sell your business Archives

Sun Acquisitions Announces the Sale of a Machining and Fabrication Shop

January 27, 2021 by Ellen Park

Sun Acquisitions is pleased to announce the successful acquisition of Keller Machine & Welding, located in Valparaiso, Indiana.

Keller Machine & Welding was founded in the early 1990s. Since inception, the company offers custom machining, custom fabrication and millwright services to its commercial customer base. They are well-equipped with the machining and fabrication equipment, as well as, machinery needed to re-build a variety of equipment to support any need. They have developed strong relationships with their customers, which resulted in 85% of their sales to come from repeat customers. The company is run by the experienced team of employees and operates out of a professional and custom constructed 21,000 sq. ft. machine shop.

There are major growth opportunities for the new ownership to continue to grow the business. These opportunities include: establishing a sales and marketing strategy, diversifying the service offerings to current customers, and expand the current geographical market served.

Throughout the confidential marketing of the business, Sun Acquisitions generated over 70 interested buyers, which led to 2 final offers to purchase Keller Machine & Welding from its previous ownership. The business was acquired by a strategic buyer with existing operations in Michigan.

Matt Brunstrum, Advisor, led the transaction and Joseph Beer, VP of Operations, facilitated the closing coordination for the client. After completing the sale of the company, Matt stated, “Dan Keller built a terrific business over his career with a very loyal employee and customer base. We are happy that we were able to assist Dan in the sale of Keller Machine & Welding which has allowed him to move onto the next phase of his life in retirement.”

Are You Financially Ready?

September 16, 2020 by Sun Acquisitions

Are you financially ready to sell your business? Getting a business to a place where you can present it to potential buyers can be an exhaustive process. There is legal preparation before selling to be handled, determining the right time to sell, and reading up on every aspect of things owners should know prior to an acquisition. The financials of a business are the hinge upon which almost every other detail of the transaction rests upon. Because of their prominence, it is imperative that you and the business are both financially ready. Here are five key steps to take to assist with financial preparation.

1. Have the business professionally valued

How do you know what your business is worth? You might have an idea of what you think the business should be worth, however, the best way to get an accurate estimate is to have the entire operation professionally valued. A business valuation will give you a realistic and objective proposition of the worth of your company. This valuation can then be used to come up with an offer price as well as figure out the final amount that you would be ready to negotiate with buyers.

A valuation is an excellent tool that reveals your business’ current market performance, position, strengths, weaknesses, and financial situation. As a qualified business broker, Sun Acquisitions can perform your business valuation to give you the data you need as you financially prepare the business for a sale.

2. Create a buyer strategy with an experienced business broker

Leading business brokers like Sun Acquisitions can help you put together a list of business buyers. Advisors with sufficient experience have connections and links with people who might be interested in purchasing your business. Access to such an extended network is one of the key reasons to bring an M&A advisor on board when you’re preparing for a sale.

That’s not all, but when you select the right advisor they can also help you create an all-star team to facilitate the purchase of your business. Get recommendations for reputable legal, business, and tax experts. Don’t try to figure out things by yourself when a business broker can simplify life for you.

3. Develop a tax plan with assistance from a tax advisor

The sale of a business precipitates a change in your financial status which has a direct bearing on your taxes. As part of your financial preparation, it is recommended that you sit down with a tax advisor to establish a tax strategy to handle the different tax situations that will present themselves post-sale.

For example, if the expected gains from the sale are long-term you will be liable to pay federal tax rates that can be 23.8% or higher. In addition, local state income taxes on the gain may also apply. In the event of your death, any value you may have acquired from the sale of the business will be taxed. Your heirs should expect federal estate tax rates of 40% or more. It’s also worth noting that there are other states that have inheritance tax that your beneficiaries will also have to pay.

4. Remove non-business related items from your financials

Part of the process of getting your financials in order includes removing all non-business related financial items such as salaries for extended non-working family members and insurance for them from your operations. These items have no direct bearing on the business and should be eliminated from the financial records that will be presented to buyers. To be removed as well are expense accounts and discretionary expenses. How do you know if it’s an element you should probably leave out? If it’s not directly related to the business and the buyer derives no profit from it then it shouldn’t be in your financials.

5. Have an accountant review your financial statements

Your financial statements are of great interest to any potential buyer of the business. For this reason, they should preferably be reviewed, and in some instances, audited statements. There are three types of financial reviews that can be conducted. Let’s look at each one to understand which is better suited when preparing to sell a business.

Compilation: as the name implies, a compilation is simply a preparation of financial statements compiled into one document. This task is carried out by a certified public accountant. The accountant compiles financial statements provided by the seller but gives no professional opinion about the information provided. This is the least formal assessment and is great for sellers who simply want to evaluate how the company is doing so they can drive internal goals in the right direction.

Review: the difference between a review and a compilation lies mostly in the fact that the accountant offers an in-depth analysis of the financial statements they have compiled. The accountant provides a written opinion regarding the financial status of the business including any problem areas. This review is the accountant saying that they did not come across any serious financial issues. The review gives ‘limited assurance’ only.

Audit: audits are the most formal type of assessment that can be carried out on a business’s financial statements. This is a critical look at the company’s management. The CPA does not only look at the information provided by the seller about the business but also relies on information from an independent inquiry to help formulate a professional judgment. For buyers and sellers, such an audit provides the highest assurance level that all is in order regarding the business’ financials.

Get financial preparation help from qualified advisors

Business brokers are well aware of the fact that when selling a business you have to be both emotionally ready and financially ready. This comes through in the counsel that we give would-be business sellers. Would you like to discuss how to prepare financially for an acquisition? Our team of M&A advisors would be happy to consult with you. Get in touch with us today.

Disclaimer: Any information provided in this blog is not intended to replace legal, financial, or taxation advice given by qualified professionals.

Sell NOW – The Crystal Ball Is Pretty Clear

August 24, 2020 by Sun Acquisitions

We are living through unprecedented times with a global pandemic and a recession on our hands. Many business owners have repeatedly asked themselves, “Do I stay and grow the business, or do I sell and go?” While we can give sound advice as seasoned business brokers, we cannot make the final decision for you. There are numerous reasons you may want to consider selling now. We’re going to explore each of these reasons to help you discern and establish your exit plan.

1. Sell NOW if you’re above 60 years of age

Baby boomers constitute a fair share of small business owners in the United States. To date, boomers have experienced the most recessions of any age group. Between 1945 and 2020, there have been 13 recessions in total. According to Barlow Research Associates, 40% of small business owners today are aged 65 years and above.

The long and short is that non-essential businesses need to assess the situation and ask the tough questions such as ‘Can the business rebound? Can funding be secured to resuscitate the company?’ Essential businesses have been somewhat lucky and some have even enjoyed a markup in their valuation. Regardless, business owners in the baby boomer age range should start thinking of exiting now.

If you’re running a business that has since closed doors, it’s not wise to attempt to hold onto the business in the hopes that you can dip into your personal assets to rebuild. If you’re fortunate enough to be running a business that’s flourished during these tough times, selling now is still a great idea because of the favorable valuation the business will receive.

2. Sell NOW and recoup your current business valuation

The future is uncertain. No one is sure when the current pandemic is going to end. The economy is already entering the first stages of a recession. And over 100,000 small businesses have closed doors forever. Don’t let all your hard work go to waste. Selling now may help you salvage something from your years of hard work.

A study published in the Q1 2020 Market Pulse Report reveals that an overwhelming 81% of advisors project business valuations to decline as the year progresses. As an SME owner, it’s only normal to believe that your business is worth a lot. However, this may not always be the case. The best way to get a realistic figure of the type of offers you can expect is to get the business professionally valued by a business broker. This business valuation will give you a starting place when negotiating with investors.

3. Sell NOW and get a head start with investors

The Great Recession killed off 170,000 businesses between 2008 and 2010. Within less than a six month period, we’ve seen more than 100,000 businesses shut down. What we’re witnessing is more brutal and catastrophic than what people ever imagined in 2008. As people begin to come to terms with what’s really going on there is going to be a flood of businesses-for-sale as companies go under the hammer.

By making a conscious decision to sell now, you can get a head start with investors and walk away with a potentially better offer than trying to sell in a crowded market. Think of it this way: If you’re affected, that means your competition is affected. If you’re thinking of selling, your competition is also probably considering selling their business. The more choices investors have, the higher the chance that you will be forced to lower the price of your business.

4. Sell NOW before taxes become more complex

The coronavirus pandemic has wrecked the economy of this country and the economies of countries the world over. The government rolled out massive relief packages which have increased national debt. With millions of jobs lost over the duration of the pandemic and hefty bailouts, government coffers are running dry. Inevitably the debt will have to be paid back and the vehicle through which this will happen will be – taxes.

With an impending presidential election in November, the stakes are high but more so for small business owners who are likely going to see an increase in the corporate rate, estate taxes, sales taxes, and various business taxes. A storm is coming and one of the best ways to shield how much you can expect to take home is to sell now before November comes along.

5. Sell NOW because investors are having the time of their lives

For investors, recessions are one of the best moments to purchase undervalued companies and assets. Contrary to popular belief that people don’t buy businesses when things are tough, the opposite is true for the monied-up. Investors are on the prowl, hunting for ‘best-buys’. For sellers who already had an exit plan of selling off their company, this may be a blessing in disguise.

How do you link up with such investors? The fastest way is to bring onboard a qualified M&A advisory team that has a rich network of potential buyers. Apart from introducing you to verified buyers, such M&A advisors can handle the negotiations, paperwork, and offer advice. You don’t want to have the deal drag on for months. An experienced business broker can assist in speeding things along.

Discuss your exit plan with experienced business brokers today

Are you worried about your business and need help on how to sell it during these troublesome times? Not sure where to start or how to get your business ready for an acquisition? Contact Sun Acquisitions for business advisory services. We’ve helped thousands of business owners and investors close deals over the years and we are well acquainted with the complex process of selling a business during a recession.

Disclaimer: Any information provided in this blog is not intended to replace legal, financial, or taxation advice given by qualified professionals.

Are you Emotionally Ready?

August 20, 2020 by Sun Acquisitions

We live in an Age of Entrepreneurship where more businesses are started, bought, and sold than at any other time in history. And one of the core beliefs of this Age is building a business whose exit plan is an acquisition. This buy-out is meant to be the “finish line”, the “ultimate goal” so one can cash out and live large right? However, over the years, as business brokers, we’ve seen many of the so-called “successful” entrepreneurs plagued by emotional turmoil and even severe bouts of remorse.

Sellers often have to struggle through a broad range of emotions that come about from the decision to sell. As an M&A firm that has facilitated hundreds of deals, we’re convinced emotional preparation on the part of the seller is fundamental and should not be overlooked. Here are five things you can do to help foster emotional readiness.

1. Develop your exit plan before you engage buyers

For the majority of entrepreneurs, the day-to-day operations of the business are so time-consuming they barely have a moment’s respite to think about the details of a potential exit strategy. Yes, perhaps in the back of their minds, they would like to eventually sell the business one day but they haven’t really taken time to think things through.

Unfortunately for most, life doesn’t always afford you the chance to sell when you want. Death of a loved one, divorce, disability, personal or business distress, and disagreement are the top factors that force many to end up selling. And selling under duress will only compound the emotional stress that’s already associated with such a process. Hence the very real need to set aside time when things are still well to develop a thorough exit plan.

2. Acknowledge the source of your current identity so you can build a new one

Many entrepreneurs find their identity in their work and have a strong attachment to it. In fact, according to a 2017 study carried out in Finland, by researchers at the University of Helsinki, MRI scans showed that entrepreneurs are just as emotionally attached to their businesses as parents to their children. This explains the deep sense of loss and period of mourning that often accompanies the sale of one’s business.

The emotional attachment to one’s business is also exacerbated where the business is a generational one that has been in the family for years. Letting go and selling such an entity can wreak havoc not just on you the seller but complicate family dynamics if the business was central to the family’s identity. However, if selling such a corporation is in the best interests of the company, the ensuing emotions will simply have to be dealt with as part of the process. This leads us to the next point.

3. Adopt hobbies and interests beyond your business

Post-sale it might be difficult to still meet up with partners who had become friends through business. Especially those who relied on your business to earn a living. You will probably need a new set of friends and acquaintances. Some of your friends from your current life just won’t feature much in your new state of life because you aren’t running in the same circles anymore.

At least a year before you plan to sell, you may want to start making personal adjustments to cushion what’s about to happen. Adopt new hobbies and pursue interests that you’ve always had but just never made time for. You will need a new community around you to hang out with while you transition into your new life. Joining a clubhouse, church, or volunteering within your community can provide you with a new network of people to get to know.

4. Establish what you will do after the business sale

The proverbial, “An idle mind is the devil’s workshop” rings true even after you’ve cashed probably one of the biggest checks of your life. This does not mean, however, that as soon as you sign the contract you should start on a new venture.

In fact, you should live a little à la former Minecraft Games founder Markus Persson enjoying your new wealth. Yes, travel to Ibiza on a whim if you so wish, throw spectacular parties if you’re so inclined, or outbid celebrities to buy luxury homes. Recover from the burnout.

BUT, you must have a post-sale plan otherwise like Persson, even after selling your business to Microsoft for a record $2.5 billion you’ll end up depressed and taking it to Twitter to reveal how you’ve “never felt more isolated”.

5. Find a trusted team of advisors and support system

This is probably one of the most important points to take note of. We’re not islands; we live in a community with others. Being able to express how we feel especially around such a life-changing event with people who’ve facilitated such deals and who specialize in this area in the form of M&A advisors is critical for your mental health.

Family and friends can offer a listening ear when things get tough – as they probably will over the course of the months. And their support will prove invaluable. Talk to your spouse and or children before the sale so they will know the stress you’ll be under and can offer the support needed as life transitions for all of you.

Finding business people who’ve been where you are and can talk to you about how they emotionally dealt with selling their business and moving on will be therapeutic.

Discuss selling a business with a professional business broker

Sun Acquisitions provides a host of business advisory service s to facilitate the buying and selling of businesses. From preparing for a divestiture, conducting due diligence reviews, to

analyzing target opportunities, and developing acquisition strategies, our expert team can assist in various capacities. Contact us to learn more about how Sun Acquisitions can help you during the buying and selling of a business.

Disclaimer: Any information provided in this blog is not intended to replace legal, financial, or taxation advice given by qualified professionals.

Waiting Too Long to Sell

August 12, 2020 by Sun Acquisitions

When selling a business, what is the expected timeframe to complete the deal? While every transaction is particular, most businesses will sell within 6 to 12 months. It’s worth noting however, that the average time it takes to sell a business is dependent on a number of factors such as the selling price, whether the business is a franchise or not, and the type of industry the business operates in. If selling your business is your exit plan you might want to time things properly. Waiting too long to sell may have unfavorable consequences.

Defining the ideal time to sell

Perhaps you’re asking, “So, when is the best time to sell my business?” Is there such a thing as the right time to sell a business? As brokers who have facilitated scores of mergers and acquisitions, we attest to the notion that some moments are decidedly better than others.

For example, when the economy is enjoying a growth spurt investors are more inclined to consider buying a business. Additionally, when interest rates and capital gains taxes are low and financing is readily available selling your business might happen faster than when the economy isn’t doing as well.

In a nutshell, the right time to sell is when your business has enjoyed at least three great years, the economy is growing and your business is financially sound. However if selling is your intended exit plan don’t wait for the business to get into financial difficulties to try selling. And avoid attempting to sell during a recession. Here are more problems you may face if you wait too long to sell.

1. The business might sell for less than the asking price

How much your business is worth depends on a lot of variable factors which means that business valuation is not set in stone. The amount you believe your business is worth may fluctuate a great deal from month-to-month and year-to-year.

Business valuations are dynamic almost like the stock market – never stationary or static. The main force that dictates a business’s valuation is the Sellers’ Discretionary Earnings (SDE) which is a figure that is also never fixed but changes every year.

Additionally, your asking price isn’t always the one you end up settling for. Using data extracted from Bizcomps to illustrate this point, here is a comparison of the average time it takes for a seller to sell a business based on the final offer (and not the initial asking price):

Less than $100,000 – 6.3 months

$100,000 – $500,000 – 7.2 months

$500,000 – $1,000,000 – 8.1 months

$1,000,000 – $5,000,000 – 9.7 months

$5,000,000 – $10,000,000 – 10 months

2. Economic climates are unpredictable

The 2008 recession caught a lot of people off-guard. 43,500 businesses filed for bankruptcy while millions of people lost their jobs. Economists have a way of making economic recessions appear as if they are short-term events and yet in reality it often takes several years for an economy to properly get back on track.

In fact, if we study history we’ll discover that since 1900, the average recession has lasted 15 months. The economic downturn of 2008 spanned 18 months and became the longest economic decline in the United States since World War II. However, this may very well change since the onset of the COVID-19 pandemic that is wreaking havoc on the global economy.

Once again, millions of people and businesses were caught off-guard by the Coronavirus epidemic. Already more than 30 million people have been furloughed across the country and in the first six months of 2020, over 3,600 businesses have filed for bankruptcy including major firms like Neiman Marcus, Hertz, J. Crew, and CMX Cinemas.

Timing is everything when selling a business. You don’t want to be left holding onto a business you’re no longer interested in while you wait for the economy to gain traction again. So, if you plan on selling your business at any time, it’s worth it to keep an eye on the market conditions and what’s happening in the economy in order to find a suitable moment to sell.

3. Business valuation may continue to decrease

If you’re trying to sell the business because it’s taking a toll on your health and you’re burnt out then the faster you sell it the better. You see, the moment a business starts faltering and the results become evident in the company’s financials, the business’ valuation immediately declines.

This is a very difficult place to be in as it generally takes another three years of steady, positive results for the business to be valued favorably again. Before attempting to revive the business, it’s fair to put it out there that most businesses never recover – particularly if the business owner is already suffering from burn-out.

When you find yourself in this state, don’t make the timing mistake of thinking that you can turn things around before you sell. Remember, you probably need to make an additional investment of three more years or more to bring your business valuation up. This isn’t a task to be undertaken lightly. It can be very stressful and trigger mental health issues such as depression. Furthermore, you may actually cause the business to lose more value than it has already lost.

Get the help you need from an expert business broker

Sun Acquisitions is an experienced M&A business broker that can help you define the right time to sell based on your individual preferences and prevailing market conditions. We offer a range of business advisory services including preparation for divestiture, conducting due diligence reviews, analysis of target opportunities, and development of acquisition strategies. Contact us to learn more about how Sun Acquisitions can help you during the buying and selling of a business.