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Warning from a Business Broker: Be Cautious with Seller Carry Notes on Full Standby

Mon, 19 Aug 2024 18:46:30 GMT

Warning from a Business Broker: Be Cautious with Seller Carry Notes on Full Standby

When buying a business, financing options play a crucial role in determining the deal's success. One such option, the seller carry note on full standby, can be extremely useful and has its place. However, it's important to ensure that it’s not being used to the buyer's disadvantage.

What is a Seller Carry Note on Full Standby?

A seller carry note on full standby is an agreement where the seller finances part of the purchase price. The payments on this note are deferred for a set period, often two years, during which no payments are required. This can help improve cash flow for the buyer in the short term.

Potential Risks

While this arrangement can be beneficial, I've noticed some sellers and brokers using it to inflate the business valuation. They play with the debt service ratio to make the deal look better on paper than it is in reality. Here’s why buyers should be cautious:

1. Debt Service Coverage Ratio (DSCR)

The debt service coverage ratio is a key metric lenders use to assess a business's ability to service its debt. A healthy DSCR indicates that the business generates enough income to cover its debt obligations. If a business does not meet a reasonable DSCR today, you're taking a significant risk assuming it will be able to in the future.

How a Full Standby Period Impacts SBA Loans

Let’s break down how the standby period of a seller note impacts the overall risk of an SBA loan:

1. Initial Cash Flow Relief

During the standby period, no payments are required on the seller note. This improves the business's cash flow, reducing immediate financial pressure on the borrower. For example, if a business generates $100,000 per year in cash flow and has $80,000 in debt service obligations, placing a $20,000 seller note on standby can temporarily relieve this pressure.

2. Deferred Risk

The risk is simply pushed to the end of the standby period. After 24 months, the borrower must begin making payments on the seller note. If the business's cash flow hasn’t improved sufficiently, this can lead to financial strain. Using our earlier example, if the business still generates $100,000 per year in cash flow after two years but now has $100,000 in debt service obligations, the situation becomes untenable.

3. Lender Confidence

The standby period can make lenders more confident in the borrower’s ability to manage initial cash flows. This can increase the likelihood of loan approval since the lender sees a buffer period where the immediate cash flow is not overly strained.

4. Long-term Risk

The overall risk to the SBA loan may increase after the standby period if the business cannot generate enough cash flow to cover both the SBA loan and the seller note payments. This deferred payment structure can create a false sense of security if the business's financial health does not improve as anticipated.

Practical Example with Math

Let's put this into numbers for a clearer understanding. Suppose you're buying a business for $500,000. The deal includes:

- An SBA loan of $400,000

- A seller carry note of $100,000 on full standby for 2 years

- Annual cash flow of the business is $120,000

In the first two years:

- You only need to service the SBA loan, assuming an annual debt service of $50,000.

- Your DSCR is $120,000 / $50,000 = 2.4, which is healthy.

After the standby period ends:

- You must now service both the SBA loan and the seller note, assuming the combined annual debt service is now $70,000.

- Your DSCR drops to $120,000 / $70,000 = 1.71, which might still be acceptable but leaves less room for error.

If the business's cash flow doesn’t grow:

- The DSCR might drop further, creating financial strain.

- Any unforeseen expenses or a dip in revenue could make it difficult to service the debt.

My concern is that a buyer might be tempted to push the debt down the road, hoping for future improvements that may not materialize. It's crucial to assess the business's current and projected cash flows realistically. Make sure the business can meet its debt obligations today, not just after a rosy future projection.

Always perform thorough due diligence and consult with financial advisors to understand the full implications of a seller carry note on full standby. This will help you make a well-informed decision and avoid potential pitfalls down the road.

The Tax Return Test: How to Outsmart Sellers with Shady Cash Claims

Tue, 13 Aug 2024 16:31:11 GMT

The Tax Return Test: How to Outsmart Sellers with Shady Cash Claims

So, you're about to buy a business, and the seller is sweet-talking you about all the unreported cash they've been pocketing over the years. “Hey,” they say, “the business is actually making way more than the tax returns show!” Tempting, right? Wrong. Before you fall into that trap, let’s have a little chat about why those tax returns are your new best friend.

The Myth of the P&L: It's Like Believing in Unicorns

Profit and Loss Statements (P&Ls) are like that one friend who always tells you they’re going to the gym but somehow never lose a pound. Sure, they look nice on paper, but are they telling you the whole truth? Probably not.

- Easily Manipulated: Sellers can twist P&Ls like a balloon animal to make the business look like it’s booming. Don’t be fooled by those pretty numbers.

- Lack of Consistency: P&Ls are like snowflakes—no two are alike. Try comparing them can be challenging.

- Non-GAAP Practices: Many small businesses don’t follow the rules. They do their own thing, which might involve some creative accounting that doesn’t exactly scream “reliable.”

Tax Returns: The Unmasking of the Real Business

Now, let’s talk about tax returns. If a seller tries to tell you the tax returns don’t reflect the business’s “real” income, it’s time to raise an eyebrow—maybe even both.

- Accuracy and Verification: Unlike P&Ls, tax returns are the real deal.

- Standardized Format: Every tax return follows the same structure, so comparing them is as much easier.

- Debt Service Calculation: If you’re planning on getting a loan to buy this business, the bank will look at the tax returns, not the P&L. They trust the tax returns because they show what the business really earns—according to the government, anyway.

The 'Oh So Honest' Seller: A Buyer’s Cautionary Tale

Imagine this: You're sitting across from the seller, and they’re bragging about how they’ve been skimming off the top for years, stashing away all that unreported cash. They think they’re clever, but guess what? The IRS doesn’t know about that money, and as far as you’re concerned, neither should you.

So, you smile politely and say, “Well, it seems like you’ve already gotten your benefit by shortchanging Uncle Sam. I’m here to buy a business, not a pipe dream, so I’ll stick to what’s on the tax returns, thanks.” Watch the color drain from their face as they realize their little scheme isn’t going to fly.

Why Banks Only Dance to the Tune of Tax Returns

Banks aren’t in the business of taking risks—they leave that to people who buy lottery tickets. When it comes to financing, they use the tax returns to figure out if the business can actually pay back the loan. The calculation they use is called the Debt Service Coverage Ratio (DSCR), and it’s all about real, reported income.

- DSCR: This little number tells the bank whether the business is making enough money to cover its debts. The higher, the better. And guess what? They calculate this using—you guessed it—tax returns.

How to Avoid Getting Played

- Review Multiple Years of Tax Returns: Look at the last few years (3-5 years) to spot trends and make sure the business hasn’t just had a one-time lucky break.

- Cross-Check with P&Ls: Sure, P&Ls can give you some extra details, but always double-check them against the tax returns and bank statements. If they don’t match up, it’s a big red flag.

- Bring in the Pros: Hire a CPA or financial advisor to comb through those tax returns with you. They’ll know exactly what to look for—and what to watch out for.

Conclusion: When in Doubt, Trust the IRS (But Maybe Not the Seller)

At the end of the day, tax returns are your best defense against buying into a fantasy. The seller might have pulled one over on the IRS, but don’t let them pull one over on you. Stick to the tax returns, and you’ll be much more likely to make a solid investment. Remember, you’re not just buying a business; you’re buying its history—and the tax returns are the most reliable record of that history.

So, the next time a seller starts spinning tales about unreported cash, just smile and say, “That might’ve worked for the IRS, but it’s not going to work for me.”

Besides, if a seller can lie, for years, to the IRS, are they really someone you can trust? Unreported cash is not only illegal but it’s a pretty good indication of the character of the seller so beware!

The One Question Nearly Every Business Owner Should Know but Doesn't

Mon, 08 Jul 2024 15:45:02 GMT

The One Question Nearly Every Business Owner Should Know but Doesn't

Are you thinking about selling your company? Or maybe you're in the market to buy one? There’s one crucial question you need to know, whether you're a buyer or a seller. It's a question so important that it can drastically improve your chances if you are selling or give you significantly more confidence when buying. Despite its importance, nearly every business owner I meet doesn’t know the answer to the question when I ask them. Curious what the question is? Read on, because this question can significantly impact your business's future.

For the past six years, the International Business Broker Association (IBBA) has named me the top business broker in the country. I mention this not to brag, but to highlight that I’ve closed a lot of businesses, over 663 businesses sold. In every deal, I ask the seller this one question. Yet, 99% don’t know the answer, don’t track it, and don’t understand why it’s so vital. When a business owner does know it, I nearly fall out of my chair!

So, what’s the question? Before revealing it, let's set the stage.

The Critical Concept in Business Valuation

Every seller likes to talk about their business's potential. They say how a new owner, by implementing a few changes, if they just do X or Y, could grow the business. Hogwash! Don’t buy into this pipedream, that isn’t how real-world valuations work. I take a different approach if I am doing expert witness work or in other situations, for this example, I am specifically referring to buying and selling businesses on the open market that are often tied to bank financing.

While it might be true the business does have unrealized potential, valuations—especially in the main street and lower middle market—are based on historical performance, not hypothetical future growth. Specifically, they’re often based on a three-year weighted average, with the most weight given to the trailing 12 months.

Yet, there’s a key principle to remember: Buyers pay for historical performance but buy for potential. This is worth repeating: Buyers pay for historical performance but buy for potential.

So, how do you, as a seller, prove your business has potential? And as a buyer, how do you verify that a business is truly scalable? The answer lies in knowing two critical metrics: your customer acquisition cost (CAC) and your average customer lifetime value (CLV).

Understanding Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLV)

To illustrate, let’s consider an example. Imagine a manufacturing business that sells a product for $2,000, with a profit of $500 per sale (after all fulfillment, operational and marketing costs and assuming no repeat orders to increase the CLV).

If this manufacturer runs paid ads costing $20 per lead and converts 1 out of every 5 leads, their customer acquisition cost (CAC) is $100.

Let's break it down step by step:

• Product selling price: $2,000

• Profit per sale: $500

• Cost per lead: $20

• Conversion rate: 1 in 5 leads (or 20%)

Step 1: Calculate the number of leads needed to acquire one customer

Leads per customer = 1 / Conversion rate = 1 / (1/5) = 5 leads

Step 2: Calculate the total cost of acquiring leads for one customer

Cost of leads per customer = Cost per lead × Leads per customer

Cost of leads per customer = $20 × 5 = $100

Step 3: Calculate the CAC

In this case, the CAC is equal to the cost of leads per customer, as no other marketing or sales expenses are mentioned. CAC = Cost of leads per customer = $100

Therefore, the Customer Acquisition Cost (CAC) for this manufacturing business is $100.

Additional insights:

• Profit per customer: $500

• CAC: $100

• CAC to profit ratio: $100 / $500 = 0.2 or 20%

Now, why is this important?

Why CAC and CLV Matter for Sellers

As a seller, if your business has the potential you claim it does, you need to prove that your CAC is 25% or less of your average CLV. Then, scale the business to turn that potential into actual performance that is shown on your trailing 12 month financial statement.

Why CAC and CLV Matter for Buyers

As a buyer, understand that most small business owners don’t track these metrics. However, if you can find a business where the CAC is 25% or less of the CLV, you have a golden opportunity. This means the business is scalable and has proven and predictable growth potential. Here’s why:

- If the CAC is lower than 25% of the profit per sale, you can invest in scaling up marketing efforts, knowing that each dollar spent will likely yield a 4:1 ratio (or thereabouts).

- You can confidently project future growth and profitability, making your investment thesis stronger and more reliable. As a buyer, you should update your investment thesis or buying criteria to find a company that meets these criteria, assuming your goal is to buy a business and scale it.

The Key to Predictable and Scalable Business

Whether you’re buying or selling, make CAC and CLV central to your strategy. Sellers, prove your business’s potential by optimizing and tracking these metrics, then showcasing your results. Buyers, look for companies with a low CAC relative to their CLV to ensure scalable and predictable growth.

Knowing and understanding these numbers isn't just about making a sale—it’s about proving your business’s true value and potential. So, ask yourself: Do you know your CAC and CLV? If not, it's time to start tracking. This knowledge can transform your business and give you a significant advantage in the marketplace.

p.s. A common mistake to be aware of. Using CAC and CPA (Cost Per Acquisition) interchangeably: These metrics are often confused, but they measure different things. Using them incorrectly can lead to misguided decisions in growth projections and company valuations

Understanding ROI in Business Acquisition.

Mon, 24 Jun 2024 15:25:12 GMT

Understanding ROI in Business Acquisition.

When thinking about buying a business, one key concept you need to understand is Return on Investment (ROI). A common question that comes up is whether you should subtract a reasonable salary for yourself as the owner when calculating the owner's benefit or cash flow. This question touches on some fundamental principles of business evaluation, and it's crucial to understand the different perspectives.

Two Schools of Thought on ROI Calculation

Investment Perspective

From a strict investment viewpoint, it makes sense to subtract a manager's salary from the owner's benefit. This approach helps you evaluate the ROI in comparison to other investments, like stocks or real estate. By deducting a manager’s salary, you can see what the business would generate purely as an investment, separate from your role as an operator.

Owner-Operator Perspective

On the other hand, some people prefer to evaluate the business from the perspective of an owner-operator. In this view, you don’t deduct a manager’s salary because you’re considering the business as your job and investment combined. This approach aligns with the idea that you’re not just buying a business for passive income but also for the opportunity to run and grow it.

Example: Calculating ROI

Let's break down an example to understand these concepts better.

Imagine you're considering buying a business that generates $100,000 in owner benefit and is selling for $250,000. The seller is willing to finance $125,000, so you need to put down $125,000 in cash.

Now, let's calculate the ROI in two scenarios:

1. **Without Deducting Owner's Salary**:

- Owner Benefit: $100,000

- Purchase Price: $250,000

- Down Payment: $125,000

- Seller Financing: $125,000

In this scenario, you get to keep the full $100,000 as the owner benefit. If we consider the seller financing with a five-year note at 8% interest, the annual debt payment is approximately $30,000. After paying the debt, you are left with $70,000.

ROI Calculation:

ROI = (Net Income / Initial Investment) * 100 = (70,000 / 125,000) * 100 = 56%

2. **With Deducting Owner's Salary**:

- Assume you would hire a manager for $40,000 per year.

- Adjusted Owner Benefit: $100,000 - $40,000 = $60,000

- After debt payment: $60,000 - $30,000 = $30,000

ROI Calculation:

ROI = (Net Income / Initial Investment) * 100 = (30,000 / 125,000) * 100 =24%

Why Not Deduct the Owner's Salary?

Deducting the owner's salary can give you a clear picture of the business as a passive investment. However, not deducting it can highlight the business’s potential as your primary source of income and growth opportunity. It’s essential to understand that when you buy a business, you are not just investing money; you are also investing your time and effort.

Valuation vs. ROI

It’s crucial to distinguish between calculating ROI and determining business valuation. The business valuation typically includes the full owner's benefit because it assumes that you, as the new owner, will replace the seller. Therefore, the owner's benefit represents the total financial benefit you would receive from running the business.

Public Companies vs. Small Businesses

Comparing the ROI of a small business to investing in public companies is like comparing apples to oranges. Public companies offer passive investment opportunities without requiring you to give up your current job. In contrast, buying and running a small business often requires your full-time commitment but provides the potential for unlimited growth and control over your destiny.

When evaluating a business for purchase, consider both perspectives on ROI. Calculate the ROI with and without a manager's salary to understand the full scope of your investment. Remember, buying a business is not just about the financial return; it’s also about the lifestyle and personal goals you wish to achieve. By considering these factors, you can make a well-informed decision that aligns with your long-term objectives.

When Should You Include Adjustable Seller Carry Notes in Your Offer to Buy a Business?

Mon, 17 Jun 2024 16:27:28 GMT

When Should You Include Adjustable Seller Carry Notes in Your Offer to Buy a Business?

Adjustable seller carry notes can be a very effective condition to an offer when buying a business. However, they don’t apply to every business for sale. So what exactly are adjustable seller carry notes and when should they be used?

First, it's important to note that earnouts are not allowed with SBA loans, but some banks will allow adjustable seller carry notes. An adjustable seller carry note is when a percentage of the purchase price or an agreed-upon amount is paid to the seller at some point in the future, depending upon the business achieving certain milestones or conditions. For example, if the sales of the business hit a predetermined level within an agreed-upon time, the seller gets an additional payment. This doesn’t only apply to sales; it could be a wide array of milestones having to be met. Let’s discuss the more common scenarios when adjustable seller carry notes make sense.

When to Use Adjustable Seller Carry Notes:

1. Fluctuating Sales or Profits:

If the business has experienced a recent substantial increase or decrease in sales or profits, a buyer wants to be certain that this trend will continue (if an increase) or not continue (if there has been a decrease).

2. Customer Concentration:

If the business relies on a limited number of clients for a large percentage of its sales or profits, the buyer wants to ensure these customers will continue to buy from the business after the sale. An adjustable seller carry note provides a mechanism to not pay for these customers' contributions as part of the purchase price should they discontinue doing business with the company after the sale.

3. Pending Contracts:

If the seller has worked on some large contracts that will only come to fruition after the sale, the seller wants to be compensated for their recent past work, which isn’t reflected in the financials. The buyer will only pay for this potential if it pans out.

Key Points for Structuring Adjustable Seller Carry Notes:

1. Keep It Simple:

If the conditions are too difficult to measure and calculate, it often leads to disagreements.

2. Focus on One Metric:

Whether it’s revenue, profit, specific customer retention, etc., focusing on one metric keeps things straightforward.

3. Seller Apprehension:

Sellers may be hesitant about accepting an adjustable seller carry note but can be convinced if the buyer has a legitimate concern.

4. Broker Considerations:

Business brokers may dislike these deal terms because their contracts usually have them getting paid based on the total deal value. Sellers won’t want to pay their commission on the carry note

portion unless it’s realized. However, that’s for the seller and broker to figure out, not the buyer.

SBA Compliance for Adjustable Seller Carry Notes:

To ensure that an adjustable seller carry note is compliant with SBA guidelines, two important conditions need to be met:

1. Seller Benefit Limitation: The seller's benefit can only decrease. It cannot exceed the agreed-upon amount. This means if the business performs better than expected, the payment to the seller will not increase beyond the initially agreed-upon limit.

2. Debt Service Coverage Ratio (DSCR): The debt service coverage ratio must still meet the bank's guidelines at the fully paid potential amount to the seller. The DSCR is a measure of the business's ability to service its debt with its operating income.

The business must maintain a DSCR that aligns with the bank's requirements, ensuring it can comfortably handle its debt obligations even if the full amount of the adjustable seller carry note is paid out.

Structuring an Adjustable Seller Carry Note:

Let's use the example of declining profits. Suppose the business has seen a drop of 25% in the last year. The seller has various reasons for this. Before the drop, the business was valued using a 3 times multiple on $200,000 of Owner Benefits, yielding a valuation of $600,000. However, in the most recent year, the Owner Benefits were $150,000. At a 3x multiple, the value changes to $450,000. Therefore, there’s a $150,000 gap ($600,000 - $450,000).

You offer the seller $450,000 with a $150,000 adjustable seller carry note, conditional upon the business generating an average of $200,000 in Owner Benefits over the next two years (or whatever period you can agree upon). If the Owner Benefits return to $200,000, the seller gets the additional $150,000. Adjustable seller carry notes do not need to be all-or-nothing deals. They can be on a scale. For example, if Owner Benefits average $180,000, then at a 3x multiple, the value would be $540,000, so the seller earns an additional $60,000.

Important Considerations:

It's critical that whatever you use as the basis for the multiple to determine the guaranteed price is a figure the buyer is absolutely comfortable with and will be sustainable after closing. If done right, adjustable seller carry notes can be an incredibly beneficial to both buyer and seller.

Why Buying a Business with No Money Down Could Be a Bad Idea

Mon, 10 Jun 2024 15:07:34 GMT

Why Buying a Business with No Money Down Could Be a Bad Idea!

Anytime your opening balance sheet is 0% equity to 100% debt, it’s a very high risk for a potential disaster.

Understanding Over-Leverage

Buying a business with no money down might sound like a dream come true. Here is where every online marketing chimes in about how they can teach you how to do it with ease, of course you’ll have to join their coaching first. However, it often leads to being over-leveraged with debt, which can turn that dream into a financial nightmare. Let's break this down with a detailed example to show why.

The Scenario

Imagine you are buying a business valued at $1 million. You decide to finance this purchase using:

- SBA loan for 80%: $800,000

- Seller financing for 20%: $200,000

Let's go through the details of these loans and how they impact your finances.

SBA Loan Calculation

- Loan amount: $800,000

- Monthly interest rate: 11.5% annually / 12 months = 0.9583% (0.009583)

- Number of payments: 120

Using this formula, the monthly payment for the SBA loan is approximately $11,219.

Seller Financing Calculation

- Loan amount: $200,000

- Monthly interest rate: 8% annually / 12 months = 0.6667% (0.006667)

- Number of payments: 36

Using this formula, the monthly payment for the seller financing is approximately $6,270.

Total Monthly Debt Service

Now, let's add up the monthly payments:

- SBA Loan: $11,219

- Seller Financing: $6,270

Total Monthly Debt Service: $17,489

Annual Debt Service

Annual Debt Service = 17,489 times 12 = 209,868

Profit and Owner's Salary

The business nets $300,000 annually. As the owner, you need to pay yourself $80,000 a year before servicing the debt.

Calculating Remaining Profit After Debt Service

1. Net Income: $300,000

2. Owner's Salary: $80,000

3. Profit Before Debt Service: $300,000 - $80,000 = $220,000

4. Annual Debt Service: $209,868

Remaining Profit: $220,000 - $209,868 = $10,132

Debt Service Coverage Ratio (DSCR)

The Debt Service Coverage Ratio (DSCR) is a measure of the cash flow available to pay current debt obligations. It's calculated as:

DSCR = Net Operating Income/Total Debt Service

In this case:

DSCR = 220,000/209,868 or approximately 1.05

A DSCR of 1.05 means you are barely covering your debt payments with very little margin for error. Stated another way, for every $1.05 of net income you have $1.00 of debt that you owe. That’s just plain stupid! Not to mention no lender would approve this transaction.

Risks of Being Over-Leveraged

1. Lack of Working Capital: With no money down, you start with no buffer. Any unexpected expense can be disastrous.

2. High Monthly Payments: The combined debt payments consume most of your net profit, leaving little room for reinvestment or emergency funds.

3. Cash Flow Issues: A minor dip in business revenue can make it impossible to meet debt obligations, risking default.

4. Stress and Management Pressure: Constantly worrying about making debt payments can distract from focusing on growing the business.

Buying a business with no money down may seem tempting, but the risks often outweigh the benefits. High debt payments can leave you over-leveraged, with minimal profit margins and no safety net. It's crucial to have sufficient working capital and a solid financial plan to ensure the long-term success and stability of the business. Always consider these factors and consult with financial advisors before making such a significant investment decision.

If you are dead set on being one of those who thinks they are the exception to the rule and can make this work, here's my recommendation, find a business that you are passionate about, have direct industry experience, don't mind being a hands on owner operator AND do not pay more than 2x multipe of earnings. The numbers just dont work paying more than this, you'll be over leveraged.

Understanding Debt Service Coverage Ratio (DSCR) in Business Purchases

Mon, 27 May 2024 16:26:53 GMT

Understanding D ebt Service Coverage Ratio (DSCR) in Business Purchases

Here is an important topic if you are interested in buying a business. Understanding the Debt Service Coverage Ratio (DSCR). A buyer recently asked me about a situation where a bank deemed a business overpriced due to its DSCR.

Let’s break this down to understand what DSCR is and why it’s crucial when buying a business.

What is Debt Service Coverage Ratio (DSCR)?

The Debt Service Coverage Ratio (DSCR) measures how much cash is available to pay off debt. It compares a business’s net operating income to its debt obligations. In simple terms, it tells us how well a business can cover its debt with its current cash flow.

How to Calculate DSCR

To calculate DSCR, you need to know:

Net Operating Income (NOI): The profit after all operating expenses are deducted.

Debt Service: The total amount of principal and interest payments on debt.

The formula is:

DSCR = Net Operating Income/Debt Service

For example, if a business has an NOI of $1,000 and debt service of $500, the DSCR would be:

DSCR= 1,000/500=2

This means the business has $2 of income for every $1 of debt obligation.

Why is DSCR Important?

A higher DSCR indicates a business has enough income to cover its debt, making it less risky for lenders. Banks usually look for a DSCR of at least 1.25 for stable investments like apartment buildings, meaning $1.25 in income for every $1 in debt. For businesses, which are riskier, a DSCR of 1.5 or higher is often preferred.

Applying DSCR in Business Purchases

When buying a business, ensuring a healthy DSCR is crucial. Here’s why:

Risk Management: A high DSCR means the business can comfortably cover its debt, reducing the risk of default.

Loan Approval: Lenders are more likely to approve loans for businesses with a high DSCR.

Financial Health: A good DSCR reflects strong financial health and sustainability of the business.

Common Issues with DSCR in Business Valuations.

Sometimes, sellers overvalue their businesses, leading to an unrealistic DSCR. A good business broker should stop this before even taking it to the market but let's be honest, most business brokers aren't good haha.

Here are some potential issues:

Inflated Cash Flows: Overestimating income or underestimating expenses can distort the DSCR. Don't be fooled into using Sellers Discretionary Earnings (SDE)to calculate your debt service ratio. Business brokers love to do this but banks won't fall for it. A savvy buyer and bank will need to factor in a "livable wage" for the buyer.

So Sellers Discretionary Earnings (SDE) - buyers livable wage = net operating income.

Let me break down a "bad business broker" example so you dont fall for their shenanigans:

Sellers Discretionary Earnings (SDE): $275,000

market multiple: 3.0

asking price: $825,000

Dont let them play games with you! Here is what it should be:

Sellers Discretionary Earnings (SDE): $275,000

Buyers livable wage: $90,000

market multiple: 3.0

asking price: $555,000 (275k-90k=185k*3.0)

Now this is a bankable deal you can get financing for all day long!

Improper Separation of Assets: Not correctly separating business operations from real estate can inflate perceived cash flow.

Ignoring Principal Payments: Principal payments are not expenses but can significantly impact cash flow, affecting DSCR.

Conclusion

Understanding and accurately calculating DSCR is essential when evaluating a business for purchase. It helps in making informed decisions and ensures that the business can meet its debt obligations comfortably.

p.s . I realize I am using the same multiple for SDE and EBITDA, that isnt the point of this post, its just to show the example of how to calculate DSCR and why its important to make sure a business is not over priced.

if we want to be accurate, we would apply an appropriate multiple for both SDE and EBITDA.

¿Qué es más importante, los activos o los ingresos?

duda@fcbb.com — Thu, 12 Oct 2023 22:30:09 GMT

Conozca la diferencia entre un activo y ganancias en valores comerciales

Si bien esto puede parecer una pregunta extraña, tenga la seguridad de que encontrará argumentos para ambas respuestas mientras esté en el proceso de comprar un negocio. Estoy seguro de que has escuchado el dicho: "No existen las preguntas tontas". – Puede que sea cierto, pero ciertamente hay respuestas tontas.

Antes de abordar ambos lados de la cuestión, imagine este escenario...

Bob y Mary entran al banco para pagar sus respectivos préstamos comerciales. Mary les da un cheque, obtiene un recibo por su pago y listo. Bob, por otro lado, incorpora una enorme pieza de equipo que utiliza para producir los dispositivos que fabrica. Le informa al cajero que quiere pagar su préstamo. Cuando ella le pide el pago, él señala el equipo y le dice: “Te voy a dar esa unidad de producción; vale más que el dinero que debo”. ¿Crees que el banco lo aceptará?

¡Los activos no pagan las cuentas!

Es casi seguro que su contador prestará más atención a los activos de la empresa y analizará su perspectiva del negocio basándose en el balance. Ciertamente esa afirmación es importante, pero en realidad hay algunas cosas a considerar.

Primero, los activos son un medio para generar ingresos. Piénselo de esta manera: un negocio rico en activos que no genera ventas rentables no es realmente muy valioso, ¿verdad?

En segundo lugar, los activos influyen si se busca obtener financiación de terceros. Un prestamista quiere saber si los activos pueden cubrir el préstamo si tienen que liquidarse. Sin embargo, el hecho es que pocas ventas de pequeñas empresas implican financiación bancaria, por lo que también en este caso esto es un poco engañoso.

En tercer lugar, tanto desde la perspectiva del contable como del banco, su forma de pensar es algo poco realista porque si hay que liquidar los activos, rara vez se venderán por el valor que se les da en el acuerdo general.

Ahora consideremos las ganancias y el argumento es muy simple: cuanto más ganancias genere el negocio, más tendrá disponible para pagarle, pagar la deuda e invertir en el negocio para comercializar la empresa y, en muchos casos, para pagar nuevos equipos que puede ser necesario para sostener o hacer crecer el negocio.

Obviamente, algunas empresas necesitan activos para generar ingresos, pero no se dejan consumir por los activos en relación con la importancia de la rentabilidad. La mayoría de las pequeñas empresas en venta no tienen muchos activos. Además, muchas empresas de servicios no tienen nada aparte del equipamiento básico de oficina.

Al buscar negocios potenciales para comprar, preste atención a los activos, pero recuerde, son las ganancias y SÓLO las ganancias las que pagarán las facturas.

What’s More Important, Assets Or Income?

duda@fcbb.com — Thu, 12 Oct 2023 22:28:18 GMT

Learn the difference between an asset and profits in business values

While this may sound like an odd question, rest assured you will encounter arguments for both answers while you’re in the process to buy a business. I’m sure you’ve heard the saying, “There’s no such thing as a dumb question.” – that may be true, but there are certainly dumb answers.

Before we get into both sides of the question, imagine this scenario…

Bob and Mary walk into the bank to pay their respective business loans. Mary gives them a check, gets a receipt for her payment and is done. Bob on the other hand wheels in a huge piece of equipment he uses to produce the widgets he manufactures. He informs the teller he wants to pay his loan. When she asks for his payment, he points to the equipment and says, “I’m going to give you that production unit – it’s worth more than the money I owe”. Do you think the bank will accept it?

Assets do not pay the bills!

Your accountant will almost certainly pay more attention to the company’s assets and discuss their perspective of the business based upon the balance sheet. Certainly that statement is important, but in reality there are a few things to consider.

First, assets are a means to generate revenue. Think of it this way – an asset-rich business that does not generate profitable sales isn’t really very valuable is it?

Second, the assets play a role if you’re looking to obtain third-party financing. A lender wants to know that the assets can cover the loan if they have to be liquidated. The fact however is that few small business sales involve bank financing and so here too this is a bit misleading.

Third, from both the accountant’s and bank’s perspective, their thinking is somewhat unrealistic because if you have to liquidate the assets, they will rarely sell for what they’re valued for in the overall deal.

Now let’s consider profits and the argument is very simple: The more profit the business generates, the more it will have available to pay you, service debt and invest in the business to market the company and in many cases, to pay for new equipment that may be needed to sustain or grow the business.

Obviously, some businesses need assets to generate the revenue, but don’t get consumed by assets relative to the importance of profitability. The majority of small businesses for sale don’t have a lot of assets. Further, many service businesses have none at all outside of basic office equipment.

As you look at potential businesses to buy, pay attention to the assets but remember, it’s the profit and ONLY the profit that will pay the bills.

¿Por qué una vendedora vendería un negocio rentable?

duda@fcbb.com — Thu, 12 Oct 2023 22:28:14 GMT

Estrategias inteligentes de planificación de salida del vendedor

Descubra las razones por las que un vendedor vendería lo que parece ser un negocio muy rentable.

Es un hecho conocido que muchos emprendedores habían iniciado otros negocios antes de entrar en el negocio que se ha convertido en un éxito.

Muchos empresarios exitosos también hacen algo más que la mayoría de los dueños de negocios no hacen: planean una estrategia de salida.

Entonces la pregunta es por qué la persona que dirige un negocio que funciona con éxito y genera dinero buscaría una estrategia de salida.

Las razones típicas para planificar una estrategia de salida o considerar la venta son (y no en ningún orden de importancia): 1. El propietario ha alcanzado el objetivo que quería alcanzar; 2. El propietario ha encontrado otra idea que quería seguir; 3. Aburrimiento o agotamiento; 4. No es financieramente gratificante; o 5. No satisfactorio emocionalmente. 6. Necesidad de un nuevo desafío.

Por eso es bueno saber que muchos emprendedores que están ocupados construyendo su negocio también están considerando su estrategia de salida.

Como propietario de un negocio, ¿conoce su estrategia de salida y estará preparado?

Los compradores buscan empresas que puedan ofrecer dos componentes principales: uno es ingresos sostenibles y el segundo es potencial de crecimiento. Después de veinticuatro años de reunir a compradores y vendedores, descubrimos que si estos dos ingredientes están en el negocio que un comprador está investigando, las posibilidades de que el comprador haga una oferta son muy altas.

Si está considerando vender su negocio en el futuro, asegúrese de que un comprador pueda verificar sus ingresos. La mayoría de los compradores abandonarán una transacción si no se pueden verificar los ingresos. Su corredor de First Choice Business puede asesorarlo con más detalle sobre lo que un comprador necesitará de usted cuando esté listo para vender.

Why Would A Seller Sell A Profitable Business?

duda@fcbb.com — Thu, 12 Oct 2023 22:27:21 GMT

Smart Seller Exit Planning Strategies

Discover the reasons that a seller would sell what appears to be a great profitable business.

It’s a known fact that many entrepreneurs had started other businesses before getting into the business that has become a success.

Many successful entrepreneurs also do something else that most business owners don’t do, they plan an exit strategy.

So the question is why would the person who is operating a business that is running successfully and making money look for an exit strategy.

The typical reasons are for either planning an exit strategy or considering selling are (and not in any order of importance): 1. The owner has reached the goal that they wanted to achieve; 2. The owner has found another idea that they wanted to pursue; 3. Boredom or burn out; 4. Not financially rewarding; or 5. Not emotionally fulfilling. 6. Need of a new challenge.

So it is good to know that many entrepreneurs who are busy building their business are also considering their exit strategy.

As a business owner, do you know your exit strategy and will you be prepared?

Buyers look for businesses that can provide two major components, one is sustainable income and the second is growth potential. After twenty four years of bringing buyers and sellers together we found that if these two ingredients are in the business that a buyer is investigating, the chances that the buyer will make an offer are very high.

If you are considering selling your business in the future make certain that a buyer can verify your income. Most buyers will walk away from a transaction if the income cannot be verified. Your First Choice Business broker can advise you in more detail as to what a buyer will need from you when you are ready to sell.

¿Copia de Listo para dejar tu trabajo?

duda@fcbb.com — Thu, 12 Oct 2023 22:27:00 GMT

¿Es ahora el momento adecuado para comprar un negocio?

Utilice su plan de impuestos diferidos 401k para comprar un negocio, obtenga más información.

¿Cuándo tiene sentido dejar su trabajo y utilizar el fondo de su plan de jubilación para comprar un negocio?

Esta es una pregunta que muchos empleados se hacen habitualmente.

¡Estas son algunas de las señales de que es el momento!

Estás aburrido de lo que haces porque no hay ningún desafío en tu trabajo.
Sus ingresos no son la cantidad que cree que deberían ser.
Su empleador es de propiedad familiar, por lo que no puede ascender demasiado en la escalera.
Está cansado de mudarse y quiere estabilizarse a usted y a su familia.
Temes los lunes por la mañana.

Estas son sólo algunas de las razones para considerar “jubilarse” y tomar su 401K (libre de impuestos y multas) y usar el dinero para comprar un negocio existente.

First Choice Business Brokers recibe muchas llamadas de personas posiblemente en su posición, sin embargo lo que no nos sorprende es que el negocio que están considerando comprar no esté relacionado con su puesto laboral actual.

Muchas veces una persona quiere un negocio que haga algo que sienta que disfrutará y que le brinde el estilo de vida que desea.

¿Estás listo para el desafío?

¿Cuánto vale su negocio?

duda@fcbb.com — Thu, 12 Oct 2023 22:24:59 GMT

Descubra cómo un Business Broker valorará su negocio.

Trabajar con un agente comercial profesional puede ayudarle a fijar un precio de venta realista para su empresa.

Muchos vendedores, antes de reunirse con un corredor de negocios, tienen una idea en mente de cuánto deben pedir por su negocio.

Es posible que su contador público certificado, su amigo o su agente inmobiliario le hayan ofrecido sugerencias. Entonces, en el momento en que se reúnen con su corredor comercial y el corredor ofrece un precio de venta sugerido, los vendedores a veces responden con la cifra en dólares por la que su contador público certificado, amigo o agente inmobiliario pensó que debían vender.

La difícil situación de los corredores de negocios es cómo decirle al vendedor que el precio será demasiado alto para su negocio.

La mayoría de los corredores de negocios profesionales explicarán la realidad de una empresa con precios excesivos, incluido el hecho de que las empresas con precios excesivos ayudan a las empresas con precios razonables del mismo tipo a vender.

El propietario de un negocio debe comprender que un corredor de negocios valora el negocio de manera lógica y realista basándose en las ventas y la experiencia pasadas, mientras que un vendedor mira el negocio desde un punto de vista emocional.

El arte de valorar un negocio es solo eso, es un arte y no una ciencia. Una empresa vende por lo que un comprador dispuesto pagará y lo que un vendedor dispuesto aceptará.

Otra opción es obtener una valoración externa por un costo aproximado de $3,000.00. A veces, estas valoraciones externas son teóricas y no un análisis de precios de mercado y pueden no valer la pena.

Para obtener más información sobre cómo se valora una empresa, comuníquese con su agente profesional de First Choice Business Broker cuyo único puesto es cotizar y vender empresas a tiempo completo.

What Is Your Business Worth?

duda@fcbb.com — Thu, 12 Oct 2023 22:23:49 GMT

Discover how a Business Broker will value your business.

Working with a professional Business Broker can help to realistically price your business for sale.

Many Sellers, before meeting with a Business broker have an idea in their mind as to how much they should ask for their business.

Their CPA or their friend or their realtor may have offered suggestions. So at the time when they do meet their Business Broker and the Broker offer a suggested selling price, sellers will sometimes respond with the dollar figure that their CPA, friend or realtor thought that they should sell for.

The predicament of the business Brokers is how to and will they tell the seller that the price will be too high for their business.

Most professional business brokers will explain the reality of an overpriced business including the fact that overpriced businesses help reasonably priced businesses of the same to type to actually sell.

A business owner needs to understand that a Business Broker is valuing the business logically and realistically based upon past sales and experience whereas a seller looks at the business emotionally.

The art of valuing a business is just that, it is an art and not a science. A business sells for what a willing buyer will pay and what a willing seller will accept.

Another option is to obtain an outside valuation for a cost of about $3,000.00. Sometimes these outside valuations are theoretical and not a Market Price Analysis and may not be worth the cost.

For more information on how a business is valued, contact your First Choice Business Broker professional whose only position is listing and selling businesses full time.

¿Qué es la parálisis del análisis?

duda@fcbb.com — Thu, 12 Oct 2023 22:19:44 GMT

Cómo puedes perderte una “gran” oferta si analizas demasiado.

Descubra por qué debería arriesgarse y tomar una decisión.

En el corretaje de negocios, vemos muchos compradores potenciales que han decidido que quieren seguir su sueño de ser dueños de su propio negocio. Estos compradores potenciales le pedirán a su agente que se comunique con ellos rápidamente cuando surja una "oferta importante" cuando estén listos para comprar.

Sorprendentemente, vemos pasar seis o incluso nueve meses con docenas de presentaciones de oportunidades comerciales y avisos de "ofertas especiales" enviados al comprador para descubrir que este comprador ansioso sufre una "parálisis de análisis". Este comprador ha perdido las posibles "ofertas especiales" frente a otros compradores que han aprovechado estas oportunidades.

¿Qué es la “parálisis del análisis”? En pocas palabras, la incapacidad de tomar una decisión. Los compradores quedan tan atrapados en la revisión y el análisis de tantos negocios que el proceso en sí se convierte en su negocio, preguntándose siempre si la próxima oportunidad será una mejor opción o un negocio más sólido, etc. Algunos compradores se presionan extraordinariamente a sí mismos para comprar el negocio "correcto" pierde la oportunidad adecuada debido a la parálisis del análisis. De hecho, hemos escuchado a compradores decir: "¿Puedo hacer este negocio todos los días por el resto de mi vida"? Por supuesto, es una pregunta razonable; sin embargo, esta pregunta también puede hacer que cada negocio parezca abrumador y supone una gran tensión indebida para el comprador. Sí, por supuesto que desea que la compra del negocio sea lo más adecuada posible; sin embargo, recuerde también que si no es la opción adecuada, tiene la oportunidad de vender ese negocio y dedicarse a otras empresas.

Nuestro consejo, basado en muchos años de experiencia, es que los compradores mantengan la mente abierta a diferentes oportunidades; es posible que se sorprenda de cuál terminará siendo el negocio adecuado para usted. También es importante que los compradores obviamente hagan su debida diligencia; sin embargo, esos mismos compradores también deben darse cuenta de que otros compradores comerciales también están analizando las oportunidades que surgen y es posible que esos compradores no se vean afectados por la "parálisis del análisis". ¡Esté preparado para intervenir cuando aparezca el negocio adecuado!

What Is Analysis Paralysis?

duda@fcbb.com — Thu, 12 Oct 2023 22:18:36 GMT

How you can miss out on a “great” offering by over analyzing.

Learn why you should take a chance and make a decision.

In business brokerage, we see many potential buyers who have decided that they want to follow their dream of owning their own business. These potential buyers will ask their agent to quickly contact them when a “hot deal” comes up as they are ready to buy.

Amazingly we see six or even nine months pass with dozens of business opportunity introductions made and “hot deal” notices sent to the buyer to find this anxious buyer is stricken with “analysis paralysis”. This buyer has lost out on the potential “hot deals” to other buyers who have taken advantage of these opportunities.

What is “analysis paralysis?” Simply put, the inability to make a decision. Buyers get so caught up in the review and analysis of so many businesses that the process itself becomes their business, always wondering if the next opportunity will be a better fit or stronger business etc. Some buyers put an extraordinarily large amount of pressure on themselves to buy the “right” business that they miss out on the right opportunity due to analysis paralysis. We’ve actually heard buyers say, “Can I do this business every day for the rest of my life”? It is of course a reasonable question however this question can also make every business seem overwhelming and puts a lot of undue stress on the buyer. Yes of course you want the business buy to be as a good fit as possible however also remember if it is not the right fit you have the opportunity to sell that business and move into other ventures.

Our advice from many years of experience is for buyers to keep an open mind to different opportunities, you might be surprised about what the right business fit for you actually ends up being. Also it is important for buyers to obviously do their due diligence however those same buyers must also realize that other business buyers are also looking at the opportunities that come up and those buyers may not be stricken with “analysis paralysis”. Be ready to jump in when the right business comes along!

¡El CALIENTE mercado de ventas para pequeñas empresas de hoy!

duda@fcbb.com — Thu, 12 Oct 2023 22:18:27 GMT

La economía hace realidad la compra

Ventas récord reportadas por el sitio web nacional BizBuySell

El mercado está de moda: los baby boomers que se jubilan y los crecientes ingresos impulsan las ventas récord de las pequeñas empresas

El Informe Insight del segundo trimestre de 2018 de BizBuySell.com examina las transacciones y la demografía detrás de los niveles récord de pequeñas empresas que cambian de manos.

San Francisco, CA - BizBuySell.com, el mercado de negocios para la venta más grande de Internet, informó hoy un número récord de pequeñas empresas que cambiaron de manos en el primer semestre de 2018. El crecimiento se puede atribuir en gran medida a un número creciente de Baby Boomers que salen sus negocios, así como mejorar las finanzas empresariales. Los resultados completos se incluyen en el Informe Insight del segundo trimestre de 2018 de BizBuySell, que agrega estadísticas de transacciones de negocios para la venta informadas por los corredores comerciales participantes en todo el país.

Se informó que se vendieron un total de 5,383 negocios en los dos primeros trimestres de 2018, lo que pone el año en camino de superar el récord de 9,919 transacciones de 2017. Sólo en el segundo trimestre, 2.705 empresas cambiaron de manos, un aumento del 6,7 por ciento respecto al mismo período del año pasado y la mayor cantidad en cualquier trimestre desde que BizBuySell comenzó a rastrear datos en 2007.

Vender o no vender, ¿esa es la cuestión?

duda@fcbb.com — Thu, 12 Oct 2023 22:15:48 GMT

¡No esperes hasta que sea demasiado tarde!

Los dueños de negocios se enfrentan al dilema de si deben vender y, de ser así, ¿cuándo es un buen momento?

¿Deberían los dueños de negocios vender cuando su negocio está en auge, cuando está decayendo o cuando están cansados y agotados?

Después de 24 años vendiendo negocios podemos afirmar definitivamente que el mejor momento para vender es cuando el negocio está en una tendencia ascendente. Este es el momento en que los compradores están dispuestos a pagar el precio más alto. Desafortunadamente, muchos dueños de negocios esperan hasta que su negocio esté decayendo cuando deciden que ya es suficiente y quieren poner su negocio a la venta. Los compradores generalmente no pagarán mucho dinero si ven que el negocio está decayendo durante un período de tiempo. Los vendedores quieren vender según el potencial, sin embargo, los compradores solo pagarán por lo que puedan ver como ingresos y la tendencia de los ingresos en el momento en que el negocio esté disponible.

Su Broker de Negocios First Choice puede ofrecerle las experiencias de nuestros 24 años de venta de negocios. Cuando llegue el momento de considerar la venta, estaremos aquí para ayudarlo. Mientras tanto, mantenga su negocio funcionando con fuerza para que la “tendencia” de su negocio a los ojos del comprador sea estable o tenga una tendencia ascendente. Durante el proceso de venta, nosotros nos ocuparemos de los compradores entrantes y usted se ocupará de su negocio para que pueda obtener el precio más alto por sus esfuerzos ganados con tanto esfuerzo.

To Sell Or Not To Sell, That Is The Question?

duda@fcbb.com — Thu, 12 Oct 2023 22:14:52 GMT

Don’t wait until it’s too late!

Business owners are faced with a dilemma of whether they should sell and if so when is a good time?

Should business owners sell when their business is booming, when the business is declining or when they are tired and burned out?

After 24 years of selling businesses we can definitely state that the best time to sell is when the business is on an upward trend. This is the time that buyers are willing to pay the highest price. Unfortunately many business owners wait until their business is declining when they decide enough is enough and want to put their business up for sale. Buyers will not usually pay top dollar if they see the business is declining over a period of time. Sellers want to sell on potential however buyers will only pay for what they can see for income and the income trend at the time the business is available.

Your First Choice Business Broker can offer you the experiences of our 24 years of selling businesses. When the time comes to consider selling we’ll be here for you. In the meantime, keep your business running strong so the “trend” of your business in the eyes of a buyer is stable or on an upward trend. During the sale process we’ll take care of the incoming buyers and you take care of your business so you can capture the highest price for your hard earned efforts.

¿Lista para la jubilación pero no la mecedora?

duda@fcbb.com — Thu, 12 Oct 2023 22:13:00 GMT

Ideas para mantener tu cerebro activo después de la jubilación

Por qué la vida no termina con la jubilación laboral

Como intermediarios comerciales durante más de 24 años, escuchamos una y otra vez a personas que desean retirarse de sus trabajos corporativos y emprender una nueva vida con la propiedad de un negocio. Estamos orgullosos de ser parte de estos eventos que cambian vidas y estamos aquí para ayudarlo a encontrar el “negocio del próximo capítulo” perfecto.

Después de pasar años trabajando en un empleo, finalmente llega el día de la jubilación. ¡Excelente!

Muchos médicos creen que una persona que deja de utilizar su capacidad cerebral es un gran candidato para sufrir la enfermedad de Alzheimer. La solución es muy simple. El jubilado debería dedicarse a un pasatiempo que requiera capacidad intelectual o considerar la posibilidad de tener un negocio. Muchas de las personas que contactan con nuestras oficinas son jubilados que aún son jóvenes y activos y quieren controlar su futuro.

Hoy, afortunadamente, vivimos en un mundo donde los 65 años todavía se consideran jóvenes. En 1958 se consideraba que la esperanza de vida de un hombre era de 72 años. Hoy en día, según la Tabla Uniforme de Esperanza de Vida de 2013, un hombre de 70 años tiene una esperanza de vida de 27 años más.

¿Qué quiere decir esto? Significa que nunca es demasiado tarde para convertirse en autónomo y ser dueño de su propio negocio. Esto puede brindarle la oportunidad de disfrutar de su jubilación posterior al empleo en una nueva carrera en la que usted dictará su éxito. First Choice Business Brokers tiene una gran selección de muchas empresas a la venta y una de ellas podría satisfacer sus necesidades.

Today’s HOT Small Business Sales Market!

duda@fcbb.com — Thu, 12 Oct 2023 22:10:46 GMT

Economy makes buying a reality

Record high sales reported by BizBuySell national website

The Market is Hot: Retiring Baby Boomers and Rising Revenues Fuel Record Small Business Sales

BizBuySell.com's Second Quarter 2018 Insight Report examines the transactions and demographics behind the record levels of small businesses changing hands

San Francisco, CA - BizBuySell.com , the Internet's largest business-for-sale marketplace, reported today a record number of small businesses changing hands in the first half of 2018. The growth can largely be attributed to a growing number of Baby Boomers exiting their business as well as improving business financials. The full results are included in BizBuySell's Q2 2018 Insight Report, which aggregates statistics from business-for-sale transactions reported by participating business brokers nationwide.

A total of 5,383 businesses were reported sold in the first two quarters of 2018, putting the year on pace to surpass 2017's record-high of 9,919 transactions. In Q2 alone, 2,705 businesses changed hands, an increase of 6.7 percent over the same time last year and the most of any quarter since BizBuySell began tracking data in 2007.

Ready For Retirement But Not The Rocking Chair?

duda@fcbb.com — Thu, 12 Oct 2023 22:09:18 GMT

Ideas to keep your brain active after retirement

Why Life does not end with Job Retirement

As business brokers for over 24 years, we hear time and time again people wanting to retire from their corporate jobs and take on a new lease in life with business ownership. We’ve proudly been part of these life changing events and are here to help you find the perfect “next chapter business”.

After spending years working in a job, the day for retirement finally comes. Great!

Many doctors believe that a person who stops using their brain power is a great candidate for Alzheimer’s disease. The solution is very simple. The retiree should take up a hobby that requires brain power or consider owing a business. Many of the people who contact our offices are retirees who are still young and active and want to control their future.

Today, very luckily, we are living in a world where age 65 is still considered young. The life expectancy of a male in 1958 was considered to be 72. Today according to the Uniform Life Expectancy Table 2013 a 70 year old man has a life expectancy of an additional 27 years.

What does this mean? It means that it is never too late to become self-employed by owning your own business. This can give you the opportunity to look forward to enjoying your post job retirement in a new career where you dictate your success. First Choice Business Brokers has a large selection of many businesses for sale and one of these just might fit your needs.

Comience bien el año nuevo: cómo preparar su negocio para vender al mejor precio

duda@fcbb.com — Thu, 12 Oct 2023 22:06:00 GMT

¿Has estado pensando que este podría ser un buen año para vender tu negocio pero no sabes por dónde empezar? Los pasos a continuación lo ayudarán a decidir vender su negocio tal como está o si debe realizar las reparaciones o mejoras necesarias para obtener más dinero para su negocio.

En primer lugar, mantenga sus planes en secreto. Es muy importante mantener sus planes confidenciales. No querrás que los buenos empleados se vayan si creen que pronto se quedarán sin trabajo. También pone nerviosos a los proveedores y clientes y podrían cambiar la cantidad de negocios que hacen con usted. Ambos devaluarán su negocio. Está bien no dejar que otros sepan tus planes.

Haga una lista de los elementos de su negocio que necesitan mejorar y califíquelos como alto, medio y bajo. Los artículos altos que definitivamente necesitan ser reparados y los artículos bajos que realmente no afectarán el precio y el nuevo propietario podría cambiarlos o repararlos fácilmente. Piense en elementos que reducen sus ingresos y márquelos como Altos. Asegúrese de resolver cualquier problema legal en el que pueda estar involucrada su empresa. Tener problemas legales desanimará a los compradores de inmediato.

Una vez que haya identificado los elementos que deben mejorarse, tome su lista y haga un cronograma para completarlo todo. Comience con los artículos que ha marcado como “altos” porque estos artículos marcarán la mayor diferencia en el precio que obtendrá por su negocio. Determine un cronograma realista para cada elemento y vea qué elementos podrían completarse al mismo tiempo o por el mismo contratista o profesional.

Considere la posibilidad de contratar la ayuda de un corredor de negocios profesional que pueda realizar una valoración gratuita de su negocio, para que tenga un buen punto de partida. Tendrán una visión poco objetiva de su negocio y pueden encontrar áreas de mejora que usted no ve. También pueden informarle qué áreas de su negocio tendrán el mayor impacto en un vendedor. Una vez que se completen los cambios, tendrá un buen corredor con el que podrá cotizar su empresa.

Puede haber factores externos en su decisión de vender su negocio este año. Si tiene problemas financieros o de salud, puede considerar vender su negocio "tal cual" y eso también está bien. Debe sopesar la cantidad de tiempo, dinero y estrés que le puede causar preparar su negocio para la venta. A veces, salir de algo que ya no te apasiona vale unos pocos dólares para tu tranquilidad.

Start The New Year Right – How To Prepare Your Business To Sell At The Best Price

duda@fcbb.com — Thu, 12 Oct 2023 22:00:48 GMT

Have you been thinking this might be a good year to sell your business but don’t know where to start? The below steps will help you decide to sell your business as is or should you make the necessary repairs or improvements to get more money for your business.

First and foremost, keep your plans quiet. It is very important to keep your plans confidential. You don’t want good employees leaving if they think they will soon be out of a job. It also makes vendors and clients nervous and they could change the amount of business they do with you. Both will devalue your business. It’s okay not to let others know of your plans.

Make a list of items in your business that need improvement and rate them as high, medium and low. High being items that definitely need to be fixed and low being items that really won’t affect the price and the new owner could easily change or repair. Think about items that lower your revenue and mark those as High. Make sure to resolve any legal issues your business might be involved in. Having legal issues will turn buyers off right away.

Once you have identified the items that need to be improved take your list and make a timeline to get it all completed. Start with the items you have marked as “high” because these items will make the biggest difference in the price you will get for your business. Determine a realistic timeline for each item and see which items might be able to be completed at the same time or by the same contractor or professional.

Consider enlisting the help of a professional business broker that can do a free valuation of your business, so you have a good starting point. They will have an unobjective view of your business and may find areas of improvement you don’t see. They can also let you know which areas of your business will make the most impact on a seller. Once the changes are completed you have a good broker you can list your company with.

There may be outside factors in your decision to sell your business this year. If you are having health or financial issues you may want to consider selling your business “as is” and that is fine too. You must weigh the amount of time, money and stress preparing your business to sell might cause you. Sometimes getting out of something that no longer holds your passion is worth the few dollars for your peace of mind.

6 elementos clave a tener en cuenta al comprar un restaurante

duda@fcbb.com — Thu, 12 Oct 2023 21:58:31 GMT

A la hora de plantearnos comprar un restaurante es importante tener en cuenta varias cosas. A continuación se muestra una lista de elementos a incluir al evaluar la compra. Un corredor de negocios profesional puede ayudarlo a orientarse en la dirección correcta.

1. Ubicación, ubicación, ubicación: ¿el restaurante está situado en una buena ubicación? Querrá comprobar los otros negocios que rodean el restaurante y ver si les está yendo bien o si hay muchos escaparates vacíos. ¿Cuál es la visibilidad del restaurante? Quiere un negocio que sea fácil de ver desde la calle cuando pasa el tráfico o hay mucho tráfico peatonal. ¿Es fácil llegar y salir del restaurante? No hay nada peor que tener que hacer 3 giros a la derecha y un giro en U para llegar al restaurante o que el tráfico esté tan congestionado que las personas se mantengan alejadas del área. ¿La temática del restaurante se adapta a la zona? No querrás abrir un restaurante de 5 estrellas con alimentos por valor de $200 al lado de una universidad donde los estudiantes solo tienen $5,00 para gastar en comidas.

2. ¿Cuál es el Arrendamiento y Renta existente del Restaurante? Asegúrese de recibir una copia del contrato de arrendamiento existente y reúnase con el administrador de la propiedad, para tener una copia clara y detallada de todos los detalles. Querrá saber si el contrato de arrendamiento es transferible o tendrá que solicitar un nuevo contrato de arrendamiento. ¿Cuáles son las opciones de renovación, la seguridad requerida y existen exclusiones que perjudicarán directamente a su negocio? Además, es importante que el alquiler no supere la cantidad de ganancias que generará su restaurante. Un restaurante no podrá sobrevivir si el alquiler es superior al beneficio mensual. Puede pensar que el alto alquiler vale la pena por la ubicación del restaurante, pero si los artículos que vende no tienen una ganancia lo suficientemente alta, siempre estará atrasado y no ganará suficiente dinero para justificar el alto alquiler .

3. El equipo, los accesorios y el inventario de la cocina: si estos artículos están incluidos en el precio de venta, como suele ser el caso, querrá asegurarse de que estén en buen estado de funcionamiento y que realmente sean un activo para el negocio. ¿Se les da servicio regularmente, hay alguna garantía para el equipo o cuál es la esperanza de vida de los accesorios? Asegúrese de inspeccionar minuciosamente la cocina y los electrodomésticos para asegurarse de que estén en buen estado de funcionamiento. De lo contrario, no permita que eso le impida comprar el negocio, pero podría ser una buena herramienta para negociar un mejor precio.

4. Licencias y permisos: querrá saber si se necesitan licencias especiales para administrar el restaurante. Por ejemplo, ¿necesitará obtener una licencia de venta de bebidas alcohólicas o una licencia de juegos de azar? ¿Existe algún permiso especial que deberá pagar y obtener? ¿Cuáles son los requisitos de zonificación que rodean el negocio? Si desea abrir el negocio por las noches o los fines de semana es lo permitido en el barrio. Estos elementos adicionales podrían costarle fondos adicionales y tiempo para completar las solicitudes, lo que provocará retrasos en el momento de abrir su restaurante y consumir sus ganancias.

5. Logotipo icónico, alimentos especiales y otros intangibles: otros artículos que agregan valor pero que no se consideran un activo tangible son un ícono o logotipo famoso. ¿Es este un objeto familiar, popular en la zona y que te diferencia de otros restaurantes? ¿Tiene el restaurante una hamburguesa especial u otros alimentos que solo ellos pueden ofrecer y que atraen a clientes y turistas al lugar? ¿Es este el único restaurante abierto después de cierta hora de la noche que atrae a una multitud y aumenta las ventas? Todos estos son elementos intangibles que lo ayudarán a tener éxito una vez que haya comprado el negocio y algo que puede agregar para ayudar a promover el negocio y aumentar las ganancias.

6. Documentos financieros y crecimiento futuro del restaurante: deberá realizar la debida diligencia y revisar los documentos financieros del restaurante. Querrá ver los últimos 3 años de las declaraciones de pérdidas y ganancias. No solo desea ver si al restaurante le ha ido bien, sino también cuáles son las áreas del restaurante que puede mejorar o reducir costos para ayudar con los gastos generales. ¿Necesitas revisar el menú y eliminar artículos que no se venden bien pero que tienen un coste elevado? ¿Sería más beneficioso servir el desayuno sólo los fines de semana?

Como puede ver en lo anterior, hay mucho que revisar y considerar al comprar un restaurante existente. Contar con la ayuda de un corredor de negocios profesional puede ayudar a aliviar algunos de estos problemas y brindarle confianza al presentar su propuesta. Serán menos emocionales con el trato y tendrán en mente sus mejores intereses. Crear una lista de verificación para repasar los elementos anteriores lo ayudará a sentirse seguro de que está haciendo la inversión correcta.

6 Key Items To Look For When Buying A Restaurant

duda@fcbb.com — Thu, 12 Oct 2023 21:55:48 GMT

When considering buying a restaurant it is important to consider several things. Below is a list of items to include when evaluating the purchase . A professional business broker can help lead you in the right direction.

1. Location, Location, Location – Is the restaurant situated in a good location ? You will want to check the other businesses surrounding the restaurant and see if they are doing well or is there a lot of empty storefronts. What is the visibility of the restaurant? You want a business that is easy to see from the street as traffic drives by or there is a lot of foot traffic passing by. Is it easy to get to and from the restaurant? Nothing is worse than having to make 3 right turns and a U-turn to get to the restaurant or is the traffic so congested people stay away from the area. Does the theme of the restaurant suit the area? You don’t want to open a 5-star restaurant with $200 food items next to a University where students only have $5.00 to spend on meals.

2. What is the existing Lease and Rent of the Restaurant? Make sure you receive a copy of the existing lease and meet with the property manager, so you have a clear and every detail spelled out. You will want to find out if the lease is transferrable or will you have to apply for a new lease. What are the renewal options, the security required and are there any exclusions that will directly hurt your business? Also, it is important the rent is not higher than the amount of profit your restaurant will generate. A restaurant will not be able to survive if the rent is higher than the monthly profit. You may think the high rent is worth the location of the restaurant, but if the items you are selling don’t have a high enough profit you will always be behind and not making enough money to justify the high rent.

3. The Kitchen Equipment, Fixtures, and Inventory – If these items are included in the sales price, which they usually are, you will want to make sure they are in good working order and really is an asset to the business. Are they regularly serviced, are there any warranties on the equipment, or what is the life expectancy of the fixtures? Make sure to thoroughly inspect the kitchen and appliances to ensure they are in good working order. If not, don’t let that deter you from purchasing the business but might be a good tool for brokering a better price.

4. Licenses and Permits– You will want to find out if there are any special licenses needed to run the restaurant. For example, will you need to obtain a liquor license or a gambling license? Are there any special permits that you will need to pay for and obtain? What are the zoning requirements surrounding the business? If you want to open the business at night or on the weekends is that allowed in the neighborhood. These additional items could cost you extra funds and time for completing applications which will lead to delays in when you can open your restaurant and eat into your profit.
5. Iconic Logo, Special Food Items and Other Intangibles – Other items that add value but are not considered a tangible asset are a famous icon or logo. Is this a familiar object that is popular in the area and differentiates you from other restaurants? Does the restaurant have a special burger or other food items that only they can provide that draws patrons and tourists to the location? Is this the only restaurant open after a certain time of night that draws a crowd and increases sales? These are all intangible items that will help you succeed once you have purchased the business and something you can add to help promote the business and increase profits.

6. Financial Documents and Future Growth of the Restaurant – You will want to perform your due diligence and go over the financial documents of the restaurant. You will want to see the last 3 years of the profit and loss statements. Not only do you want to see if the restaurant has been doing well but where are the areas of the restaurant you can improve on or reduce costs to help the overhead. Do you need to revise the menu and remove items that are not selling well but have a large cost? Would it be more beneficial to only serve breakfast on the weekends?

As you can tell from the above there is a lot to review and consider when purchasing an existing restaurant. Enlisting the help of a professional business broker can help alleviate some of these items and give you confidence when submitting your proposal. They will be less emotional about the deal and will have your best interest in mind. Creating a checklist to go over the above items will help you feel secure that you are making the right investment.

Qué Es La Diligencia Debida Y Qué Pasos Se Toman

duda@fcbb.com — Thu, 12 Oct 2023 21:53:11 GMT

¿Qué significa Due Diligence? Son los pasos razonables que toma una persona para satisfacer un requisito legal, especialmente en la compra o venta de algo. Una vez que se haya hecho una oferta y se haya aceptado una carta de intención (o acuerdo de compra de activos), el comprador realizará su debida diligencia para garantizar que este sea el negocio adecuado para que lo compren. Un comprador realizará su propia diligencia debida para garantizar que las finanzas y características de la empresa sean las anunciadas. Usted querrá obtener la ayuda de un Business Broker profesional y un contador para este proceso.

¿Cuál es la duración del período de diligencia debida? - El proceso de diligencia debida generalmente debe durar entre 7 y 45 días. Esto es posible completarlo con la asistencia de un Business Broker profesional y un contador. Es importante no tomar demasiado tiempo y cerrar el trato lo antes posible. Sin embargo, aún desea tomarse el tiempo para revisar todos los detalles, examinar la información y revisar en detalle para localizar cualquier posible problema o problema que pueda tener el negocio.

Estados financieros, estados de pérdidas y ganancias y declaraciones de impuestos : tanto el comprador como el vendedor querrán examinar los estados financieros del otro. El comprador revisará los documentos financieros de las empresas, incluidos los balances y los estados de resultados, los cronogramas de inventario, las previsiones y proyecciones futuras, las tendencias de ingresos, ganancias y crecimiento, el historial y las opciones de acciones, las deudas a corto y largo plazo, los formularios y documentos de impuestos, y los múltiplos y ratios de valoración en comparación con los competidores y los puntos de referencia de la industria para ver la historia del negocio y su oportunidad de crecimiento. El vendedor revisará las finanzas, el informe de crédito y las declaraciones de impuestos del comprador para ver si el comprador paga sus facturas a tiempo o si alguna vez se ha declarado en bancarrota. Ambas partes deben usar un contador para realizar las revisiones.

Planes de negocios - Ambas partes deben compartir sus planes de negocios. Este comprador podrá ver el plan de negocios del vendedor actual y ver dónde deben estar los ajustes o cambios. ¿Necesitará el comprador contratar nuevo personal, cambiar de proveedor, etc. El vendedor podrá ver el plan de negocios del comprador para hacerle saber que el nuevo comprador entiende el negocio y podrá ejecutarlo con éxito?

Referencias - Profesional y Personal - Cada parte debe proporcionar una lista de referencias profesionales y personales que puedan dar fe de su credibilidad. Si es necesario establecer contacto con las referencias, ambas partes deben acordar pautas sobre cómo se contactará con las referencias. Recuerde que la venta de un negocio suele ser altamente confidencial, por lo que debe mantenerse privada para proteger el negocio de los demás.

Realizar la debida diligencia es un paso vital tanto para el comprador como para el vendedor al comprar un negocio. Ayudará a ambas partes a decidir si el acuerdo es adecuado para ambas partes. Es importante contar con la asistencia de un Business Broker profesional y un contador para ayudar a resolver el trato y asegurarse de que toda la información se recopile y revise correctamente.

What Is Due Diligence And What Steps Are Taken

duda@fcbb.com — Thu, 12 Oct 2023 21:51:12 GMT

What does Due Diligence mean? It is the reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling something. Once an offer has been made and a letter of intent (or asset purchase agreement) accepted the buyer will perform their due diligence to ensure this is the right business for them to purchase. A buyer will perform their own due diligence to ensure the business’s financials and characteristics are as advertised. You will want to enlist the help of a professional business broker and an accountant for this process.

What is the Length of the Due Diligence Period? - The due diligence process should typically last between 7 to 45 days. This is possible to complete with the assistance of a professional business broker and an accountant. It is important to not take too long and get the deal closed as soon as possible. However, you still want to take the time to go over all the details, examine the information, and review in detail to locate any possible issues or problems the business may have.

Financial Statements, Profit and Loss Statements, and Tax Returns - Both the buyer and the seller will want to examine each other’s financial statements. The buyer is going to review the businesses’ financial documents including the balance sheets and income statements, inventory schedules, future forecasts and projections, revenue, profit, and growth trends, stock history and options, short and long-term debts, tax forms and documents, and valuation multiples and ratios in comparison to competitors and industry benchmarks to see the history of the business and its opportunity for growth. The seller will review the buyer’s financials, credit report, and tax returns to see if the buyer pays their bills on time or has ever filed for bankruptcy. Both parties should use an accountant to perform the reviews.

Business Plans - Both parties should share their business plans. This buyer will be able to see the current seller’s business plan and see where adjustments or changes need to be. Will the buyer need to hire new staff, change vendors, etc. The seller will be able to see the buyer’s business plan to let them know the new buyer understands the business and will be able to run it successfully.

References - Professional and Personal - Each party should provide a list of professional and personal references that can vouch for their credibility. If contact with the references needs to be made then both parties need to agree on guidelines on how the references will be contacted. Remember the selling of a business is usually highly confidential so it needs to be kept private to protect each other’s business.

Performing due diligence is a vital step for both the buyer and the seller when purchasing a business. It will help both parties decide if the deal is right for both sides. It is important to enlist the assistance of a professional business broker and an accountant to help with ironing out the deal and making sure all the information is collected and reviewed correctly.

Cómo conseguir el mejor precio para su negocio

duda@fcbb.com — Thu, 12 Oct 2023 21:49:38 GMT

Ha decidido vender su negocio, pero no está seguro de a qué precio publicarlo. No sabe qué criterios y documentos se necesitan para fijar el precio correcto de su negocio para atraer a muchos compradores y aún así obtener la mayor cantidad de dinero y ganancias por todo su arduo trabajo e inversión. Los pasos a continuación enumeran los criterios y documentos que necesitará para vender su negocio con éxito.

1. Consiga la ayuda de un agente comercial profesional.

Lo mejor que puede hacer por usted y su empresa es contratar a un agente comercial profesional. Valorarán su negocio, crearán material de marketing y publicarán su negocio en varios sitios web para atraer a la mayor cantidad de compradores. Tienen años de experiencia en el trato con una variedad de empresas, conocen el mercado local y tienen los recursos para asegurarse de que su empresa se venda al mejor precio. Una vez que encuentren un comprador, su experiencia lo guiará con confianza a través de las negociaciones, el proceso de diligencia debida, el depósito en garantía y garantizará que el acuerdo esté estructurado y procesado adecuadamente para protegerlo a usted, a su familia y a otros activos.

2. Declaraciones de Pérdidas y Ganancias, Declaraciones de Impuestos y Otros Documentos Financieros.

Necesitará tener los últimos tres años de los estados de pérdidas y ganancias, declaraciones de impuestos, estados de flujo de efectivo y balances generales de su empresa. Consulte a su contador para recopilar esta información y una Declaración de ganancias discrecionales del vendedor (SDE). Los compradores querrán ver los ingresos brutos y netos de la empresa y su desempeño. También es bueno tener el contrato de arrendamiento o alquiler, recibos del equipo, títulos o documentos de préstamo de vehículos y una lista de las obligaciones adeudadas.

3. Cree una lista de activos tangibles.

Deberá realizar un estudio de su empresa y hacer una lista de todos sus activos tangibles. Esto incluirá cualquier mobiliario o enseres, equipos, vehículos, maquinaria y todo el inventario. Indique la edad, el estado y el precio original. Todo esto será valorado e incluido en el precio de venta de su negocio.

4. Investigue el mercado para encontrar negocios comparables.

Utilizando Internet y sitios web de venta de empresas, busque empresas comparables y vea para qué figuran en la lista. Querrá investigar empresas que estén en la misma categoría, pies cuadrados, producto, número de empleados, etc. Esto le ayudará a saber si su empresa está cotizando al precio correcto.

Como puede ver, hay muchos factores que intervienen a la hora de fijar correctamente el precio de una empresa. Utilizar un corredor de negocios profesional lo ayudará a seguir todos estos pasos y garantizará que su negocio tenga un precio de venta y que usted obtenga las mayores ganancias. Permítales hacer el trabajo pesado valorando su negocio, su ubicación, estados financieros, activos tangibles, tendencias en el mercado, etc. Pero como siempre, cuanto más sepa, mejor se sentirá durante el proceso de venta. Tener la información anterior le dará la confianza de que todos los pasos se están considerando y completando y que su negocio figura al precio de venta óptimo.

How To Get The Best Price For Your Business

duda@fcbb.com — Thu, 12 Oct 2023 21:45:04 GMT

You have decided to sell your business, but you are unsure of what price to list it at. You don’t know what criteria and documents are needed to price your business at the right price to attract a lot of buyers but still get the most money and profit for all your hard work and investment. The below steps list the criteria and documents you will need to successfully sell your business.

1. Enlist the help of a Professional Business Broker.

The very best thing you can do for yourself and your business is to hire a Professional Business Broker. They will valuate your business, create marketing material, and list your business on several websites to attract the most buyers. They have years of experience in dealing with a variety of businesses, they know the local market, and they have the resources to make sure your business sells for top dollar. Once they find a buyer their expertise will lead you with confidence through negotiations, the due diligence process , escrow and ensure the deal is structured properly and processed to protect you, your family and other assets.

2. Profit and Loss Statements, Tax Returns, and Other Financial Documents.

You will need to have the last three years of your business’s profit and loss statements, tax returns, cash flow statements, and balance sheets. Get with your accountant to gather this information and a Statement of Seller’s Discretionary Earnings (SDE). Buyers are going to want to see the business's gross revenue, net revenue, and how the business has been performing. It is also good to have the lease or rental agreement, receipts for equipment, titles or loan documents for vehicles, and a list of any liabilities that are owed.

3. Create a List of Tangible Assets.

You will need to survey your business and make a list of all its tangible assets. This will include any furniture or furnishings, equipment, vehicles, machinery, and all the inventory. List the age, condition, and original price. This will all be valuated and included in the sales price of your business.

4. Research the Market to Find Comparable Businesses.

Using the internet and business selling websites look for comparable businesses and see what they are listed for. You will want to research businesses that are in the same category, square footage, product, number of employees, etc. This will help you know that your business is being listed at the right price.

As you can see there is a lot of factors that go into pricing a business correctly. Using a professional business broker will help you navigate through all these steps and ensure your business is priced to sell and you will get the most profit. Let them do the heavy lifting by valuating your business, it’s location, financial statements, tangible assets, trends in the market, etc. But as always, the more you know the better you will feel during the selling process. Having the above information will give you the confidence that all the steps are being considered and completed and your business is listed at the optimum sales price.

Se Necesitan Profesionales Importantes Al Comprar Un Negocio

duda@fcbb.com — Thu, 12 Oct 2023 21:43:32 GMT

Al comprar un negocio, es importante contar con los profesionales adecuados a su lado para ayudarlo a navegar el proceso de compra de negocios. Su experiencia y conocimiento lo ayudarán a localizar un negocio, presentar la oferta correcta, revisar todos los documentos, realizar la debida diligencia adecuada y cerrar el trato sabiendo que ha comprado el negocio al precio correcto y ha protegido sus activos.

1. Un Business Broker profesional

Un Business Broker experimentado está familiarizado conel mercadolocal, ha establecido relaciones con la comunidad empresarial y puede ayudarlo a buscar un negocio para la venta. La mayoría de los Brokers generalmente se especializan en ciertas industrias. Pueden aconsejarle sobre qué buscar y qué preguntarle al propietario. A menudo, también hacen valoraciones profesionales y pueden decirle cuánto vale el negocio. También pueden ayudarlo a armar una oferta, guiarlo a través de las negociaciones y ayudarlo a cerrar el trato.

¿Cómo elegir un Business Broker profesional?

Busque ibba "encontrar un Broker" para encontrar un Broker en su área local. Asegúrese de que el Business Broker tenga una designación CBI (intermediario comercial certificado). El perfil del Broker debe mostrar los tipos de negocios que han vendido y sus áreas de especialización. Su perfil también indicará si es miembro de una asociación profesional, como la International Business Brokers Association (IBBA) o una asociación estatal, como la California Business Brokers Association (CABB). En algunos estados, como California, los Business Brokers deben tener una licencia de bienes raíces, lo cual también es importante si un negocio incluye bienes raíces o transferirá un contrato de arrendamiento.

2. Un abogado

Un componente clave en la compra de un negocio es garantizar que la transacción se realice de manera legal y adecuada. Desde ponerse en contacto con el propietario y firmar un acuerdo de no divulgación, hasta decidir sobre la estructura de la compra, casi todos los documentos deben ser revisados por su abogado. También tendrá que decidir quién comprará el negocio: ¿usted personalmente o su empresa? ¿O comprará los activos o acciones? Un abogado experimentado sabrá lo que tiene más sentido. Su abogado también lo ayudará a negociar los términos de compra, el acuerdo de compra y venta, así como cualquier otro detalle involucrado en la transferencia de propiedad.

¿Cómo elegir un abogado al comprar un negocio?

Cuando se trata de adquisiciones de negocios, el aporte de su abogado puede tener un fuerte impacto en el resultado del acuerdo. Deben tener experiencia con adquisiciones de pequeñas y medianas empresas, los diferentes tipos de estructuras comerciales y cómo protegerlo contra cualquier responsabilidad u obligación fiscal. Deben poder guiarlo a través de la diligencia debida, la transferencia de permisos y licencias. También deben saber qué documentos deben presentarse ante los tribunales y cómo tratar con los empleados. Dependiendo de la transacción, también puede requerir la experiencia de abogados laborales o fiscales, o de bienes raíces. Antes de contratar a un abogado, entreviste a ellos, pida referencias y verifique que no se hayan presentado demandas por negligencia en su contra.

3. Un contador

Una de las cosas más importantes a considerar sobre la compra de un negocio es su rendimiento financiero. Sin embargo, muchas pequeñas empresas no son los mejores contadores. Además, sus métodos contables se centran en minimizar sus impuestos. Como resultado, sus finanzas pueden no mostrar mucha ganancia, o cualquier ganancia. Una cuenta con experiencia revisará sus finanzas y le hará preguntas específicas al propietario sobre cómo ganan su dinero. Un contador experimentado puede ayudarlo a determinar las ganancias discrecionales (SDE) del vendedor y el potencial de ganancias de la empresa, dándole una idea de cuánto vale realmente.

¿Cómo elegir un contador al comprar un negocio?

Un buen contador debe ser un Contador Público Certificado (CPA) a través del Instituto Americano de Contadores Públicos Certificados y tener experiencia en su industria. Deben tener experiencia con la adquisición de una pequeña empresa, incluida la debida diligencia financiera y la valoración de negocios. Deben entender que hay varias reglas generales de valoración, y no todos los tipos de negocios se valoran utilizando el mismo método. Muchos contadores también están acreditados en valoración de negocios y están certificados como tasadores de negocios profesionales. Pida una referencia de alguien en quien confíe, como su abogado o un Business Broker. Es posible que conozcan a un contador que tenga experiencia en adquisiciones de negocios.

Cuando se trata de comprar un negocio, tener un equipo experimentado a su lado puede ser extremadamente valioso. Su experiencia profesional y orientación están ahí para garantizar que reciba el resultado más beneficioso. Además, aportan un nivel de objetividad muy necesario a una transacción compleja.

Important Professionals Needed When Purchasing A Business

duda@fcbb.com — Thu, 12 Oct 2023 21:41:30 GMT

When purchasing a business , it is important to have the right professionals by your side to help you navigate the business buying process. Their expertise and knowledge will help you locate a business, present the right offer, review all documents, performs proper due diligence , and close the deal knowing you have purchased the business at the right price and have protected your assets.

1. A Professional Business Broker

An experienced business broker is familiar with the local market, has established relationships with the business community, and can help you search for a business for sale. Most brokers usually specialize in certain industries. They can advise you on what to look for and what to ask the owner. Oftentimes, they also do professional valuations and can tell you how much the business is worth. They can also assist you in putting together an offer, guide you through negotiations, and help you close the deal.

How do you choose a professional business broker?

Search IBBA “find a broker” to find a broker in your local area. Make sure that the business broker holds a CBI designation (certified business intermediary). The broker’s profile should show the types of businesses they’ve sold and their areas of expertise. Their profile will also indicate if they are a member of a professional association, such as the International Business Brokers Association (IBBA) or a state association, such as the California Business Brokers Association (CABB). In some states, such as California, business brokers are required to hold a real estate license, which is also important if a business includes real property or will be transferring a lease.

2. An Attorney

A key component in buying a business is ensuring the transaction is done legally and properly. From contacting the owner and signing a non-disclosure agreement, to deciding on the structure of the purchase, nearly all documents should be reviewed by your attorney. You will also need to decide who will be buying the business – you personally or your company? Or, will you be buying the assets or shares? An experienced attorney will know what makes the best sense. Your attorney will also assist you in negotiating the purchase terms, the purchase and sale agreement, as well as any other details involved in transferring ownership.

How do you choose an attorney when buying a business?

When it comes to business acquisitions, your attorney’s input can have a strong impact on the outcome of the deal. They should be experienced with small to mid-sized business acquisitions, the different types of business structures, and how to protect you against any liabilities or tax obligations. They should be able to guide you through due diligence, transferring permits, and licenses. They should also know what documents need to be filed with the courts and how to deal with employees. Depending on the transaction, it may also require the expertise of labor or tax, or real estate attorneys. Before hiring an attorney, interview them, ask for references, and check to ensure that no malpractice suits have been filed against them.

3. An Accountant

One of the most important things to consider about buying a business is its financial performance. Yet, many small businesses are not the best bookkeepers. Additionally, their accounting methods focus on minimizing their taxes. As a result, their financials may not show much of a profit, or any profit. An experienced account will review their financials and ask the owner specific questions about how they make their money. An experienced accountant can help you determine the seller’s discretionary earnings (SDE) and the business’ earnings potential, giving you a sense of how much it’s actually worth.

How do you choose an accountant when buying a business?

A good accountant should be a Certified Public Accountant (CPA) through the American Institute of Certified Public Accountants and be experienced in your industry. They should be experienced with a small business acquisition, including financial due diligence and business valuation. They should understand that there are several valuation rules of thumb, and not all types of businesses are valued using the same method. Many accountants are also credentialed in business valuation and are certified as professional business appraisers. Ask for a referral from someone you trust, such as your attorney or a business broker. They may know of an accountant who is experienced with business acquisitions.

When it comes to buying a business, having an experienced team at your side can be extremely valuable. Their professional expertise and guidance are there to ensure you receive the most beneficial outcome. Plus, they bring a much-needed level of objectivity to a complex transaction.

Preguntas Importantes A Considerar Al Comprar Una Pequeña Empresa

duda@fcbb.com — Thu, 12 Oct 2023 21:39:43 GMT

Al comprar una pequeña empresa, querrá considerar las siguientes preguntas para ayudarlo en su búsqueda y aprovechar al máximo el trabajo con un Broker de negocios profesional.

1. ¿Qué tipo de negocio te interesa?

Asegúrese de centrarse en los negocios que le interesan. No querrás pasar mucho tiempo mirando las finanzas y los planes de negocios si el negocio no es algo que te va a importar. También deberá centrarse en las empresas que cumplen con sus habilidades y sobre las que tiene conocimientos. ¿El negocio se encontrará con su estilo de vida? ¿Está buscando ser propietario de un negocio a tiempo completo o está buscando ser un propietario ausente y contar con un gerente para realizar todas las tareas diarias? Todas estas son preguntas que querrá hacerse para asegurarse de que el negocio que compre sea exitoso y próspero.

2. ¿Qué finanzas son las más importantes para revisar?

Al revisar las finanzas de la empresa, querrá centrarse en las ventas brutas y netas del negocio para ver cómo se está beneficiando el negocio. Querrá ver los últimos tres años de estados de pérdidas y ganancias para ver si las ventas han tenido una tendencia al alza o si el negocio está perdiendo dinero cada año. Si un negocio no es rentable, ¿hay cambios simples que pueda hacer para cambiar el negocio?

3. ¿Qué puedes aportar al negocio para que tenga más éxito?

Al mirar a una pequeña empresa, deberá elaborar un plan de acción sobre cómo puede continuar haciendo que el negocio sea rentable o qué cambios puede hacer para mejorar la rentabilidad e impulsar el crecimiento futuro. ¿Necesitas mejorar la visibilidad de la empresa con más redes sociales o publicidad? ¿Se pueden hacer cambios en el menú para atraer nuevos clientes? ¿Sería capaz de ir tras cuentas más grandes para escalar el negocio? ¿Qué se está haciendo actualmente que está contribuyendo al éxito del negocio y podrá continuar el proceso? Un buen plan de acción te ayudará a mantenerte en el buen camino.

Por lo tanto, recuerde, elija un negocio que le apasione y tenga conocimiento. Revise las finanzas y asegúrese de que podrá continuar obteniendo ganancias o podrá hacer los cambios necesarios para cambiar el negocio. Cree un plan de acción para ayudarlo a mantenerse al día con los elementos que necesita revisar y los elementos que necesita cambiar. Comprar una pequeña empresa es un momento emocionante y difícil, así que asegúrese de obtener la ayuda y la experiencia de un Business Broker profesional. Le ayudarán a localizar el negocio correcto, hacer las preguntas correctas y guiarlo a través de todo el proceso para asegurarse de que tenga éxito y esté protegido.

Si desea una valoración gratuita para averiguar cuánto vale su negocio, comuníquese con Trent Lee. Es el #1 "Transacciones más cerradas" en todo el país para la franquicia First Choice Business Broker.

Important Questions To Consider When Purchasing A Small Business

duda@fcbb.com — Thu, 12 Oct 2023 21:37:22 GMT

When purchasing a small business, you will want to consider the below questions to help you in your search and to get the most out of working with a professional business broker .

1. What type of business are you interested in?

Make sure to focus on businesses that you are interested in. You do not want to spend a lot of time looking at financials and business plans if the business is not something you are going to care about. You will also need to focus on businesses that meet your skills and you have knowledge about. Will the business meet your lifestyle? Are you looking to be a full time on hands business owner or are you looking to be an absentee owner and count on a manager to perform all the daily tasks? All of these are questions you will want to ask yourself to ensure the business you purchase will be successful and prosperous.

2. What financials are most important to review?

When reviewing the company’s financials, you will want to focus on the gross and net sales of the business to see how the business is profiting. You will want to see the last three years of profit and loss statements to see if the sales have been trending up or is the business losing money each year. If a business is not profitable are there simple changes you can make to turn the business around?

3. What can you bring to the business to make it more successful?

When looking at a small business you will need to come up with an action plan on how you can either continue to make the business profitable or what changes can you make to improve the profitability and fuel future growth. Do you need to improve the company’s visibility with more social media or advertising? Can you make changes to the menu to attract new customers? Would you be able to go after bigger accounts to scale the business? What is currently being done that is contributing to the business success and will you be able to continue the process? A good action plan will help you stay on track.

So, remember, choose a business that you are passionate about and have knowledge about. Review the financials and make sure you will be able to continue making a profit or you will be able to make the necessary changes to turn the business around. Create an action plan to help you stay on track with the items you need to review and items you need to change. Purchasing a small business is an exciting and difficult time so make sure to enlist the help and expertise of a professional business broker. They will help you locate the right business, ask the right questions, and guide you through the entire process to make sure you are successful and protected.

If you would like a free valuation in order to find out how much your business is worth, reach out to Trent Lee. He is the #1 “Most Closed Transactions” in the entire country for the First Choice Business Broker franchise.

Comprender La Diferencia Entre Una Pequeña Empresa Y Una Gran Empresa

duda@fcbb.com — Thu, 12 Oct 2023 21:33:43 GMT

1. Cada uno genera ingresos de manera diferente

Los grandes negocios son empresas que generan ventas de 10 millones de dólares o más al vender sus productos o sus servicios. Por lo general, se negocian públicamente, por lo que tienen una junta directiva a la que informar y responder. Por lo tanto, mostrar una gran ganancia es extremadamente importante. También deben proporcionar estados financieros que serán auditados e informados públicamente.

Las pequeñas empresas son empresas que generan ingresos más pequeños y no son propiedad ni están supervisadas por una junta directiva. Por lo general, son propiedad de un propietario que está muy involucrado con el funcionamiento diario del negocio y todos los aspectos. Las empresas más pequeñas no están obligadas a que sus ganancias se informen públicamente o a ser auditadas.

2. Comprender la diferencia para los registros financieros

Las grandes empresas siempre quieren mostrar grandes ganancias y una tendencia de crecimiento positiva. También es importante que sus acciones estén funcionando bien para que puedan vender con un margen más alto y hacer felices a los accionistas actuales. Todo esto se debe a que los ejecutivos que dirigen las operaciones diarias de la compañía tienen que informar a una Junta Directiva que está claramente enfocada en los números.

Las pequeñas empresas tienen otro uso para los registros financieros. Debido a que son los únicos propietarios, no tienen a nadie a quien reportar, por lo que si el negocio no está funcionando bien, todo descansa sobre sus hombros. Los registros financieros se utilizan principalmente para minimizar los impuestos y mostrar que el negocio está funcionando en su máximo rendimiento. También utilizan sus ganancias para medir las ganancias discrecionales del Vendedor o SDE. Esto ayuda a valorar la empresa y muestra la viabilidad de la empresa.

3. Costos generales: cómo afecta las ganancias brutas

Cuanto más grande sea la empresa, mayores serán los costos generales. Tiene más empleados, más costos operativos diarios, mayores compras e inventario. Todo esto se come los ingresos brutos y netos. A menos que la gran empresa esté trayendo negocios continuos y grandes contratos, más rápido todos estos costos reducirán significativamente los ingresos.

Una empresa más pequeña tiene menores costos generales, menos empleados y no necesita preocuparse por obtener grandes contactos o proyectos para mantener sus puertas abiertas. Necesitan concentrarse en las operaciones diarias y en campañas de marketing más pequeñas. Pueden ser capaces de sobrevivir a una recesión en el mercado más tiempo que una empresa más grande.

Una vez que decida qué tamaño de empresa es el adecuado para usted, solicite la ayuda de un Business Broker profesional. Te ayudarán con tu búsqueda y podrán proporcionarte toda la información financiera. Piensa en cuánto conocimiento, tiempo y dedicación tienes que darle al negocio. Investigue y escuche a los expertos y disfrute del éxito de su nueva empresa.

Understanding The Difference Between A Small Business Vs A Large Businesses

duda@fcbb.com — Thu, 12 Oct 2023 21:32:17 GMT

1. Each One Generates Revenue Differently

Large businesses are companies that generate sales of 10 million dollars or more by selling their products or their services. They are usually traded publicly so they have a board of directors to report to and answer to. So, showing a large profit is extremely important. They must also provide financial statements that will be audited and publicly reported.

Small businesses are companies that generate smaller revenues and are not owned by or overseen by a board of directors. They are usually owned by one owner that is heavily involved with the day to day running of the business and all aspects. Smaller companies are not required to have their earnings reported publicly or to be audited.

2. Understanding the Difference for Financial Records

Large businesses always want to show large earnings and a positive growth trend. It is also important that their stock is doing well so they can sell at a higher margin and make current stockholders happy. This is all due to the executives running the day to day operations of the company having to report to a Board of Directors that are clearly focused on the numbers.

Small businesses have another use for financial records. Because they are the sole owners, they do not have anyone to report to so if the business is not doing well it all rest on their shoulders. The financial records are mainly used to minimize taxes and show the business is running at its top peak performance. They also use their earnings to measure the Seller’s Discretionary Earnings or SDE. This helps value the company and shows the company’s viability.

3. Overhead Costs – How it Affects Gross Earnings

The larger the company the higher the overhead costs. You have more employees, more daily operating costs, larger purchasing, and inventory. This all eats into the gross and net revenues. Unless the large company is bringing in continued business and large contracts the faster all these costs significantly reduce revenue.

A smaller company has lower overhead costs, fewer employees, and does not need to worry about obtaining large contacts or projects to keep their doors open. They need to concentrate on the day to day operations and smaller marketing campaigns. They may be able to survive a downturn in the market longer than a larger company.

Once you decide which size company is right for you enlist the help of a Professional Business Broker. They will help you with your search and be able to provide you with all the financial information. Think about how much knowledge, time, and dedication you have to give the business. Do your research and listen to the experts and enjoy the success of your new company.

Due Diligence ¿Qué significa para la vendedora?

duda@fcbb.com — Wed, 27 Sep 2023 01:36:43 GMT

La preparación del vendedor facilita la diligencia debida

Pasos para que los vendedores se preparen para el eventual proceso de debida diligencia.

El Comprador ha hecho una oferta por su negocio y en el Acuerdo de Compra establece que necesita diez días para completar la diligencia debida sobre su negocio, ¿qué debe hacer usted como vendedor?

El comprador querrá ver sus estados financieros y declaraciones de impuestos si aún no se los ha proporcionado.

Consejo #1 cuando le entregues el listado de negocios a tu Broker; Intente proporcionar los últimos 3 años de sus pérdidas y ganancias, balances y declaraciones de impuestos. Esto no sólo le ahorrará mucho tiempo y le demostrará al comprador que usted es sincero con sus documentos.

El Comprador querrá validar los ingresos y gastos que usted ha mostrado en sus pérdidas y ganancias para que comprenda completamente los ingresos reclamados por el negocio.

Consejo # 2: es una gran idea darle una explicación por escrito a su agente sobre cualquier “agregación” para que el Comprador no esté tratando de adivinar cómo llegó a sus cifras. A menos que el Comprador entienda cómo llegó a sus cifras de ingresos, él o seguirá pidiendo más comprobantes de ingresos

Consejo # 3 Cuanta más información (mantenimiento de registros) proporcione a su corredor por adelantado, menos información tendrá que seguir solicitando el Comprador. Intente proporcionar la mayor cantidad de documentación (informes de impuestos sobre las ventas, etc.) a su corredor. Recuerde que dependiendo de la época del año, el Comprador querrá tener sus finanzas actualizadas.

Consejo # 4 Intente mantener su grabación actualizada. Se han perdido muchos acuerdos debido a que el Vendedor no informó al Comprador sobre cambios importantes en los ingresos brutos o netos.

Due Diligence ¿qué significa para el Comprador?

Muchos compradores solicitan la debida diligencia en un negocio cuando hacen una oferta, pero no están seguros de lo que esto implica.

El Vendedor debe proporcionar al Comprador sus declaraciones de ingresos y posiblemente sus declaraciones de impuestos.

La diligencia debida generalmente no incluye ninguna contingencia que deba completarse, como licencias, acuerdos con empleados u otros elementos similares.

Intente elaborar una lista de los elementos que desea revisar para no solicitar elementos adicionales constantemente. El corredor habrá informado al vendedor que deberá suministrar ciertos artículos al comprador.

Como Comprador, usted tiene la obligación de revisar los documentos proporcionados por el Vendedor o pedirle a su asesor profesional que los revise. Lamentablemente, no puede pedirle ni confiar en que su corredor complete su debida diligencia por usted.

Una vez que reciba los documentos solicitados, deberá tomar una decisión dentro del plazo establecido en el Acuerdo de Compra.

Si decide que necesita más documentación para respaldar los ingresos que reclama el vendedor, intente hacerlo lo antes posible ya que tiene ciertas limitaciones de tiempo para obtener estos documentos. Está bien pedirle al Vendedor que explique ciertos gastos o cambios en los ingresos netos del Vendedor.

Finalmente, asegúrese de comprender completamente los ingresos y gastos del negocio antes de continuar.

Una vez que realice su debida diligencia, declara que está satisfecho de que las cifras que le proporcionó el vendedor parecen ser correctas y que está avanzando en la transacción.

Agregar respaldos: ¿qué son?

duda@fcbb.com — Wed, 27 Sep 2023 01:33:47 GMT

Comprender los verdaderos ingresos netos del vendedor

Una comprensión más profunda de qué gastos del vendedor se pueden agregar al resultado final de manera realista.

Sin embargo, estas explicaciones a veces plantean más preguntas de las que responden.

Cuando el comprador que estaba investigando el negocio examinó lo que decía el vendedor, se enteró de que, aunque no había nadie físicamente presente en la oficina durante el horario comercial, era necesario tener a alguien a cargo del trabajo de oficina. La cuñada venía por las noches o los fines de semana para equilibrar la chequera de la empresa, verificar que todas las piezas solicitadas se cargaran a las órdenes de reparación, comparar declaraciones de proveedores con facturas individuales, manejar las responsabilidades de nómina e impuestos sobre las ventas y encargarse de las tareas relacionadas.

Y si bien era cierto que el vendedor le estaba cobrando a la empresa los gastos personales de su automóvil, también lo era el hecho de que el automóvil se usaba para actividades comerciales necesarias, como recoger repuestos y llevar a los clientes a su casa u oficina.

Un estado de pérdidas y ganancias ajustado bien preparado anticipa las preguntas de los compradores y define claramente qué gastos en el estado de funcionamiento son y cuáles no son necesarios para una gestión eficiente del negocio.

Pero no todos los vendedores saben cómo proporcionar esa información de una manera que sea fácil de entender. Y no todo el mundo está dispuesto a hacer una divulgación total y completa.

Depende del comprador cuidadoso cuestionar cada elemento del estado de ingresos y gastos. Y para hacer preguntas como:

- ¿Es necesario cada gasto detallado para operar el negocio correctamente?

- ¿El total indicado para cada artículo es el gasto real, o el costo real es menor o mayor que lo que se ha registrado en los libros?

El comprador de negocios inteligente no acepta, sin cuestionar, las cifras enumeradas en las pérdidas y ganancias y las finanzas de una empresa que está considerando, pero investiga un poco para saber qué representan realmente las cifras.

Parte del trabajo de los corredores de negocios es interrogar al vendedor sobre cada artículo para determinar si el gasto es un “verdadero gasto comercial” o es un gasto necesario para administrar el negocio.

Un agente comercial competente revisará las pérdidas y ganancias del vendedor y "reestructurará" las cifras sumando los "gastos no esenciales" que se pagaron a través de la empresa para llegar a un ingreso neto ajustado para la empresa.

Los compradores encontrarán que el 98 % de los propietarios de pequeñas empresas tienen algún tipo de complemento y no deberían abandonar el negocio si están satisfechos con las explicaciones del vendedor sobre los “complementos”.

¿Su negocio se trata exclusivamente de usted?

duda@fcbb.com — Wed, 27 Sep 2023 01:30:51 GMT

Mirando su negocio a través de los ojos del Comprador

Ideas para despersonalizar su negocio y hacerlo más atractivo para los compradores.

Mire su negocio a través de los ojos de un comprador. Podría tener un negocio familiar muy exitoso con demasiada personalización personal. Cuando llegue el momento de vender, esto asustará a los compradores potenciales porque creen que los propietarios están tan vinculados con sus clientes que la empresa perderá ingresos una vez que cambie de dueño.

Los vendedores de este restaurante en particular habían intentado anteriormente vender su negocio sin éxito. Cuando hicimos el listado nos dimos cuenta de que nos estaban contratando por nuestra experiencia y, a menudo, por nuestros consejos de sentido común. Inmediatamente sugerimos que los vendedores hicieran cambios en su menú para eliminar sus nombres de cada artículo. El resultado fue que vendimos el negocio en un plazo muy corto. Su negocio fue realmente exitoso, pero los compradores no pudieron ver más allá de toda la personalización. Con este pequeño cambio, su negocio se volvió mucho más vendible, lo que por supuesto resultó en vendedores y compradores felices.

Un comprador potencial debe creer que el negocio que se ofrece es transferible sin una pérdida importante de negocio debido a la relación de los vendedores una vez completada la transacción.

Como corredores de negocios, siempre aconsejamos a los propietarios de negocios que están considerando vender que despersonalicen su negocio antes de comercializarlo. Entonces, ¿cómo puede el propietario de la empresa eliminar la personalización, como una gran cantidad de fotografías familiares, etc., sin alertar a todos de que están considerando vender? Un método que hemos presenciado es que el dueño del negocio considera alguna “pequeña” remodelación o pintura donde necesita quitar elementos.

La conclusión es que si está considerando vender su negocio, hable con su profesional de First Choice para revisar si su negocio no sólo es vendible y deseable, sino también si está listo para venderse según cómo lo verá el comprador. Asegúrese de que el comprador no sienta que su negocio "se trata exclusivamente de usted".

Due Diligence What Does It Mean To The Seller?

duda@fcbb.com — Wed, 27 Sep 2023 00:26:32 GMT

Seller’s preparation makes smooth due diligence

Steps for sellers to prepare for the eventual due diligence process.

The Buyer has made an offer on your business and in the Purchase Agreement it states that he needs ten days to complete his due diligence on your business, what should you as the seller do?

The buyer will want to see your financial statements and tax returns if they have not already been supplied.

Tip # 1 when you give the business listing to your Broker; try to give the last 3 years of your P&L’s, Balance Sheets and tax returns. This will not only save a lot of time and will show the Buyer that you are forthright with your documents.

The Buyer will want to validate the income and expenses that you have shown on your P&L’s so that they fully understand the income claimed on the business.

Tip # 2 it is a great idea to give a written explanation to your agent of any “add backs” so that the Buyer is not trying to guess how you arrived at your figures.Unless the Buyer understands how you arrived at your income figures he or she will keep asking for more proof of income

Tip # 3 The more information (record keeping), that you supply to your Broker up front, the less information the Buyer will have to keep asking for. Try to provide as much documentation (Sales tax reports etc.), to your Broker. Remember depending upon the time of the year, the Buyer will want up to date financials.

Tip # 4 Try to keep your recording keeping up to date. Many deals have been lost due to the Seller not letting the Buyer know of any major changes to the Gross or Net income.

Due Diligence what does it mean to the Buyer?

Many Buyers ask for Due diligence on a business when making an offer but are not sure what this encompasses.

The Seller should be supplying the Buyer, with their income statements and possibly their tax returns.

Due diligence usually does not include any contingencies that need to be completed such as licensing, employee agreements or other such items.

Try to put a list together of the items that you want to review so that you are not constantly asking for additional items. The Seller will have been advised by the Broker that he will need to supply a buyer with certain items.

As a Buyer you do have an obligation to either review those documents supplied by the Seller or have your professional advisor review the documents. Unfortunately you cannot ask or rely on your Broker to complete your Due diligence for you.

Once you receive the documents requested, you will need to make a decision within the time period set up in the Purchase Agreement.

If you decide that you need more documentation to support the income that the Seller is claiming, try to do this as soon as possible since you have certain time constraints to obtain these documents. It is OK to ask the Seller to explain certain expenses or changes to the Sellers net income.

Finally, make certain that you fully understand the income and expenses of the business before going forward.

Once you release your Due Diligence, you are stating that you are satisfied that the figures given to you by the Seller appear to be correct and you are moving forward in the transaction.

Add Backs: What Are They?

duda@fcbb.com — Wed, 27 Sep 2023 00:22:17 GMT

Understanding the seller’s true Net income

A deeper understanding of which seller expenses can be added back to the bottom line realistically.

These explanations, however, sometimes raise more questions than they answer.

When the buyer who was investigating the business looked into what the seller was saying, he learned that although there was no one physically present in the office during business hours, it was necessary to have someone handling office work. The sister in law came in on evenings or weekends to balance the company check book, verify that all parts ordered were charged against repair orders, to compare vendor statements with individual invoices, handle payroll and sales tax responsibilities and take care of related duties.

And while it was true that the seller was charging the business for his personal auto expenses, it also was the fact that the car was used for needed business activities such as picking up parts and taking customers to their home or office.

A well prepared adjusted profit and loss statement anticipates buyer questions and clearly defines what expenses on the operating statement are, and what are not necessary for efficient management of the business.

But not every seller knows how to provide that information in a way that's easy to understand. And not everyone is willing to engage in full and complete disclosure.

It's up to the careful buyer to question every item on the income and expense statement. And to ask questions such as:

- Is each itemized expense necessary in order to operate the business properly?

- Is the listed total for each item the actual expense, or is the real cost lower, or higher than what has been entered in the books?

The smart business buyer does not accept, without question, the figures listed in the P&L and financials of a company being considered, but does some investigating to learn what the figures actually represent.

Part of the Business Brokers job is to question the seller about each items to determine if the expense is a “true business expense” or is it an expense that is necessary to run the business.

A competent Business Broker will review the seller’s P & L’s and “recast” the numbers by adding back the “non-essential expenses” that were paid through the business in order to arrive at an Adjusted net income for the business.

Buyers will find that 98% of small business owners have some type of add back and should not walk away from the business if they are satisfied with the seller’s explanations of the “add backs”.

Is Your Business All About You?

duda@fcbb.com — Tue, 26 Sep 2023 05:46:04 GMT

Looking at your business through the eyes of the Buyer

Ideas to de-personalize your business and make it more desirable to Buyers.

Take a look at your business through the eyes of a buyer. You could have a very successful business that is family owned with too much personal customization. When it comes time to sell, this will scare off potential buyers because they believe that the owners are so tied in with their customers or clients that the business will lose revenue once the business changes hands.

The sellers of this particular restaurant had previously attempted to sell their business with no success. We realized when we took the listing that they were hiring us for our experience and often common sense advice. We immediately suggested that the sellers make changes to their menu to remove their names from each item. The result was that we sold the business within a very short time period. Their business was truly successful but buyers couldn’t see past all the personalization with this small change their business became much more saleable which of course resulted in happy sellers and buyers.

A potential buyer must believe that the business that is being offered is transferable without a major loss of business because of the relationship of the sellers after the transaction is completed.

As Business Brokers, we always advise business owners who are considering selling to de-personalize their business prior to the business being marketed. So how does the business owner remove personalization such as an abundance of family photos etc. without alerting everyone that they are considering selling? One method we have witnessed is that the business owner considers some “small” remodeling or painting where he or she needs to remove items.

The bottom line is that if you are considering selling your business, talk to your First Choice professional to review whether your business is not only saleable and desirable but also if your business is ready to sell from how the buyer will view it. Make sure that the buyer will not feel that your business is “All about you”.

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