Katrina Loftin: 30 Years of Lessons from the Business Medium (Voices)

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Katrina Loftin Winkel

Katrina Loftin Winkel

This year marks my 30th year as a commercial broker and M&A intermediary. Over the years, I’ve been able to look inside hundreds of different privately held businesses ranging from $1 million to $50 million. I’ve seen the best of times and the worst of times. Some transactions come together, and some don’t. As a business owner, here’s what you need to know.

Be Prepared: Most people never plan for illness or retirement. One thing is certain, all businesses will either change hands or close. If something happens to you, manage and plan.


Get your books in order: Up-to-date financial matters are critical. The need to stay on top is important. Make sure your CPA understands your plans and the importance of maximizing profits and cutting unnecessary and personal expenses (even if you have to pay some taxes).You can often see a 2-3x return by cleaning up your books and maximizing your final sale price. .


Clear out inventory and sell outdated assets: Get rid of obsolete or excess inventory, most buyers won’t pay for it and outdated inventory can negatively impact your business sales.


Review your contracts: If your company has contracts with your customers or suppliers, make sure they are in writing and, most importantly, transferable.


Diversify: A large customer focus can have a negative impact on the value of your business. If possible, try not to have a single customer account for more than 15% of your sales.


Hire the right broker: Make sure the right advisors are on board when it’s time to sell. Usually this pays for itself. Interview brokers that are right for the size of your company. Make sure you contact a broker who is properly licensed and works in your local market, it can make a big difference. Start watching at least one year in advance.


Hire the right attorney: Make sure you have a transactional attorney with experience in business sales. Mistakes at this stage can be very costly.


Hire the best CPA on the purchase price classification: this alone will save you a significant amount of money on taxes. This may not be your current CPA.


Know the value: The best person to determine the current market value of your business is a business broker or M&A intermediary who is active in your market. Most brokers will give you a quote at no charge. A qualified business appraiser can do this for you as well. There are many factors that can significantly affect the price, both positive and negative. It is best to address issues that affect pricing early.


Know when to let go: It’s best to let go on a high note if there’s still upside for the buyer and you’re seeing steady annual revenue and profit growth. I have seen some very good offers turned down only to have the business turn down during the recession. Many businesses only get one offer, so consider all offers carefully and carefully. Selling a business is not like selling a home, very few buyers will overpay for a business.


The bottom line is that selling your business is one of the most important and complex things you will ever do. It is important to have the right professionals guide you through the process.


Katrina Loftin is CBI, M&AMI. She is Co-Founder/Managing Partner at M&A Business Advisors.



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