Summary

In this podcast episode, Brandon Bourgeois and Chris Sater discuss the current state of the market for selling businesses in 2025. They explore key trends, including inventory challenges, buyer behavior, financing options, and the importance of scalability for business growth. The conversation highlights the uncertainty in the market and how it affects both sellers and buyers, emphasizing the need for preparation and adaptability in deal structures. In this conversation, Brandon Bourgeois and Chris Sater discuss the current state of the business market, focusing on financing challenges, seller sentiment, and the importance of preparation for potential sellers. They emphasize the need for sellers to be flexible and ready to act, as well as the growing trend of franchises in the market. The discussion also covers business valuations, multiples, and predictions for future market activity, highlighting the importance of being prepared for upcoming opportunities.

Takeaways

• The market has seen significant changes in inventory levels.
• Sellers are hesitant due to market uncertainty and financing challenges.
• Buyers are looking for businesses with guaranteed revenue and scalability.
• Interest rates have impacted deal structures and buyer behavior.
• Preparation and proper financials are crucial for sellers.
• Creative financing options are becoming more common in deals.
• Market dynamics are shifting, with buyers seeking long-term growth.
• Sellers should not wait for the perfect time to sell their business.
• The importance of understanding buyer priorities in the current market.
• Good deals can still happen even in tough market conditions. Private equity groups have minimum targets for investments.
• Small deals are hard to finance due to high rates.
• Sellers should keep their financials clean and ready.
• Seller sentiment is cautious; many are hesitant to sell now.
• It's better to get on the market sooner than later.
• Franchises are becoming more prevalent in the market.
• Buyers are still paying high multiples due to limited supply.
• Sellers need to prepare their businesses like an audit.
• The market is expected to stabilize in Q3 and Q4.
• 2026 may present significant opportunities for sellers.

Chapters

00:00Market Overview and Key Trends

02:50Inventory Challenges and Seller Hesitation

05:46Buyer Behavior and Market Uncertainty

08:45Financing and Deal Structures

12:03Scalability and Business Growth

15:04Buyer Priorities and Market Dynamics

20:09Market Dynamics and Financing Challenges

21:58Seller Sentiment and Common Mistakes

25:28Preparing for Market Opportunities

29:04Franchise Trends and Business Models

30:15Understanding Business Valuations and Multiples

34:49Future Market Predictions and Seller Readiness

Keywords

market trends, selling business, inventory challenges, buyer behavior, financing, deal structures, scalability, business growth, market uncertainty, seller hesitation, business market, seller sentiment, financing challenges, business valuation, franchise trends, market predictions, seller mistakes, business opportunities, economic uncertainty, buyer activity

Summary
In this episode of the Steps To Sold podcast, Brandon Bourgeois, Chris Sater and guest Nathan Hamaker discuss the organizational mistakes that can derail a sale. They explore common financial missteps, the importance of clean bookkeeping, and the implications of different business structures on sales. The conversation delves into the differences between cash and accrual accounting, the advantages of stock sales versus asset sales, and when business owners should consider reorganizing before a sale. The episode emphasizes the need for proper planning and understanding of financial practices to maximize business value during a sale. In this conversation, Nathan Hamaker, Brandon Bourgeois, and Chris Sater discuss various challenges and strategies related to business operations, particularly in construction and bookkeeping. They delve into the importance of accurate financial records, common bookkeeping mistakes, the implications of PPP and EIDL loans, and effective tax strategies for business owners. The discussion also covers employee retention strategies post-transaction and explores the complexities of ESOPs and their tax implications. The overarching theme emphasizes the necessity of maintaining clean financial records to facilitate better decision-making and successful business transactions.

Takeaways

• Business owners often neglect their bookkeeping responsibilities.
• A clean set of books is crucial for a successful sale.
• Revisiting entity structure can save on taxes during a sale.
• Cash basis accounting is simpler but can misrepresent financial health.
• Accrual accounting provides a more accurate financial picture.
• C-Corps are less common and can lead to double taxation.
• Stock sales are generally more favorable for sellers than asset sales.
• Buyers often prefer asset sales to avoid unknown liabilities.
• Proper planning should start at least three years before a sale.
• Certain industries, like medical and construction, may have red flags for buyers. Seasonal businesses have limited time to generate revenue.
• Construction bookkeeping is complex due to multiple projects.
• Reconciliation is crucial to avoid gaps in financial data.
• Tax strategies can significantly impact business profitability.
• Employee retention is vital during ownership transitions.
• ESOPs can offer tax benefits but come with complexities.
• Accurate financial records are essential for business success.
• Common bookkeeping mistakes can lead to significant issues.
• Understanding P&L is critical for effective business management.

Chapters

00:00Introduction to Organizational Mistakes in Sales

01:11Common Financial Missteps in Business

03:56 Understanding Cash vs. Accrual Accounting

06:11 Legal Structures and Their Impact on Sales

09:41 Stock Sale vs. Asset Sale: Tax Implications

13:22 The Benefits of Stock Sales for Sellers

17:10 When to Reorganize Before a Sale

20:03 Accrual vs. Cash Accounting: Why It Matters

22:26 Industries with Potential Red Flags for Buyers

22:53 Understanding Seasonal Business Challenges

25:37 Common Bookkeeping Mistakes in Construction

27:30 The Importance of Reconciliation

30:30 Navigating PPP and EIDL Loans

34:43 Tax Strategies for Business Owners

37:45 Employee Retention Strategies Post-Transaction

39:47 Exploring ESOPs and Their Tax Implications

41:23 The Importance of Accurate Financial Records

Keywords
organizational mistakes, sales, business structure, financial missteps, accounting, tax implications, stock sale, asset sale, legal structures, business valuation, business challenges, bookkeeping, construction, PPP loans, tax strategies, employee retention, ESOPs, financial records

Summary
In this conversation, Brandon Bourgeois and Chris Sater delve into the intricacies of seller financing, emphasizing its importance in business acquisitions. They discuss the role of seller notes, how to structure them effectively, and the ongoing relationship between buyers and sellers post-sale. The conversation also addresses common misconceptions about seller financing and the legal considerations that must be taken into account to protect both parties involved in the transaction. In this episode, Brandon Bourgeois and Chris Sater delve into the intricacies of seller financing, emphasizing the importance of personal guarantees, the risks associated with seller notes, and the necessity of clear communication between buyers and sellers. They discuss the emotional and financial implications of seller financing, the need for structured agreements, and the potential alternatives to seller financing. The conversation highlights the significance of building relationships and understanding the unique needs of different industries when it comes to financing business transactions.

Takeaways
Seller financing is an underrated tool for closing deals.
The relationship between buyer and seller continues post-closing with seller notes.
Understanding the mechanics of a seller note is crucial for both parties.
Seller financing can bridge the gap between business valuation and lender requirements.
Buyers should be aware of the debt service obligations associated with seller notes.
Structuring seller financing properly can prevent cash flow issues later on.
Sellers often have misconceptions about the necessity of seller financing.
The standby period in seller financing is essential for buyer stability.
Legal structures, such as personal guarantees, are important in seller financing.
Communication and trust between buyers and sellers are key to successful transactions. Personal guarantees show commitment from the buyer.
Sellers must be prepared for potential losses on seller notes.
Clear communication is essential in seller financing agreements.
Seller financing does not equate to free labor from the seller.
Building a relationship with the seller is crucial for success.
Sellers should not expect the same rates as traditional financing.
Payment terms should be clearly defined in the LOI.
Not every deal requires seller financing; alternatives exist.
Certain industries may necessitate seller financing due to customer relationships.
A seller note is a promise that extends beyond the closing table.

Chapters
00:00 Introduction to Seller Financing
03:02 Understanding Seller Notes
06:09 Structuring Seller Financing
09:00 Post-Sale Responsibilities and Relationships
12:01 Common Misconceptions about Seller Financing
14:59 Legal Considerations in Seller Financing
19:54 The Importance of Personal Guarantees
21:16 Understanding Seller Notes and Risks
23:52 Building Relationships in Seller Financing
25:50 Navigating Seller Financing Rates
27:03 Clarifying Payment Terms in Agreements
29:43 The Role of Seller Financing in Business Transactions
31:40 Evaluating the Need for Seller Financing
33:38 Alternatives to Seller Financing
35:21 Industry-Specific Considerations for Seller Financing
37:22 The Promise of Seller Notes and Reasonable Terms

Keywords
seller financing, seller notes, business acquisition, deal structure, post-closing relationship, misconceptions, legal considerations, SBA loans, buyer-seller relationship, financing options, seller financing, personal guarantees, seller notes, business transactions, payment terms, industry considerations, buyer-seller relationships, financing rates, escrow alternatives, business brokers