Raising $22.5 million, Liftit looks to expand its logistics services in Brazil, Mexico, Chile and Ecuador

The Colombian trucking and logistics services startup Liftit has raised $ 22.5 million in a new round of funding to capitalize on its newfound traction in markets across Latin America as responses to the COVID-19 epidemic bring changes to the industry across the region.

“We’re focusing on the five countries that we’re already in,” says Liftit chief executive Brian York.

The company recently hired a head of operations for Mexico and a head of operations for Brazil as it looks to double down on its success in both regions.

Funding for the round was led by Cambridge Capital and included investments from the new Latin American-focused firm H20 Capital along with AC Ventures, the venture arm of the second-largest Coca-Cola bottler in LatAm; 10x Capital, Banyan Tree Ventures, Alpha4 Ventures, the lingerie brand Leonisa; and Mexico’s largest long-haul trucking company, Grupo Transportes Monterrey. Individual investor Jason Radisson, the former chief operating officer of the on-demand ride hailing startup 99, also invested.

The new capital comes on top of Liftit’s $ 14.3 million Series A from some of the region’s top local investors. Firms like Monashees, Jaguar Ventures and NXTP Ventures all joined the International Finance Corp. in financing the company previously and all returned to back the company again with its new funding.

Investors likely responded to the company’s strong performance in its core markets. Already profitable in Chile and Colombia, Liftit expects to reach profitability across all of its operations before the end of the year. That’s despite the global pandemic.

Of the 220 contracts the company had with shippers, half of them went to zero and the other half spiked significantly, York said. While Liftit’s major Colombian customer stumbled, new business, like Walmart, saw huge spikes in deliveries and usage.

“Managing truck drivers is incredibly difficult, and trucking, in our opinion, is not on-demand,” said York. “At the end of the day the trucking market in all of Latin America is a majority of independent owners. They’re not looking for on-demand work… they’re looking for full-time work.”

Less than 1% of the company’s deliveries come from on-demand orders; instead, it’s a service comprised of scheduled shipments with optimized routes and efficiencies that are bringing customers to Liftit’s virtual door. 

“We do scheduled trucking delivery so we integrate with existing systems that shippers have and start planning how many trucks they’re going to need and the routes they’re going to take and … tee it up exactly what is going to happen regardless what the traffic conditions are so we have been able to reduce the delivery times for the trucks,” said York. 

Startups – TechCrunch

Fisker raises $50 million to bring its all-electric Ocean SUV to market in 2022

Electric vehicle startup Fisker Inc. said Wednesday it has raised $ 50 million, much needed capital that will go toward funding the next phase of engineering work on the company’s all-electric luxury SUV.

The startup is aiming to launch the Fisker Ocean SUV in 2022.

The Series C funding round was led by Moore Strategic Ventures LLC, the private investment vehicle of Louis M. Bacon, the billionaire hedge fund manager.

“Since we first showed the car at CES earlier this year, reaction from customers and investors has been extremely positive,” Fisker Inc. Chairman and CEO Henrik Fisker said in a statement. “We are radically challenging the conventional industry thinking around developing and selling cars and this capital will allow us to execute our planned timeline to start producing vehicles in 2022.”

The company is also beefing up its executive lineup to help push the project along. Fisker said it has hired Burkhard Huhnke as its CTO. Huhnke was the former vice president of e-mobility for Volkswagen America and vice president of automotive at chipmaker Synopses.

As CTO, Huhnke will spread his time between the company’s R&D work in Los Angeles and its new Fisker Innovation Lab in Silicon Valley.

Building a car company isn’t easy. Just ask Fisker. The well-known automotive designer, who was behind the Aston Martin V8 Vantage, Aston Martin DB9 and BMW Z8 among others, launched a startup called Fisker Automotive that aimed to produce a luxury plug-in hybrid electric vehicles. The flagship vehicle, the Fisker Karma, debuted at the 2008 North American International Auto Show, and first deliveries were in 2011. But the company ran into numerous challenges and production was suspended in November 2012 and ended in bankruptcy a year later.

China’s Wanxiang Group purchased what was left of Fisker in 2014 and launched a new company called Karma Automotive . On a side note: Karma, which has had its own financial struggles, also announced Wednesday it had raised $ 100 million.

This time around, Fisker is focused on an SUV. The Fisker Ocean, which was officially revealed in January at CES 2020, starts at $ 37,499 before applying any federal income tax credit or state incentives.

Startups – TechCrunch

Super-early stage startup: Advice needed on formation docs, initial surveys

Per the thread title, we are in process building a SaaS tool. We have an initial test customer lined up (long-term would be $ 30k to $ 60k ARR). The test customer is also an ideal board member and someone I'd like to give small equity to on vesting schedule, as he is well positioned to help sell the product to other businesses.

Some questions:

  • I do not have nay organizational documents set up yet. There are 2 founders. We are located in Texas. We will ultimately raise outside capital if all goes well. Any advice on setup? LLC… can anyone point me to a solid "template" org document or the like? Especially for a 2 founder startup where equity will be split more or less evenly? Would like it to factor in things like vesting.

  • What would be a typical amount of equity to give an initial key/lead board member, and how would it vest?

  • I need to create an initial survey/list of questions to further communication with the test customer as we build the beta product. Any general key questions to ask there? Obviously product specific questions I'd have to handle.

Thank you!

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Startups – Rapid Growth and Innovation is in Our Very Nature!

K4Connect, a startup bringing tech to senior living centers, closes its $21M Series B

K4Connect, a startup focused on bringing new technologies like voice assistance, home automation, digital messaging and more to older adults and those living with disabilities, has closed on $ 21 million in Series B funding. The B round had originally wrapped in October 2018, but was extended with the recent addition of $ 7.7 million led by Forte Ventures.

Others taking part in the round include existing investors Sierra Ventures, Intel Capital, AXA Venture Partners, the Ziegler Link•Age Fund, Revolution’s Rise of the Rest, Topmark Partners (formerly Stonehenge Growth Equity Partners) and Traverse. As a result of the new funding, Forte Ventures’ Louis Rajczi will join the startup’s board. To date, K4Connect has raised $ 31 million in venture funding.

Image Credits: K4Connect

Notably, the additional funds were raised amid the coronavirus pandemic, which has been disproportionately impacting older adults in care facilities, cutting off their communication from loved ones and disrupting their daily activities.

The K4Connect platform, which today serves over 800 continuing care, independent living and assisted living communities across the U.S., can help to address many of the challenges these communities are now facing.

The startup was co-founded in 2013 by Scott Moody, the entrepreneur whose biometrics company AuthenTec sold to Apple, where it became the basis for Touch ID.

Now K4Connect’s CEO, Moody had moved to Raleigh, N.C. to retire, but soon realized he still had energy left to start another company. Originally, the startup’s focus had been on bringing smart home technologies together through what’s now K4Connect’s patented operating system, FusionOS. But the team hadn’t initially narrowed in on a particular market.

That changed when Moody met a man, Eric, who was an advocate for the homeless and living with MS. He told the founder that when he wakes up in the morning, he has the energy for about a thousand good steps during his day — and how he uses those steps defines the quality of his life. He said the smart home tech K4Connect was developing could help him make his life better.

Moody immediately pivoted the company to redirect its focus on serving those in similar situations, which didn’t just include individuals living with disabilities but also the broader senior market.

Image Credits: K4Connect

Today, the FusionOS-powered platform integrates a suite of solutions designed for residents in independent or assisted living facilities as well as other care facilities. This includes tools to stay connected to their families through voice and video messaging, as well as those for accessing a digital resident directory, playing games and staying informed on the latest community news — ranging from COVID-19 updates to daily meal menus to updated visitation policies, or anything else the facility wants to broadcast.

For the facilities who purchase the Software-as-a-Service (SaaS) solution for their communities, there are other productivity tools they can use, like those for event management, resident surveys, resident and family management, communications, prospect communications and more. Due the coronavirus outbreak, K4Connect is even developing an expanded video chat service that will allow residents to video call staff for their requests, instead of having staff enter their rooms.

Another key aspect to K4Connect’s solution is its smart home automation functionality.

The company provisions Alexa devices for residents, so they don’t have to configure devices themselves — they just plug them in. It also supports other home automation devices like smart thermostats, smart lights, motion sensors, sleep tracking devices and more. 

This is all managed by way of the company’s “K4Community” solution powered by the underlying FusionOS technology. Residents can access this as an app on their own smartphones, on pre-provisioned tablets or even through digital signage in the facility itself.

The SaaS solution is priced based on per-resident basis and the cost depends on which modules the facility wants to use in their own setup. This can range from a few dollars per month per resident to tens of dollars per month per resident, Moody says, and includes support.

Image Credits: K4Connect

As it turns out, K4Connect had a bit of a head start in terms of working on solutions more specifically designed to meet the needs of its communities amid the coronavirus outbreak, thanks to advice from its investors.

“Having investors like Intel and AXA did provide a wider perspective,” says Moody. “I figured, look, they’re really concerned. They’re seeing this issue from a wider geographic perspective than we are,” he explains.

Moody already knew that even the flu impacted older adults more than the general population. Due to K4Connect’s market of seniors, he multiplied what investors were saying could be the impact of coronavirus by a much larger factor.

“We kind of saw it coming,” Moody admits. “Many people were not completely bought in yet at the end of February. But just at the start of March, we launched something called ‘Project COVID 911.’ I just thought it was going to have a significant impact on the economy, but more importantly, the people we serve. And we had to be in a position to react and support,” he adds.

“If I was wrong, then we were going to be more prepared. And if I was right, then we would be in a situation where we can actually help serve people,” says Moody.

K4Connect adjusted its roadmap to focus on specific areas, like communications, content delivery, and pre-provisioning the Alexa Dot speakers, in order to limit time spent installing in residents’ rooms, among other things. Today, its solution offers features like resident-to-resident video chat for those now stuck in their rooms, tools for booking time slots in the dining area for facilities limiting large groups, access to livestreamed content — like those yoga classes you can’t attend in person — and more.

With the added funding, K4Connect, now a team of 57 full time, plans to further expand into the senior market, including not only those in facilities and senior communities, but also those living in affordable housing on their own. The team is actively developing solutions for this market segment, Moody says.

We are incredibly fortunate in our investor relationships in that they not only believe in our vision but equally value our mission,” Moody said, in a statement about the new funding. “Forte Ventures is a prime example of that relationship and we’re proud to welcome them to the bench of our valued investors. With their support, and all of our investors, we’re continuing to accelerate to serve as many older adults through technology as possible.”

Startups – TechCrunch

[Lemonade in Market Watch] Lemonade logs best U.S. IPO debut of 2020 with more than 140% gain

Lemonade Inc. snagged 2020’s strongest initial public offering debut of a U.S. company as shares of the mobile-based insurance startup became the latest to more than double on their first day of trading.

Read more here.

The post [Lemonade in Market Watch] Lemonade logs best U.S. IPO debut of 2020 with more than 140% gain appeared first on OurCrowd.

OurCrowd

Colvin raises $15M to rethink the flower supply chain

At first glance, Colvin — which recently announced that it has raised a $ 15 million Series B — might look like just another flower and plant delivery company, but co-founder and CEO Andres Cester said the startup has a much grander vision.

“We were born with the ambition the company that would redesign global flower trade,” he said.

Apparently, when Cester and his co-founder/COO Sergi Bastardas started researching the flower supply chain, they found an industry that was both “fragmented” in terms of growsers and sellers, but also surprisingly centralized, with the Aalsmeer Flower Auction in the Netherlands accounting for 77% of all flower bulbs sold globally.

With all the middlemen, Cester said flowers end up being more expensive (with the growers getting a smaller share of the overall payment), and it takes longer for the flowers to reach the consumer.

So the startup created a marketplace where consumers are buying flowers from straight the growers, with Colvin as the only intermediary. That results in average savings of 50% to 100% compared to online competitors, Cester said. (For example, the bouquets featured on the Colvin homepage all cost about €33 or €34).

And while the flower business is hurting overall due to the COVID-19 pandemic, Bastardas said consumers are turning to online options, with Colvin seeing a fourfold sales increase year-over-year, and delivery volumes worth $ 1 million in a single day. The challenge, he said, has been making sure to deliver those flowers within the promised time window.

Colvin founders

Image Credits: Colvin

Cester said Colvin started by selling directly to consumers because it was a good way to build the supply from growers, and that consumer sales should a become a profitable, “cash-generating business.” However, the company’s big focus moving forward is building out its sales to flower wholesalers, who in turn sell to the retailers.

“We’re envisioning the B2B part of the business is going to drive most of the returns and valuation,” Bastardas added.

Colvin was founded in Spain and currently operates in Spain, Italy, Germany and Portugal. There are no plans to come to the U.S. anytime soon, but Cester said, “We believe that if we really want to … redesign how the flower industry works, we’re going to have to land in U.S. sooner or later.”

The startup has now raised a total of $ 27 million. The new round was led by Italian investment fund Milano Investment Partners, with participation from P101 sgr and Samaipata.

And if you’re wondering about the name, Bastardas said the company was named for civil rights pioneer Claudette Colvin, who was arrested in several months before Rosa Parks in Montgomery, Alabama for refusing to give up her bus seat to a white person.

It’s an incongruous choice for a flower startup, but Bastardas said the founders took inspiration from Colvin’s story and the idea that “from several small actions, we can really change an industry.”

Startups – TechCrunch

PQShield raises $7M for quantum-ready cryptographic security solutions

A deep tech startup building cryptographic solutions to secure hardware, software, and communications systems for a future when quantum computers may render many current cybersecurity approaches useless is today emerging out of stealth mode with $ 7 million in funding and a mission to make cryptographic security something that cannot be hackable, even with the most sophisticated systems, by building systems today that will continue to be usable in a post-quantum future.

PQShield (PQ being short for “post-quantum”), a spin out from Oxford University, is being backed in a seed round led by Kindred Capital, with participation also Crane Venture Partners, Oxford Sciences Innovation and various angel investors, including Andre Crawford-Brunt, Deutsche Bank’s former global head of equities.

PQShield was founded in 2018, and its time in stealth has not been in vain.

The startup claims to have the UK’s highest concentration of cryptography PhDs outside academia and classified agencies, and it is one of the biggest contributors to the NIST cybersecurity framework (alongside academic institutions and huge tech companies), which is working on creating new cryptographic standards, which take into account the fact that quantum computing will likely make quick work of breaking down the standards that are currently in place.

“The scale is massive,” Dr Ali El Kaafarani, a research fellow at Oxford’s Mathematical Institute and former engineer at Hewlett-Packard Labs, who is the founder and CEO of PQShield said of that project. “For the first time we are changing the whole of public key infrastructure.”

And according to El Kaafarani, the startup has customers — companies that build hardware and software services, or run communications systems that deal with sensitive information and run the biggest risks from being hacked.

They include entities in the financial and government sectors that it’s not naming, as well as its first OEM customer, Bosch. El Kaafarani said in an interview that it is also in talks with at least one major communications and messaging provider exploring more security for end-to-end encryption on messaging networks. Other target applications could include keyless cars, connected IoT devices, and cloud services.

The gap in the market the PQShield is aiming to address is the fact that while there are already a number of companies exploring the cutting edge of cryptographic security in the market — they include large tech companies like Amazon and MicrosoftHub Security, Duality, another startup out of the UK focused on post-quantum cryptography called Post Quantum and a number of others — the concern is that quantum computing will be utilised to crack even the most sophisticated cryptography such as the RSA and Elliptic Curve cryptographic standards.

This has not been much of a threat so far since quantum computers are still not widely available and used, but there have been a number of signs of a breakthrough on the horizon.

El Kaafarani says that PQShield is the first startup to approach that predicament with a multi-pronged solution aimed at a variety of use cases, including solutions that encompass current cryptographic standards and provide a migration path the next generation of how they will look — meaning, they can be commercially deployed today, even without quantum computers being a commercial reality, but in preparation for that.

“Whatever we encrypt now can be harvested, and once we have a fully functioning quantum computer people can use that to get back to the data and the sensitive information,” he said.

For hardware applications, it’s designed a System on Chip (SoC) solution that will be licensed to hardware manufacturers (Bosch being the first OEM). For software applications, there is an SDK that secures messaging and is protected by “post-quantum algorithms” based on a secure, Signal-derived protocol.

Thinking about and building for the full spectrum of applications is central to PQShield’s approach, he added. “In security it’s important to understand the whole ecosystem since everything is about connected components.”

Some sectors in the tech world have been especially negatively impacted by the coronavirus and its consequences, a predicament that has been exacerbated by uncertainties over the future of the global economy.

I asked El Kaafarani if that translated to a particularly tricky time to raise money as a deep tech startup, given that deep tech companies so often work on long-term problems that may not have immediate commercial outcomes.

Interestingly, he said that wasn’t the case.

“We talked to VCs that were interested in deep tech to begin with, which made the discussion a lot easier,” he said. “And the fact is that we’re a security company, and that is one of the areas that is doing well. Everything has become digitised, and we have all become more heavily reliant on our digital connections. We ultimately help make the digital world more secure. There are people who understand that, and so it wasn’t too difficult to talk to them and understand the importance of this company.”

Indeed, Chrysanthos Chrysanthou, partner at Kindred Capital, echoed that sentiment:

“With some of the brightest minds in cryptography, mathematics and engineering, and boasting world-class software and hardware solutions, PQShield is uniquely positioned to lead the charge in protecting businesses from one of the most profound threats to their future,” he said. “We couldn’t be happier to support the team as it works to set a new standard for information security and defuse risks resulting from the rise of quantum.”

Startups – TechCrunch

Hot to filter out bad advice from people without being too in love with your own ideas?

Basically the title. I work on a project/startup that I sometimes show people, and of course everyone has advices.

Some were good but I only saw it after some time, some were bad and I wasted my time.

I wanna make sure I don't rule out ideas because I am too in love with parts of my startup, and yet not take bad advice and waste time on it. I know it is very case specific, so even commenting what you think and if you felt it too is appreciated.

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Startups – Rapid Growth and Innovation is in Our Very Nature!

In pandemic era, entrepreneurs turn to SPACs, crowdfunding and direct listings

If necessity is the mother of invention, then new business owners are getting very inventive in the ways in which they access cash. Relying on some long-tested and some new avenues to raise money, entrepreneurs are finding more ways to get public market cash faster than they would have in the past.

Whether it’s from Reg A crowdfunding dollars, Special Purpose Acquisition Companies (SPACs) or direct listings, these somewhat arcane and specialized financing vehicles are making a comeback alongside a rise in new funding mechanisms to get to market quickly and avoid the dilution that comes from private market rounds (especially since those rounds are likely to come at a reduced valuation given market conditions).

Some of these tools have existed for a while and are newly popular in an era where retail investors are driving much of the daily fluctuations of the public markets. Wall Street institutions are largely maintaining their conservative postures with regard to new offerings, so secondary market retail volume growth is outpacing institutional. Retail investors want into these new issues and are pouring into the markets, contributing to huge pops to new public offerings for companies like Lemonade this Thursday and creating an environment where SPACs and crowdfunding campaigns can flourish.

The rise of zero-commission brokerages and the popularization of fractional trading led by the startup Robinhood and adopted by every one of the major online brokers including Charles Schwab, TD Ameritrade, E-Trade and Interactive Brokers has created a stock market boom that defies the underlying market conditions in the U.S. and globally. For instance, daily trades on Robinhood are up 300% year-over-year as of March 2020.

According to data from the BATS exchange, the total trade count in the U.S. was up 71% and May trading was up more than 43% over 2019. Meanwhile, E-Trade daily average revenue trades posted a 244% increase in May over last year’s numbers.

Don’t call it a comeback

The appetite for new issues is growing and if many of the largest venture-backed companies are holding off on going public, smaller names are using SPACs to access public capital and reach these new investors.

Startups – TechCrunch

How to Sell Your Business

You’ve decided to sell your business—now what?

Selling a business can feel overwhelming, especially if you’ve never been through this process before. Between the timing of the sale and the logistics, there are lots of factors to take into consideration before you proceed.

First, you need to understand that it’s perfectly OK to sell your business. Many small business owners struggle with this concept, especially if it’s a company they’ve built from scratch.

Entrepreneurs sell their businesses for a wide range of reasons. Whether you’re ready for retirement, feeling overworked, or just ready to move on to the next chapter of your life, selling your business can be extremely rewarding.

If you take the right approach, the profits can fund your next venture or give you the financial freedom you’ve always dreamed about.

As someone who has bought and sold multiple businesses throughout my career, I know what it takes to sell your business the right way. I’ve taken a complicated process and simplified it to just five easy steps.

Step #1: Determine Your Business Valuation

Most entrepreneurs think they have an idea about what their business is worth. But in many cases, the number in their minds is way off from its actual value.

So before you list the sale price too high or too low, it’s best to bring in a valuation expert. A third-party valuation will provide you with a realistic estimate of the company’s worth. For a fixed amount (usually a few thousand dollars), a qualified appraiser can determine the business’s worth with a detailed report and documentation.

The report can ultimately help bring credibility to your asking price if prospective buyers question the amount. At the very least, the valuation will give you a rough estimate of what you can expect.

If you don’t want to hire an appraiser, you could always try to figure out the value on your own. Generally speaking, there are three main ways to value a business—cost approach, market approach, or the intrinsic value approach.

The third method, also known as the discounted cash flow approach, is the easiest to do. Most companies are usually worth anywhere from three to six times the current cash flow.

With that said, there are lots of other factors to take into consideration here. Industry trends, business debt, assets, and similar companies for sale are just a few examples to consider.

Whether you estimate the value on your own or bring in a third-party appraiser, the valuation may not end up being the final sale price.

At the end of the day, the business is only worth what someone is willing to pay for it. If you’re unhappy with the valuation, it might not be time to sell your business quite yet.

Think of it like selling a home. Your real estate agent could tell you what the house is worth, but the property could sit on the market for months at that list price. You might have to put some money into the house to get the maximum value. The same analogy can be applied to selling your business.

Step #2: Get Your Financials in Order

Once you’ve determined the company’s value, it’s time to organize your financials. For some of you, this will be much easier than others.

Selling a business puts lots of eyes on your financial records. Prospective buyers, lawyers, accountants, third-party valuation firms, brokers, specialists, and other people will be combing through your statements. To ensure everything goes smoothly, your bookkeeping must be immaculate.

In most cases, you’ll need to provide at least the last three years of tax returns, as well as accurate financial statements (balance sheet, income statement, cash flow statement).

Any mistakes or disorganization in these records could be a red flag for potential buyers. Inconsistencies in your books could raise other questions, even if it was just an honest mistake.

Am I being misled? Are these numbers trying to cover something up? Can I believe everything else I’ve been told about the business? These are the types of thoughts that will go through the mind of a buyer if errors are found in your financials.

The vast majority of small businesses don’t have an accountant or a bookkeeper.

If you fall into that category, I strongly recommend hiring an accounting expert to clean up your books before you list the business for sale. This will make your life much easier down the road.

Step #3: Hire a Business Broker

There are basically two options to consider when selling a business—sell it on your own or use a broker.

You could potentially sell the company on your own if you’re selling to a family member or someone trustworthy in your life. This will help you save some money on brokerage fees.

But for the vast majority of circumstances, using a broker will be your best bet.

Will there be some extra fees associated with this method? Absolutely. But a broker can help you get the best possible price and sell your business faster than you could do on your own. Remember, brokers work on commission. So it’s in their best interest as well to sell the company for maximum value.

The broker will typically form their own valuation of the business. Compare this to estimate you got back in step #1. While the two numbers probably won’t be exact, they should be relatively close.

If there’s a drastic difference between the broker’s estimate and valuation given by the appraiser, you might want to get a third opinion to see which one is more accurate.

Your broker has lots of experience selling businesses, which is extremely valuable. Other common duties of a broker include:

  • Finding the best buyers
  • Marketing the sale
  • Provide confidentiality
  • Getting the deal financed
  • Assist with negotiations
  • Manage due diligence

Business Broker Options

Here are recommendations on best business brokers to sell your business:

  1. Bizbuysell.com – best for businesses with Under $ 300,000
  2. Businessexits.com – best for businesses with over $ 300,000 to $ 10m in yearly profit
  3. HL.com – best for businesses with over $ 10m in yearly profit

So how much will this cost you? Pricing for a business broker usually depends on how much money your business makes.

The general rule of thumb is this; the higher your revenue, the lower the broker’s commission fee.

A business with up to $ 1 million in revenue will typically pay a 10-12% brokerage fee, whereas businesses with $ 25+ million typically pay in the 2.5-4.5% commission range. For companies in the middle, it’s common for brokers to use the Double Lehman commission model, as opposed to a flat percentage.

It’s important to understand the broker’s commission model from the beginning. So ask questions if you’re unsure. Some brokers might even charge you a retainer, but you can probably avoid that by offering a minimum commission amount.

Step #4: Find Pre-Qualified Buyers

There are two key words to this step; pre-qualified and buyers (plural).

You’ll definitely want to field multiple offers for several reasons. For starters, not every offer will be legitimate. Selling your business requires you to disclose sensitive information about your organization. This could be worth a fortune to your competitors.

It’s possible that a competitor, or someone acting on behalf of a competitor, could make an offer just to review your financials. So don’t hand over that information to just anyone.

Most business transactions are backed by a third-party loan from the SBA. In some cases, banks require sellers to provide some of the financing as well. So don’t get too excited over the first offer that comes in and assume the company will be sold.

On average, it takes six to eight months to sell a business.

In addition to the broker, you could always bring in a sales expert to help speed up this process and pre-qualify buyers.

Buyers can typically be segmented into three main categories:

  • Individual buyers
  • Strategic buyers
  • Private equity groups

The type of buyer making an offer plays a role in how long it takes to process the transaction. For example, an individual buyer will likely need an SBA-backed loan, which can take up to 90 days for approval, whereas a private equity group could finance the purchase on its own.

Don’t rush to accept an offer right away, either. You can always use one offer to leverage another, which will give you the maximum value for your business.

Step #5: Finalize Legal Documents and Contracts

Once you’ve found a qualified buyer and accepted an offer, it’s time to finalize the deal.

This is where things can get a little bit messy and confusing. So you’ll definitely want to have your lawyer handle the vast majority of this stage.

Some of the standard legal documents and contracts associated with a business sale include:

  • Purchase agreement
  • Asset listings
  • Noncompete agreements
  • Guidelines for website use and domain name
  • Bill of sale
  • Security agreement

You could potentially draft a purchase agreement and contract on your own, but I would strongly advise against that. There’s a good chance that you’ll miss vital information, and you could be left vulnerable to unforeseen circumstances. These contracts can be upwards of 25-50+ pages long.

If your current lawyer is not an expert with contract law, they should be able to refer a colleague.

Once everything is in order, it’s just a matter of crossing the T’s, dotting the I’s, followed by lots of signatures and initials.

Tips and Best Practices For Selling Your Business

While the process of selling your business can be simplified to just the five steps listed above, there are certain things you need to do along the way.

Follow these tips and best practices to make sure the sale goes smoothly. This will also ensure you get the maximum value for your business.

Boost Your Sales

As I said before, selling your business takes time. You can’t expect to list it today and get an offer tomorrow.

I’ve seen so many business owners focus so much effort on selling their company, that they neglect the business itself while they’re still in charge. You must continue coming to work every day and put all of your efforts into increasing sales.

Strong sales will ultimately increase the valuation of your business and make it more appealing to buyers. On the flip side, a drop or plateau in sales could be a huge red flag for prospective owners.

That’s why it’s important for you to surround yourself with people who can help you through this process. Let your broker, lawyer, and accountant handle their respective responsibilities. This will give you more time to prioritize sales.

Develop an Exit Strategy

Every business owner needs to have an exit strategy. The best exit strategies are developed long before the decision to sell your business occurs.

So hopefully, this is something you’ve been planning for a while; a proper exit strategy takes time to develop. For those of you who don’t currently have an exit strategy, it’s not too late to create one. But with that said, this might not be the best time to sell your business.

The last thing you want is to be in a position where you feel forced to sell your company. In those circumstances, it’s unlikely that you’ll be able to sell for maximum value.

Things come up. So have a contingency plan in place for a wide range of possible exit strategies.

What will you do if a big box store opens nearby? How will you proceed if age or illness becomes a factor in your life? What if your children don’t want to take over the company? These are just a few examples of situations that could arise.

When the day comes that you decide to sell, you’ll already be prepared with an exit strategy.

Be Rational

Selling a business can be very emotional. This is especially true for family businesses, small businesses, or something that you’ve built on your own from scratch.

Most business owners have a great sense of pride for what they’ve accomplished. Blood, sweat, tears, and sleepless nights are all things that entrepreneurs have in common.

With that said, it’s crucial that you keep your emotions out of the deal. Getting emotional can cloud your thoughts and decisions.

Prospective buyers don’t care how many hours you’ve worked per week for the last decade. All they care about is the bottom line. If you think an offer is too low or unfair, you can always decline.

In some cases, a competitor might make a legitimate and fair offer, with the full intention of buying. Don’t let an old rivalry prevent the deal from going through.

Get Paid Up Front

Make sure the terms of your deal require an upfront payment. Some buyers might make you an enticing offer, but don’t have the funding to pay you now.

Getting paid over time might not sound like a big deal, but this arrangement could pose some challenges for you down the road. You could end up in a situation where you’re not getting paid to the terms that you agreed. If that happens, any legal recourse would just be an added expense to your side.

Furthermore, the new owner could run out of money to keep the business alive. If that happens, there may not be any money left for you if the company goes under.

Let’s say you have two serious offers on the table. One is for a higher amount but involves a ten year financing period. The second offer is less but pays you upfront. I’d strongly recommend the latter.

Conclusion

Ready to sell your business? Don’t overcomplicate things; the entire process can be broken down into just five simple steps.

With that said, selling a business takes time. Have realistic expectations in terms of the price and timeframe.

In some cases, you might ultimately decide to postpone the sale until you can increase revenues and get your financials organized. If your company is doing well and generating high profits, it’s much more appealing to potential buyers.

Use this guide as a reference to walk you through the process. Make sure to follow the tips and best practices that I’ve outlined above to get the maximum purchase value for your company.

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