What type of businesses do you sell?
At Beacon Corporation, Brokerage we specialize selling small to medium size businesses, mostly privately owned, with revenues between $1 million and $50 million. Rather than focusing on a certain industry, we represent a wide variety of Businesses for Sale across diverse industries and sectors, ranging from general contractors and other construction trades, to retail, services and manufacturing businesses. We have extensive experience with both Business-to-Business (B2B) and Business-to-Consumer (B2C) companies. We work with business owners across Southern Ontario, including Toronto, the GTA, Burlington, Hamilton, St. Catharines and Niagara Falls.
What are the common reasons for selling a business?
Most private small to medium size businesses that are available to purchase are on the market because of personal reasons of the owners rather than because the company is in financial trouble. Generally, we will enlist only businesses that have been established and have a healthy financial outlook. Reasons to sell include: the wish to retire – especially true for the “baby boom” generation, a feeling of “burn out” leaving the seller uninterested in continuing the business, other business interests or opportunities available to the owner that he/she would like to pursue, desire by the owner to move to another location, divorce or partnership split-ups, health reasons, death of the owner.
How should I prepare for selling my business?
Before you place your business on the market for sale, there are general issues that owners should address. The goal in preparing your business for sale is to show it in its best marketable position so that a prospective buyer can optimally assess the business value and future growth potential. Some items to address are of a housekeeping nature, whereas others require more change and a longer timeframe to implement. Things to consider include: a) Financial - ensure that you have been keeping accurate financial records so that profitability can be understood and verified easily by a prospective buyer, b) Human Resources - structure the business so that it is not dependant on you solely, ideally have a manager in place who knows the business well and can help smoothen the transition to a new owner, c) Operations - strengthen systems and documentation, and reduce costs where possible to generate higher profitability, d) Marketing - increase your marketing activities in order to keep growing your business, e) Administration - organize your paperwork such as incorporation papers, leases, contracts, licenses.
What are the costs associated with selling or buying a business?
Standard costs associated with selling or buying a business include fees to accountants and lawyers, and commission costs to the business broker. As a general rule, we suggest to assume at least $10,000 in closing costs on top of the commission costs that consist of a percentage of the transaction price – normally 10% for the first $1M, with a sliding scale for subsequent tranches. The commission costs are paid by the seller, whereas both parties will carry closing costs as they each need an accountant and lawyer. Additional costs to the seller may arise from settling outstanding debts, lawsuits or other liabilities before the transaction is closed. Additional costs to the buyer may include severance payments to lay-off non-essential employees and other expenses to improve business performance.
Why buy an existing business?
Buyers can typically be categorized in two categories; those individuals that have built extensive work experience in a certain industry and are now looking to become an independent business owner, and business owners operating a company in the same or complimentary industries, who wish to expand and/or diversify their operations. Rather than building a new business from scratch, buying an existing business provides significant advantage from a financial and operating point of view. It allows for an immediate generation of revenue at a reduced cost, permitting the new owner to focus on ways how to grow the business and improve performance. Benefits include: reduced capital investment requirements before the start of operations (e.g. leasehold improvements, equipment purchase), operations and logistics fully embedded and in place; agreements with suppliers, leases and licenses, employees, organizational procedures, existing brand name and reputation, including repeat business from existing customers and access to past client lists. transitioning and training period with the former owner to learn the specifics of how to run the company and compete in the industry.