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April, 2009
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| How Much a Buyer Should Put Down When the Seller Offers Financing
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Generally, most potential buyers in today’s market determine how much capital to put down on a business through offering a down payment between one third and half of the purchase price. For many businesses, this means approximately one year's worth of adjusted cash flow.
However, please keep in mind that there are cases where these levels of down payment will not clear the existing debt in the business. It is in your interest that the company be transferred free and clean of debt, so
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| Buying and Selling Business in the Middle Market
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VR defines
the middle market as a realm of businesses that have grown beyond single
management entities to significant regional or national stature with revenues
between $10 million and $200 million.
However,
the majority of the middle market is made up of businesses that are built
around a single product area and its natural extensions. Normally, they are not
comprised of multi-market corporations with a group of divisions. Therefore, the
enterprise is an integral unit that does n
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| Enhancing Direct Mail Response Will Bring More Revenue
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The
simplest and most immediate measure of a direct marketing campaign for your business is the
response level that it achieves. Many different factors can affect these rates,
so it is important to test all the variables before committing all your
resources to this particular approach. Also keep in mind that you must aim for
a realistic figure that is within your budget.
Remember
that your response rates will be greater when you define your target market as
precisely as possible.
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| The Importance of Going with a VR Business Broker Over One That Specializes in Real Estate
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Business brokerage is a highly-specialized field that's comprised of well-trained and
experienced professionals. Most people don't know that there are
numerous differences between selling real property and an ongoing
business.
Here at VR, we understand how to perform cash flow analysis that will best benefit our clients, maintain complete confidentiality, advertise for results and
advise the seller in such vital areas as pricing, terms, offer structure,
negotiations, legal issues, and bu
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| How to Finance Buying a Business
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In this day
and age, more people that have found themselves out of work are going into
entrepreneurship, specifically buying an already existing business. What you
may not know is that obtaining the necessary funds is easier than you think; you
just need to be aware of the options that you have available.
Stay Clear of the Bank
In most
cases, you won’t be able to find funding from traditional lenders such as banks.
They are not business or client friendly, no matter how muc
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| Keeping Good Business Records
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At least once a year, you should be doing an analysis of
your business to make sure that your books and records are in working
order. It’s not only good to see the progression of your company but to verify
that both your accounts payables and receivables are in the black if you
do decide later about selling.
Specifically, you should be paying attention to profit and
loss statements (P&Ls) when analyzing your business. Make sure that you are able to
account for all the in
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| When to Disclose Financial Records
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Just
as you would not want your personal financial documents made available to the
public, business owners only want serious buyers to have access to information such as their accounting books and records. Disclosure of such information does not occur until much further into the selling process, depending upon the progress. Even when such information is brought out into the open, the party in question will have signed a non-disclosure agreement.
We here at VR will
provide you with summ
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| Showing Due Diligence with Intellectual Property
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With ever
increasing frequency, intellectual property has become a bigger part of M&A
transactions. Intangible assets such as patents and proprietary industrial
designs have grown quite significant. In some cases, they’ve become more
important than physical assets when determining a value of a business.
Most
likely, if you are in negotiations to sell your business to a potential buyer,
the deal that’s being put on the table includes clauses that will give them
acc
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| Protecting the Business from being disclosed by the Public when on the Market
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Here at VR, we work with the problem of protecting a business that’s for sale from being disclosed to the public daily. We require that every prospective buyer sign a non-disclosure agreement stating that he or she will not make available any proprietary information learned about that business to others.
In addition, all advertising is completely generic in nature; therefore, no business’ name, location or any other identifying data will ever be revealed. Remember that no individ
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| Offer Seller Financing when Putting a Business on the Market
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If you’re deciding to sell a business, there are a number of questions that you need to consider. Seller financing is the most important one that you should be answering “yes” to after reviewing all the advantages.
Greater Chance of Selling Your Business
When you agree to terms, a business has a greater likelihood of selling than in an all-cash scenario.
A buyer can purchase with limited funds when a business for sale is offered with terms. Although, a few buyer
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| Calculating the Maximum Price and Necessary Terms for Your Business
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We here at VR are well schooled in calculating the maximum price and correct
terms that are necessary to successfully market your business. There are many methods that are employedincluding cash flow, industry averages,
current area trends and asset values.Because a VR business broker lives and breathes in the market that your business operates, that person
will be best equipped to advise you on the ideal situation to position your business to receive the best possible return.
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| Obtaining a Fair Market Price when Selling Your Business
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Business
owners face a myriad of challenges on a daily basis. One challenge that no
owner wants to grapple with is financial distress. If you’ve struggled with such
problems as declining profits, rising costs, fierce competition with no sign
that the situation will improve, selling may be the best solution. There are
steps that you can take to help maximize your business’ value and get a
relatively fair sale price.
Valuating Your Business
It’s never
an ea
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| Industry Rules of Thumb Tell Only Part of the Story with Business Valuations
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Rules of thumb can serve as useful sanity checks for controlling interests that are generally valued using more technically sound methods.
However, they should not be used as the sole method of business valuation for a few reasons:
Based on Unreliable Word of Mouth
Rules of thumb have always been largely based on folklore or word of mouthand notproven data and in-depth statistical analysis. Therefore, it should be takenwith a grain of salt, and never solely used to base your entire
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| Better to Sell Your Business to a Strategic instead of a Financial Buyer
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During a period of economic uncertainty, many entrepreneurs love to hear reports of businesses being sold to strategic buyers for apparently large sums. The truth is the investors that are strategically-inclined will recognize higher valuations with potential investments than those that are financially-oriented venture capitalists. Additionally, strategic investors can provide validation for financial investors, and influence them to recognize a higher valuation.
Strategic vs. Financial Bu
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| Awareness and Accolades Highlight VR's 2009 Regional Meeting in California
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VR
took over the Shoreline Yacht Club in Long Beach, California for their
Regional Meeting. Action, awareness and awards were the three keywords
for this event that saw a tremendous amount of excitement, interest and
invigorating motivation in increasing more business transactions.
I partook in the proceedings to help generate fervor
for creating and enhancing existing content for the VR office and
business-for-sale websites as well as other marketing material provided
in the VR
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| Setting the Record Straight on Business Valuation
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Many people can become incredibly confused about understanding what business valuation means. Many misnomers exist regarding the subject, which canbe a complex financial discipline that consists of unintelligiblejargon, reason and underlying mathematics to any outsider who maybe looking to buy or sell.
Therefore, let’sreveal the truth behind afew myths of business valuation.
1.) Net income and net free cash flow are identical
First of all, there is nothing remotely similar to th
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| Preparing Your Business for a Buyer's Visit
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Believe it or not, some business owners will take a qualified buyer’s visit too
lightly to the point where they only see it as a quick meet-and-greet before pushing him or her out
the door that he or she came in. This cannot be stressed that a buyer visit has to be taken very seriously for a number of reasons if you want to move closer to a deal and check.
A visit from a buyer is an opportunity for him or her to
meet not only with you but with your management team as well as tour
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| The Importance of Due Diligence When Buying or Selling a Business
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There is no such
thing as a short cut when approaching due diligence. As time consuming and
cumbersome as the process may be, it is not to be taken lightly. The
examination has to be comprehensive and thorough for both the buyer and the
seller.
Particularly for the
buyer, a less than thorough review could result in costly surprises upon
acquiring the business. A misstep in the seller’s research could end in losing
the deal or another kind of adjustment. Regardless of the side
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| A Business Plan for Growth in Sluggish Times
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“I don’t want to put any money
into my business until the economy improves.” How many times have you
heard a small business owner say something like that? It kind of gives me a
chill every time I hear it. Imagine deciding not to spend any more money on
transportation until traffic improves.
Many business owners who bought
their own businesses did it because they liked the idea of setting their own
hours, being their own bosses, making a good income, and growing their
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| Why Drafting a "Letter of Intent" is Recommended When Selling Your Business
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Except in rare cases, the use of a
letter of intent is recommended. First,
the letter contains certain binding provisions that can give both parties a
clearer understanding about the basic terms of the deal. For example, experienced buyers do not want
to spin their wheels while the seller shops an offer for their business around to other potential parties. Thus, the buyer may wish to
obtain a no-shop agreement from the seller, a provision requiring the seller to
refrain from negotiating
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| 2008 VR Annual Awards Winners
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We are pleased to announce the winners of the 2008 Annual Awards for their great success in business sales. We take great pride and consideration in choosing these select business intermediaries that have moved ahead of the pack, and continue to have our company be the leader in business sales and mergers & acquisitions.
This year, the VR Annual Award Winners are:
2008
Top 10 VR Offices
1.) Artesia, CA
(William Park - Owner)
2.) Charlotte, NC
(Brad & Jay Offerdahl - Owners)
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| Finding the Cutting-Edge Strategy
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Every company has to have a strategy. Specifically, you need one that is effective and will create a buzz in the marketplace without the complexities and the numerous graphs. A successful strategy should create significant value and lead to sustained growth and returns, investor enthusiasm as well as customer fanaticism.
First and foremost, strategy should generate a unique value. This is especially important in crowded markets, where competition is widespread and the numerous choices can ove
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