Hi guys,
I'm looking to sell a small business that I own. No idea if its even salable or who the logical buyers would be. I need some help with referrals for good business brokers and/or exchanges (other than bizbuysell.com) where I should be looking/posting this thing.
Without disclosing exactly what we do, this is a short excerpt from what I've sent to 3 potential brokers today: We'll probably be around $500-600k of revenues & $200-250k of trailing EBITDA when we look to exit in a few months. All sales are web based, although we do not have a .com. The partners have little/no commitment to the business and it runs autonomously thanks to our hired/trained manager & a slew of services that we outsourced. The physical part of our operations are located in downtown Chicago, although presence in Chicago is not necessary (I have been in Miami for the last 4 months).
We already have financials, unit economics breakdowns, verification for all of our previous sales, and tax forms. We've only been in business since March 2015 and were funded primarily with personally guaranteed debt & credit cards. Targeting a September/October exit, as we are quite seasonal and want to book this busy season since EBITDA will be up about 10x.
In addition to referrals and website/reading recommendations, I'd love to hear any general thoughts or advice on this kind of stuff. I have no experience in this area.
Thanks!
I don't have any suggestions on marketing the business aside from the channels you've already identified (Google business brokers, maybe post on relevant forums?).
My question is why you are selling so soon? You hit $600k revenue at a 30-35% EBITDA margin in less than two years, why not try to grow that more? You'd be able to attract much more interest and a higher multiple at ~$3-4mm revenue than right now, not sure why you wouldn't just wait a bit.
all of the big private wealth firms will have access to boutique investment bankers/biz brokers. while what you're talking about is on the smaller end, I'd start there.
there are lots of pre-exit things you should do, and there are resources on the web, but a good advisor/biz broker/attorney will help you with that as well.
Curious to know what industry this is in? Since it's essentially self generating I can only guess?..
I agree that it seems like its worth hanging onto unless you're trying to reallocate capital elsewhere.
We've used Timothy P. Muehler for CliftonLarsonAllen for some start-up valuations. It can be helpful to get a 3rd party judgement - you likely will need it for the transaction anyway. Message me if you're interested in his contact. Valuations are of course only as good as the data and estimates you provide.
Digital Exits is another exchange you can list on. I've heard some great success stories about exchanges and others said it was a waste of time. Digital Exits has a great article on "What's your business worth" with data from their marketplace transactions. You'll have to Google it as I can't share links apparently.
Are there any companies in the space that would benefit from acquiring the services your business offers?
Depending on where you're located Merit Harbor Group is pretty good for lower market, but with that type of EBITDA Margin I would recommend growing to about 6 million or so in revenues and then sell. This of course would depend on your reasons for sale
Most important question, Why do you want to sell?
double post
I'm not sure how brokers structure their engagements, but I have seen listings hit multiple broker websites / platforms at the same time. So, try to get on multiple platforms.
I'd recommend the additional platforms:
-Divestopedia -DealNexus (part of Intralinks now)
Thanks so much, all. Great referrals to sites & platforms that I had never heard of.
We are still considering hanging on to it, but really need to take a hard look at our options. The growth from $0 to $500k of revenue was much easier than the growth to $5mm revenues will be. In our particular business, it can be very risky to get big.
Also, spoke to 2 brokers over the last couple days, who indicated we could probably get 3-4x depending on the level of automation involved in the business, which is shocking to me.
They also assured me that we are definitely salable, barring some sort of legal catastrophe. Also shocking.
You are clearly a smart guy, so just take what these brokers say with a grain of salt. They are brokers and not I-bankers for a reason. Great at sales and networking, minimal understanding of value drivers, financial mechanics, etc.
Every business on this earth is worth 3-4x EBITDA according to a business broker, as long as it's less than 1x revenue. Not slamming them, just providing background.
Yes, I'm starting to see that. And yes, as bullet-tooth said, take with a grain of salt.
I am sort of in the same situation but instead of a company I need to find a buyer for an asset in the NatRes space. What is the best way to go about this?
Can you reveal a little more about what the company actually does? I agree with all the other comments, I'd probably hang onto it, especially if that EBITDA number is net of paying your 'Manager'...
Well, I can understand your situation and it's really tough to find exact match referral for selling small business according to your demands. But, not to worry about any more you should give your proper time in researching trustworthy business referral network according to requirement. If you do all possible searches on referrals network then you will definitely get one of best referral. So I suggest you, first of all, you should do complete research on your near about referral network.
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