Timing is Everything:

Why Now is the Right Time to Sell Your Company

It is no secret when purchasing a business you are going to kiss a few frogs before finding a solid company within your wheelhouse that excites you.

2009 has shown less than normal inventory levels for the solid to exceptional quality businesses. Some feel this is due to the poor state of affairs and as a result most businesses may now fall into the poor to fair quality category. But we have found the story to be quite different.

With so much talk of reduced valuations and constriction in financing options, Sellers considering selling with solid to exceptional quality companies decided to remain on the sidelines until prevailing conditions improved.

On the other side of the equation, as predicted, in the 4th Qtr ’09 we saw a surge of qualified buyers coming into the market place. It stands to reason as we experience 10% unemployment rates with some of the most hyper educated and experienced individuals ever. Many are tired of their roller coaster careers and are now focused on controlling their own destiny either by starting their own company or mitigating the risks of a start-up either by purchasing an existing established company.

Part of mitigating risk when purchasing a company is to target and focus on the solid and exceptional quality companies that have weathered the storm with grace, ease, growth and cash flow. Yes, they do exist. This category, regardless of prevailing conditions, always represents the smallest portion of the available businesses for sale.

This brings us to the reason why ‘Timing is Everything: Why Now is the Right Time to Sell Your Company’.

There has been a lot of media coverage focused on Baby Boomer business owners and the expected ownership turnover in the decade to come. The first of the Baby Boomers just turned 65 with 77M people from 1946 to 1964 and the youngest being 47 covering an eighteen year span.

Census Bureau: Characteristics of Business Owners 2002 reports 1-in-3 of all business owners were over 55 years of age in 2002. Of the owners of respondent firms 31 percent were over the age of 55; 29 percent were between 45 and 54 years old; 24 percent were between 35 and 44 years old; 12 percent were between 25 and 34 years old; and only 2 percent were under 25 years old.

Our typical Seller is 55+ years of age while our typical Buyer is 48+ years of age. So, if we take into account our statistical ages of Sellers and, more importantly, profiles of typical Buyers, the majority of this turnover in the next ten years is going to stay within the Boomer generation.

In the short term, we anticipate through the 3rd Qtr 2010 there will be significant competition for the “good” businesses that may have experienced hits to the top-line but have held or increased their bottom-line through efficiencies or market share gains. This competition will come from the traditional Boomer Buyers in the market place plus the addition of the 10% unemployed with talent, desire and the means.

But as the Baby Boomers continue to age they will be relying on Generation X with 55M people from 1965 to 1981 to become the driving force of business acquisition. It would stand to reason as Sellers start to outnumber Buyers the corresponding business valuations may drop unless you can plan for and ensure your business is one of the few in the exceptional category.

Based on this, we feel the Sellers sitting on the fence will be better off going to market now before the typical ratios of buyers to ‘good’ businesses return to normal, minus normalized un-employment rates removing potential Buyers from the market and minus the reduced Buyer pool within Generation X that follows.

In the long run, planning for an exit in 3, 5 and 7 years out will provide the greatest options and the ability to take advantage of the Boomer Buyers still in the market place with normal to strong valuations.

Planning your exit will help ensure your business is one in the strong to exceptional category which will improve the probability of a transaction consummating and improve the overall value. We are available to assist you or your friends and family with a myriad of services to accomplish the ‘Timing that is Right’ for you. Roupp Acquisitions Services

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Regards,

Michael Roupp
President and Designated Broker

Roupp Acquisitions Inc – Current Listings
Click on the title link to learn more.

Tender Boat Manufacturer
A well established and recognized name in rigid hull tender boats for 40 years. This company is looking for new Ownership to take the helm. The boat molds have been improved to focus on safety, weight savings and to reduce production costs/time. Seller is willing to finance for the right candidate. Click on the title link to learn more.

Wood Mfg Montana
A long established wood manufacturing company with a national customer base and primary production in the USA along with supplemental production facilities in China. Company has a very stable work force increasing their profit margins over last year. Owner enjoys 6-7 weeks of vacation per year plus optional trips to China. Company owns the 18,000 sqft manufacturing facilities in Bozeman, Montana. Click on the title link to learn more.

When is the Right Time to Sell Your Company?

The short answer: before you need to.

Too often we are approached by Sellers with time constraints creating pressure to sell their company in less than ideal conditions regardless of the prevailing economy. Such pressures could be family, health, burn out or personal financial situation.

Buyers wanting solid companies with discounted pricing look for these circumstances.

Without proper planning, these pressures can creep up and prevent capturing the best value of the company. This is where Exit Strategy planning comes into play.

By having a 3, 5 and 7 year exit strategy, you can focus on the light-at-the-end-of-the-tunnel working toward an end-game. Whether you choose to exercise the plan when the time comes is up to you but by having the plan you might reduce the chances of being caught off guard and forcing you to contemplate unattractive options.

We recommend the same planning for every Buyer looking to purchase a business. We have found that there are times when some business owners without exit planning slip into the category of owning a job. The ideal situation is being in the position of working ON the business rather than working IN the business.

So when is the right time to sell your company? By choice based on a pre-planned strategy while you are working ON the business in the position of strength.

We focus on opportunities possessing these and other key ingredients for both Sellers and Buyers.

Please contact us if you or any of your associates are interested in learning more about these and other strong opportunities we have.

Roupp Acquisitions Inc – Current Listings

Wood Mfg Montana
A long established wood manufacturing company with a national customer base and primary production in the USA along with supplemental production facilities in China. Company has a very stable work force increasing their profit margins over last year. Owner enjoys 6-7 weeks of vacation per year plus optional trips to China. Company owns the 18,000 sqft manufacturing facilities in Bozeman, Montana. Click on the title link to learn more.

What Makes a Business Desirable?

Sellers often ask, what maximizes the value and probability of selling a business? Buyers often ask, what are the key ingredients to look for when purchasing a business?
 
In most cases, the answers are the same for both Buyers and Sellers.
 
To maximize value and increase the probability for a successful buy/sell transaction Sellers should focus on; clean easy to understand and verifiable financials, training systems in place to ease Ownership transition, customer and branding focus on the business versus the individual owner or owner’s relationships, customer/supplier diversification, niche product or process with a barrier to entry, Owner working “on” the business versus working “in” the business and – the very important ingredient – plenty of room to grow/expand. The hardest business to sell is the perfect business.
 
Key ingredients to look for when purchasing a business are similar. Many business Buyers are looking to build on an established platform. This allows the Buyer to apply their skill-sets immediately to the bottom-line bringing added value to the transaction and bypass the start-up phase of being the first-in, the last-out and the person taking out the trash.
 
Of Course, there are exceptions with many Buyers looking to purchase opportunities or assets at a discount but a company counter to the current market trends with stable/growing revenue, plenty of room to grow, significant barrier to entry and Owner working “on” the business is a business opportunity desirable in all markets.
 
We focus on opportunities possessing these key ingredients for both Sellers and Buyers. Please contact us if you or any of your associates are interested in learning more about these and other strong opportunities we have.

Michael Roupp
President/Designated Broker
www.rouppacquisitions.com

Current State of Affairs

With the current uncertainty in the market we thought it important to showcase the positives and strengths of our current opportunities.

Certainly the financial and residential industries have taken a temporary turn for the worst but small business thrives and below we have examples of strong growing companies during challenging times.

Please contact us if you or any of your associates are interested in learning more about these and other strong opportunities.

Metal Casting Foundry
Our client is a green sand steel casting foundry with a diversified customer base over many industries. Through all the recent economy, market and commodity turmoil they have experienced record numbers, their largest order backlog in history and currently tracking better than their 2007 successes.

Carpet Cleaning Services with Real Estate
This client has felt very little effects of the economy and continues to expand by hiring additional cleaning. The Owner works 20 hours or less per week and is offering the business and Real Estate as a package for less than the individual fair market value of each. This business has been pre-screened for SBA lending dependent on the strength of the Buyer.

High Tech Construction
Our client specializes in technical facility construction such as bio-medical, cleanrooms and data-centers with an enormous contract backlog and $10,000,000 in revenue they are an ideal acquisition for a strategic buyer.

CPA Practice
A well established public accounting and small business consulting practice with nearly 1000 transferable clients located in the pristine San Juan Island. They have grown organically with little effort and a positive community relationship.