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Submit Questions to VR
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| How Do You Answer a Buyer’s Concerns Regarding Your Business?
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Any buyer when they’re reviewing your business will have these questions to ask:
What is the business’ growth potential?How can I grow the business?What separates your business from the competition in the marketplace?What are the variables involved in operating the business?How stable is the management and work force in place?Are there pending issues regarding the lease or real estate involved?What type of existing debts and other liabilities are present?Has the business been audit
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| Preparing an Offer as a Business Buyer
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When you are looking to buy a business, VR will assist you in finding the one that matches your qualifications and interests. More importantly, we will educate you on what the seller expects from you as a buyer, performing due diligence and writing an offer that’s fair in relation to the marketplace.
Both the seller and you, as the buyer, have to understand each other’s motivations and personality types. Every VR business intermediary will assist you in deciding what is most impor
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| Calculating the Working Capital that You Have Available
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Working capital describes capital (usually cash) as it moves through a business. It first flows from a company to pay for supplies, materials, finished goods inventory and wages to workers who produce goods and services. It then flows into a company as goods and services sold as well as through new investment equity and received loans. Each stage of this cycle consumes time. The more time the stages consume, the greater the demands are on working capital.
The formula for working capital ca
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| Understanding Your Strengths and Weaknesses before Buying a Business
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When you're coming close to buying a business, you will want to investigate and research every objective you have. You will want to see what the alternatives to achieve these goals are.
Once you have done this, you should assess the business you’re buying and its current operations. Understanding the company’s strengths and weaknesses will help you be more objective about its value and allow you to negotiate more effectively.
Can You Sell the Products in the Current Market?Assessin
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| Making an Offer on a Business
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When an offer is made on a business; generally, there are three ways for to do this as well as negotiating price and terms. There is the down payment, the transfer of a property lease and how the financing involved.
Terms of PaymentAn offer will include both a down payment and a seller carry-back note from the buyer – i.e. paid over x years at x%. This is based on the value of the business. AnyVR Business Intermediary will be able to determine the fair market value of the business where b
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| Reducing Risk Will Pay Off at the Closing Table
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When considering the idea of selling your company, it’s important that you the owner understand that the relationship between risk and cash flow will always be the main consideration of the company’s value. Depending on the size of the company, Seller’s Discretionary Cash Flow, EBITDA, or EBIT are all standard levels of cash flow (adjusted) potential buyers will look at as the basis for determining value.
Ultimately, it’s the present value of future cash flow that a p
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| Determining the Fair Market Value of a Business
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It should be noted that in determining the fair market value of a business, the appearance of the establishment, equipment and products is imperative. In particular, the equipment must be judged on mechanical and electrical working conditions and not just on appearance. Paint, lubrication and general clean up should be part of general maintenance and should not be used to cover up defective equipment.
The physical condition, deterioration, depreciation or state of repair is a major factor in v
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| Advantages of Buying a Franchise
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When you are looking to become a business owner for the first time,buying a franchise can be a smart move.
With buying a franchise, you have the best of both worlds: starting a business you own independently, while having the support of an established operating system with already existing products and services.
Although, in most cases, you will have to follow a set of rules, regulations, restrictions and other requirements when you buy a franchise; you can establish a customer base right aw
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| Operating an Effective and Successful Business after Buying
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When you are going to buy a business, you have to know how to be an effective manager. Since the business you have bought is now yours to run, there are some important points to follow to be not only an effective but a successful manager.
You should be articulate and vocal about your beliefs – this will set the tone for your workplace.
You should lay down strict standards for your employees to follow.
An even hand and temperament will help you will retain employees long term.
Have th
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| Investigate Your Financing Options When Buying a Business
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One of the most important requirements when you buy a business is raising capital, which will require you to prepare a well-thought-out business plan. This is vital not only for when you are using capital to buy a business but also for budgeting initial operating expenses. Additionally, a business plan will help creditors to determine the maximum amount and terms of financing that will be made available to you.
CHOOSING THE RIGHT FINANCING OPTIONS
Since most financial institutions only provide
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| Deciding a Fair Price when Selling a Business
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When you are looking to sell a business, there are many way to price that business, which your VR business intermediary can assist.
Multiples of cash flow – Usually 1 to 3 times annual cash flow depending on the type and size of the business;
Value of equipment and inventory – This includes one year’s cash flow;
3 to 12 monthly gross sales – Depending on the type of business;
Book value of assets.
Many elements will affect the price of the busin
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| Why You Must Find a Qualified Buyer When Selling Your Business
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Remember that even though you may find aspiring and established business owners that are looking to buy a business, they might not be qualified to buy your business.VR Business Sales will help you find the most qualified buyers to take over your business through our extensive global network.
Your local VR business intermediary will consider a variety of factors to determine the most qualified buyer for owning your business:
Buyer’s Capital;
Source of the Buyer’s Capital
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| Determining the Right Strategy for Your Business that You Buy
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In order to determine the strategy that will work effectively after buying your business, there are five essential questions that will help you determine if you will able to implement and push you to prosperity and solidify customer loyalty.
As a business owner, you cannot expect to answer these questions quickly, nor are the answers black and white. Evaluate the strategy that you want to follow with these five questions at least twice a year – even if the answers haven’t changed si
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| The Main Two Methods of Valuating a Business
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Whether you’re selling or buying your business, your VR Intermediary will perform a business valuation.
There are two methods that are normally used in business valuations: Multiple of Earnings and Discounted Cash Flow Approach.
Multiple of Earnings
This method can also be used when valuing a business. Parties dealing with private businesses should also remember that most are likely to be subject to a much lower price-to-earnings ratio than a publicly-held corporation because the smal
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| Different Ways to Financing Your Business
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With the majority of businesses,financing to buy a business is going to be needed to both keep your business in operation if you have just bought it and/or if you’re looking to expand your business. Here at VR, we will offer advice and support to small and medium-sized businesses, providing some ways to raise capital if you’re looking to buy.
Debt Financing
With this way, the principal must be repaid with interest. However, this does not give the lender ownership control. Depending
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| Financing When Buying a Business
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In every situation where a bank lends money to a person, they intend to make a profit, not a loss. Remember that a bank is not a charitable institution but a business.
To verify that a bank will be paid back, they will make sure that there is sufficient assurance thatthe person in question can not only repay the loan but has met similar financial obligations in the past.
Here are the five C’s of credit that banks use to evaluate potentialloans forbuying a business as told by the Small
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| Having Clear and Effective Standards for Your Web Site Design
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When you are putting together a web site for your business, you want to follow a particular pattern when someone is viewing that content. In general, people navigate and search in a certain way; therefore, you don’t want to have too many diverse sections when designing your web site.
There are some firm guidelines that you should follow when designing your web site:
Effective Home Page Design
With a home page, there are two main functions:
Provide the visitor with the co
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| Is Buying a Home-Based Business Right for You?
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Many people think about this all the time: the chance to combine both career and family life by working from home. But once you make the leap, the concern enters your mind: will you have trouble waking up in the morning without the need to drive to an office?
If you have doubts already, then working from home will not be for you. While running a home-based business offers tremendous freedom and flexibility, it also requires a high degree of motivation, self-discipline and organization. If y
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| Importance of Planning when Buying a Business
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Considering that buying a business can be a scary process for some, here at VR, you are best advised to develop a business plan that can help ensure that you know what your goals are and how to achieve them. In essence, a business plan is a road map that helps you focus on something else besides your apprehension.VRwill sit down with you and discuss the best course of action for operating a successful business; following the transaction every step of the way. Meanwhile, here are some points to c
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| What Not to Do if You Become a Small-Business Owner
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There are always concerns and reservations when buying a business. Particularly, there's the question of "What if I make a bad decision while going through the process or moving forward after the transaction." Every industry is going to have its own set of pitfalls that you want to avoid.
Here are a few things that you should NOT do when you're going to be buying a business:
Set Up an Equal
Partnership
Business owners often share the start-up responsibilities with
a partner or p
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| Importance of the Brand in Business
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What is a brand?
It is the difference between a bottle of sugared, flavored,
carbonated water and a bottle of Coca-Cola.
A brand is the sum of the functional and
emotional characteristics (both tangible and intangible) that a consumer attributes
to a product or service a business creates and sells. These characteristics are embodied in a name,
trademark, symbol or design or any combination of these.
This is a powerful form for any business that allows them to separate themselves from
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| Creating More Profitability for Your Business
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Every
business is always finding ways to increase their profit. Generally, there are a
few ways that this can be done:
Conducting a Market Analysis;
Increase sales volume;
Reducing and/or ensuring that costs
are fully recovered;
Improving the product mix – varying
the relationships between the volumes of individual products or groups of
products sold;
Raise prices for select goods or
overall;
Reduce the capital neede
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| Choosing the Proper Business Entity to Buy a Company
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If you’re a company owner that’s buying another business to operate, there are some options that you can consider when proceeding.
TYPES OF ACQUIRING ENTITIES
Normally, there are four basic types of entities that can be used to buy and operate the business of the acquired corporation:
C Corporations;
S Corporations;
Partnerships – General or Limited;
Limited Liability Company (LLC) – a hybrid entity authorized in 1988 by the IRS that off
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| Dealing Effectively With Computer Viruses in Your Business
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Computer viruses are always a threat on the Internet; therefore, they will be a threat to your business. Whether you’re building, about to buy or sell one; today, you can get one as easy as visiting a web site or opening an email.
Types of Viruses
What a computer virus does is attach itself to files on your hard drive, before replicating itself. These can infect all sorts of files on your computer from programs and system files to Word documents and HTML files. With the Internet no
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| Knowing When You’re Ready to Own a Business
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The idea of becoming your
own boss is always appealing as millions of people have tried and liked it. How
you determine if you are ready to become one yourself? What are the challenges
of buying an existing business that’s for sale?
There are ten questions that
you need to be able to ask yourself:
Do I thrive on risk and challenge?
Do you want the
freedom and responsibility?
Not having
anyo
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| Recognizing Copyrighted and Trademarked Material on Your Business Web Site
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No matter
what the kind of business that you are in and products that you sell; if you
have a web site, you need to be aware and able to address all the legal issues
that you could be privy to in a court of law. These comprise of various types
of digitized content such as graphics, text, images, music and coding.
Assuming What Content is Protected
Web site
owners have to assume that all content is protected ether by copyright or moral
rights.
Copyright protection disallo
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| Why Behaving Ethically is Important for Business
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It’s not
unusual to look in the newspaper or on the Internet any day of the week to find
at least one business scandal that has taken place. It’s not shocking for
people to read about how a corporation such as Enron violated the rules of engagement
that’s accepted by society. Whether company finances have been manipulated in
order to secure a business deal, child labor has been used to assemble a
product, discriminatory practices have prevented the employment or promotion
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| Why Public Relations is Important in Business
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All of us
would agree that investing in creating a strong, credible image for our
business is a worthwhile endeavor. We also know that long-term,
business-building advertising and marketing activities are absolutely necessary
for sustaining the effective business sales.
However, many
of us are not aware that our secret weapon in this continuous game of attracting
new and repeat customers is public relations. This is due to the fact that people’s
attitudes about businesses a
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| Why You Need to Understand Legal Issues in E-Commerce
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In any
e-business strategy, it is important to address comprehensively the key legal
issues. At a basic level, these are matters such as copyright and libel; at a
more advance level, such things as restrictions pertaining to the sale of your
product within particular jurisdictions that requires attention. When
addressing legal issues on the Web, keep the following in mind:
Prevention is Better than a Cure
Establishing
a sound legal structure early on is much easier than trying to
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| Determining the Right Selling Price for a Dry Cleaning Business
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According to the International Fabricare
Institute, dry cleaning businesses are currently selling for a multiple of 70-100% of the gross sales. The correct percentage to
use is often determined by the age and condition of the dry cleaning
equipment. They generally have
a lifespan of approximately 20 years.
So that starting with 100% for equipment of 5 years of age or less the
price might logically be discounted as the age approaches 20 years. Please consult a VR
Business Intermediary for
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| What Holds a Business Owner Back from Offering Seller Financing
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Many sellers do not understand the value to both the
buyer and seller when it comes to presenting an offer to finance a part of their business. Perhaps a competent broker has not explained
the market as it exists today to them. On the other hand, there are a few situations that require mostly or all cash in an offer. In most areas, debt on assets
must be paid at the time of closing. A business with
a large debt may not be able to finance as large sums of cash will be required
to be paid at
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| Why a Buyer Needs to Submit a Personal Financial Statement
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First, a VR business intermediary has many
listings that are available in all sizes and price ranges. He/she is often able to use his/her experience
to assist a buyer in finding additional sources of money that can be used
for a sale.
Additionally our
contractual agreements with business sellers require that no buyer will be
introduced to their business until he/she has demonstrated the ability to make that sale. A personal financial statement
is the tool used to make that determinatio
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| Why a Buyer Can Withdraw Their Earnest Money Deposit Following Due Diligence
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A buyer’s earnest money deposit is
to assure that he or she will complete a transaction after agreeing to do so.The
nature of an offer to purchase a business, as opposed to real property, is
that the seller builds certain contingencies that allows the buyer
to prove the facts presented.
Some of these facts may be:
Are the presented financial documents correct?
Can I obtain the lease that I need?
What happens if I
cannot receive the needed out
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| Questions that You Have to Ask Yourself When Looking to Buy a Business
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Changing economies always make both potential buyers and sellers nervous. If you're looking into buying a business, this is what you have to ask yourself:
Will this business continue to be attractive to customers in the future as it has been in the past?
If the answer is yes, you can consider a business' performance over the last three years to determine the viability of your intended purchase. If one has three or more years of profitable performance, this will be a success
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| Finding the Businesses that are Ripe for Buying
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A business is going to be more valuable to you as a buyer
when the synergies, economies of scale and other integration benefits can be
achieved. You can determine which ones are in the right condition to acquire
when you look at the following characteristics:
High Potential for Growth
– A buyer is going to look for a business that has a high historical or
potential growth – companies with new products and services and in a new
market.
Specialty or New
Products
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| A VR Intermediary is the Best Source of Educating Yourself on Owning a Business
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When you're buying a business for the first time, you're going to feel a little apprehensive. It's a major step for anyone that decides to go into ownership for the first time. However, you don't need to go to school to educate yourself because here at VR, we can guide you every step of the way.
In almost every
case, the former owner agrees to train you in the successful operation of that particular business. You won't
have to be concerned with the risk of receiving outdated or irrelevant
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| Preventing Buyers from Foregoing Later Payments to the Seller
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Every VR business intermediary carefully screens very potential buyers well in advance of
even disclosing the existence of a business opportunity. Only when the intermediary is satisfied will a
buyer learn that a business is for sale.
A VR professional intermediary’s track record is exceptional with a success
rate of well over 96%. In addition to
the screening process, consider the amount of the down payment and the buyer's
credit report. No one will walk away
from a substantial
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| How to Prepare Your Business for a New Owner in Two Years
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Today, a buyers needs confirmation of the
business’ financial standing. This
means solid and verified financial documents by an accounting firm. The most valuable ones come from updated and correct tax reports. You shouldn't be insulted if a potential buyer asks you to validate your records as he is only showing due diligence.
Additionally, the
appearance of your business is vital. Buyers like well-maintained equipment, clean facilities and current inventory that can be sold. You wa
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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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| 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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| 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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| 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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| 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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| 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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| 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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| 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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| Submit your questions to VR
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We welcome questions about buying, selling, preparing to sell your business, exit strategies, and business ownership in general.Submit your questions to VR here, we respond to selected questions daily.
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