JS Business Services, LLC

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Frequently Asked Questions

What Sellers Want To Know

  1. How Are Businesses Priced?
    Understandably, this is one of the first questions a prospective seller will ask. The art of finding the correct buyer is key to closing the deal. Keep in mind, a high valuation that cannot close is of no value to the seller. We are familiar with market considerations and, by reviewing financial information and asking a few questions, we can provide an idea of what can be currently expected in the marketplace. If the seller has reasonable expectations, which correspond with the current marketplace, then the probability that the business will sell is raised considerably.

    NOTE: Sophisticated buyers purchase a multiple of cash flow (technically they are interested in EBITDA...Earnings Before Interest, Taxes, Depreciation and Amortization).

  2. Are inventory, changer funds and accounts receivable sold separately?
    Yes. Warehouse/field inventory, changer/impress funds and accounts receivable are purchased separately over and above the selling price.

  3. Confidentiality is extremely important. How do you handle confidential issues?
    Confidentiality is one of the most important considerations in selling or buying a business.

    Sellers understandably are concerned about confidentiality. They do not want the news that their business is being sold to be on the street. Customers may be concerned, competitors may spread rumors, employees might fear for their future.

    JSBS will channel the process to keep the transaction within safely silent bounds. We will do the following:

    • Qualify the buyer.
      We will present only qualified buyers. Many potential "buyers" are either not serious or not financially qualified. JSBS will contribute to confidentiality by limiting the exposure of the business to only qualified buyers.

    • Confidentiality Agreement
      JSBS will require potential buyers to sign a strictly-worded Confidentiality Agreement. The Confidentiality Agreement prohibits the potential buyer from disclosing any information about the operations of the seller's business or that a sale is in process.

    • Manage Release of Information
      Until a Purchase and Sale Agreement has been signed, JSBS will assist in managing the release and character of information to the potential buyer, so as to protect the confidentiality of your business.

    • Meetings with Buyer
      Meetings regarding the sale of your business will be confidential and will be scheduled off premises.

  4. What are Buyers Buying?
    They are purchasing the future. Buyers will project the seller's current business into the future, which will serve as their basis for determining the market value of the business.

  5. Who are the Buyers?
    Buyers fall into four general categories:

    • Synergistic Buyer, often a competitor of the potential seller and interested in combining facilities and consolidating overhead.

    • Strategic Buyer, primarily interested in entering new markets and/or increasing market share in their existing market.

    • Individual Buyer, approaches the purchase with substantial financial resources and experience in heading up a company.

    • Financial Buyer, focused on obtaining a high return on investment and financing as large a portion of the purchase price as possible.

  6. How Long Will It Take to Sell My Business?
    The time needed for a sale to complete depends on a great many factors, including the businesses location, price and market conditions. Once an interested, qualified buyer is identified, it is our experience that it takes three to nine months to sell most businesses. Of course, it also depends on how quickly the buyer receives all the information they require, and how thorough, complete and accurate is the information they receive.

  7. Is Seller Financing Important to the Sale?
    A seller who asks for all cash may receive less than those who accept terms. Often, the more cash down required by the seller, the lower the selling price. Conversely, the smaller the cash requirements of the seller, the higher the selling price. With reasonable terms, however, the chances of selling increase dramatically, and the time period from listing to sale greatly decreases.

  8. Does the Seller Sign a Non-compete Agreement?
    Yes. Generally, the non-compete agreement details the area from which your current customers are generated and a time period that meets the buyers needs.

  9. When Should I Tell My Employees About the Sale?
    Our experience is that it is best to tell your employees about the sale immediately before or immediately after the sale is complete. Of course, there may be employees whose expertise will be needed before the sale, in which case you have to reveal to them that the sale is in process.

  10. Do I Need an Attorney?
    Yes. The attorney you engage should be familiar with the business buying process. An experienced attorney can be of real assistance in making sure that all of the legal details and legal decisions are handled properly. Sellers should make their own business decisions. We have seen buyer and seller attorneys make business decisions for their clients and torpedo deals that should have been consummated.

    Your attorney and/or your accountant will help you understand the tax implications of selling your business. The big question is not how much your business sells for, but how much you get to keep.

What Buyers Want To Know

  1. I'm New to the Industry... Why Should I Buy an Existing Business?
    If you are a new buyer, you will generally have a greater chance of success if you buy an existing business than if you start from scratch and try to grow one. An existing business will be up and running, have an existing account base, and the seller will provide support. Think of a three year old peach tree...it will more assuredly provide fruit, and a lot sooner, than if you start by planting a seed.

  2. I'm Already in the Business... Why Should I Buy an Existing Business?
    If you are a Strategic Buyer looking to enter a market where you don't have a presence, one option is to set up a sales organization and begin to acquire accounts. This is a slow, expensive process without assurance that you will be successful in establishing a beachhead. However, your chances of success are much greater if you purchase an existing business in your target market and keep the existing management in place.

    If you are a Synergistic Buyer, you will be looking to fold a competitor's operation into your own business by consolidating facilities, reducing overhead and increasing your purchasing power. In this case, the combined company will be worth more than the sum of the parts, and provide a way to grow your business efficiently and effectively.

General Questions

  1. What are your Fees?
    Our fee is a small percentage of the purchase price. There is no fee for inventory, changer funds or account receivables.

  2. Other Considerations:

    • What other information is required? When?
    • How is business value maximized?
    • What happens to employees after the sale is completed?
    • What happens with the business facility?
    • How is inventory value established?
    • Should the principals of the seller stay on with the buyer? For how long?
    • What is a holdback?
    • And on and on...

Each question is vital to you. Contact us...We will help you answer them.

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