your own business.

7. Negotiating Skill

Negotiating a final deal when buying or selling a business is probably the trickiest part of the whole process and one that most people, even those experienced in business, feel uncomfortable in doing.

A business broker can use their years of negotiating skill to help find creative solutions to sticking points along the way and ensure good communications between the buyer and the seller at all times. Ultimately this results in a greater number of successful business sales and acquisitions, with both seller and buyer achieving their goals more quickly.

The Axis Partnership are Business Brokers based in Suffolk, who can assist you with buying or selling a business in the UK. Contact us now for more information and to discuss your requirements.

Thursday, 16 August 2012

Companies for Sale - Is Niche the Way to Go?

When it comes to companies for sale, prospective buyers will usually be looking for something specific - such as a particular skillset or operating within a particular sector. In other words, they will be looking for companies for sale that fit a specific niche. So when it comes to buying a business, it is helpful to buyers to be able to easily see what niche a company fits into.

While some global brands may be able to experiment with diversification and then retreat from any ventures that don’t work out, for most small and medium business owners it makes sense to keep a clear identity and a focused strategy especially if they plan to sell eventually.

But how niche is niche? Is buying a highly specialised niche business always a better investment than buying a more diverse business? In this article we will explore what a buyer Is likely to consider when considering niche companies for sale.

Companies for Sale - click here to search our business listings

Companies for Sale - Not Niche Enough?

Companies for sale that are too diverse can be a problematic proposition for a potential buyer. Buyers usually have specific requirements in mind, especially if they are buying to add to an existing portfolio. If a company is too diverse there may be aspects of the business that a buyer has no interest in.

For example a buyer may be looking for a packaging company and sees for sale a company which imports, packages and distributes. The buyer may wonder what to do with the import and distribution parts of the business. In this instance the buyer may find it difficult to see where the profit is actually being generated.  If the buyer wants one part of the business but not the other parts, this can lead to company breakups, which is probably not what the seller wanted.

On the other hand, if a buyer is looking purely in terms of overall financial performance and the company is doing well, a more diverse company may still be an attractive investment for them.

Companies for Sale - Too Niche?

There are also possible problems with companies for sale being over-specialised. If a company is too dependent on a tiny part of the market this can make them vulnerable if something happens to affect their sector.

For example if a buyer is looking for a recruitment company and finds one for sale that only specialises in the public sector or finance workers, the business could be suddenly affected by government cuts in public spending or fluctuations in the money markets, meaning the demand for recruitment is not so high in those areas. Other recruitment companies with a more diverse portfolio, or in sectors likely to withstand general economic problems such as IT or healthcare are more resilient and less likely to be so badly affected. Another example of a niche recruitment company is in the energy sector where there is always going to be a consistent demand for the product from the consumer making it unlikely to be a target for economic shifts.

Companies for sale in niche recruitment areas often have a strong focus on building ongoing relationships with their candidates. Many people often go back to the recruitment agency at several points throughout their careers and this can be a bonus in investing in such a specialist area.

However recruitment companies who have a broader appeal or are able to diversify into temporary recruitment may be a safer bet than one that is too heavily reliant on a niche market.

The problem of being too niche is compounded if companies for sale have only one or two major clients. Not having a broad enough customer base can make very niche companies for sale look like a vulnerable and risky prospect.

Companies for Sale - Balanced Niche

Buyers will be attracted to companies for sale that are focused on their own product or service but have diversified in ways that don’t threaten that focus. This achieves a balanced niche which is much more attractive as an investment prospect.

One good way to achieve a balanced niche is to have a diverse customer base. Multiple customers of one type (e.g. packaging fruit for many different growers) is better than just one or two customers. Even better is to have multiple customers of different types (e.g. packaging fruit, vegetables and flowers for multiple growers).

Having transferable skills is another way to achieve a balanced niche. Staff that can deal with a range of customer types, even if they mainly spend their time on one account, are a valuable asset as are staff that can multi-task within the organization and have a variety of specialist skills within the business. Buyers will like to see that there is scope for expansion and growth within the business, even if it has not yet been fulfilled.

Equipment can be a major part of many companies for sale, and repurposing machinery to other uses is something that a niche business should be open to in order to grow the business as well as showing the potential of the company to prospective buyers. For example a machine that may have been originally purchased to pack fruit may also be used for packing vegetables or other produce.
Companies for Sale Through Axis

Axis Partnerships specialise in buying and selling niche businesses throughout Suffolk, Essex, London, East Anglia, South East, Norfolk, Cambridgeshire, Home Counties, England, South West, North West, South East, Midlands and West Midlands. 

Most of the companies for sale Axis deal with are in popular business sectors such as health care, recruitment, manufacturing and logistics. However Axis also have great experience in niche areas such as IT, precision engineering and specialist manufacturing.

As an experienced business broker Axis is very familiar with what potential buyers are looking for and can help sellers position their companies appropriately to be as attractive as possible in the marketplace.

Ultimately the aim is to match a company for sale that has a level of specialisation to a buyer’s requirements.

Companies for Sale - click here to search our business listings

Monday, 13 August 2012

Finding Businesses for Sale

There are thousands of businesses for sale at any one time so finding businesses for sale is easy, but finding the right business for you is a much harder process. In this article we will look at the various methods a prospective buyer might use to find suitable businesses for sale and the pros and cons of each one.

Businesses for Sale - click here to search our business listings

Businesses for Sale - Online Listings

Any search for "businesses for sale" will show a plethora of websites with thousands of businesses for sale. The sheer quantity and choice this gives you is one of the major advantages of using online listings - although it can also be daunting and slightly overwhelming.

Sifting through all this information can be time consuming but it is good for getting a feel for what’s around in your chosen business area. Online listings for businesses for sale will also give you an idea of current market prices in your chosen sector which can be a good benchmark for getting the best deal possible. Looking at online listings can also show you possibilities that you may not have thought of.

However although online listings will give you lots of choice there is often very little specific information online about individual businesses for sale. This basic information is often less than you would expect to get about a flat or house for sale and buying a business is a much more complex and expensive process, so you do need as much information as possible.

Often online listings for businesses for sale will have an enquiry page or route such as an email address. However, due to the limit on good quality information online you can waste a lot of time enquiring about different businesses only to discover they are not suitable after all.
Although prices of businesses for sale online can give you a flavour of what businesses are charging it is worth noting that some valuations can be suspect, as many online listings will allow individual owners to list privately with their own personal valuations.

Online listings as a method of finding businesses for sale is only really feasible if you are already very experienced in buying businesses or perhaps you have access to your own valuation resource.

Businesses for Sale - Specialist Papers and Magazines
There are still many specialist publications for businesses for sale which can offer a wide choice, but will carry the same sort of limited information as online listings.

Nowadays many traditional paper publications will also have a website where you can look up details of businesses that are advertised in the paper version, and perhaps find out more about the business there - although the information will still tend to be fairly basic.

While specialist paper publications can be very useful for keeping an eye on your sector and getting a feel for current market values, the major downfall of finding businesses for sale in specialist papers and magazines is that, especially if it is a monthly publication, they are more likely to be out of date as opposed to online listings which tend to be more current. Paper publications won’t tell you about businesses that have just come on to the market in the last day or so.

Businesses for Sale - Contact Businesses Directly
There is always the option when looking for businesses for sale, to contact a business directly.

This could be very effective if you are already in the same type of business and have contacts in that field. This lets people know you are looking for a certain kind of business to buy which could lead to a private contact, meaning you could avoid competition from other interested buyers.

However this method of finding businesses for sale can only really work if you do have strong contacts in that industry and even if you do there is a big element of luck that it will turn up the right kind of business for you.

It can also be very time consuming to contact multiple businesses and you will
have to reveal your identity and intentions, possibly before you are ready to do so, which can be a great disadvantage. This could lead to tricky conversations between you and the business owners regarding the value of the business. Contacting a business to enquire about a sale could catch them off guard and before any firm valuations have been made.

Businesses for Sale - Use a Business Broker

Using a business broker to find businesses for sale is a much more focused and professional method. A dedicated business broker will take time to help you clarify your own requirements, and then do the work of finding a business for you, which frees up your time.

A business broker will either already have valuations and other details about businesses you are interested in, or they can research businesses on your behalf. Using a business broker means you can also make specific enquiries about a business without having to talk to the business owner directly, thereby retaining your confidentiality.

By using a business broker to research and approach companies on your behalf which are not currently up for sale, you will avoid competition from other interested buyers - which can give you considerable advantage when it comes to negotiating a sale, and increase your chances of a successful acquisition.

An experienced business broker will be familiar with the general market and will know what’s going on in your sector. And when it comes to the difficult negotiation stage a business broker can see a deal through for you and find ways past any sticking points on your behalf.

Axis Partnership are experienced business brokers offering two different methods of helping prospective buyers.

You can register your details stating the kinds of business you are looking for and you will then receive notification when those types of businesses are available.

Alternatively Axis Partnership can go out and look for businesses on your behalf that match your specific requirements in location, price, turnover and business sector. Axis act as a central point between buyer and seller, which not only maintains confidentiality for all concerned but means many details can be ironed out prior to committing to formal negotiations and revealing your identity.

Businesses for Sale - click here to search our business listings