The first day of November was a great one for Transworld, as we hosted the November Gold Program at the Denver Metro Chamber of Commerce! The program began before the sun even came out, but that didn't matter to our close to 65 attendees. They came suited up and ready to share breakfast, converse with fellow members of the Chamber and most importantly to listen to our panel discuss on preparing a business for sale.
Jessica Fialkovich, our President, moderated the discussion between Al Fialkovich, our Managing Director; Jarrod Musick, President of Destiny Capital; and Jonathan Langer, an Attorney with Izbiky and Associates. Al set the scene for our discussion with a little market overview discussing some of the business sale trends we saw in Quarter 3. As expected Quarter 3 showed continued positive trends in business sales. Small business transactions were up 15% from last year and are at their highest levels since Q2 of 2008. In the Denver market, the average cash flow multiple of a business sold was at 2.32!
From here the conversation moved towards early planning. Jarrod framed our attitude towards early planning best when he stated that, "Typically more time is better. The best time to start planning is yesterday and the next best time is today." This really captures the sentiment that we can't emphasize enough how integral early planning for the exit from your business is to its ultimate success and your future success in moving on from that business. Early planning discussions tend to lead well into the discussion of good operational habits that have lasting affects on the business. One of these habits is keeping up with the books and record keeping.
A discussion of preparing your business for sale is never complete without addressing books and record keeping. Al coming from a background in accounting always likes to make mention that extensive and clean book keeping is integral to facilitating the sale of your business. During our Gold Program Al mentioned that, "The cleaner you can be, in regards to financials, the better. You can get a return of 10X because of good accounting practices." The financial discussion brought up a great question from an attendee on whether revenue is a good indicator of business value. Al was able to explain that, "Revenue is not a good metric in terms of business valuation. Banks are not financing off of revenue because it does not necessarily indicate profitability. Banks will lend on earnings, so that is one of the metrics we use."
Towards the end of the panel discussion, we had a lot of great questions from the audience. There were questions concerning business valuation, employee involvement in the sale and customer contracts. One question Jonathan was able to answer concerned customer contracts and what they look like during the sale process. Jonathan emphasized that, "Customer contracts are generally good, having one contract for your whole business isn?t ideal, but being able to show you have 25 assignable, customer contracts, that is a great thing for a buyer to see."
Overall the panel discussion kept the audience in tune and ended with extra time for networking before the real work day set in. Transworld would like to extend our appreciation for the high level of attendance and we look forward to hosting our next event in January with the Small Business Development Center, an affiliate of the Chamber. Stay tuned for more details on this exciting event, which will take the form of a training series!
Rachael Holstein joined the Transworld Team in 2016 as Marketing Coordinator. Her working experience has been largely focused on Business Development and Marketing in the finance, architecture, property management, and information technology industries. A long time resident of Cleveland, Ohio, she attained her Undergrad from John Carroll University and a Master's Degree in Global Interactions from Cleveland State University. She relocated to Denver in 2013 for a change of scenery and a bit of adventure.
