Greenwood Village, CO based Freedom Factory’s Tyler Tysdal is reaching out to teach local entrepreneurs how to sell a business. While many resources provide insight on starting a business and then expanding it, he acknowledges that there is relatively little information available on the intricacies of selling one. Fortunately, the Freedom Factory team and their leadership have a lot of experience in this field, and they are keen to share what they know.
Tysdal states that it is necessary to gain an overall understanding of the subject before any direct tips can be shared, especially given that many decisions are only valid in the right context. There is no single solution or strategy that business owners can take on the path to making a sale, and there are many variables they need to consider in order to ensure they get the best deal possible.
A business valuation depends on many factors, not all of which may necessarily be within the business’ control. For instance, Tysdal explains that Freedom Factory often begins by looking at a client’s biggest source of cash flow (as this will indicate which aspects of their operations they are strongest in). As a result, businesses that begin in one segment of their industry may find they are more successful in what was once expected to be a niche earner, so positioning the business to promote this aspect as its main focus can help improve its valuation.
On the other hand, many factors simply cannot be controlled, only accounted for. Tysdal explains that shifts in the economy and the implementation of new laws or tax policies are some examples of this. These market timing conditions will inevitably weigh in during a business valuation, so it is important to take them all into account in order to reach an accurate selling price.
Next, it should be noted that selling a business is no easy task. Compounding this is the fact that an owner cannot afford to ignore the business’ ongoing needs and operations in order to focus on selling it — Tysdal warns that a potential sale may fall through if the business starts to perform below expectations. In other words, the company asserts that a business must prioritize the maximization of profits as it undergoes a sale. This will help prevent the owner from missing out on a deal or even losing some of the business’ valuation. Freedom Factory takes this into account with their clients as well, helping them make the transition from a point where the business needs the owner’s constant attention to where several systems can be erected that allow it to proceed virtually unaided. From then on, the owner is free to focus more on selling (and getting the most out of the sale).
Working with the right broker can similarly make a world of difference. Tysdal warns that sellers should avoid assuming that the stakes are the same as they would be in real estate deals, especially given that the valuation of a business can be 200-300% less than it merits if the broker is not suited for the task. Tyler Tysdal is a cofounder and managing partner at Freedom Factory, and he has witnessed the negatives outcomes of such inefficient partnerships firsthand. As such, his primary advice to business owners is to get in touch with his team if they find these challenges too frustrating to navigate. They are always happy to lend their expertise and assistance.
Tysdal concludes by clarifying that there are ways to engineer a sale to ensure that it occurs at a time that favors the seller. He explains that one way Freedom Factory achieves this is to market a client’s business to several potential buyers in order to create ‘deal tension,’ wherein buyers are compelled to make serious, competitive offers as soon as possible because a delay may lead to them losing the opportunity completely to another party. Conversely, a buyer who is confident they have no competition may be more willing to wait for the deal to tip in their favor (often at the seller’s expense). Deal tension is an effective way to combat this.
It is notable that Freedom Factory is able to help most of their clients sell their business in six months or less by utilizing all these strategies and more. Since they focus exclusively on helping clients make sales (they do not represent buyers), they are able to commit themselves completely to this endeavor, which ultimately benefits the sellers they work with.
Those interested in learning more are welcome to follow Tysdal on Instagram and other social media platforms where similar insight is regularly shared. Business owners who want an expert’s assistance making a sale are also welcome to visit the official Freedom Factory website or contact their team directly for further details.
For more information about Tyler Tysdal, contact the company here:
5500 Greenwood Plaza Blvd., Ste 230
Greenwood Village, CO 80111