Should I sell my business?

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beantown08
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Should I sell my business?

Post by beantown08 »

All,

I am 40 years old, married with 2 young children. I am 100% owner of a small business that will net me approximately $480K annually. We have $268K in taxable/tax deferred accounts. $90K in cash savings. $230K liquid business assets (cash). We are renting our home. We owe $22K on a minivan. There is no other personal debt. There is no business debt. I have an offer to buy the business for $525K, which I would finance at 6% for 5 years.

We live in an area that we do not love. We are considering relocating for better weather and to be closer to family. If we did this, I would start another business that would require about $900K in bank loans. It would take a few years, but I think my income would reach the $350-$400K range and the lifestyle would be better.

I am torn. We are currently contributing $3K/week into our vanguard funds. If I keep the business and there are no significant changes, we should hit the $4-5M mark around age 55.

If we sale the business we will receive about $9,800 per month for 5 years. I would like to use this solely for retirement but it may be needed for living expenses in the beginning. In my mind, I would like to have $5M when i retire at age 65.

Please help me decide what to do.

Thanks.
randomguy
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Re: Should I sell my business?

Post by randomguy »

see a couple of questions
a) is that a fair offer? Depends on a lot on the business. It seems low to me but if the value of the business is largely the owners work (say medical, law, or other professional services) it might be in line.

b)Should I move? That is hard. There is the plus of living somewhere that you would prefer. The minus is that starting a new business is hard. What happens if you can't replicate your prior success what happens? Given that small account balances (for someone saving 150k/year) I would assume this bussiness success is pretty recent. You have to figure out how much was luck and how much skill it was in the current scheme being a success. Taking on 900k of debt is a huge risk. Again I don't know what you are doing but the list of banks that will write loans for money like that to a start up is pretty small unless you are buying things like equipment that holds value.
Topic Author
beantown08
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Re: Should I sell my business?

Post by beantown08 »

It is a medical based business that relies significantly on the owners work. The business is just over 3 years old. We have not been saving this aggressively for long (about 6 months). Prior to that our efforts were focused on paying off education loans.

I have been "pre-qualified" by BOA. Nothing finalized, but they have verbally said that with the sale of the practice and our business model, financing should not be a problem.
GymGuyTX
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Re: Should I sell my business?

Post by GymGuyTX »

Unless I'm missing something, whomever is buying your business looks to be getting an incredible deal.
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Watty
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Re: Should I sell my business?

Post by Watty »

How does disability insurance work with a business like that?

If the business is depending you all that debt could be a big problem if you are laid up for even a few months.

beantown08 wrote:If we sale the business we will receive about $9,800 per month for 5 years.
Is that after taxes? I would suspect that a large percentage of the sales proceeds will be taxed.
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beantown08
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Re: Should I sell my business?

Post by beantown08 »

I have disability for just under $20K per month.

The $9800 per month would be before taxes. The majority of the sale would be considered goodwill. The plus side of this, is that during the first 5 years, income from the new business will lowest. This MAY provide an option for a ROTH conversion and taxes will be lower.
AlohaJoe
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Re: Should I sell my business?

Post by AlohaJoe »

beantown08 wrote:I am 100% owner of a small business that will net me approximately $480K annually. We have $268K in taxable/tax deferred accounts. $90K in cash savings. $230K liquid business assets (cash). We are renting our home. We owe $22K on a minivan. There is no other personal debt. There is no business debt. I have an offer to buy the business for $525K, which I would finance at 6% for 5 years.
I think you'd be crazy to sell it on those terms.

6% interest when a 5 year home mortgage (i.e. with hard collateral and all the due diligence a bank does) goes for 4%?

Financed yourself?

You haven't actually made anything from the company yet?

When you include the business assets they are paying $295,000 for a business that generates $480,000 in profit a year. Why is the financing for 5 years when they can pay it off in 7 months?
GrandMasterBlaster
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Re: Should I sell my business?

Post by GrandMasterBlaster »

Selling the business for just slightly more than it nets you in a year doesn't make sense to me. If you're confident in the earning potential of your business in the short-term, why not buckle down on expenses, continue for a few more years and pad your accounts? With practically no outstanding debt and close to half a million in income annually, it seems to me that you could be almost FI in the time it would take to finance the sale. Taking on close to a million dollars in debt after finally paying off what I assume was a large med school balance seems very dangerous. You can always reevaluate the possibility of selling in a few years when you will have saved enough to finance your new business yourself, if necessary.
Topic Author
beantown08
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Re: Should I sell my business?

Post by beantown08 »

The $230K in business assets (cash) will come with me. This would not be included as part of the sale.
AlohaJoe wrote:
beantown08 wrote:I am 100% owner of a small business that will net me approximately $480K annually. We have $268K in taxable/tax deferred accounts. $90K in cash savings. $230K liquid business assets (cash). We are renting our home. We owe $22K on a minivan. There is no other personal debt. There is no business debt. I have an offer to buy the business for $525K, which I would finance at 6% for 5 years.
I think you'd be crazy to sell it on those terms.

6% interest when a 5 year home mortgage (i.e. with hard collateral and all the due diligence a bank does) goes for 4%?

Financed yourself?

You haven't actually made anything from the company yet?

When you include the business assets they are paying $295,000 for a business that generates $480,000 in profit a year. Why is the financing for 5 years when they can pay it off in 7 months?
Topic Author
beantown08
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Re: Should I sell my business?

Post by beantown08 »

GandMasterBlaster, you touched on one of my biggest concerns. I am confident in the earning potential of the business. If I stay the course for the next few years, we will hit the $1M mark around my 44th birthday.

I'm worried that if I don't sell at this point, I may not have the opportunity to do so again. We are in a niche market with a small pool of individuals who have the background to provide the service we do.
GrandMasterBlaster wrote:Selling the business for just slightly more than it nets you in a year doesn't make sense to me. If you're confident in the earning potential of your business in the short-term, why not buckle down on expenses, continue for a few more years and pad your accounts? With practically no outstanding debt and close to half a million in income annually, it seems to me that you could be almost FI in the time it would take to finance the sale. Taking on close to a million dollars in debt after finally paying off what I assume was a large med school balance seems very dangerous. You can always reevaluate the possibility of selling in a few years when you will have saved enough to finance your new business yourself, if necessary.
GrandMasterBlaster
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Re: Should I sell my business?

Post by GrandMasterBlaster »

If you reach $1mil in four years, how much longer do you think it will take you to make it to $2mil? At that point, does it really matter whether or not you can sell your business for $500K?
GrandMasterBlaster
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Re: Should I sell my business?

Post by GrandMasterBlaster »

I'm a business owner. I make nowhere near what you make, but I've worked my butt off to get where I am, and I love the work. Building a business as profitable as yours is an incredible feat: what do you think the odds are that you can do it again? Are you willing to bet $500K a year on it?
AlohaJoe
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Re: Should I sell my business?

Post by AlohaJoe »

beantown08 wrote:The $230K in business assets (cash) will come with me. This would not be included as part of the sale.
I obviously don't know your business is structure or how your books are set up...but it sure sounds like your business has a $230,000 liability/debt that you didn't list above then.

In any case, I don't think it changes things dramatically. They still will make enough profit to break even on the deal in 13 months.

I wouldn't be worried about not finding another buyer in the future. In the worst case, you take on someone else pay them $80,000 a year for a year or two (keeping $400,000 for yourself) and train them up. Then sell the business to them.

If the driving concern here is: you thought the quality of life was fine but you've realised after a few years you were wrong and it sucks...you need to seriously evaluate whether you just suck it up for the money for another 2 or 3 years. Maybe you decide yes but maybe you decide no. Given your financial situation at age 40, though, I'm a bit surprised you're even considering it.

If the driving concern here is: you might not find another buyer in 3 or 4 years...I think that concern is misplaced.
Vanguard Fan 1367
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Re: Should I sell my business?

Post by Vanguard Fan 1367 »

I think it is pretty amazing that you have built such a profitable business. I believe that income puts you in the one percenter category.

I know of two families that were doing ok and because they were in an area that the wife didn't love they moved. One of them tried to do the same business in a new area and eventually went bankrupt. The other is having trouble finding work that pays anywhere near as well as what he had before he moved.

If you can borrow 900K and set up a great business, that is fabulous. I am pretty conservative and would probably try to enjoy the great profits of my current business and maybe squirrel away more savings before moving. It doesn't sound like you would have to work that many years to save as much as you would get from the sale.
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
Bacchus01
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Re: Should I sell my business?

Post by Bacchus01 »

How did you come about that valuation?

What is your EBITDA? 6X should be your bottom end. 12-14X is not unheard of for a service company.

Why would you finance it so low and continue to take on enormous risk? You said yourself it's heavy on owner involvement and there is a small pool. 6% does not seem to nearly justify the risk you are taking on.
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Watty
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Re: Should I sell my business?

Post by Watty »

Something doesn't make a lot of sense to me.

You would be selling your business for $525K then spending the $230K in cash plus another $900K in loans for a total of $1,130,000 to set up the new business.

It seems odd that the new businesses would cost more than twice as much to set up in the new location even if things like office space cost a lot more in the new location.

If there is expensive equipment involved then you could just shut down your old business and move everything to the new location for a lot less.

To have the same return on your investment you would then need to have more than double the your sales in the new location, but the income seems to depend a lot on the work you are doing so being able to double the number of hours you work isn't possible.

If it is possible to hire more qualified medical staff to fill in for you at a fraction of what you are making then one option would be to not sell your current current business but instead hire a business manager and more medical staff and get out of the day to day operations of your current business but retain ownership. That might allow you to move away and only come back occasionally for business meetings.

I can understand not wanting to post a lot of details on the internet but it sounds like you are not just cloning your current business in the new location.

If so that would increase the chances of it not working out.
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Watty
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Re: Should I sell my business?

Post by Watty »

One more thought.

Be cautious about thinking that the bank being willing to lend you the $900K means a lot about how good they think your business plan is.

If you would be personally responsible for the loan then the bank may be be willing to lend you that much since if the business fails you could get a normal job and be able to pay it off using that income.
Tarkus
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Re: Should I sell my business?

Post by Tarkus »

Let's say your EBITDA is close to $500K per year.

If I were buying your business as an investment, I would need to hire somebody to run it. You said the business requires a significant amount of the "owner's work". Could I hire somebody with your skills at $200K per year? If so, I'm going to adjust that EBITDA down to $300K.

It is definitely harder to sell smaller businesses and they get lower valuations. Larger businesses with many millions of revenue and large, diversified customer bases are more attractive. These are the ones that trade for 5x-8x EBITDA. Somebody said 16x... there's a lot of speculation involved when you're paying 16x. For a rapidly growing company in the right industry, it might make sense. When a small business trades for 16x, everybody hears about it, but I'm not sure that it is "normal".

How many employees are in your business? If it is just you and a small support staff, then I think you can't expect massive multiples. Personally, I would look for at least 3x EBITDA -- $900K -- at a bare minimum, unless circumstances are so dire you need to make a move. Think about it -- to an investor, that's a 3 year payback. It's not a huge ask. If it's not an all-cash deal, you probably want to ask for more.

Every business is unique, so don't listen to generic advice (like mine or anyone else's here). It might make sense to talk to a business broker. I'm not saying to engage them, but you can learn a lot in a 1 hour meeting. Get a meeting, bring your financial reports, and ask them what they could sell your business for. Ballpark it.
LawyersGunsAndMoney
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Re: Should I sell my business?

Post by LawyersGunsAndMoney »

Basically impossible to provide objective advice without much more information on the business.

I get the sense from OP's comments that the business is more of a service than a company, and that it's probably more of a service he provides as the owner rather than a service-oriented firm. But again, impossible to tell.
LarryAllen
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Re: Should I sell my business?

Post by LarryAllen »

You sound like things are guarantees.

That the current business will keep earning this much.

That if you sell it the buyers will for sure make all their payments and not run it into the ground.

That you can start a new business and make a certain amount of money.

I am a business owner and have been amazed at how income can change (up and down). I thought I made a lot 10 years ago and now I make triple that amount with less work. Maybe your busy will scale and or change for the better!? I'd ride it a few years and then early retire.

Good luck.
cantos
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Re: Should I sell my business?

Post by cantos »

beantown08 wrote: I am 40 years old, married with 2 young children. I am 100% owner of a small business that will net me approximately $480K annually. We have $268K in taxable/tax deferred accounts. $90K in cash savings. $230K liquid business assets (cash). We are renting our home. We owe $22K on a minivan. There is no other personal debt. There is no business debt. I have an offer to buy the business for $525K, which I would finance at 6% for 5 years.
Very concerned about you financing the sale. This means you are getting income from the buyer on a monthly basis. But if the buyer gets sick, dies, decides not to work any more, etc., you have no real way to get the money. The buyer should get a loan from the bank and pay you everything up front in cash.

As for your question of whether to move on or not, we need way more info about what exactly it is you do. If you're a physician, I'd think we'd be a lot more confident in saying yeah, go ahead and move, because we know chances are good your income from a medical partnership/etc will be fine. If you're an occupational therapist who's built up a huge clientele, though, that's a different story. Etc.
wanderin1
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Re: Should I sell my business?

Post by wanderin1 »

I’m a serial entrepreneur who has started up and sold several businesses. A couple of thoughts:

1. It sounds like you're driven more by fear of finding a future buyer than by thinking it’s an ideal time to sell. Teasing this apart a little more could help you make your decision. For example: could you see yourself being satisfied running this business for five+ more years? (and would your family be satisfied with living in this area that long?) If not, maybe go for a deal with this buyer. I can tell you from experience that it’s a multi-year project to sell a service business that depends on specialized owner expertise. If your own timeframe is less than 5 years, you’ll need to start planning for a sale anyway within 18 months.

2. Most posters see the biggest risk in this scenario as being whether or not you can make a success of business #2. I think the biggest risk here is that the new owner of business #1 fails in some way and you don’t get paid back. Sure, your sale agreement will likely say that you can take the business back at that point—but if you are knee deep in a new biz that you’ve borrowed almost a mil to get started—that’s not gonna work. The only sale where I was willing to do owner financing: I’d known the buyer for 4+ years and had reams of info for predicting their likelihood of success--and I insisted on their sizeable downpayment so they had serious “skin in the game” from day 1. In your situation, I’d think very carefully, and get attorney and accountant advice on terms.

3. You mention that you’ve been “pre-qualified” by BOA for the $900k loan. In my experience, small business lending decisions even at the big banks are locally made. So make sure you are indeed pre-qualified IN THE LOCALE WHERE YOU’LL BE MOVING.
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Abe
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Re: Should I sell my business?

Post by Abe »

GrandMasterBlaster wrote:I'm a business owner. I make nowhere near what you make, but I've worked my butt off to get where I am, and I love the work. Building a business as profitable as yours is an incredible feat: what do you think the odds are that you can do it again? Are you willing to bet $500K a year on it?

I agree with this. A bird in the hand is worth two in the bush. You are very fortunate to have a business the makes that kind of money. I would not sell a business for $525k if it nets $480k per year.
Slow and steady wins the race.
randomguy
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Re: Should I sell my business?

Post by randomguy »

wanderin1 wrote:I’m a serial entrepreneur who has started up and sold several businesses. A couple of thoughts:

2. Most posters see the biggest risk in this scenario as being whether or not you can make a success of business #2. I think the biggest risk here is that the new owner of business #1 fails in some way and you don’t get paid back. Sure, your sale agreement will likely say that you can take the business back at that point—but if you are knee deep in a new biz that you’ve borrowed almost a mil to get started—that’s not gonna work. The only sale where I was willing to do owner financing: I’d known the buyer for 4+ years and had reams of info for predicting their likelihood of success--and I insisted on their sizeable downpayment so they had serious “skin in the game” from day 1. In your situation, I’d think very carefully, and get attorney and accountant advice on terms.
2) Not getting paid is a definite risk. But it is more or less capped at a 600k loss. On the other hand if you move, lose 900k and end up working and making 100k versus 400k, you are looking at a 6+ million dollar loss over the next 20 years. If you move and are making 400k, you can recover from the not getting paid. The new business failing on the other make drastically change you outlook. Obviously there is no way to know what the new or old business will do going forward.
renue74
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Re: Should I sell my business?

Post by renue74 »

Agree. The purchaser who can't or won't get financing to buy your business.....I would worry about them.

Theoretically you could work another year or so and make the purchase price back in salary...then just drop all the stuff and walk away...if you wanted. That's safer than assuming somebody is going to pay you on time.
randomguy
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Re: Should I sell my business?

Post by randomguy »

Bacchus01 wrote:How did you come about that valuation?

What is your EBITDA? 6X should be your bottom end. 12-14X is not unheard of for a service company.

Why would you finance it so low and continue to take on enormous risk? You said yourself it's heavy on owner involvement and there is a small pool. 6% does not seem to nearly justify the risk you are taking on.
I have never heard of anywhere near close to that. To get multiples like that you need growth which can be hard for a lot of small owner owned business, Paying 2.0 million to get a 200k income stream (which can go up and down) doesn't make sense. If you think the income stream will be 800k in say 5 years, you can justify paying something like 2 million. You can get more money if the buyer has some vision (i.e. it fill a niche in their product line and they get synergy, they have a plan to double sales,...) that the person just buying it for cash doesn't. And obviously if you are a story stock (i.e. twitter), your sale price and EBITDA have no relationship. For a flat earnings business 2-4x is what I have seen. Things are very situation dependant though.

People have suggested hiring someone else (no clue if you need to pay them 60k or 300k). That could work. But it can be a real pain to find a replacement for a owner/operator who is used to filling a dozen roles.
randomguy
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Re: Should I sell my business?

Post by randomguy »

renue74 wrote:Agree. The purchaser who can't or won't get financing to buy your business.....I would worry about them.

Theoretically you could work another year or so and make the purchase price back in salary...then just drop all the stuff and walk away...if you wanted. That's safer than assuming somebody is going to pay you on time.
You would still be behind
Work for a 2 year: 2x480k = 960k
Sell and work for a 2 years in new company= 525(+interest an better taxaton)+2x400k = 1.325 million

Obviously we are ignoring the risks of not getting paid and the new company working out.

But at a high level I agree with you in that the business sounds like it should be worth closer to 900-1.2 million (again with no details). And doing 100% owner financing is a bit sketchy. Have the buyer put up 200-300k and finance the rest.
smitcat
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Re: Should I sell my business?

Post by smitcat »

For some data on what business's sell for you can look up the ask and sell multiples by business type and size n sites like Bizbuysell(dot)com.
Then you have a baseline for selling prices for equivalent transactions.
As said above - you will likely see multiples of 2.5-4 times for your example given, but your in-posted details will narrow that down when you look it up.
Bacchus01
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Re: Should I sell my business?

Post by Bacchus01 »

randomguy wrote:
Bacchus01 wrote:How did you come about that valuation?

What is your EBITDA? 6X should be your bottom end. 12-14X is not unheard of for a service company.

Why would you finance it so low and continue to take on enormous risk? You said yourself it's heavy on owner involvement and there is a small pool. 6% does not seem to nearly justify the risk you are taking on.
I have never heard of anywhere near close to that. To get multiples like that you need growth which can be hard for a lot of small owner owned business, Paying 2.0 million to get a 200k income stream (which can go up and down) doesn't make sense. If you think the income stream will be 800k in say 5 years, you can justify paying something like 2 million. You can get more money if the buyer has some vision (i.e. it fill a niche in their product line and they get synergy, they have a plan to double sales,...) that the person just buying it for cash doesn't. And obviously if you are a story stock (i.e. twitter), your sale price and EBITDA have no relationship. For a flat earnings business 2-4x is what I have seen. Things are very situation dependant though.

People have suggested hiring someone else (no clue if you need to pay them 60k or 300k). That could work. But it can be a real pain to find a replacement for a owner/operator who is used to filling a dozen roles.
You wouldn't put down $2M for $200K a year in return? Hmm. I better check all my investments.

And the OP said it was a relatively new startup that was growing. Or at least that was the inference.

And I'd buy every business I could find at 2-4X EBITDA. I realize small business is very different, but I evaluate acquisitions almost weekly. The multiples used to be 4-6, but are easily getting above 10X for the right and some are much higher.
renue74
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Re: Should I sell my business?

Post by renue74 »

I sold a small business in 2012. It was a very small software business with approximately $250K annual sales and it sold for 4x sales.

Others are right, you should talk to a business broker, especially one familiar with your industry. There are tons of brokers who could sell a gas station...but you need to look at somebody in your industry.
aristotelian
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Re: Should I sell my business?

Post by aristotelian »

A business that brings in 400k annually should not be sold for $500k. I would want closer to $5m. And I would want cash and let the financing be somebody else's problem.
randomguy
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Re: Should I sell my business?

Post by randomguy »

Bacchus01 wrote:
You wouldn't put down $2M for $200K a year in return? Hmm. I better check all my investments.

And the OP said it was a relatively new startup that was growing. Or at least that was the inference.

And I'd buy every business I could find at 2-4X EBITDA. I realize small business is very different, but I evaluate acquisitions almost weekly. The multiples used to be 4-6, but are easily getting above 10X for the right and some are much higher.
No I wouldn't consider it. Why would I invest in something far riskier than stocks, with worse tax treatment, and get about the same returns? We know nothing about the growth of the company or what the barriers to entry are. We do know that the key employee is leaving and a replacement needs to be found. I am sure we are both making assumptions about this business that may or may not be true.
2pedals
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Re: Should I sell my business?

Post by 2pedals »

beantown08 wrote:All,
I am 100% owner of a small business that will net me approximately $480K annually.

There is no business debt. I have an offer to buy the business for $525K, which I would finance at 6% for 5 years.
No I would not. I suspect your offer is waaaaay too low, a "low ball" offer. Sounds like you have increasing profits, consistent income figures, a strong customer base.

If you would like to sell it, I would recommend getting professional help to assess the full value of your business.
researcher
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Re: Should I sell my business?

Post by researcher »

beantown08 wrote:I am 100% owner of a small business that will net me approximately $480K annually.
$230K liquid business assets (cash).
There is no business debt.
I have an offer to buy the business for $525K, which I would finance at 6% for 5 years.

I would start another business that would require about $900K in bank loans.
I think my income would reach the $350-$400K range and the lifestyle would be better.
I think you would be crazy to follow through with this.

Your business currently nets nearly $500K annually, carries zero debt, and has cash reserves of over $200K.
Yet you want to sell the business for the equivalent of just one year's net income???

Then you want to go ONE MILLION dollars in debt, for the potential to earn $100K LESS than you currently do???

How could your lifestyle possibly be better under this scenario?
Because of "better weather?" Just buy a second house in the area you are considering.
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unclescrooge
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Re: Should I sell my business?

Post by unclescrooge »

OP, you need to provide more information about your personal situation in order to get better advice.

Otherwise it will be vague and probably unhelpful.
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Hayden
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Re: Should I sell my business?

Post by Hayden »

I had a very profitable business in an area I didn't love.
I read somewhere the question, are you good or are you lucky? Well, I couldn't be sure I hadn't just been lucky, i.e., I wasn't sure I could replicate the numbers with a new business.
What I did:. I bought a vacation home in an area I enjoy, and ran my business until I had enough money to comfortably early retire.
randomguy
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Joined: Wed Sep 17, 2014 9:00 am

Re: Should I sell my business?

Post by randomguy »

Hayden wrote:I had a very profitable business in an area I didn't love.
I read somewhere the question, are you good or are you lucky? Well, I couldn't be sure I hadn't just been lucky, i.e., I wasn't sure I could replicate the numbers with a new business.
What I did:. I bought a vacation home in an area I enjoy, and ran my business until I had enough money to comfortably early retire.
I know I am good AND lucky. Not sure if one alone would be enough.

From a risk/money point of view not selling is going to be the right move until you start talking about 5x+ multiples. QOL is another thing. Being miserable for 20 years when you are raising kids to have a big pile of money might not be the right choice either
Cruise
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Joined: Mon Nov 21, 2016 6:17 pm

Re: Should I sell my business?

Post by Cruise »

OP: Feel free to sell your practice at the going rate. Ignore those who suggest that there is a magic "multiple" number for valuation purposes. While that may be true for certain businesses, it does not hold true for others, especially professional practices in which goodwill is the primary asset transferred.

The reality is that your business is only worth as much as a buyer is capable of paying. If you are selling a professional practice, only younger, poorer professionals will be interested. That depresses the sales price. Another limiting factor is that you won't sell your good reputation to an incompetent, further limiting your options.

Good luck in your decision-making!
Last edited by Cruise on Sat May 20, 2017 11:18 pm, edited 1 time in total.
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AllieTB1323
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Location: Washington State

Re: Should I sell my business?

Post by AllieTB1323 »

Seller financed business sales are scary. Check around, too many come back to the seller. I'm a proud, retired former owner of a small service business. The business provided us with about 300K per year. We sold it for about 3.5X the cash flow. We financed the sale. Our goal was NOT to have the buyer go belly up and leave us with a mess to cleanup. We brought the buyer into the business and he worked for us for about a year which allowed the clients become accustomed to the new face. We structured the payment schedule in a way to ensure an adequate income for him to live on. We even introduced him to our business bankers so he didn't have to cold call them.
CurlyDave
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Joined: Thu Jul 28, 2016 11:37 am

Re: Should I sell my business?

Post by CurlyDave »

For that kind of income, I could learn to like a lot of miserable places.

I think the offer is very low. And, I would never 100% finance it. That is not really a sale of your business, it is a giveaway.

Keep looking for a buyer.
Answering a question is easy -- asking the right question is the hard part.
Cruise
Posts: 2750
Joined: Mon Nov 21, 2016 6:17 pm

Re: Should I sell my business?

Post by Cruise »

OP: Best advice I got when selling my business and having to finance part of the sale: Make sure your financing rate is several points higher than a bank's rate. This decision really motivated my purchaser to get eventually obtain loans from banks and pay me off over a year before schedule. :)
Retired1809
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Joined: Fri Feb 23, 2007 3:11 pm
Location: North Carolina, USA

Re: Should I sell my business?

Post by Retired1809 »

From what you report about your financial position, I take it that you haven't been earning this kind of income for many years. For instance, you don't have commensurate assets and you even owe $22k on a minivan note. Before you decide to sell your business and relocate, I would recommend sitting down with your spouse/mate and seriously consider what you might be able to do to improve your quality of life without moving far away from your business. For example, would moving to a better neighborhood (but still within commuting distance from your business) improve your quality of life? You are to be congratulated on building a business throwing off the income you cited but who knows whether you can replicate that success, starting anew in a different state? And other than climate, are you sure that you would be happier in a different location? (And taking out a huge loan to start a new business - with an uncertain future - would seem much less appealing than continuing your current successful business.)

I'm usually a "numbers guy," but in this instance, I would implore you to ask yourselves what you can do to be happier where you are instead of seeking happiness somewhere else. I've often observed that someone who leaves an "unhappy" area will find the same "unhappiness" at the new location.
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