Vipin Singh with Murphy Business Sales

Intro: Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for Buy a Business Near Me, brought to you by the Business Radio X Ambassador program, helping business brokers sell more local businesses. Now, here’s your host.

Stone Payton: Welcome to another exciting and informative edition of Buy a Business Near Me Stone Payton here with you. Please join me in welcoming to the broadcast with Murphy Business Sales Edison Office. Mr. Vipin Singh. How are you, man?

Vipin Singh: I Stone Very good. How are.

Stone Payton: You? I am doing well. Excited about this conversation. Got a ton of questions. I know we won’t get to them all, but I’d like to start if we could. If you would share with me and our listeners mission purpose. What are you and your team really out there trying to do for folks?

Vipin Singh: So our mission is to help business owners find the ideal retirement they are looking for. We seek excellence in transactions that we support. We are business brokers and we cover Main Street to lower middle market businesses. And we want to make sure that both the buyers and sellers have the best experience while working with us.

Stone Payton: So how did you get into this line of work, man? What’s the back story?

Vipin Singh: I used to be in the corporate world until last year, and then I was looking to buy a business, didn’t really see a lot of good information. Most of the brokers I spoke with, I couldn’t really figure out how they were presenting the information. Then I started looking at franchises thinking that they’ll be some more diligence and there’s a PhD that I could review. And in that process I found more for business sales and the interactions I had with the team that is based out of Clearwater, Florida, and the team in New Jersey. I love the setup. I love the process. I signed up by thought. This way I will also get to learn dealmaking and if in the future I like something for myself, I would be an investor. But right now I’m happy being a business broker, M&A advisor.

Stone Payton: So you mentioned Main Street. I’m particularly intrigued with what you feel like you you’ve learned in that arena and why the focus or at least part of your focus being on on Main Street.

Vipin Singh: So as most of your listeners probably know, Main Street drives the real American economy. 70% of US GDP is driven by small businesses or businesses, and then Main Street businesses are the local businesses that help local economies. We have been in this business of helping with buying and selling businesses since the early nineties, and most of the volume that comes through our marketing channels is Main Street businesses. We do go up to 20, 30, sometimes even more millions of dollars, but our average deal size is close to $1,000,000, and that’s pretty much what we see in the main street space.

Stone Payton: So let’s talk a little bit about not only deal size, but deal structure, because these things can be crafted in a in a number of different ways, Right.

Vipin Singh: That’s correct. So that’s a good question because it comes down to price and terms. And when you say deal structure, that’s the terms component. Sometimes business owners, both buyers and sellers, they kind of focus too much on the price and forget that there’s a whole separate area around deal structuring. And typically what we see is that buyer brings to the table, say, around 10 to 20% down payment. There might be some amount of seller financing that the seller is willing to take some of that debt on their own future balance sheet. And then there’s a bank that typically is an SBA lender, SBA being the Small Business Administration that guarantees the loan that a bank would underwrite. So most of our deals, we see that kind of a structure. But then there are also deals where the investor has enough capital so they are able to bring in their own sources of money. And then there would be other instances where the business is small and the buyer is able to buy it all cash. But I would say majority is done through an SBA loan and some seller financing and the buyer bringing in some down payment.

Stone Payton: Well, it still sounds like a lot of moving parts to me. And a really strong case for teaming up with someone that has the the background, the expertise, the experience to help you navigate that that terrain. When you are working with first time buyers or sellers, do you run into, I’ll call them myths, misconceptions, preconceived notions, assumptions that you kind of have to educate them and help them really understand what this world really entails?

Vipin Singh: Yes. Especially on the main street side, as unless someone has bought a business or sold a business. It is a brand new world. And there is what we call asymmetry of information. So whoever is selling the business has all the information that a buyer would like to see, and the buyer has to essentially dig into that data and get that information out. So we act as intermediaries and we help kind of bridge the gap where in the beginning, when we are engaging with the seller, we educate them as to what the process would look like, what a buyer would ask for, how they should approach the conversation. And then on the other side with buyers, we tell them that what a seller would seek from a transaction, what kind of a buyer the seller is looking for. And it’s not just about the buyer bringing money to the table. Sometimes sellers are looking for that individual who would take care of their employees, who take care of their company in the future. One of the reasons they are trying to sell the business and not shut it down is because they want to preserve that legacy that they have built over several decades of their life. And it’s in a lot of cases, 80 to 90% of their net worth. So they want to protect it. They want to hand it to someone who will be a good custodian of that asset that they have created. And that’s the kind of education we are providing to the buyers and also the sellers in the beginning.

Stone Payton: Now, as I understand it, one of the really important steps or processes on the seller side is this business of of valuation, valuing the business. Can you speak a little bit to to that process?

Vipin Singh: Absolutely. So that’s where we start the discussion as valuation is key for any business, not very dissimilar to commercial real estate. We look at earnings that a business has and then we look at how similar businesses in that same industry, same sector, perhaps in a similar geography have sold for. And then it’s essentially based on multiples. So it could be, say, a business is generating $100,000 in earnings and we see that other businesses, similar sized businesses, have sold for two X earnings. So it will be 200,000 will be the value placed on that business. That’s at a very high level. These multiples change as the businesses grow. We do see larger businesses sell for sometimes four or five, six times their earnings. And the reason for that is because larger businesses tend to have teams in place. The investors are looking at themselves as more in a governance role versus being an operator for smaller businesses. They are mostly owner operator businesses and the buyer is essentially looking to run that business once they acquire. So they tend to pay a little bit less in terms of the multiples on that business.

Stone Payton: I think I already know the answer to this question, but I’m going to ask it anyway. Do you find sometimes that the seller just feels like the value of their business is well beyond what’s what’s, you know, to be practical in the marketplace?

Vipin Singh: A lot of times. So the there are different ways of approaching it. One, the valuation aspect that we just spoke about and we are happy for them to take that valuation and ask others for a second opinion if they want to. But we are generally coming from a source of knowledge and information that the seller typically won’t find other data points. But obviously there’s there’s an aspect of they want a certain number from the sale of the business. And in those situations our recommendation is to grow the business to a certain size. So the earnings are going to be able to get that price that they are looking for and terms and then we can reengage in the discussion. In fact, one of the businesses that I have currently listed and has attracted a lot of buyer interest is one of those where when I initially spoke with the owner, she was looking for a certain price. I recommended that price will not be acceptable to the market. She held back for a few months. She made sure that she made those changes, grew the business a little bit, and then came back. And this time her earnings were looking better, her price was more reasonable. And we listed and we got lots of buyers. So it’s a matter of patience in some instances. Sometimes we also recommend that if the seller is looking for a price higher than what would be acceptable, they might have to be flexible with their terms so the buyer might not pay them as much upfront in the form of downpayment and loan. They would maybe ask for an earnout or a future payment contingent upon the business returning a certain level of revenue and profitability. So the sellers have to be willing to accept those terms if they’re not as flexible on the price as we would recommend.

Stone Payton: Well, this raises what I suspect is a very important topic, and I’d like to dive into it a little bit, and that’s timing. Well, for example, my business partner and I, we run a pretty successful media company where we don’t want to do anything next year or even the year after. But but sooner is better than later as far as connecting with someone like you and kind of getting our ducks in a row and planning for the the result that we want, right.

Vipin Singh: Those are the ideal customers for us. And we do offer a service which is exit planning, and that is the service where we provide guidance to owners who are not looking to sell immediately but would like to sell a few years down the line and we would tell them how they can position their business for success. It comes down to keeping in mind what a buyer would be looking for when the business is for sale. So one of the key issues we run into is some of the smaller businesses, their financials or the bookkeeping is not in place as the buyer would like it to be. The other thing is a lot of business owners are working in their business versus working on their business. So a buyer typically would want to buy a business that they could own but not have to operate, as I was saying earlier. So building a team that can be a team that the new owner can inherit is an important factor. And just making sure that you’re not tied to a few customers. Customer concentration can be a big challenge. Some buyers would not be comfortable having 50% of their business coming from one or two customers. So diversifying customer base, supplier base, or all of those things that we recommend business should focus on.

Stone Payton: So now that you’ve been at this for a while, what are you finding the most rewarding man? What’s the most fun about it for you?

Vipin Singh: I would say most fun is that I get to talk to business owners, I get to learn their life story. I get to see what made them passionate about the business they are in. Even if we talk about a very small business, these are businesses that have funded their kids education. They have built a huge amount of net worth through these businesses and it’s just inspiring to see how they have done that. As like I said, my initial journey started with trying to buy a business of my own. So I’m respectful of what a business owner does, how they are able to deal with some of the volatility. They deal with good economies, bad economies, employee issues, inflation, and they are still being successful running huge part of the US economy and all over the world, all over the world. So I just enjoy that process of engaging with business owners from different industries, learning about them and in the process helping them.

Stone Payton: So there’s this activity, there’s this experience, and I’m operating under the impression, you know, structured process with some discipline and rigor to it. And in terms of you helping me prepare and then ultimately sell my business, how does the the whole sales and marketing thing work for for you personally? Like how do you attract the new prospective clients?

Vipin Singh: Most of our clients come through referrals, so it’s a very heavy word of mouth kind of a business because it requires a lot of trust. We are essentially getting into the details of a business owners biggest asset and we are asking for tax returns. We are asking for confidential documents. The business owner has to trust us that we will help them sell their business confidentially. Their employees should not find out until it’s very close to changing hands. Their customers should not find out. As in a lot of cases, they could switch to another service provider. Their vendors and suppliers should not find out. So confidentiality is a big requirement in terms of business sales and a huge difference from real estate sales. And in terms of our marketing, we make sure that when we are closing a transaction, we are sharing that with our network. We do our local networking with networking groups like B’nai to Chambers of Commerce. We participate in discussions with other business and industry associations. We are networking with CPAs, attorneys. So anyone who would be working closely with a business owner would be a great referral partner for us.

Stone Payton: So have you had the benefit of one or more mentors to to help you in this business along the way?

Vipin Singh: Yeah, that’s one of the reasons I joined Murphy versus trying to do this on my own as I had some background, I have MBA, etc. that I could have potentially started doing this without joining a franchise. But the reason I joined the franchise was because I was looking for that mentorship. And there are individuals in New Jersey and rest of the country with the Murphy platform who are helping me, and we meet regularly, we discuss our issues. We have forums where we can ask questions from each other, and that’s the benefit of doing it with a bigger team versus going solo.

Stone Payton: Yeah, I’ll bet. And like in my example of of Lee and I, having a successful media company approaching you, even if you personally may not have had specific experience, I’ll bet somebody in that Murphy system has done something. You’ve got precedent for probably virtually any type of deal, don’t you, that you can rely on?

Vipin Singh: Exactly. So we have closed close to $3 billion in total deal volume. Just in New Jersey, we have more than 100 businesses that we have listed. We are close to $50 Million in total value just in New Jersey. So, you know, that’s one of the questions I used to get or I still get. Every broker gets is have you sold a business like mine? And for someone who is doing this on their own and hasn’t experienced that specific industry, it would be hard to say yes or I was working in that space. But we have so many deals in our database that we have closed or we are working on that. We can always pull up examples that are similar to another business. There would always be a new kind of an industry, a new niche that we haven’t yet explored, but we can show something that comes very close to that business.

Stone Payton: What a tremendous asset to be able to lean on that to genuinely serve your your clients. Okay, before we wrap, let’s leave our listeners, potential buyers and sellers alike with a couple of pro tips and things to be thinking about, some things to be doing, not doing reading. Let’s leave them with a couple of action items on some of these topics.

Vipin Singh: So for people who are looking to sell their business, I would recommend that they should definitely reach out to their local network and ask for people who they trust or they can trust. As like you said, this conversation needs time and you need to know the people you’re working with and you need to work with people. As typically, especially for larger companies, buyers have advisors that they are working with. So you need to have some advisors on your side as well. And you need good accounting advice, you need good legal advice, you need good business brokerage or M&A advice that folks like myself provide. And it takes time to prepare. As I was mentioning, you need to have your books in order. You need to have a team in place. So all of that takes time. So starting early is a great idea. And then for buyers, I would say look for opportunities that align with your experience and also your financial capacity. As a lot of times we see buyers come to us with an interest in a business, but they don’t have a lot of experience that would make them successful. So we don’t always dissuade them for not looking at that opportunity, but we feel that it’s always a good thing to have that experience. Banks look for that experience. If you are going to an SBA lender looking for money, they would look at your resume. They would like to see how your experience fits with that industry or that acquisition you’re trying to make and keep an open mind. Because like I was saying earlier, sellers are not just looking for the best price. They are looking for good terms. They are looking for someone who will take care of their business. So build that rapport with sellers, with brokers, with other advisors that a buyer would work with because eventually it is a team sport and a lot of stakeholders are involved in the eventual buying and selling of a business.

Stone Payton: Great advice, man. All right. What is the best way for our listeners to get connected with you and learn more?

Vipin Singh: So best would be my email. It’s v dot sing assigned at Murphy business dot com. Murphy is mrp ph vi business us i n s dot com or I’m on LinkedIn and Twitter as well best as my email. V dot singh at Murphy business dot com.

Stone Payton: Well, Vipin, it has been an absolute delight having you on the show, man. Thanks for hanging out with us and sharing your your knowledge. This has been very helpful. And keep up the good work, man.

Vipin Singh: Thank you. I appreciate the opportunity. And this was great.

Stone Payton: My pleasure, man. All right. Until next time, this is Stone Payton for our guest today, Vipin Singh with Murphy Business Sales, Edison Office, and everyone here at the Business RadioX family saying we’ll see you again on Buy a Business near me.