Selling my booming business..Just pondering?!?!

[laurajane]

Ok so as some of you know my soon to be husband and i own a business supplying entertainment to hotels and have been very successful recently in the private event area also. Our type of business is unique as we are the ONLY people in the DR (in fact the caribbean) to own TWO freestanding trapezes and we supply various unusual but in demand entertainment.

It is low season and we still have 46 shows this calendar month, in highseason as many as 70!!

I am holding off advertising currently as we can not supply demand.

Here is the butt....

My husband and i feel the business has grown beyond our grasp sometimes and both of us feel we would like to maybe sell the business and invest in property and possibly live in my home country, the U.K. We have also been given an oppurtunity to run a circus arts school in Miami.

My question is, how would i sell the business?

How do i prove the potential and get what it is worth?

Would it be difficult to sell such a specialized business as people with the money may not necessarily have the background?

Maybe selling is not needed, maybe we just could have a full time manager to take over and continue our life together elsewhere.

Really i am just putting some feelers out as we need to know our options really.

Any advice would be appreciated.

Thanks

[Robert]

That's a tough one, especially when you are the business.
I would look first at your own industry for buyers, then further afield.

How systemized is your business?
How easy is it for someone that has no experience in the circus industry to
run the day to day stuff of your business?
I'm assuming they would need to be bilingual?
etc etc etc....

I think you need to give lots of answers, then see who bites

[El_Uruguayo]

What i think would be pretty important to know is what kind of skillset a manager for such a business would need - and availability/access to such people?

[cobraboy]

I have been involved in buying and selling business for many, many years.

One option: consider bringing in an equity operating partner...a real person with real money...with an option to buy the whole thing at some point in time. That would free up some personal time, spread the workload around and give you an opportunity to "bond" with that person. You'll understand why I say that later.

A business is only worth what someone is willing to pay. And keep this in mind regarding the sale of a business: a buyer rarely buys what a seller thinks he is selling.

The value of a business is a fine art and somewhat abstract. It depends on the wholesale value of the asset base, and whether real property is included or not. I'd suggest separating operating assets from real property for evaluation purposes.

Very roughly speaking, the value of a business is either, MOL:

1) 6 times the free cash flow, including owners benefit above equal market salaries for legitimate operating functions they perform. That equates to a general 15% cap rate to an investor.

*or*

2) The wholesale value of the owned assets employed

whichever is higher.

You will find that businesses priced below that nmber sell quickly, and those above that number just never seem to sell.

Another VERY important Fact of Life to consider when contemplating the sale: businesses are not bankable, meaning banks generally will NOT loan money to fianance the purchase, except maybe real property. Especially in the current economic climate, especially in the DR. You should figure in you'll be doing some owner financing. And THAT means you NEED to have a concrete plan IN PLACE ready to implement in a moments notice if/when the buyer defaults. Thank me later.

The chances of selling a business for cash is ~maybe~ 10-20%...IF you're lucky, especially if #1 above is the pricing.

I'd be happy to answer any questions and make possible suggestions back-channel. As I said earlier, this is an area I have considerable knowledge.

Good Luck!

[PICHARDO]

Originally Posted by laurajane

Ok so as some of you know my soon to be husband and i own a business supplying entertainment to hotels and have been very successful recently in the private event area also. Our type of business is unique as we are the ONLY people in the DR (in fact the caribbean) to own TWO freestanding trapezes and we supply various unusual but in demand entertainment.

It is low season and we still have 46 shows this calendar month, in highseason as many as 70!!

I am holding off advertising currently as we can not supply demand.

Here is the butt....

My husband and i feel the business has grown beyond our grasp sometimes and both of us feel we would like to maybe sell the business and invest in property and possibly live in my home country, the U.K. We have also been given an oppurtunity to run a circus arts school in Miami.

My question is, how would i sell the business?

Your best bet would be to advertise the biz to potential investors from abroad, looking to move into the DR and have the means to invest into buying an already established biz.

How do i prove the potential and get what it is worth?

The potential of the biz is only something a buyer would agree to, once the actual financial records provide the background of your particular biz growth trajectory. Potential is based on the growth trajectory the biz undertook to the present point, only to be matched by the drive of the new possible owners.

The biz worth is easy to calculate! Assets such as inventory, contracts, highly qualified personnel, etc... are in relation to biz expenses such as wages, rental fees, revolving inventory, transportation, ads, etc...

The lower the expenses (liabilities) to the ratio of income (assets), the more equity (profit) therefore value your biz represents.

Would it be difficult to sell such a specialized business as people with the money may not necessarily have the background?

Not really... If you know how to advertise your biz to prospective buyers.
Rule of thumb in biz, is that over 75% of investments within the private sectors, are carried out by people buying into biz that they never had any experience/knowledge about on the first hand.

What drive investors to buy biz is not that they know 100% the actual enterprise they're getting themselves into, but the proven potential for returns for the money. You want to almost fail-proof your investment to the maximum possible. A strong record of financially sustained growth is the best potential proofing a good biz can offer, to those looking to invest into a biz long term.

Offering an after sale limited time guidance line, will work heavens for your prospective buyers and your chances of selling as well.

Maybe selling is not needed, maybe we just could have a full time manager to take over and continue our life together elsewhere.

Seldom works out as planned! I would pick this option as a last resort only...

Really i am just putting some feelers out as we need to know our options really.

Any advice would be appreciated.

Thanks

I do agree with Robert's take on your kind of biz...