The Top Ways to Create an Attention-Grabbing Sales Ad to Sell Your Business
A major part of selling your business is getting the word out. After all, the more people that know your business is for sale, the better off you’ll be. In Bob House’s recent article, “How to Create an Effective Business for Sale Ad and Ensure It Gets the Best Result,” House gives readers an assortment of tips that he believes will help sellers attract higher offers from real buyers.
Getting the Word Out
As House wisely points out, many buyers wait until the last second to dive in and create a good sales ad. In fact, many buyers fail to grasp the real importance of creating a quality and compelling advertisement. Imagine creating a good sales ad like you would going fishing with a group of friends. The more friends you have on your fishing trip, the greater the odds that someone catches a fish. In much the same way, the more people who know you are selling your business, the greater the chances that you’ll get some serious “bites.”
Tips for Receiving More Attention
House has five key tips for attracting more attention from prospective buyers via your sales ad. At the top of the list is to be descriptive. Your sales ad should give an excellent description of your business and its unique features. As House notes, you want to “paint a clear picture.” In other words, now is not the time for mystery. You want prospective buyers to have a very clear idea of what kind of business they could possibly buy.
Headlines Count
Secondly, you should have a great headline. People have always skimmed, but the rise of the Internet has taken skimming to a whole new level. Your sales ad should have a very engaging and interesting headline. You want to capture people’s attention. A good place to start is by determining what your business’s best feature is and emphasizing that feature in your headline.
Incorporate Top-Notch Images
Third, the old saying that a picture is worth a thousand words absolutely applies to selling a business. Just as a great headline will capture people’s attention, the same holds true for a great picture. Consider having a professional photographer take the photo, as he or she may have tips to make your business look its best that you may simply not know.
Your Financials
Fourth, your ad should definitely include key financials. Any serious buyer will be very concerned, if not obsessed, with your financials. Information such as cash flow and income statements are a good idea as may potential buyers focus their business searches around key financial metrics.
Don’t Forget the Final Step
Finally, if there has ever been a time in your life to proofread, this is the time. In fact, you should consider hiring a proofreader to look over your ad for grammar and spelling mistakes. As House notes, you want prospective buyers to realize that you are attention oriented and responsible. A simple grammar or spelling mistake could wreck a potential deal.
Creating a great sales ad is an art form. One of the best ways to ensure that you have a great sales ad is to work with an experienced business broker. Business brokers know what buyers are looking for, have great marketing professionals at their disposal, and can help you frame your business in the best light possible.
What Do You Need to Do to Get Your Business Ready to Sell?
In his recent article in Smart Business entitled, “How to get your business, and yourself, ready for sale,” author Adam Burroughs explores the key points of getting your business ready to sell. Burroughs points to the truism that, at some point, almost every business owner must sell his or her business. For this reason, it is critical to think about what it takes to get your business ready to sell. Simply stated, it is best to explore and plan for selling your business long before you actually need to place your business on the market. Let’s explore some key points for selling your business.
Broadening Your Options
Burroughs interviews Scott McRill at Clark Schaefer Hackett. McRill notes, “The sooner you think about your exit, the more options you’ll have for yourself and the business when the time comes.” A savvy business owner will always want to give himself or herself as many options as possible. McRill wisely points out that early planning is key, and a failure to engage in early planning could lead to a lower selling price. If you want to get the best price for your business, then planning for the eventual sale as far in advance as possible is a good move.
Planning in Advance
According to Burroughs, business owners should start planning to sell their business at least 2 to 3 years before they actually plan to sell. Part of the reason for this is so that business owners will have enough time to make operational improvements designed to maximize the business’s overall value.
A Financial Review
At the top of every business owners “preparing to sell” list is to have a third-party review the business’s financial situation. This is excellent advice for, as frequent readers of this blog know, any serious prospective buyer will look long and hard at your business’s financials. Getting your business’s financial house in order means that you should turn to an accounting firm for help. You’ll want to review financial statements for at least the previous 2 to 3 years.
Burroughs points out that when it comes to selling a business, there are many variables that business owners often overlook. At the top of the list is the management team.
Your Management Team
Prospective buyers can get very nervous about the stability of the management team once ownership has changed hands. Often, the new buyer may only sign on the dotted line if the owner agrees to stay on after the sale during a transition period. Having a competent and proven team in place, one that is dedicated to staying with the company will help you get your business ready to sell.
There are a lot of variables involved in preparing to sell a business. The sooner that you get experts involved in the process, the better off you will be. A business broker can serve as a guide – one that can point you in the right direction. Find a broker with an abundance of experience, and you’ll have an invaluable ally who can help you navigate the process. It can take a lot of time and effort to sell a business. Working with a business broker can keep you from reinventing the wheel at every step of the process.
Selling Your Business, Taxes & Tax Structures
It is never too early to start thinking about what tax structure you should use when it comes time to sell your business. A simple, but undeniable, rule of life is that taxes matter and they can’t be overlooked. Author Tim Fries at The Tokenist has written an excellent and quite detailed overview article on what tax issues business owners need to consider before selling their business. His article, “What Tax Structure Should You Use When Selling Your Business?” explores many aspects of a topic that many business owners fail to invest enough time in, namely taxes.
As Fries astutely points out, the taxes involving the sale of a business can be complex and are usually unknown to those selling a business for the first time. Your tax structure can influence how much money you receive at the closing of your deal, so it’s a very good idea to pay attention to all aspects of taxation and your business. It is key to remember, “When you are selling your business – as far as taxes are concerned – you’re ultimately selling a collection of assets.”
Fries points out that taxes and selling a business are no small matter. It is possible that up to 50% of the sale of a business can go to taxes. Don’t worry if you are learning this for the first time and feel more than a little shocked. However, this fact does a good job of illuminating the importance of setting up the right tax structure for your business. While you might not be able to get around taxes altogether by investing the time and effort to set up the right structure for your business, you can keep from paying more taxes than is necessary.
There are a lot of variables that go into how much you will ultimately have to pay in taxes. Let’s take a look at some of the key questions Fries raises in his article.
- Is your sale considered ordinary income or is the sale considered capital gains?
- Are you operating as an LLC, a sole proprietorship, a partnership or are you operating as a corporation?
- What portion of the sale price goes to tangible assets as compared to intangible assets?
- Is there a difference between your tax basis and the proceeds from your sale?
- What does your depreciation look like?
- Don’t expect that the buyer will instantly agree to your terms.
- Realize that the decisions you make during negotiations with a buyer will have tax implications.
- Is an installment sale right for your business?
- With C corporations, sellers usually want a stock sale whereas buyers generally prefer an asset sale.
- Cashing out immediately, where you receive all your funds at once, will increase your tax liability.
- Have you considered switching to an S corporation?
- Have you consulted with experts to decide which tax structure is best for you?
- Have you consulted with a business broker?
Selling a business is obviously complicated. Finding a seasoned business broker can help you demystify many aspects of buying and selling a business. Ultimately, having the best deal structure and finding the right buyer can be a labyrinthian process. Having the very best professional help in your corner is simply a must.
Understanding Corporate Social Responsibility (CSR)
If you don’t exactly understand what corporate social responsibility (CSR) means, don’t worry. We’ll cover the main points you need to know. CSR is increasingly seen as something that companies of all sizes need to be aware of, so let’s take a closer look at a few of the finer points.
There are 4 basic pillars in CSR: the community, the environment, the marketplace and the workplace. The community pillar of CSR refers to your company’s contribution to the local community; this contribution can take a variety of forms ranging from financial support to personal involvement.
The second pillar of CSR is the environment. The simple fact is that people around the world are becoming much more environmentally aware. You can be quite certain that a percentage of your customers and/or clients have environmental concerns.
Increasingly, consumers want to know that the companies that they are purchasing from have good environmental practices. There are many ways that businesses can show that they are environmentally aware. They range from recycling and using low-emission and high-mileage vehicles whenever possible to adopting packaging and containers that are environmentally friendly.
The third pillar of CSR is the marketplace. Proper corporate social responsibility includes the responsible utilization of advertising, public relations, and ethical business conduct. Another key element in the marketplace pillar is adopting fair treatment policies towards suppliers and vendors, contractors and shareholders. In other words, the marketplace aspect of CSR means rejecting exploitative business practices in favor of fairer and more equitable business practices.
The final pillar of CSR concerns the workplace. In the workplace pillar, CSR encourages the implementation of fair and equitable treatment of employees, as well as observing workplace safety protocols and embracing equal opportunity employment and labor standards.
Adopting CSR practices in today’s business climate is a prudent decision, as it serves to increase both shareholder and investor interest, while simultaneously encouraging a company’s value. Likewise, embracing CSR practices can make it easier to attract a buyer and that party may be willing to pay a higher selling price.
Typically, buyers want a business that has many of the attributes supported by the four pillars of CSR. Buyers want businesses that enjoy a high level of customer loyalty and have good overall relations with the local community. Additionally, buyers want businesses that have quality relationships with their suppliers and vendors as well as loyal and dependable employees.
Sellers must realize that buyers want products, goods and services that are in line with the current trends of the marketplace and have an eye towards future trends. Finally, buyers want as little “baggage” as possible. You can be certain that buyers don’t want to find any skeletons lurking about in the company closet. The proper utilization of CSR can address all of these concerns and, in the process, make your business more attractive to a potential buyer.
Understanding M&A Purchasing Agreements
M&A purchasing agreements can have a lot of moving parts. A recent article from Meghan Daniels entitled, “The Makings of the M&A Purchase Agreement” serves to outline a range of facts including that every M&A deal is different. The article, which serves as a general overview, raises a range of good points.
Understanding M&A Purchasing Agreements: Key Elements and Best Practices
Mergers and acquisitions (M&A) are complex transactions that require meticulous planning and execution. One of the most critical components of any M&A deal is the purchasing agreement. This document outlines the terms and conditions of the transaction and serves as a legal contract between the buyer and the seller. In this comprehensive guide, we’ll delve into the essential elements of M&A purchasing agreements and provide best practices to ensure a successful transaction.
What is an M&A Purchasing Agreement?
An M&A purchasing agreement, also known as a purchase and sale agreement (PSA), is a legally binding document that details the terms of the sale of a business or its assets. It covers various aspects of the transaction, including:
- Purchase price and payment terms
- Representations and warranties
- Covenants and conditions
- Indemnification provisions
- Closing procedures
This agreement is crucial for protecting the interests of both parties and ensuring a smooth and transparent transaction process.
Key Elements of an M&A Purchasing Agreement
1. Purchase Price and Payment Terms
The purchase price is the total amount that the buyer agrees to pay for the business or its assets. Payment terms outline how and when the payment will be made, which may include:
- Lump-sum payments
- Installment payments
- Earn-outs based on future performance
- Stock or equity compensation
Pro tip: Clearly define the payment structure to avoid any misunderstandings or disputes.
2. Representations and Warranties
Representations and warranties are statements made by both parties regarding the condition and status of the business. These may include:
- Financial statements accuracy
- Legal compliance
- Ownership of assets
- Absence of undisclosed liabilities
These statements provide assurance to the buyer and can serve as a basis for indemnification if any issues arise post-closing.
3. Covenants and Conditions
Covenants are promises made by the parties to take or refrain from certain actions before and after the closing. Common covenants include:
- Non-compete agreements
- Confidentiality clauses
- Employee retention commitments
- Maintenance of business operations
Conditions are specific requirements that must be met for the transaction to close, such as obtaining regulatory approvals or third-party consents.
4. Indemnification Provisions
Indemnification provisions outline the circumstances under which one party must compensate the other for losses or damages. These provisions typically cover:
- Breaches of representations and warranties
- Pre-existing liabilities
- Post-closing adjustments
Pro tip: Clearly define the scope and limitations of indemnification to protect both parties’ interests.
5. Closing Procedures
The closing procedures section details the steps and requirements for finalizing the transaction. This may include:
- Delivery of documents
- Payment of the purchase price
- Transfer of ownership
- Post-closing adjustments
Best Practices for Drafting M&A Purchasing Agreements
To ensure a successful M&A transaction, consider the following best practices when drafting purchasing agreements:
- Engage Experienced Advisors: Work with legal and financial advisors who specialize in M&A transactions to ensure all aspects of the agreement are thoroughly addressed.
- Conduct Thorough Due Diligence: Perform comprehensive due diligence to identify potential risks and liabilities that should be addressed in the agreement.
- Tailor the Agreement: Customize the agreement to reflect the specific terms and conditions of the transaction, rather than relying on generic templates.
- Negotiate Key Terms: Engage in open and transparent negotiations to reach mutually beneficial terms for both parties.
- Document Everything: Keep detailed records of all communications, negotiations, and agreements to avoid misunderstandings and disputes.
- Review and Revise: Regularly review and update the agreement to reflect any changes in the transaction or business environment.
Common Pitfalls to Avoid
When drafting and negotiating M&A purchasing agreements, be aware of these common pitfalls:
- Overlooking critical terms and conditions
- Failing to adequately address potential liabilities
- Using overly complex or ambiguous language
- Neglecting to involve experienced advisors
- Rushing the drafting process to meet tight deadlines
The Role of Professional Advisors
Engaging professional advisors can significantly enhance the quality and effectiveness of your M&A purchasing agreement. Consider working with:
- M&A attorneys
- Certified public accountants
- Industry-specific consultants
- Valuation experts
These professionals can provide valuable insights, identify potential issues, and help you navigate the complexities of the transaction.
Conclusion: Ensuring a Smooth M&A Transaction
M&A purchasing agreements are vital for ensuring a smooth and successful transaction. By understanding the key elements and best practices, you can protect your interests and facilitate a transparent and efficient process. Remember to engage experienced advisors, conduct thorough due diligence, and tailor the agreement to the specific terms of your transaction.
Call to Action
Are you planning an M&A transaction? Ensure a smooth and successful process with expert guidance from Indiana Equity Brokers. Our experienced team can help you draft comprehensive purchasing agreements, conduct due diligence, and navigate the complexities of M&A transactions. Contact us today to schedule a consultation and learn how we can support your business acquisition journey.
Read More
