In the past, I have focused on many of the issues, challenges and questions associated with buying and selling businesses in Northern Nevada.
They have ranged in topics from why someone should buy an existing business to what a seller should do to prepare their business for sale. Throughout the columns, I have always tried to interject real-life examples from our local business community without divulging names in order to maintain the confidentiality of the principals.
Today, I’m going to take it a little deeper. My columns is about a local company that listed their business for sale earlier this month. Although I cannot tell you their name, what I can disclose is some generic details about their business, about their history, about their motivation, etc.
The business started about 10 years ago when the founder decided to take control of her destiny and start a business that would allow for a good income and a flexible schedule.
The company offers a variety of name-brand business products to its clients, primarily other businesses. In fact, its customer list reads like a “Who’s Who” of local businesses.
It is a business that has grown from $280,000 in revenue to $2 Million. The owner attributes their growth to the industry, a fast-growing, city and, above all, excellent customer service and strong customer relationships.
This steady growth has occurred even though the owner only spends an average of 20 hours a week working at the business.
Expansion opportunities exist through increased sales with their current customers, developing new sales relationships with existing local businesses who are not currently clients, and capitalizing on our area’s growth with new companies relocating to the Truckee Meadows.
The owner is motivated to sell because they want to relocate to another state to pursue other non-related business interests.
Buyers are finding this business attractive for a number of reasons. It has strong cash flow, which at its listed price will represent a 31% return on investment for the buyer.
It has an impressive history, is currently doing very well, and is positioned for growth. The business has key employees in place who will assist the new owner during the transition period.
Having an established and stable client and product line is also appealing. And finally, since the owner is prepared to offer seller financing, it sends a positive message that the owner has faith in the long-term success of the business.
We are also seeing interest from prospective buyers in related business who see the benefits of the financial, customer service and product-line synergies that could be capitalized on by integrating this business into theirs.
Next month I’ll report on how the sale is progressing.
Buzz Harris is a Licensed Business Broker with The Liberty Group of Nevada. Contact him at BHarris@TheLibertyGroupofNevada.com.