5 Simple Buy and Sell Business Terms You Need To Know!
November 30, 2015 Business Terms
“Finding your way buying and selling businesses using these simple business terms”
There are a number of key business terms that you will need to succeed in selling or buying a business. We will do our best to explain these business terms as plainly as possible in one article. We will do our best to explain the broad strokes and terms that are most commonly used. Having this knowledge will not only allow you to succeed in selling or buying a business it will give you the confidence needed to do so well.
You can’t sell something unless you have a buyer for it. There are four main types of buyers strategic, financial, other companies backed by PE funds and individuals. Selling your business will be determined on knowing which type of buyer you are dealing with. Knowing which type of buyer you are dealing with will allow you to not only approach to deal in the proper manner to allow you to close the deal in the proper manner.
You can’t sell something unless you have a seller. There are many reasons for business owners want to sell their business such as the spinoff, the change in control, the recap, and the capital growth. Having the proper information by knowing which type of seller you’re dealing with will give you the ammunition you need to close the deal. Not knowing the reason why a person is selling a business to leave you in a vulnerable situation, something to remember.
Consideration is what is seller receives from a buyer as a result of selling the business. Some of the most obvious forms of consideration are cash, stock and property. In some occasions a seller may accept a note from a buyer known as a buyers note for later purchase. How much consideration you receive is dependent on the performance of your business and its current value.
EBITDA (earnings before interest, tax, depreciation, and amortization.) Is a must know term used to identify a healthy business or an unhealthy business for that matter. This is a major key factor used to value a business. Not always used to value a business but very common practice. This is in a very important number something to keep in mind.
Closing is the single most important part of the buying and selling process. Without closing we don’t have a transfer of wealth or of value. If you can’t close the deal what is the point in getting involved. Everything that we do in the deal should be pushing towards the close. If you are finding resistance towards the close perhaps you’re not dealing with the right buyer or seller.
Those are some major key business terms that allow you to get comfortable with buying and selling businesses. There are many other terms that you need to know as you go through the process and these will come with experience and time. If you are unsure of something use Google and it’ll help you find all the answers that you need. Also you are really unsure about something you can always talk to an expert in the field. Selling or buying a businesses is something that you come naturally not easily but naturally. Use your common sense if the deal seems too good to be true nine times out of ten it is. Focus on things that you can control such as the information your request, expert to consult with and the deals you go after.
I wish you best of luck moving forward! If you have any question or need a better explanation regarding the business terms above I would be more then willing to help. Please leave a comment below.
Find Your Next Business For Sale Here