Business Brokers and Consultants

P.C. Geffers, Associates

 

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QUESTIONS and ANSWERS!


You're invited to E-mail us with any questions or concerns you may have on "BUYING", "SELLING" or "VALUING" a Business.

We'll answer as many as time and space allows. - Pete Geffers


[Q.] - I've been looking for a business for over 6 months - and really haven't found much. How long does it take to find a business? - Ron D., Chicago, IL (Buyer)

[A,] - Of the six broad steps involved in buying a business - finding the company is by far the most difficult. I always tell buyers to be prepared to wait up to a year, and sometimes longer, but also be prepared to move quickly when you find your business - because there are a lot of buyers out there. Buyers far outnumber the sellers - and you need to be patient.
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[Q.] - I recently heard that less than 20% of the businesses put up for sale actually sell. Is this correct? - Tom A., Appleton, WI (Seller)

[A.] - I think it probably is correct. However - virtually any business can be sold if - the buyer is profiled correctly, it's exposed to enough of the right kind of buyers, given adequate time and structured properly.

Buyers come in all shapes and sizes. The individual buyer is usually "buying a job." They're looking for a business that will provide them with a living wage and enough money to pay back any loans taken to purchase the business.

Investors are interested in return on investment and will sometimes forgo immediate returns for future returns and growth. They'll often infuse additional capital, knowledge and contacts.

A strategic buyer is usually another company interested in increasing customers, products, territory, combining operations to lower costs or some other strategic fit. The company may be in a similar or complementary type business or it may want to expand into the sellers type business.

By recognizing and finding the "best fit" - almost any business can be sold.
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[Q.] - I own a small business and have been trying to get a handle on what it's worth. A friend of mine heard a business should be worth about 5 times sales. Does this sound about right? Mark M., Milwaukee, WI (Seller)

[A.] - Sellers always like to value their business based on their sales or even on their potential sales. The problem arises because someone reads an article that states that a certain type of business was sold for 5 times cash flow - and the reader confuses cash flow with sales.

If the financial statements are analyzed line by line, adjusted and restated - showing the actual earning power of the business - you can arrive at a realistic cash flow figure. Comparing that cash flow figure with the cash flow figure of what similar type business have recently sold for - will give you some meaningful guidance.
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[Q.] - Yesterday I talked to someone who said they talked to you about selling their business and that you declined. Could this have happened? Emily S., Oshkosh, WI (Seller)

[A.] - It happens. Since I don't know who you're talking about I don't know the details. If we don't feel a seller is realistic - we won't get involved. After 36+ years of selling businesses - we don't need the practice anymore. We have plenty of buyers so we don't need "swing listings." ( A listing that looks good in an ad, attracts buyers to swing to other listings.) We try to spend most of our time and energy finding the "Best Fit" for our client's businesses and to complete the job.
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[Q.] - We've been watching your website for almost two years now and I've seen a wide variety and price range of businesses. What types of businesses do you sell? Bill & Sue S. Kenosha, WI (Buyers)

[A.] - When we started selling business in the 70's most of the businesses we handled were small mom and pop types. (Restaurants, Retail Stores, Small Print Shops, Small Auto Repair Shops, etc. etc. etc.)

We never turn down a former client or customer - no matter how small the business. We also get many, many requests for smaller type businesses.

Today we focus on the larger businesses - Manufacturing, Distribution and Service type Companies - but we'll help any serious buyer or seller.

We are currently working with companies in a price range from about $95 thousand to $15 million.
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To E-mail us your questions or concerns - just click on the link below . . .

pete@pcgeffers.com