SellMyBusinessAlaska.com has been serving the greater Alaska state region for business transactions and M&A work for over twenty years. Our state represents a unique marketplace for both industry-type and for investors, including private equity buyers and strategic investors in the oil and gas and mining industries. If you are a business owner who doesn’t know where to begin to learn how to sell your business, our team has built this resource to help educate you on the process of selling a business in the range of $50,000 up to $10,000,000.
255 E Fireweed Ln #200, Anchorage, AK 99503
How Do I Sell My Business?
It’s a tough question for many business owners to answer. After several years, or even several decades, of building a successful company to profitability, you come to the decision that now is the time to start exploring a sale. Whether your reasons are personal – like age, health or retirement – or for market reasons like wanting to realize a large cash payment for the years you’ve put into day-to-day operations running the company. Many of our clients quickly come to the realization that running a business is very different from selling a business. In fact, selling a business can become a full time job. That is why business owners hire business brokers or investment bankers to help with their sale. Unless you can remove yourself almost completely from the day-to-day of the business, you may find it hard to find the time to focus on things like cleaning up your financial statements, working with an attorney, marketing the business for sale on different websites and buyer email lists, and then fielding the calls from interested buyers.
Most business sales take 6-12 months to close from the time the first offer comes in the door. In Alaska, we’ve found that strategic buyers in industries that are well-known to our region can sometimes execute a deal more quickly because they know the industry well. Regardless, be prepared for a long process. And that’s okay. Ultimately, if you want to hit your desired purchase price and cash out into a comfortable retirement, selling your business to the right buyer for the right multiple is worth the effort and time it will take working with a broker or M&A advisor.
I Want to Sell My Business
Now that you’ve made the decision to move towards a sale, there are several things you can do in the short-term to prepare your business for sale. First, is your business profitable? A business that is throwing off positive cash flow each year is going to be much easier to sell than a business that is losing money. That’s intuitive. However, even if you are profitable, it’s time to take a look at your financial records. Do you have accountant-reviewed financial statements dating back at least 3-5 years? You should compile income statements, balance sheets, a list of receivables, your inventory, and a statement of cash flows. Potential buyers are interested in the “scorecard” of your company and the easiest way to quickly show them that is through your financial records.
Work with your accountant to also pull preceding tax returns for at least the last three years. If your tax returns have been professional prepared by a CPA in Alaska, buyers will be more likely to take the information shown in those returns as accurate. This becomes important if you are to accept an offer from a buyer at a purchase price you desire, because the financial due diligence process will be shortened if you have reviewed tax returns and clean financial statements.
Who are your top customers? This is a key question to ask yourself and to answer when you are preparing your business to go to market for sale. Potential buyers get spooked by any serious customer concentration or noticeable fluctuations in a single customer’s spending with your business year-to-year. For example, if you have a key customer who represents 50% of your revenue, that is a customer concentration issue. While you may personally know the customer well and the customer may have spent consistently with the business for 5-10 years, it still can be an issue. A buyer will ask, what if that customer leaves tomorrow? It’s half of your sales! Also, large fluctuations in customer spending from year-to-year can signal that your business is unpredictable and that can hurt your valuation.
Can I Sell My Business Online?
Well, you certainly should leverage the internet to market your business. After all, you’re reading our guide to selling a business here on our own website, and we are well-versed in the process of using business listing websites and our own direct online marketing to get a business out in front of potential buyers. In a place as spread out as Alaska, it can be even more beneficial to leverage online databases of private equity buyers or other entrepreneurs who are looking to buy a business as their next venture. The internet scales that outreach and marketing ability like nothing else.
What Value Does a Broker Bring?
Besides the experience marketing a business like yours to potential buyers online, our group provides value in a number ways.
- Business Valuation.
First off, we help you answer the question of “what is my business worth?”. Business valuation is a non-exact science, but you have to have the data from recent sales in the industry as well as a pulse on the appetite of the different potential buyers that are out there to know how to price a company. In 2017, a “hot” industry like mining might be seeing buyers who are paying 7-8x multiples of cash flow for companies. While a smaller business like a laundromat or a car wash in Juneau might only sell for 2-3x net income.
- Buyer Lists.
We have completed dozens of transactions in Alaska in the last 20 years. This means we know buyers of companies, and the buyers know us. Our value proposition is we can put your business in front of several targeted business investors and equity groups with the click of a button from our vetted email list. Most business owners, unless they are going to sell to a strategic buyer and also want their competitors to know that the company is for sale, do not want to handle contacting potential buyers (nor do they have the contacts.)
Having an intermediary to negotiate on your behalf with potential buyers is good for many reasons. First, it saves you the administrative hassle of having to respond to every request from every interested party that comes along. That can be distracting if you are trying to operate a business so there is still a profitable business left to sell! Also, once a letter of intent (LOI) is accepted, it is often helpful to have a second party in the middle between you and the buyer. This is because the due diligence process can become controversial, and it’s easier to have a go-between to discuss issues between the two parties.
As we’ve highlighted, selling a business can take several months, if not years. If you are coming into the process thinking, “I want to sell my business fast”, you have a better chance at doing so if you hire a professional broker.
How Much Do Business Brokers Cost?
Most business brokers and M&A advisors work on a small retainer and then receive a percentage of the eventual sale price as a commission. Our firm is no different. Or low, up-front fee is in place simply to weed out serious sellers. In the first 60 days, we will work under this fee to help you compile your financial statements, to get to know your business, and to prepare a confidential investment memorandum (CIM) to be shared with potential buyers once we go to market.
Ultimately, we only make any noticeable money if we sell your business. The commission fee is a small percentage and is almost guaranteed to be made up (and then some) in our ability to help you sell the business for a higher purchase price. Data shows that businesses that are professional represented sell for 20-30% higher than for sale by owner scenarios. Our customer testimonials available via inquiry also support our value in this way.
Will My Buyer Be Based in Alaska?
Alaska is a large, but small state. There are plenty of good businesses and investors based here, whether we are talking about Juneau, Anchorage, Fairbanks or some of the smaller towns. Typically, we do see interest from local buyers for smaller companies. Larger businesses that we’ve taken to market are more likely to see interest from private equity buyers based in the lower 48 or in Canada or abroad. Much like if you were selling a business in the state of Washington, the buyers could come from anywhere in today’s market. We will market the company for sale online and to our buyers’ lists, and that means it goes out to many geographies. However, we know that some business owners are selling their “baby” and want to ensure that the local employees and their local reputation remain intact. We can successfully help manage the process to focus on Alaska ownership. And remember, it’s your company. Our brokerage’s job is to help bring prospects to you. It’s still your decision to sell the company no matter what.