Business Information for Buyers and Sellers - Florida Business Broker Russell Cohen

Business Broker Russell Cohen

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Business Articles for Buyers and Sellers


Buying A Business

Home Based Guidelines

If you are a home-based business owner who is ready to sell, you may have many questions and concerns regarding selling your business. You may have started a business from scratch and had much success with it, but now you are looking toward retiring, or starting a new business, or taking a break. You don’t want to simply close down shop and allow your competitors to absorb your business. If possible, you would like to make the most from all your hard work and time; you would like to sell your business for a profit. But how? Can home-based businesses be sold? If so, can they be sold for a profitable price? Should you hire a business broker in Riverside to sell your business?  There are many factors that need to be taken into consideration when selling a business. For instance, a seller needs to acquire a business valuation, prepare the business for sale, develop a marketing plan, maintain confidentiality during the sale, and finally sale negotiations. It is no wonder that many business owners consult with a business broker when embarking on the journey of selling their business. However, as a home-based business owner, many may advise you not to hire a business broker to help you sell. To be honest with you, it can be done. If you are running a profitable business, with a few intelligent steps you could promote your company yourself. Start the selling process by having casual discussion with your professional contacts, acquaintances, customers, old employee, or even your friends. There are also online marketplaces and self-serve business sale platforms to assist you... read more

Where Does Your Company Fit?

The recently released 2003 Business Reference Guide provides a breakdown of the size of businesses in the U.S. Since exact data is almost impossible to obtain, some of the following are estimates or educated guesses. For reference purposes, they are divided into Levels – an arbitrary term. Business Size by Employees % of Total # of Businesses Average Anual Revenues Average # of Employees         1 to 4 54.7% $321,000 2.1 5 to 9 20.8% $792,000 6.6 10 to 19 12.3% $1,600,000 13.4 20 to 99 10.1% $5,701,000 39.2 100 to 499 1.6% $27,056,000 192.2 500-999 less than 1% $540,467,000 688.6 Note: Percentages do not add up to 100% due to rounding. Small Business Level One – Businesses in this category have annual sales of less than $500,000 and have less than four employees. There are approximately 3.1 million of them and they represent about 55 percent of all of businesses with one employee or more. These businesses tend to sell for $500,000 or less. Level Two – These businesses have annual sales of $500,000 to $1 million and have five to nine employees. There are approximately 1.2 million of them and they represent approximately 21 percent of all businesses that have one employee or more. They tend to sell for less than $1 million. Level Three – Businesses in this category have annual sales of $1 million to $2.5 million and have 10 to 19 employees. There are approximately 690,000 of them and represent about 12 percent of all businesses with one employee or more. These businesses tend to sell for less than $2.5 million.... read more

Why Do Deals Fall Apart?

In many cases, the buyer and seller reach a tentative agreement on the sale of the business, only to have it fall apart. There are reasons this happens, and, once understood, many of the worst deal-smashers can be avoided. Understanding is the key word. Both the buyer and the seller must develop an awareness of what the sale involves–and such an awareness should include facing potential problems before they swell into floodwaters and “sink” the sale. What keeps a sale from closing successfully? In a survey of business brokers across the United States, similar reasons were cited so often that a pattern of causality began to emerge. The following is a compilation of situations and factors affecting the sale of a business. The Seller Fails To Reveal Problems When a seller is not up-front about problems of the business, this does not mean the problems will go away. They are bound to turn up later, usually sometime after a tentative agreement has been reached. The buyer then gets cold feet–hardly anyone in this situation likes surprises–and the deal promptly falls apart. Even though this may seem a tall order, sellers must be as open about the minuses of their business as they are about the pluses. Again and again, business brokers surveyed said: “We can handle most problems . . . if we know about them at the start of the selling process. The Buyer Has Second Thoughts About the Price In some cases, the buyer agrees on a price, only to discover that the business will not, in his or her opinion, support that price. Whether this “discovery”... read more

What is a Contingency?*

A contingency in the sale of a business is a condition in the contract of sale or offer that must be resolved, satisfied or rectified by either a buyer or seller. If they are not satisfied then the sale will generally not go forward. Most offers on a business contain one or more contingencies. The sale may be subject to the buyer obtaining financing, or the seller repaving the parking lot. Experienced business brokers have seen just about every contingency there is. Most of these are placed in the offer by a buyer who has concerns about one or more issue and needs it or them to be satisfied before proceeding with or closing the sale. It may be as simple as the sale is contingent upon the buyer receiving a five-year extension of the lease by [a certain date]. Or, the offer to purchase may state that the sale is conditional upon the buyer’s approval of the seller’s books and records. The difference between the two examples is that in the first one, it is a specific event that must be satisfied, and a time limit is specified. The second example is open-ended, meaning that a buyer could opt out of the deal by disapproving the books and records essentially for any reason. Here are some tips on contingencies: There should be a time period in which the contingency must be satisfied. Without it the deal could go on almost forever. It, or they, as the case may be, should be reasonable. There is no point in making the sale contingent on moving the building to the next... read more

What is Goodwill?

In the practical sense, when selling a business, goodwill is all the hard work and effort the seller has put into the business over the years. When acquiring a business, goodwill is the difference between the tangible assets and the purchase price. Goodwill value should not be confused with going-concern value. There is a big difference. One leading business appraiser has defined going-concern value as, “The premise that a business will continue to operate consistent with its intended purpose as opposed to being liquidated.” In other words, the value of a business for just being in business is the going-concern value. It has nothing to do with whether the business is profitable, “on its last legs,” or merely breaking even. Essentially, if the doors are open, a business is a going concern. Most business owners view goodwill as good service, products and reputation. One dictionary defines Goodwill as, “A desire for the well-being of others; the pleasant feeling or relationship between a business and its customers.” The M&A Dictionary defines goodwill as: “An intangible fixed asset that is carried as an asset on the balance sheet, such as a recognizable company or product name or strong reputation. When one company pays more than the net book value for another, the former is typically paying for goodwill. Goodwill is often viewed as an approximation of the value of a company’s brand names, reputation, or long-term relationships that cannot otherwise be represented financially.” Some Examples of Goodwill Items Phantom Assets Local Economy Industry Ratios Custom-Built Factory Management Loyal Customer Base Supplier List Reputation Delivery Systems Location Experienced Design Staff Growing Industry... read more

Selling A Business

Why Your Business Won’t Sell!

What are the odds of your business actually selling once you have made the decision to sell? Well, if the annual sales of your business are $750,000 or less, research indicates that the odds of your business selling are only 18 percent. If your annual sales are $750,000 to $2 million, your odds increase to 25 percent. If your annual sales volume is above $2 million, the odds increase to 30 + percent. Keep in mind that approximately 75 percent of all businesses have annual sales of less than $750,000. What does this all mean? To put it bluntly: if you are thinking of selling your business, you have about a one in five chance of it actually selling. This obviously begs the question: why are the odds so poor? One would think that if you put your business on the market, it should sell in a reasonable length of time. Here are some reasons why some businesses didn’t sell-as explained by various business brokers and intermediaries. They are excerpted from an article in INC magazine, April 2002. The business is no longer listed for sale. The cash flow was strong, but a lot of buyers thought that the deal was overpriced. Buyers were intrigued, but the economics of the deal wouldn’t make sense, and the seller wouldn’t negotiate. There was serious interest, but the owner got distracted by an arrangement with a friend to solicit offers. None came through. We almost had a deal, but financing was impossible to find. We had three offers, including an accepted bid for $4 million, but the buyer couldn’t get financing. The... read more

You Can Help!

We look forward to working with you in finding a suitable buyer for your business. You, as the seller, are an integral part of the total marketing program. We would like to offer a few friendly recommendations that will help in our marketing efforts. We have checked those items that we think will be especially applicable to your type of business. It might also be helpful if you took a good look at your business from the perspective of a buyer. Try to put yourself in the place of a prospective purchaser of the business. What would you do to make it more attractive or more saleable? Obviously, the financial records of your business are critical to the sale of your business, but how it looks is also important. First impressions really count! If a potential buyer doesn’t like the appearance of your business, the rest of it may never get a chance. If you have any questions, please don’t hesitate to call us. It’s only by working together that we’ll get the best results. You might want to check the following to see if any of them are applicable: Keep normal operating hours. There may be a tendency to "let down" when you put your business up for sale. However, it’s important that prospective buyers see your business at its best. Repair signs, replace outside lights, etc. You don’t want your business to look as if it has been neglected. Maintain inventory at a constant level. If you let your inventory slide, your business will look neglected. If anything, increase it so your business will look busy. Remove... read more

Why Seller Financing?

Many business owners would like to receive all-cash for their business when selling. And yet they are often told that this is really not possible. Why? Most people are accustomed to financing just about everything – home, car, vacation home, even college for their children. The first question business brokers are often asked is, How much money will I have to invest to buy that business? Seller financing is usually necessary because of the lack of outside financing available. Certainly, some is available, but less than 90 percent of small business sales receive outside financing when selling. If you are selling you may be one of the few lucky ones, but the business better be absolutely perfect. If a seller is not willing to finance the sale, many buyers suspect a problem. After all, a business should be able to pay for itself and provide a reasonable income for a buyer. A buyer then wants to know what is wrong with the business that the seller wants all cash? Aside from this, even if a buyer has all of the necessary funds, he or she may want to spend their money on improving the business, adding equipment, building inventory, or just keep it for working capital. Another similar issue that is raised by sellers is that, if they are willing to finance the sale, they want some outside collateral to secure the loan on their business. They want to make sure that they get all of their money – with no risk. Buyers are very sensitive about this issue. Again, they raise the point about the business being able... read more

When Selling Your Business: Confidentiality Is Key

You’ve make the big decision to sell. Your books are in order, you’ve spiffed up the premises. What are you waiting for? Many sellers get to this threshold and then become concerned about confidentiality. They do not want the news of their decision to reach their customers, competitors, employees, or creditors. After all, they figure, customers may lose confidence in the business and go elsewhere, competitors might use this opportunity to spread rumors, employees might fear for their future security, and creditors might push for earlier payment. Not all of these qualms are reasonable; however, when selling a business, discretion is definitely the better part of valor. Few, if any, transactions have been wrecked due to excessive discretion. A breach of confidentiality, on the other hand, can severely alter the course of the transaction. What can you do to protect yourself against this possible deal-wrecker? Your first step is to look for expert guidance. When a business broker is involved in the sale, he or she will channel the process to keep the transaction within safely silent bounds. You can expect your business intermediary to do the following: 1. Qualify the buyer. Screening potential buyers is one of the most important benefits a business broker can provide for you. Keep in mind that roughly 90 percent of those who respond to business-for-sale ads are either not serious buyers or are not financially qualified. By screening prospects, the business broker will contribute to confidentiality by limiting the exposure of the business to the most promising buyers instead of to the merely curious time-wasters. 2. Use appropriate marketing strategies. How can... read more

Why Sell Your Company

Selling one’s business can be a traumatic and emotional event. In fact, “seller’s remorse” is one of the major reasons that deals don’t close. The business may have been in the family for generations. The owner may have built it from scratch or bought it and made it very successful. However, there are times when selling is the best course to take. Here are a few of them. Burnout – This is a major reason, according to industry experts, why owners consider selling their business. The long hours and 7-day workweeks can take their toll. In other cases, the business may just become boring – the challenge gone. Losing interest in one’s business usually indicates that it is time to sell. No one to take over – Sons and daughters can be disenchanted with the family business by the time it’s their turn to take over. Family members often wish to move on to their own lives and careers. Personal problems – Events such as illness, divorce, and partnership issues do occur and many times force the sale of a company. Unfortunately, one cannot predict such events, and too many times, a forced sale does not bring maximum value. Proper planning and documentation can preclude an emergency sale. Cashing-out – Many company owners have much of their personal net worth invested in their business. This can present a lack of liquidity. Other than borrowing against the assets of the business, an owner’s only option is to sell it. They have spent years building, and now it’s time to cash-in. Outside pressure – Successful businesses create competition. It may be... read more

Financing The Deal

Venture Financing: The Hard Facts

Government financing and venture capital financing account for less than one percent of all new business financing. Sixty-seven percent of all small to mid-sized businesses are financed by personal saving or friends; thirty-three percent are financed by lending institutions. The facts about venture capital financing are especially cold and hard… Venture capital is limited to high-growth potential, high capital-absorbing businesses. Venture capital benefits as few as 1000 businesses a years, and then… he average investment is $2.3 million, divided between 3-4 venture capital funds, which take 40-50-60 percent or more of the business’s equity. Venture capital investors expect the business to grow to $25-50 million within 5 years–at which time the business will go public or be... read more

Lessons Learned: Comments from Those Who Failed

The following appeared in a study, Financial Difficulties of Small Businesses and Reasons for Their Failure, prepared for the Small Business Administration (SBA). They are statements made by individuals whose business was in financial difficulty and subsequently failed. Their comments are listed under the stated reason for failure. Tax Troubles IRS stepped in and took over the bank account. The IRS threatened to repossess [our] tools of trade if [we] did not pay the $20,000 back taxes immediately. When the IRS agent told us that they will put padlocks on our doors if we can’t come up with the money in one month. Pressure from IRS. The IRS is “merciless.” IRS was attempting to reach the non-debtors wife’s income (i.e., levy) for the tax liabilities, which all preceded her marriage to the debtor. The IRS changed the locks on the business, and the business had to declare bankruptcy in order for the owners to be able to even get into the building. Personal Profiles Bank was not going to refinance her business because of divorce settlement. Inability to control blood glucose level, cholesterol, etc. due to stress of dealing with creditors. His wife has a nervous breakdown. He just knew they couldn’t handle their bills. The injury to his arm. She could not pay her medical bills. She had filed bankruptcy as soon as she couldn’t pay her bills, rather than get behind in payments. Creditors were hounding him to pay his wife’s credit card. He had not canceled the cards after the divorce. He returned his but never closed the accounts. “I had lost court case in trying... read more

Friends and Family: A Financing Option

The first job facing many prospective business owners is rounding up the cash necessary to make the purchase. They may find that banks have made borrowing difficult (or all but impossible), and that even SBA loans have requirements too stringent to meet. One viable option is obtaining financing from the seller; another is to seek help from family and friends. Borrowing money from family members and/or friends is one of the most frequently-used methods of small business financing. The pluses are obvious–there is trust, familiarity, and a general comfort level when dealing with those you know. The drawbacks are self-evident as well: “doing business” with family and friends comes with cautionary notes of legendary proportions. Everybody knows that family ventures can be complex and stressful, stirring up “bad blood” and lingering ill will. However, by taking the right preventive steps, buyers can take advantage of friendly financial help. 1. Set up an informal meeting to introduce your ideas. This is the time to “feel out” friends and relatives casually, being sure they understand that this is strictly a fact-finding (and fact-presenting) meeting. Anyone who is not interested or cannot afford to be involved has plenty of opportunity to say so without feeling obligated–or emotionally “blackmailed.” 2. Follow up with a professional business plan. Those who have indicated interest should now be treated with utmost professionalism. A formal business plan, including detailed financials, and a carefully-drafted business contract should be presented at this subsequent gathering. Consult a business professional for help in establishing a schedule for repayment based on the appropriate interest rates. Nothing will inspire more confidence in lenders... read more

Financing the Business Sale – Some Questions to Answer!

Structuring the purchase of a business is an issue that should be faced early in the selling decision. Ultimately, the final structure of the sale will be determined by actual negotiations between buyer and seller, but the seller must still answer the following questions- What is the lowest amount of cash acceptable from the sale? Has consideration been given to paying off all unsecured creditors and a portion of the closing costs? (Both are, in most cases, the seller’s responsibility.) Is there any long-term or secured debt that can be assumed by the buyer? (This may make more cash available to the seller.) What is an acceptable interest rate for the seller-financed sale? Will the business be able to service the debt and still provide a return acceptable to a buyer in relation to the down payment required? (This is a particularly important question for the seller to address.) What are the tax consequences of the sale? The professional business broker is a good source for assistance in structuring the sale of a business. Although they are not able to provide legal advice, business brokers are the experts of preference when the arena is the business marketplace. Brokers will use their knowledge of previous sales, current market conditions, and outside financing strategies, if applicable or available. A business generally represents a seller’s largest financial asset. How the sale is structured may mean the difference between the success or failure of the transaction. The best sale structuring will result in the best deal possible for both buyer and seller. A business broker can be the key player in accomplishing this... read more

Financing the Business Sale

Structuring the purchase of a business is an issue that should be faced early in the selling decision. Ultimately, the final structure of the sale will be determined by actual negotiations between buyer and seller, but the seller must still answer the following questions: What is the lowest amount of cash acceptable from the sale? Has consideration been given to paying off all unsecured creditors and a portion of the closing costs? Is there any long-term debt that can be assumed by the buyer? (This may make more cash available for the seller.) What is an acceptable interest rate for the seller-financed sale? Will the business be able to service the debt and still provide a return acceptable to a buyer in relation to the down payment required? (This is a particularly important question for the seller to address.) Recent studies indicate that the more favorable the terms the higher the price. In fact, one study found that offering favorable terms might increase the total selling price by 30 percent. A business broker professional can advise you on the all-important issue of seller... read more

Business Valuations

Why Your Company Needs a Physical?

Many executives of both public and private firms get a physical check-up once a year. Many of these same executives think nothing of having their investments checked over at least once a year – probably more often. Yet, these same prudent executives never consider giving their company an annual physical, unless they are required to by company rules, ESOP regulations or some other necessary reason. A leading CPA firm conducted a survey that revealed: 65% of business owners do not know what their company is worth; 75% of their net worth is tied up in their business; and 85% have no exit strategy There are many obvious reasons why a business owner should get a valuation of his or her company every year such as partnership issues, estate planning or a divorce; buy/sell agreements; banking relationships; etc. No matter what the reason, the importance of getting a valuation cannot be over-emphasized: An astute business owner should like to know the current value of his or her company as part of a yearly analysis of the business. How does it stack up on a year-to-year basis? Value should be increasing not decreasing! It might also point out how the company stacks up against its peers. The owner’s annual physical hopefully shows that everything is fine, but if there is a problem, catching it early on is very important. The same is true of the business. Lee Ioccoca, former CEO of the Chrysler Company said in commercials for the company, “Buy, sell or get-out-of-the-way,” meaning standing still was not an option. One never knows when an opportunity will present itself. An... read more

What Is a Company Worth?*

This question can only be answered by addressing other related questions, specifically: Who’s asking and for what purpose? From the perspective of the owner, prospective buyers, the IRS, lenders and divorce & bankruptcy courts, the value of a business for purposes of a sale, estate planning, orderly or forced liquidation, gifting, divorce, etc. can be vastly different. Intrinsically tied to the various purposes of valuation are numerous definitions of “value.” Here are a few examples: Investment Value – The value an acquirer places on a business based on a future return on investment determined by assessing past and current performance, future prospects, and other opportunities and risk factors involving the business. Liquidation Value – The value derived from the sale of the assets of a business that is closed or expected to be closed following the sale. Book Value – Book value is the difference between the total assets and total liabilities as accounted for on the company’s balance sheet. Going Concern Value – Used to define the intangible value which may exist as a result of a business having such attributes as an established, trained and knowledgeable workforce, a loyal customer base, in-place operating systems, etc. Fair Market Value – For the purpose of this article, the focus will be on transaction related valuations. Fair Market Value (“FMV”) is the most relevant definition of “value” and is of the most interest to business owners. The more knowledge business owners and prospective buyers have about the valuation process, the more likely they will come to an agreement on a purchase price. (For more information, see the article in this... read more

What Is a Business Worth?

Many courts and the Internal Revenue Service have defined fair market value as: “The amount at which property would exchange between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having a reasonable knowledge of relevant facts.” You may have to read this several times to get the gist and depth of this definition. The problem with this definition is that the conditions cited rarely exist in the real world of selling or buying a business. For example, the definition states that the sale of the business cannot be conducted under any duress, and neither the buyer nor the seller can be pushed into the transaction. Such factors as emotion and sentimental value cannot be a part of the sale. Surprisingly, under this definition, no actual sale or purchase has to take place to establish fair market value. That’s probably because one could never take place using the definition. So what does make up the value of a privately-held business? A business consists of tangible and intangible assets. The tangible assets are the most visible and the ones on which buyers too often base a judgment on the value of a business. As factors of value, fixtures, equipment and leasehold improvements are often valued first by the buyer. Well maintained equipment and attractive interior surroundings are the first things a buyer sees when visiting a business for sale. Make no mistake, regardless of what prospective buyers may say, the emotional impact of a physically well-maintained business can be a very positive factor. In addition, it is much easier to finance... read more

Valuing a Business from a Buyer’s Perspective

Often times, public company data is used when attempting to value a privately-held firm. This comparison usually requires substantial adjustments to offset the risks inherent in the privately-held or closely-held company. These potential risk characteristics are usually elements that are overlooked by sellers, but not by potential buyers. Sellers obviously look at their companies much differently than do prospective acquirers. Owners and company officers tend to place value on different factors than does a buyer. However, when it comes time to sell, it’s important that the seller consider those factors that are important to a buyer. Interviews with buyer prospects reveal that they are concerned with, and influenced by, the factors outlined below. They are often the basic considerations that determine whether they actually purchase the business, as well as the price they are willing to pay. It is the buyer’s evaluation of these factors that can make or break a possible sale. Buyers tend to look at these elements as risk factors. They also look at the expectation of future earnings. The following characteristics affect, both positively and negatively, the future earnings potential of and the risks involved in a target business. Historical Earnings The history of a company’s earnings is very important to a prospective buyer. A long history of stable, and hopefully increasing, earnings is a positive factor in whether the buyer will pursue the acquisition. Conversely, a brief history or inconsistent earnings will certainly be a negative factor. A short time frame (for example, a company that has been in business for a year or less) and erratic earnings present obvious risk factors. Entrepreneurs often... read more

How Important Is the Asking Price?

Depends on whom you are asking. If you’re the seller, you might say that the asking price is too low. The buyer would say, obviously, that the asking price is too high. How can they both be right? Who decides? Most sellers have an idea of what they want for their business. It can be based on their knowledge of the industry and what similar businesses have sold for. It may be, however, based on just a wish. There is the old, but true, story of the two partners who decided to sell their business. When asked what the price would be, they both responded with the same answer – $2 million. When asked how they arrived at that price, they each said that they wanted to be a millionaire and two times $1 million was $2 million. Sellers often say that the asking price doesn’t make any difference since it can always be reduced. What they don’t realize is that if the price is not realistic, buyers won’t even look at it. Buyers are aware that they can make an offer, but if the starting point is too high, what they consider a fair price may be so low that why bother even making the offer. Studies using various data bases comparing actual selling prices of businesses with their asking prices show that the difference is about 15 percent for small businesses. The larger the business, the smaller the spread. Businesses sold for $1 million-plus sell for about 90 percent of the asking price, while smaller ones sell for about 85 percent of the asking price. The important... read more

Using a Professional Business Broker

Why Use a Business Broker/Intermediary

Business brokers and intermediaries can be valuable allies when it comes time to sell your business. Here are just some of the reasons why it pays to work with professional business brokers: They help sellers establish a fair asking price – fair to the seller and the buyer. There is no sense going to market with a price that won’t attract serious, potential buyers. They sift through potential buyers and show the business only to those who are serious about business ownership. About one out of 50 people who call about a business ad are really serious enough that they will eventually buy a business. They work on a confidential basis so the entire community doesn’t know that the business is for sale. They show the business at times convenient for the seller and will also take charge of the process. When a potential buyer shows interest in a particular business, the broker will provide preliminary information on the business, schedule meetings with the seller, negotiate the terms of a proposed transaction, and will generally work with the parties until a satisfactory conclusion is reached. They guide both the buyer and the seller through all the nuances of the deal, walking them through the various steps necessary for a satisfactory conclusion. They work with the various outside professionals and act as the conduit between them. Finally, a business broker/intermediary, will in most cases, obtain a selling price that is more than the seller would obtain on his or her... read more

Why Use A Business Broker To Sell Your Business

Some business owners feel that they can sell their business themselves. After all, who knows the business better than they do. Often, these owners become sellers by simply placing an ad in the newspaper and waiting for the telephone to ring. They think of the money they can save by not paying a broker’s fee. Sounds good, but it very seldom works! First, the telephone may not ring. If it does, it may be the local competition attempting to find out what is for sale and for how much. Those who may be interested will visit the business, ask a thousand questions, leave, and never come back. So much for confidentiality, proper pricing, qualifying the prospects, and finding the right buyer. Business brokers are not magicians. They can’t sell an overpriced business or create a demand that isn’t there. What they can do, however, is market the business so it is shown only to qualified and interested buyer prospects. Sellers have to understand that business brokers can provide suitable prospects from the overwhelming majority of people who don’t really know what they want. Very few buyer prospects really know what kind of business they want, or what best fits their needs. In fact, 90 percent of all buyers are considering buying a business for the first time, and are open to all suggestions. A business broker can supply many prospective buyers that sellers couldn’t find on their own. Very few sellers price their business properly. A business broker has a handle on the local marketplace, access to market data, and pricing information not available to a seller. Business brokers... read more

How Can the Professional Business Broker Help?

Whether buying a business or selling one, going it alone, so to speak, can be full of surprises and pitfalls. Here are just a few of the ways that a business broker professional can assist in the sale of a business: Help maximize the price a seller can receive for the business. Many times the secret is in the structuring of the price and terms. A seller shouldn’t leave money on the table. Create and prepare a marketing strategy. The business broker professional knows the marketplace. Interview, educate and show the business to only qualified buyers. Keep the seller informed of everything that is happening regarding the sale of his or her business, and provide advice accordingly. Present all offers and point out the weaknesses – and strengths of each one. Provide the names of other qualified advisors, if necessary and any other resources that will be helpful during the selling process. The business broker professional is an experienced businessperson who specializes in selling businesses and helping people interested in selling and buying them. They know the current market conditions, pricing strategies and the selling process itself. They know how to market the business and work with qualified buyers. Sellers must understand, however, that the marketplace and not the business broker will determine the final... read more

Business Brokerage and Mergers & Acquisitions

We are often asked — what is the difference between business brokers and intermediaries? Or, what is the difference between business brokerage and mergers and acquisitions? Others ask – where is the dividing line between the two? Is the mid-market size business the same as mergers and acquisitions? We think the battle is really one of semantics. Many successful practitioners who handle the sale of the larger business feel that they are business brokers because thats exactly what they do. Others feel that, since they handle the larger business, they should be called something else, so they prefer the term intermediary. Now, we find that those who handle the very large businesses dont want to be called either, but use the term investment banker. It all depends on whom you talk to, we guess! The question of what is the dividing line, at least dollar-wise, between the two is an interesting one, since business brokers tend to attempt to sell whatever theyre comfortable with and place very few restrictions on themselves. Intermediaries and investment bankers generally only handle the mid-size company and do not work on any deals that fall below that plateau. A very successful business broker told us that, several years ago, his largest deal was $23 million, and his smallest was $40,000 quite a spread. However, it shows the range in size that business brokers will and can handle. Here is how we see the dividing lines between all of the players. Regardless of the size of the deal they are all dealmakers. Keep in mind that the dividing lines are fuzzy at best. Businesses priced... read more

10 Questions To Ask A Professional Business Broker

How will you market my business? How much do you think I should ask for my business? How will you show my business? Do you cooperate with other business brokers? Will you display my business on any Internet sites? How often will you contact me about what is going on? Can you provide any references? Are you affiliated with any business brokerage associations or trade groups? May I have a sample copy of your listing agreement? Can you please tell me about you and your... read more

General Business

Important Government Websites

The following is a list of useful phone numbers and web site addresses (URL’s) to aid you: Internal Revenue Service Contact the IRS regarding Employer’s Identification Number (EIN) (use form SS-4 to apply for EIN), income taxes, withholding from employee compensation and federal unemployment taxes. Main IRS Website IRS "Tax Information for Businesses" web page IRS "Download Forms and Publications" web page You must have Adobe Acrobat Reader to download forms. 1-800-829-1040 1-800-829-3676 1-770-455-2360 954-423-7623 Florida Department of State Contact the Florida Department of State, Division of Corporations for incorporation and fictitious name registration questions. Florida Division of Corporations web site Secretary of State "Download Forms" web page Download corporate filing and fictitious name registration forms. You must have Adobe Acrobat Reader to download forms. 1-850-488-9000 Florida Department of Revenue Contact the Florida Department of Revenue regarding sales and use tax, state intangible tax and corporate tax questions. Coral Springs Service Center (for all locations North of Broward Blvd) 3111 N University Dr #504 Coral Springs, FL Hollywood Service Center (for all locations South of Broward Blvd) 6565 Taft St #400 Hollywood, FL 33024 Department of Revenue web site Department of Revenue "Download Forms" web page 1-850-488-9750 1-800-488-6800 954-346-3000 954-967-1000 954-967-1821 Florida Department of Commerce Division of Labor, Bureau of Unemployment Compensation Contact the Bureau of Unemployment Compensation for all matters related to the State unemployment insurance. Fort Lauderdale Office: 2530 W Oakland Park Blvd Bureau of Unemployment Compensation "Home Page" 954-667-5700 Division of Workers’ Compensation Contact the Division of Workers’ Compensation to get information on Workers’ Compensation Insurance. Division of Workers’ Compensation "Home Page" 1-850-921-6966... read more

Women Business Owners: Coming On Strong

If there were any doubt that women owners are an ever-growing force on the independent business scene, new studies of leading female entrepreneurs around the world supplies incontrovertible proof. The National Foundation for Women Business Owners (NFWBO) has been hard at work, researching the small business climate for women and identifying strong trends. Fifty Top Women Show Trends In one study done jointly with IBM, the NFWBO used as its subjects 50 top women business owners (plus 10 more up-and-coming) to compile these findings: These women owners cover a wide range of industry categories, for example: 27 percent in manufacturing, 25 percent in retail trade, and 10 percent in real estate. Slightly less than half (46 percent) of these women inherited their businesses, and more than half began their own: 34 percent by themselves, and 17 percent with others. As a group, the study subjects generate $139 billion in revenue and employ more than 150,000 workers. And, the numbers keep increasing. The Majority of Women Owners Prefer “Small” More research from the NFWBO shows another picture: that women owners, taken as a whole, prefer pared-down operations. The very smallest, in fact: among the approximately eight million women-owned businesses in the U.S., 75 percent of these are one-person operations with no employees. Ownership of such a small business gives women maximum flexibility with work schedules and offers a better chance of keeping their home lives healthy as well. Ignoring the big-business gurus who claim that small does not equal successful, women owners continue to prefer keeping their businesses small. Although the NFWBO research reveals that fewer than one percent of... read more

Stock versus Asset Acquisitions

One Should always consult there accountant on these matters, however, from a lenders standpoint both forms of sales are acceptable. As a buyer, you should be aware that in a stock sale, you may be resposible for prior sins of the corporation you are buying. Your attorney can assist with language, rights of offset against seller notes and other defenses against some of these risks. Also, under the stock sale, assets are valued based on their book value, which is often less than the replacement or market value. A separate appraisal may be rquired to address this discrepancy in value as a means to provide the maximum financing. In an asset sale, many of our lenders will use the asset values as agreed to between buyer and seller, regardless of their book value, which negates the requirement of a costly appraisal Information was provided by Simple... read more

How & Where to obtain an Occupational License in Broward County?

OCCUPATIONAL LICENSES The following table will give you information where to obtain your occupational licenses in Broward County. The license must be from the city where the business is located. Call the city first to make certain the address is actually within the boundaries of that city. This will save you valuable time. First you get a license from the city, then from the County. Licenses are valid for one year. The generally expire on September 30th. If you live in unincorporated Broward County, you need only obtain a Broward County occupational license. Most cities allow home based business with some restrictions such as: No clients/customers are allowed to come to your home No employees No shipping and receiving of goods Do not use the home address in any advertising materials No signs on building Check with your city for the exact restrictions that apply. Broward County 115 S Andrews Ave, Ft. Lauderdale 954-765-4697 www.broward.org Coconut Creek 4800 W Copans Rd 954-973-6752 www.ci.coconut-creek.fl.us Cooper City 9090 SW 90th Pl 954-434-4300 Ext 237 Coral Springs 2801 Coral Springs Dr 954-346-1782 www.coralsprings.org Dania Beach 100 W Dania Beach Blvd 954-924-3644 www.ci.dania-beach.fl.us Davie 6591 Orange Dr 954-797-1112 www.davie-fl.gov Deerfield Beach 150 NE 2nd Ave 954-480-4333 www.deerfieldbch.com Fort Lauderdale 300 NE 1st Ave 954-828-5191 Ext 3 www.ci.ftlaud.fl.us Hallandale 400 S Federal Hwy 954-457-1340 www.ci.hallandale.fl.us Hillsboro Beach Does not issue occupational licenses. City has only residential districts! www.townofhillsborobeach.com Hollywood 2600 Hollywood Blvd Room 103 954-921-3225 www.hollywoodfl.org Lauderdale by the Sea 4501 Ocean Dr 954-776-0576 www.townoflbts.com Lauderdale Lakes 4300 NW 36th St (Trailer in Parking lot) 954-535-2753 www.lauderdalelakes.com Lauderhill 2000 NW 55th Ave 954-717-1510 www.lauderhill.net... read more

The Lease- Buyers and Sellers Beware!

The lease is an important issue and, in many cases, a major issue. Whether you are buying or selling a business, it’s important to understand that, if the real estate is not included, the lease is a critical lement of the sale process. There are three ways the transfer of the lease can be handled: A new lease- A new lease can be entered into buy the lessor and the buyer. A sub-lease- This can be negotiated between the seller and the buyer. In a sub-lease, the seller of the business becomes the landlord. The exsisting landlordmust always approve the sublease. The Assignment of the Lease- This is the most common method of transferring the lease. The seller simply assigns the existing lease to the buyer. The buyer assumes responsibility fot the lease, and in most cases, the landlord must approve the assignment. Sellers should be aware that, in most cases, they are still responsible for the terms of the lease. Sellers should take a look at the lease on their business and ask themselves the following questions: Is the lease long enough and the rent low enough to make the business attractive to a potential buyer? Is the rent consistent with similar businesses in the area? Are there any terms or conditions of the lease that might be unfavorable in the eyes of a potential buyer? Are you on good terms with the landlord- and can the lease be transferred without any hitches? Your business broker is a good source to review the lease and its terms from a business sale perspective. (This information was taken from the... read more

Quick Tips

Home Based Guidelines

If you are a home-based business owner who is ready to sell, you may have many questions and concerns regarding selling your business. You may have started a business from scratch and had much success with it, but now you are looking toward retiring, or starting a new business, or taking a break. You don’t want to simply close down shop and allow your competitors to absorb your business. If possible, you would like to make the most from all your hard work and time; you would like to sell your business for a profit. But how? Can home-based businesses be sold? If so, can they be sold for a profitable price? Should you hire a business broker in Riverside to sell your business?  There are many factors that need to be taken into consideration when selling a business. For instance, a seller needs to acquire a business valuation, prepare the business for sale, develop a marketing plan, maintain confidentiality during the sale, and finally sale negotiations. It is no wonder that many business owners consult with a business broker when embarking on the journey of selling their business. However, as a home-based business owner, many may advise you not to hire a business broker to help you sell. To be honest with you, it can be done. If you are running a profitable business, with a few intelligent steps you could promote your company yourself. Start the selling process by having casual discussion with your professional contacts, acquaintances, customers, old employee, or even your friends. There are also online marketplaces and self-serve business sale platforms to assist you... read more

S vs. C Corporations

An "S" corporation can be very attractive business entity. Available to small companies (up to 35 shareholders, all of whom must be citizens or residents of the US, it provides the benefits of incorporation, while eliminating "double taxation" by giving you a pass-thru tax(passed-through to your personal return). Instead of being taxed at the corporate level, profits and losses are passed to your personal return. These extra tax advantages are not available to shareholders in a regular "C" corporation. But there are limitations to "S" corporations. They can only issue one class of stock, no corporate shareholders are allowed and all shareholders must be U.S citizens or taxpayers. Article submitted by... read more