Back to the Basics of Business Sales: Part 1

The Deal Board

Andy and Jessica welcome you to another episode of The Deal Board Podcast. This week features part one of a two-part series, focusing on the fundamentals of making solid, profitable business deals and debunking persistent myths within the industry. For part one of the conversation, you’ll learn all about the basics of buying businesses while part two is dedicated to the art of selling. Tune in for part one as Andy and Jessica cover the essentials of buying businesses and expose twelve surprising myths within the mergers and acquisitions space from the buyer’s perspective. Be sure to listen in for part two where they turn their attention to the fundamentals of selling and dispel further misleading untruths in the mergers and acquisitions space. Join Andy and Jessica today as they get back to basics and bust some myths!

Listing of the Week:

Johnathan Choe is selling a 20-plus-year-old road safety business. Currently, the business is bringing in just over $2 million in revenue and is earning between $ 350,000 and $ 360,000 in SDE. The business is priced at $1.2 million. It’s a solid business with a good reputation and presents an excellent opportunity to enter a particularly stable industry – we’re going to be building and repairing roads for a long time, especially with the new infrastructure bill! For more information, call Johnathan at [phone] or email him at [e-mail]

Deal of the Week: Doug Kose tells us about a call center for a network of franchisees that has been running along smoothly for over 15 years. With a team working from home, the business has remarkably low overheads. Previously estimated to be worth $1,1 million by another broker, Doug rated it as closer to $1,5 million and sold it at full price after only three months on the market! For more information call Doug at [phone] or email him at [e-mail]

Key Points From This Episode:

• [00:23] Introducing part one of our series on getting back to the basics regarding deals.

• [00:46] Dispelling myths that stack the odds against you.

• [02:21] Why there is no such thing as a fully absentee business.

• [04:25] Jessica’s pet peeve: expecting to buy a business with no money down.

• [05:44] The unrealistic expectation that sweat equity alone will earn you a business.

• [07:22] Reasons why it’s a bad idea to play hardball with a seller.

• [09:44] The dangers of trying to bypass CPAs and attorneys to save costs.

• [11:29] What you need to know about third-party financing: why there are very few alternatives for financing outside Small Business Administration (SBA) Programs.

• [14:41] Listing of the Week: Johnathan Choe (Oregon) is selling a highly reliable, niche road safety business.

• [16:33] Deal of the Week: Doug Kose (Knoxville and Chattanooga) tells us about a profitable call center with low overheads.

• [19:03] Pitfalls of trying to turn a business into a recurring revenue model after buying it.

• [20:52] A reminder of why the perfect deal doesn’t exist.

• [22:42] Why vetting thousands of businesses to find the perfect one is unrealistic.

• [25:31] Misguided expectations that brokers will flock to you the moment you announce that you’re buying a business.

• [27:53] Why you need to get your finances in order if you want to be an appealing buyer.

• [30:12] The essential role of the broker and why you are unlikely to make a deal directly with the seller when it’s for sale by owner (FSBO).

• [33:04] What to expect from part two: getting back to basics from the seller’s perspective and debunking myths about selling.

Links Mentioned in Today’s Episode:

Small Business AdministrationSmall Business Administration Loans

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United Franchise Group

Transworld Business Advisors

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Call us on [phone]

Email us at [e-mail]

Andy Cagnetta on X

Jessica Fialkovich on X

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Quotes:

“There's really no such thing as a fully absentee business.” — @acags [0:03:40]

“We are so lucky in the US to have a program like the SBA. The reality of it is, is, if we did not have the SBA, there would be little to no business funding for small businesses, acquisitions, startups, nothing.” — @jessfialkovich [0:11:43]

“Sometimes conventional financing is not as favorable to the owner as the SBA. So, if you're going to use third-party financing to acquire a business, SBA is the vehicle to do that.” — @jessfialkovich [0:13:49]

“There is no perfect business. – A business is a full-time thing, and nothing's perfect. There's always employee issues, there's always supply side issues, there's always things that you're going to have to manage.” — @acags [0:21:44]