Stick Like Glue Radio #114 On this episode of Stick Like Glue Radio I interview super successful equity investor, Ace Chapman on how to buy and sell businesses! Don’t miss it!
On this episode of Stick Like Glue Radio I interview super successful equity investor, Ace Chapman on how to buy and sell businesses! Don’t miss it!
Main Questions Asked
- When did you start becoming an entrepreneur?
- Did you have a mentor when you were younger?
- Why should someone consider buying an ongoing business instead of building one from scratch?
- How do you become aware of these opportunities?
- Are people niche focused or do they want a nice asset?
- Do you help people prepare for selling businesses or just acquisition?
- What are the top 3 things an owner should be doing when they want to sell?
- Is 2.5 times net a standard price?
- Is there extra value in intellectual property such as client lists and trademarks?
Key Lessons Learned
- Look for opportunities in business that aren’t performing as well as they should be
- One of the biggest hurdles is confidence levels
- The reason why many small business fail is because they run out of confidence (not cash)
- You want to have your elevator pitch down with a hook that puts you in a place where you are top of mind for selling businesses
- 80% of these buying and selling business deals are done in the ‘hidden market’
- A lot of opportunities are on the web (see resources)
- The best deals are not advertised
- Find people who are motivated sellers (ask a divorce attorney)
- Focus on networking and sourcing the hidden market
- There are 2 million baby boomers who are business owners and entrepreneurs who are looking for people to help them
- Often you can get equity on not purchase the business outright
- Businesses under 2 million dollars will sell 2-3.5 times earnings depending on industry
- Consider cash flow and customer lists when you are looking to sell
Top 3 things you should do when you want to sell
- 1) Create a SOP (standard operating procedure) for every area of the business
- 2) Start to make yourself less needed in the business
- 3) Financials – start to pay attention and make sure every expense drives the bottom line (this is what tells the real story of what’s going on in the business)
Links to Resources Mentioned
2 click to tweet links (clicktotweet.com)