No thinking person would ever willingly choose to throw their time, money, and effort into an investment that yielded them only a 3% return (or less).

Yet, that is precisely what happens, day in and day out, when business owners sell their businesses. Sellers in today’s market are at the mercy of a broken, inefficient system dominated by incompetent brokers who contribute little to the process. Since most business owners do not have business succession plans in place, they are unprepared to gain the upper hand in the complex, fragile undertaking of getting their companies sold successfully.

Industry statistics paint a dismal picture: the odds are stacked against any seller who wants to sell in today’s marketplace and the situation shows no signs of improving in the future. Over 368,000 business owners turn 65 every year. Of those, around 226,000 say they want or need to sell their businesses and retire. However, the current system closes only a fraction of sales, a mere 24,000 or so a year.

These horrible statistics are having a big impact on all sellers, but are especially hard on Boomer owners looking to retire. Because they have such a low expectation of selling, many owners are forced to stay in their businesses even when they have health, family, or other situations that need their immediate attention. You don’t have to talk to too many owners to realize they are stressed-out, tired, and afraid for their futures. The system is irrevocably broken and hindered by factors such as a lack of qualified, competent buyers, too much third-party involvement (business brokers, lawyers, banks, etc.) and too many investment choices for the small pool of buyers that exists.

When I began my business career, it didn’t take long for me to realize that those of us in the business of buying and selling successful small businesses needed to come up with viable alternatives. After examining over 300 deals, deals in which nearly every seller was getting hosed, I came up with what I called the “Delta Solution.” My partner and I determined that certain key elements MUST be included in any deal in order to ensure a successful outcome for sellers.

Before discussing the best plan for dealing with shortcomings in the business selling process, let’s take a look at a typical scenario. While this is a fictional illustration, it will help you understand the challenges you face as an owner who wants to sell his or her business and give you an idea of how a new approach will work.

Let’s say that Anthony owns an air conditioning and refrigeration company with revenues around $2 million dollars a year. Anthony’s business creates approximately $300,000 in cash profits per year. In a traditional selling situation, the company, if it sold at all, would probably sell for between $900,000 and $1,000,000.

After paying broker fees, (10% or more), professional fees, and taxes (at least 20%), Anthony would be left with around $700,000 in cash profits from the sale. More than likely, especially if he is near retirement age, he will be faced with investing that money securely, so that it will generate a stream of income but not face exposure to risk.

The problem with this understandably conservative approach is that Anthony, even if he is a pretty savvy investor, is likely to get a 10% return at most. So, he now winds up going from a lifestyle based on a $300,000 a year income to one in which he makes only $70,000 a year. This represents a huge change in lifestyle; one which Anthony and his family are unwilling to make.

Unfortunately, unless he is exposed to another way of selling, Anthony may find he has no other choice when he decides to he needs to leave his business. This is the type of situation faced by business owners every day and it has long-term repercussions for the entire economy.

Sellers want and need:

• A quick, efficient sale that takes weeks, instead of years.

• Predictable, secure income that they will not outlive.

• No broker fees

• Less tax or no tax at all

• Competent buyers who will grow their business and not run it into the ground

Our experience led my partner and I to believe that the only way to achieve these goals was to create a method of selling that sets up a business so that it becomes an annuity.

Properly structured, with an iron clad, asset-backed guarantee that removes all risk for the seller, such a plan is radically different than anything currently being done. The ideal exit strategy would, first of all, provide the owner with qualified, competent buyers committed to growing the business and keeping it intact.

It would create a steady, reliable monthly paycheck for the owner that contains a cost of living adjustment and a guarantee to alleviate risk. Ideally, a balloon payment to the family would occur upon the owner’s death. The entire process of selling would take only a few weeks instead of several months or years, allowing the seller to get on with the rest of his or her life more quickly.

If you are an owner looking to sell your successful business, you can’t afford to settle for anything less than the criteria I mentioned above.

You certainly can’t afford to turn this crucial phase of your life over to an incompetent, commission-drive business broker.

I encourage you to check out the recent webinar I did which explains in more detail how business owners can successfully retire with more money, a lifetime stream of income, and with paying a lot less in taxes.

To watch the webinar, click here.

If you like what you see and want to explore these alternatives further, please visit our Getting Started page.

Delta Business Services is the only company in the United States to offer this unique 5 step strategy that gives business sellers the upper hand when the time comes to exit. Delta is passionate about helping sellers of small businesses find the best, most qualified buyers, avoiding paying unnecessary fees and taxes, and creating a lifetime income from the sale of their company that they will never outlive.

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Are you a business owner or entrepreneur? Imagine if you had to put your business on the market. Your business is something you’ve put years and years of blood, sweat, and tears into. Imagine if you lost control during the sale, and had to compromise on the terms. How would you feel? Would you feel cheated or helpless?

Many business owners find themselves in this exact situation. Every year in the United States, over 200,000 businesses go on the market. But of those only a fraction- around 24,000- actually wind up being sold, many times under terms and for amounts that are unfavorable to the business owner.

Working with Delta is very simple.  We have a streamlined process for business owners who would like to sell their business and a free report with more information.

LEARN MORE HERE

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Danny and Jen Baumgartner owned a small business for 17 years. They were proud of the construction & manufacturing company they had built. It had afforded them a nice lifestyle over the years, paid for the house, put their son through college and even grad school, but it was getting to be time to retire. Their son, Alex, had been Operations Manager for 7 years, and Danny and Jen had been grooming him to take over the business. It was their ideal exit strategy… or so they thought.

After the diagnosis, Alex began treatment for cancer. After 5 long, battle worn years, he finally succumbed. His parents were devastasted. Their only child was gone. The emotional toll was absolutely brutal, not to mention the fact that Danny and Jen’s exit strategy was extinguished, leaving them clueless as to what to do. The couple regrouped. They got organized, strategized, and began talking with their advisors to get input. During a 3 way call their financial planner, Jen vented, “We’re at our wits end. We don’t know what to do.”

Tera, a veteran financial planner for over 15 years probed, “Tell me about your business.”

Danny and Jen filled in the gaps. Tera responded, “I have someone who is perfect for your business.” Keith was a seasoned entrepreneur of more than 20 years. He had business ownership experience in over a dozen different industries, construction and manufacturing among them. Tera gave him the back story, and after exchanging a couple of emails with the Baumgartners, Keith phoned to discuss possibly

purchasing their business. “So how does this work?” Danny quipped. Seventeen years as a business owner had given him healthy skepticism in any deal. “Our process is simple. I buy to hold and grow. My team and I have created a package that gives sellers the certainty of success they need to move on to the next chapter of their lives.”

Jen’s ears perked up when she heard “move on”. That’s what she and Danny needed to do, move on.

“The problem is that the traditional methods of acquiring small businesses leave a lot to be desired,” the seasoned veteran began to speak. “The sober reality is that selling a business the old fashioned way winds up creating other problems for sellers, and doesn’t really fully address their needs.”

“Not to mention the fact that 87% of small businesses for sale never sell, and of the 13% remaining that do, 3 out of 4 of those fail.

Long story short, sellers have 4% chance of having a successful exit.”

“My word that’s horrible!” Jen exclaimed. “Why is it so bad?”

Keith responded, “The bottom line is because the people involved don’t really know what to do. Buyers and sellers are usually first timers.

They’re unfamiliar with the process and try to find their way by “feel”.

Obviously, this inevitably leads to mistakes and those become costly in a business acquisition.” Jen and Danny saw his point.

“The way to avoid that brain damage is to find out what the other principal really needs to have success in the deal. This is the key.” He went on to clarify,“ Retiring business owners want to sell, but they’re worried about getting hammered with capital gains taxes. They’re trying to get enough from the sale to create a retirement fund, but they’re concerned about out living that fund or altering their current lifestyle. They may have heirs they want to leave an inheritance to who are neither interested in nor prepared for running their parents’ business
. Furthermore, sellers need their retirement to be safe and secure.”

“Selling a business in the traditional manner will trigger tax consequences. Sellers will have to pay off liabilities, payables, cover commissions (if there’s a broker), and  transactions costs. It’s an all together expensive proposition to sell a business that inevitably leaves sellers scratching their heads when they walk away from the closing table wondering, ‘Why did I just do that?’”

“So, what’s your solution?” Danny asked directly.

Appreciating his directness, the businessman began, “Our approach solves your whole problem, and doesn’t create new ones.”

“With our solution, you can sell your business, get secure

3 Months Later…

The phone was already ringing when Tera walked into her office at 8:30am.

“This is Tera. Good morning.” A very excited voice was on the other end, “Hi Tera, it’s Jen Baumgartner. How are you?”

“I’m great, Jen. How are you and Danny?”

“That’s why I’m calling. Do you remember that gentlemen you referred us to for an exit strategy?”

“Of course. How did it work out?”

“Wow! What a great man! He bought our business and we’re calling you from our boat.”

“Hi, Danny,” Tera politely greeted.

“Hello, Tera,” Danny exclaimed and went on.

“He knew exactly what we needed and what to do. He gave us such a great package, it was impossible to say no. He freed us from our worry, allowed us to move on with our lives, and gave us secure income for our entire retirement.

It’s tax advantaged and there’s even an inheritance for Jen’s niece. The process was so simple!”

“I knew he was perfect for you,” Tera answered. “I’m so glad we found the ideal solution for your problem.”

“And that’s not all Tera!” “My golf buddies who own companies and want to retire all want to use him.” “I gave them his number and they’ve already called him.” “One friend has already begun the process.”

“My goodness alive! I bet Keith really appreciates the referrals.”

“Well he deserves them. That guy was so competent, we would have been insane to sell any other way.”

“He keeps in touch and informed us that the business is doing 35% better than it was 3 months ago. He included the report. I couldn’t believe it when I saw it! ”

“That is fantastic you two. I’m so happy for you both.”

“Tera, we can’t thank you enough. After losing Alex like that, Danny and I were so afraid. We didn’t want to lose our other baby, too.”

“Every cloud has a silver lining.”

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The Psychology of Procrastination

Business owners attempting to map out viable exit strategies in today’s volatile and complex exit environment face daunting challenges. Dealing with tax, retirement, estate planning, and asset protection issues, not to mention finding a competent buyer, is sometimes an overwhelming experience for business owners who want to retire.

Sellers often wonder, “What do I do?”, “How do I do it?”, and “Who do I know who has already been through the process who can help me avoid making mistakes?”

If you are like most business owners contemplating an exit strategy, such questions are reflective of much deeper issues that remain unaddressed in many cases. One of the core precepts in business is: know the rules of the game and develop the critical skills and tools for creating the success you desire.

Unfortunately, however, sellers of businesses encounter problems exiting because they lack the critical skills and tools it takes to get them what they really want. They often have trouble even articulating exactly what they want to accomplish and in what manner they wish to achieve it. These unexpressed desires create a cloud of pain and frustration for business owners when the time comes to sell.

What happens in the human brain with respect to this phenomenon is amazing. One of the rules of neurology is that “neurons that fire together get wired together”. Learning happens and habits are built when this occurs.

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