Chris

AE at Braizor. Buy or sell a business direct, zero broker commissions. Deal breakdowns and M&A basics.

[Chris @BraizorChris]

1/ I'm Chris. I work at Braizor, and I spend my days looking at how businesses change hands.

What I keep seeing: owners losing six figures to broker commissions on deals they could've done direct.

[Chris @BraizorChris]

@justinifountain Makes sense. If earnings are dropping and all over the place, the price has to reflect that. Definitely will follow along here!

[Chris @BraizorChris]

@BrandonPahler A big chunk of the profit going towards the loan leaves very minimal cushion. All it takes is one slow quarter and you’re paying the bank out of pocket. Smart move here.

[Chris @BraizorChris]

@TyvonD7 Good mindset. Cheap or easy financing can make a bad deal look solid. Run the numbers like you’re paying the full price in cash and you’ll see if the terms make sense.

[Chris @BraizorChris]

@therealrobbasso I’m with you on this. Sellers that start cleaning up years in advance and go to market with detailed and tidy books start ahead. Every week spent digging for documents gives the buyer time to second guess the deal.

[Chris @BraizorChris]

@VirtusEffect This catches a lot of sellers off guard. Two offers with the same price can absolutely leave each party in very different tax situations. Nice post.

[Chris @BraizorChris]

Scenario #4: A buyer pays $900k for an HVAC company. The owner barely works anymore, and his lead tech runs the jobs and handles day to day operations.

Nobody told the tech the sale was happening until closing day. Three weeks later, he leaves for a competitor and takes two techs with him.

A buyer bought the business that ran on one person, and that one person wasn’t involved in the deal.

Buyers: Meet the critical employees before closing, and consider a stay bonus to keep them.

[Chris @BraizorChris]

Buying a business with a physical location? Be sure to read that lease before you fall in love with the numbers.

Check how many years are left and whether the landlord has to approve a transfer. Also check if any rent increases are in the near future.

A great business with 8 months left on the lease and a landlord that won’t renew changes the picture.

[Chris @BraizorChris]

@MarkKravietz Good point Mark. Filling the seat after the previous owner leaves is hoping for an outcome. Preparing them for the seat ahead of time is what works.

[Chris @BraizorChris]

@MatznerJon The ones who close tend to pick one industry and stick with it. Every industry has its own unique diligence needs. Sticking to one keeps it consistent and has a higher success rate.

[Chris @BraizorChris]

@johnny_kennevan Lining them up right away whenever you enter the market will save you time and headache down the road.

[Chris @BraizorChris]

@patrickdichter Bad deals can teach you what normal ones look like. Over time, you’ll be able to spot the good ones. Nice take.

[Chris @BraizorChris]

@EdWeeksJr Agree. Fit isn’t just interest, it’s whether they can close. Continuing the conversation with additional buyers throughout the process can generate a higher sales price.

[Chris @BraizorChris]

Scenario #3: Let’s say a buyer agrees to a $1M purchase price, inventory included. When they shake hands, $150k of inventory is on the shelves.

During the next 60 days before closing, the seller keeps selling but stops ordering replenishment stock. Sales turn into cash, and seller negotiated to keep cash on hand.

On closing day, the seller will keep that cash and the $150k in inventory is now $60k. Buyer spends the same $1M, but has to spend an additional $90k restocking.

Buyers: Get an inventory count at closing and have the price adjust if it comes short.

[Chris @BraizorChris]

@brianbeers Were the two shops a package deal? Paying yourself less in those initial years sounds like it paid dividends.

[Chris @BraizorChris]

@DEAL_grade Fewer deals but higher prices tells me buyers are paying for the clean ones. On top of that, the whole market must be shifting since the loan is on the earnings and not projections. Will be interesting to monitor this.

[Chris @BraizorChris]

@Dave__Gilbert Moving fast only works if the financing is set up. Getting qualified with a lender and bringing that to the table from the start would help the rest of the process move quicker. Nice note Dave.

[Chris @BraizorChris]

@mrfundible Sounds like you’ve been sniffing these out for a while. The loyal customer base line is a big one. Can’t be dependent on just a few customers. Definitely need to dig into that a lot if that’s the case.

[Chris @BraizorChris]

@yourconsumerbro What’s some criteria you look for to determine if it makes sense for sellers?

[Chris @BraizorChris]

Buying a small business sometime soon? Be sure to dig into at least the last 12 months of bank deposits. Month by month.

You’ll be able to see if sales are steady, seasonal, or there are any outlier months.

A strong annual number may not show the whole picture.