With traditional financing options shrinking, finding a cash-rich, qualified buyer for your small business may seem hopeless. But there is a way to sell your business without feeling pressured to take whatever deal comes along.
Consider selling a share in your business to an experienced corporate executive looking to invest his or her severance money in a new life.
You don't have to look far for such a person. More than 4 million executives and middle managers have been cut loose by corporate America since 1980 -- and their numbers are continuing to grow.
These reluctant entrepreneurs are joining the pool of prospective small business buyers. If they act fast enough, many find they have enough cash from their severance packages to invest in a small business and buy themselves a future.
"There is a great need to match up potential buyers and sellers to provide them with partnering options to make business ownership a reality," said Jack Fasching, who earlier this year joined Bruce Culver and Loring Kutchins in opening Business Partnerships Inc. in Woodland Hills, Calif.
The partnering idea is appealing because the potential buyer can make a modest investment and gradually increase his or her stake in the company if the arrangement is working out. Business owners benefit by carefully checking out their potential successor before walking away from a business that has become their life. This approach also gives buyers a way to get into a business that can really use their skills and expertise.
"Many displaced executives don't really have enough money to buy a business that utilizes their strengths and skills," said Fasching, a former corporate executive. "They often have money available to only buy a business that needs their direct labor, like a dry cleaner."
Although Fasching is a business broker, Business Partnerships emphasizes a gradual, orderly transition from buyer to seller by encouraging them to work together for a while.
To make successful matches, the company has created a detailed data base of potential buyers and sellers. Potential partner/buyers pay $295 to be listed in the data base. For that amount, Business Partnerships guarantees that it will provide clientswith three potential matches in a year's time. Business owners who sign up for the business ownership transition program pay an administrative fee of $595 and agree to pay a finder's fee if a deal closes.
Kutchins said Business Partnerships is now seeking partners to invest in a manufacturer of prefabricated buildings, a distribution company, a software company and several retail stores with sales in excess of $1 million. The company now concentrates on serving clients in Southern California.
Whether the partnering idea appeals to you or not, every small-business owner, especially those nearing retirement age, or in poor health, should make some plan to sell their business.
Art Perrone, chairman of Eureka Management Team in Newport Beach, Calif., also works with displaced executives trying to find a new business and lifestyle.
A former corporate executive and co-founder of the Geneva Cos., a business appraisal and brokerage firm, Perrone helps clients deal with the trauma of buying or selling a business.
Eureka offers clients psychological as well as business counseling services. Once some decisions have been made, the company turns to a network of 1,200 lenders interested in financing smaller transactions to augment the money the client has to invest.
"Our goal is to match the former executive's talent with capital," Perrone says.
(Jane Applegate is a syndicated columnist and author. Write t her through the Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.)