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Considering the Proper Entity to Acquire a Company
By JoAnn Lombardi, VR Business Brokers/Mergers & Acquisitions, President 
There are four basic types of entities that may be used to acquire and operate the business of the acquired corporation: (1) C corporations, (2) S corporations, (3) partnerships, either general or limited, and (4) the limited liability company (LLC). The LLC is a hybrid entity authorized in 1988 by the IRS. It offers the legal insulation of a corporation and the preferred tax treatment of a limited partnership. Today, all 50 states and the District of Columbia permit LLC’s.
Primary differences exist among the four types of business entities. A regular, or C, corporation is a separate taxpaying entity. Therefore, its earnings are taxed to the corporation when earned and again to its shareholders upon distribution. Partnerships, S corporations, and LLC’s, in contrast, are generally not separate taxpaying entities.
The earnings of partnerships and S corporations are taxed directly to the partners or shareholders, whether or not distributed or otherwise made available to such persons. Moreover, partnerships and S corporations may generally distribute their earnings to the equity owners free of tax. Because S corporations, partnerships, and LLC’s are generally exempt from tax, but pass the tax liability with respect to such earnings directly through to their owners, these entities are commonly referred to as pass-through entities.
Considering Whether to Buy or Start a Small Business
By Peter C. King, VR Business Brokers/Mergers & Acquisitions, CEO
There are many ways to define a small business, most of which are more relevant to business statisticians than to would-be entrepreneurs. Anyone buying or starting a business will of necessity be running a small business. By the time the size of the business meaningfully approaches any commonly used measures – number of employees, annual sales, total assets, and so on – the owner’s problems will be those not of buying or starting a small business, but of sustaining its existence and growth.
However, according to the 2016 Annual Report of the U.S. Small Business Administration, “over 99.7 percent of the 5.5 million employer firms in the United States (all but about 16,000) had fewer than 500 employees…In addition to employer firms, about 10 million individuals whose primary occupation is self-employment are by definition small businesses.” These figures should offer would-be entrepreneurs some encouragement – you will not be alone.
Advantages and benefits to business ownership include:
  • having control over what you do and how you do it.
  • being your own boss.
  • enjoying the satisfaction of succeeding by your own efforts.
  • using your energy to promote your own interests.
The Funding Gap for Middle Market Tech
By Axial, Gliff Constable, VP of Product
Until recent years, tech has been considered a high risk, high return zone best left to specialists. The earlier part of a tech company’s life cycle was restricted to venture capitalists and well-off individuals. Private equity activity was restricted to the later stages of companies, and buy-side participants tended to be either tech-focused funds and former tech executives.
Tech entrepreneurs have historically perceived two funding paths. They can bootstrap (maybe with a small friends-and-family round) or raise traditional venture capital in a series of rounds. Most aspiring entrepreneurs dream of the latter and it’s easy to see why. The media (and our culture) hypes up VC fundraising rounds. Investors are put on a pedestal as king/queen-makers. Our university and accelerator entrepreneurship programs steer founders to raise VC. Even debt options for younger tech companies have historically been predicated on raising that VC round.
Things Fall Apart: High-Profile M&A Deals Fold Under Pressure
Dealmaking activity thus far this year has shown an uptick in the number of meaty deals to close, per PitchBook's latest quarterly M&A report.
In 2Q, 4,735 deals closed for a whopping $988 billion in value across North America and Europe. Although that first figure actually represents roughly a 2% decrease QoQ, dealmakers have been buoyed of late by the 24% increase in value that the second figure represents over the nearly $800 billion reported for total deal value in 1Q 2018.
Indeed, 31 mega-deals worth upwards of $5 billion apiece closed during 1H and have helped lift overall deal value for the year, despite the lack of a corresponding increase in the number of completed transactions. But beneath the headline-grabbing moments, trouble has been brewing for some recent M&A transactions. By analyst estimates, a total of roughly $541 billion in global M&A transactions has been withdrawn YTD, representing a 23% increase YoY.
And a number of those high-profile deals, some struck in the wake of dealmaking drivers like tax reform in the US, have started to come undone as well—not least, Qualcomm's proposed acquisition of Dutch business NXP Semiconductors. That $44 billion deal was quashed last month as part of the trade spat brewing between China and the US. But that's just the tip of the iceberg.
Chinese Buffet Restaurant| $590,000 |Artesia, CA
Amusement and Recreation | $1,350,000 | Milwaukee West, WI
Signs and Graphics Franchise| $565,000 | North Dallas, TX
Residential and Commercial Manufacturer| $3,250,000 | Denver, CO
Home Furnishings Business | $925,000 | Wyomissing, PA
VR Located in Wyomissing, PA is assisting in the sale of an Home Furnishings Business
This thriving business has proven that online selling is not a passing fad. It has established itself firmly in a niche of the home furnishings sector and flourished for over 15 years. The physical location is flexible with an online business. Office and inventory can be accommodated in less than 1,000 sf. The bulk of orders are shipped directly from the suppliers. Features include a well established presence in the niche of this sector with longevity, a strong reputation for client service, and long-standing relationships with suppliers, both domestic and overseas. This is an excellent opportunity for someone with experience in a fast-moving environment to jump into a business with a strong and well-established reputation to continue to build on.
For more information contactMicheal McCarthyon this sale!
Character Counts: Determining SBA Eligibility for Borrowers with a Criminal History
Are you a good judge of character? One of the important “C’s” of credit that can be often overlooked in financing is based on the character of the loan applicant. In order to ensure that only those deemed to be of good character receive SBA proceeds the SBA has established specific guidelines relating to the criminal history of associates of the borrowing entity both owners and key employees.
The SBA cannot provide financial assistance to businesses with associates who are:
1. Incarcerated, on probation, on parole (the SBA views a deferred prosecution as if the individual is on probation or parole).
2. Currently subject to an indictment, criminal information, arraignment or other means by which formal criminal charges are brought in any jurisdiction (minor traffic violations are not applicable).
The SBA Form 1919 (Section II: Principal Information) contains three character evaluation questions to determine the eligibility of the associate (Questions 17, 18 and 19). The onus to truthfully disclose any criminal history is placed on the individual; however, prudent lenders will perform their own due diligence search on the associate in addition to the information provided by the SBA Form 1919. If the answer is indeed applicable to the associate then a “Yes” response is required despite the criminal record of the associate being sealed, expunged or otherwise unavailable.
If the associate answers “Yes” to Questions 18 or 19 on SBA Form 1919 then SBA Form 912 “Statement of Personal History” and the SBA Form 912 Addendum must be completed by the associate in order to make a character and credit eligibility decision.
Congratulations VR in Milwaukee West, WI for Facilitating the Sale of a Motorcycle Accessory Manufacturing Business
Located in Wisconsin, this business was operating for over 30+ years and the owner was looking to retire. The business manufactured accessories for a wide variety of motorcycle brands and owned all the product designs for the accessories they sold. The business sold through multiple sales channels. While operations were solid, the real growth potential existed within growing the sales, marketing efforts, and implementing an on-line sales strategy.
We congratulateTimothy Bullardon this successful transaction!
Motorcycle Accessory Manufacturer | $1,750,000 | Milwaukee West, WI
Fast Food Restaurant| $550,000 | Artesia, CA
Lawn and Garden Equipment Dealership| $1,950,000 | San Antonio, TX
Signs and Graphics Franchise| $180,000 | North Dallas, TX
Hardware and Electrical Supply | $1,525,000 | Apollo Beach, FL
Thinking of selling your business or looking for an established 
business to purchase?Contact a VR Office Near You!
Have you ever considered selling businesses?
Small businesses make up over 56% of the annual U.S. GDP and every year a large amount of them change hands. VR is the industry leader in facilitating such transactions. Click here for more information on how to join VR.
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