April 24, 2023

12 Concepts We Can Learn About Small Business M&A Deals on How2Exit's Interview W/ Eric Grafstrom CEO of ExitGuide.com

12 Concepts We Can Learn About Small Business M&A Deals on How2Exit's Interview W/ Eric Grafstrom CEO of ExitGuide.com

12 Concepts We Can Learn About Small Business M&A Deals on How2Exit's Interview W/ Eric Grafstrom CEO of ExitGuide.com  - Watch Here E114

Here is what my team and I learned from this interview: (These are notes from team members, writers, sometimes AI, and even listeners who submitted what i learned loosely edited and shared here) - If it seems a bit unrefined, you're reading our notes, so. yeah. -Ron

 

Concept 1:  Buy and Sell Businesses Online


In today’s digital world, buying and selling businesses online has become increasingly popular. With the right tools and resources, it is easier than ever to find the perfect business to buy or sell. Eric Grafstrom, a business acquisition expert, has been working in the mergers and acquisitions industry for over two decades. He has seen firsthand the opportunities and challenges that come with buying and selling businesses online.

Eric has had a unique journey in the business acquisition industry. He started in the mid 90s, selling webcasting services to companies when people did not have sound cards and speakers. After the company was acquired, Eric worked for Yahoo in Europe for a few years before settling in Silicon Valley. He has since gone on to lead multiple successful exits, as well as some asset purchase agreements and even closures.

Through his experience, Eric has learned the mechanics of buying and selling businesses, especially in the venture capital space. He noticed that the tools, information, and professional resources available to the average business owner were limited. This led him to create a system that would allow smaller businesses, those worth less than $2 million, to go through the exit process on their own, or with minimal support from an attorney or CPA.

By utilizing Eric’s system at ExitGuide.com, business owners can access the same resources and information that the larger businesses have access to. With the right tools and resources, business owners can make informed decisions about their business transactions. This system allows for more efficient and successful transactions, as well as increased transparency and trust between buyers and sellers.

Buying and selling businesses online can be a great way to increase capital and expand a business. With the right resources and tools, it is easier than ever to find the perfect business to buy or sell. Eric Grafstrom and his system have made it possible for business owners to make informed decisions and complete successful transactions.

Concept 2: Understand Your Value

Eric Grafstrom has created a system that helps small business owners to understand the value of their business and to package it in a way that will attract potential buyers. He has developed an automated pricing tool that helps business owners to determine the right price to charge for a buy-out. Through his system, business owners can also package their business in a professional manner, as well as prepare the necessary information to engage a buyer.

 Eric Grafstrom's system has made it easier for business owners to find the right buyer for their business and to understand the value of their business. Business owners can find the right buyer for their business and can ensure that their business is valued correctly. By using the automated pricing tool, business owners can accurately determine the right price to charge for a buy-out. With the right resources and tools, business owners can make informed decisions and complete successful transactions.

Concept 3: Educate Small Business Owners

Grafstrom's system also provides education for small business owners. Through the resources and articles available, business owners can learn about the process of buying and selling a business. They can learn about the different types of revenue and how they can affect the value of their business. They can also learn about the process of finding a buyer, the importance of a letter of intent, and the importance of due diligence. By educating business owners, Grafstrom's system helps to ensure that transactions are successful and that business owners get the most out of their transactions.

Overall, Grafstrom's system is an invaluable resource for small business owners. By providing automated pricing tools and educational resources, business owners can find the right buyer for their business and can ensure that they get the best value for their business. With the right tools and resources, business owners can make informed decisions and can complete successful transactions.

Concept 4: Source and Vet Buyers

Source and vet buyers is an important step for small business owners. Grafstrom's system provides a comprehensive solution that allows business owners to easily source and vet buyers. By providing an estimated valuation range, educational resources, and access to small business coaches, business owners can get a better understanding of the process and can make informed decisions. Furthermore, Grafstrom's system allows business owners to access legal documents such as letters of intent, purchase and sale agreements, and non-disclosure agreements. 

Grafstrom's system also provides access to a legal service provider, which offers a 30% discount on their rates. This allows business owners to access more affordable legal documents and services. Additionally, business owners can book follow-up sessions with small business attorneys to ensure that their documents are properly prepared. 

Finally, Grafstrom's system will soon allow buyers to search for businesses based on revenue and geography. This will make it easier for buyers to find businesses that fit their criteria and to quickly engage with qualified sellers. 

Overall, Grafstrom's system provides a comprehensive solution for small business owners who are looking to source and vet buyers. With the right tools and resources, business owners can make informed decisions and can complete successful transactions.

Concept 5: AI Will Optimize Due Diligence Soon

However, the due diligence process can be time-consuming and tedious. It requires manual review of documents and financials, and user permissioning can be a non-trivial feature to add. This is where AI can be a game-changer. AI can automate much of the due diligence process, making it faster and more efficient.

AI can analyze and interpret financials, balance sheets, and other documents more quickly and accurately than humans. It can also automate the user permissioning process, allowing users to control who has access to documents and for how long. AI can also help craft an exit strategy and send the right emails to engage potential buyers.

AI is becoming increasingly sophisticated and can help optimize the due diligence process. In the near future, AI tools may be available to do audited third-party financials, and businesses may be able to submit their TurboTax information for AI to crawl through and generate standard documents.

Grafstrom is already having conversations about integrating AI into its platform. They are focusing on solving the right issues for sellers and ensuring that the process is working before applying more sophisticated technology.

AI has the potential to revolutionize the due diligence process and make it faster and more efficient. Business owners can use AI to make informed decisions and complete successful transactions.

Concept 6: Know State Laws and Regulations

When it comes to buying and selling businesses, it is important to know the state laws and regulations that apply. Every state has its own rules and regulations about what businesses can and cannot be owned and operated. For example, in some states, you may need to be a licensed veterinarian to own and operate an animal service business. In other states, you may need to hold a license to own a pest control business. 

It is important to understand the nuances of each state's laws and regulations when considering a business purchase or sale. A small-town broker or attorney can be a valuable resource to help you navigate the complexities of the process. They can provide insight into the legal requirements and help you make sure you are in compliance with the rules and regulations.

Concept 7: Know The Industry and Laws

It is important to research the industry you are entering and be aware of any potential pitfalls. For example, in many states, if not all, you cannot own a law firm if you are a non-attorney, and certain industries are highly regulated. Understanding the laws and regulations that apply to your industry can help you make the best decisions for your business.

It is also important to understand the value of your business. Knowing the industry and laws can help you accurately assess the value of your business and make sure you are getting the best deal. With the help of AI, it is easier to find the right buyers and determine the best course of action.

In conclusion, it is essential to understand the industry and laws. Knowing the laws and regulations that apply to your industry can help you make informed decisions and complete successful transactions. With the help of AI, it is easier to find the right buyers and accurately assess the value of your business.

Concept 8: Brokers and ExitGuide.com Collaborate

The collaboration between brokers and ExitGuide.com is an important one. Brokers are experienced professionals who provide an invaluable service to help business owners sell their businesses. They are knowledgeable about the industry and can provide advice on how to prepare a business for sale. ExitGuide.com, on the other hand, provides an online platform that helps business owners get the most out of their sale. 

ExitGuide.com provides a solution for the 90% of the market that is not going to go to a business broker. They provide a user-friendly platform that helps business owners fill out an assessment form and provide financial information. They also help business owners prioritize their needs and move through the process. 

The collaboration between brokers and ExitGuide.com is beneficial to both parties. Brokers can refer their clients to ExitGuide.com if they are too small or too early for the broker to handle. This allows the broker to focus on larger deals while still helping the client. ExitGuide.com, on the other hand, benefits from the referrals from brokers and can help more business owners get the most out of their sale. 

The collaboration between brokers and ExitGuide.com is a win-win situation for both parties. Brokers are able to focus on larger deals while still helping their clients, and ExitGuide.com is able to help more business owners get the most out of their sale. This collaboration is essential for the success of the industry and will continue to be beneficial for both parties.

Concept 9: Connect with Experts for Help

When it comes to selling a business, it is important to have the right people on your side. Business owners need to be able to connect with experts in order to get the best advice and help with their sale. This is where brokers come in. Brokers are experienced professionals who are knowledgeable in the business sale process and can help guide business owners through the process. They can provide advice on how to best market the business, how to value it, and how to negotiate the best deal. 

In addition to brokers, there are other experts that business owners can connect with for help. These include small business attorneys, small business CPAs, and small business coaches. These experts can provide valuable advice and assistance throughout the sale process, from understanding the legal and financial aspects of the sale to helping to negotiate a favorable deal. 

ExitGuide.com is a platform that helps business owners connect with the right experts to help them through their sale. It provides a marketplace for brokers to list their services and for business owners to find the right broker for their needs. It also provides access to coaches who can help business owners with the process. Lastly, it provides access to other experts, such as CPAs and attorneys, who can provide valuable advice and assistance. 

Connecting with the right experts is essential for the success of a business sale. Brokers, attorneys, CPAs, and coaches can all provide valuable advice and assistance throughout the process. ExitGuide.com provides a platform for business owners to connect with the right experts and get the help they need.

Concept 10: Seek Help When Needed

The idea of seeking help can be intimidating for business owners. They may be afraid of being judged for not knowing enough or of not being able to handle the sale on their own. ExitGuide.com understands this fear, uncertainty, and doubt and seeks to provide the tools, resources, and support to make the process easier. They offer a variety of services, from coaching to access to tools for marketing the business, to help business owners navigate the process.

When it comes to larger transactions, ExitGuide.com offers a commission-based model. This allows them to provide more extensive services while still keeping the cost reasonable. They also provide access to advisors and coaches who can provide additional help and support.

ExitGuide.com wants to make sure that business owners have the confidence to move through the sale process and that they have the resources to do it. Ultimately, they want to provide a platform that makes the process easier and less intimidating.

Seeking help when needed is an important part of the business sale process. ExitGuide.com provides a platform for business owners to connect with the right experts and resources to get the help they need. By providing the tools, resources, and support, ExitGuide.com is helping to make the process easier and less intimidating. Business owners should take advantage of these resources to ensure the success of their sale.

Concept 11: Not All Brokers Are Equal

Unfortunately, not all brokers can be trusted. A common scenario that exists is when a business owner goes to CPA and then tells them they need another million dollars in order to retire. When a broker hears this, the broker then wants to charge a fee for listing the business and managing the process, so they promise to get the business owner the million dollars. The business owner then goes to two other brokers and each one promises to get them more money than the previous one. By the time they get to the third one, they are promised 1.5 million dollars, even though the business could only be worth 750 thousand. 

In these cases, the broker is only looking to maximize their own commission and not the best interest of the business owner. Many brokers also charge a fee just for taking the listing, which can be costly for the business owner. Additionally, many businesses are hyperlocal and listing them nationally may not be beneficial since the buyer is likely to come from a 40-50 mile radius. This can be a waste of money.

In almost all states, the barrier to entry to become a business broker is extremely low. In many states, it's simply the cost of a business card. It is important to find a broker that is reliable and trustworthy. There are some great brokers out there who can help the business owner through the process and know the industry and buyers to make the transaction successful. However, there are also some not-so-good brokers who can kill a deal. ExitGuide.com is a great option for those who have had a bad experience with a broker or a listing site. It provides more control, empowerment, and knowledge to the business owner so they can take control of the process. 

In conclusion, it is important to find a broker who is reliable and trustworthy when selling a business. ExitGuide.com provides the tools and resources to make the process easier and less intimidating. By taking advantage of these resources, business owners can ensure the success of their sale.

Concept 12: Network And Collaborate

Networking and collaboration are also essential to a successful sale. It is important to build relationships with other people in the industry. This can be done through joining associations, attending events, or simply reaching out to people in the industry. By networking and collaborating with other professionals, business owners can gain valuable insight and advice that can help them make the best decisions for their sale.

Additionally, networking and collaborating can help business owners find the right broker for their sale. By talking to other professionals, business owners can learn more about different brokers and their services. This can help them find a broker that is the right fit for their sale.

Finally, networking and collaborating can help business owners gain more visibility for their sale. By networking with other professionals, business owners can increase their chances of receiving more offers for their business. This can help them get the best deal possible for their sale.

Overall, networking and collaborating are essential for a successful sale. Business owners should take advantage of ExitGuide.com resources, build relationships with other professionals in the industry, and find the right broker for their sale. By doing these things, business owners can ensure that their sales will be successful.

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