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May 2016
Volume 17 Issue 5
What are the Real Small Business Survival Rate?

By: Ryan Jorden, VR Calgary office

Those of us who converse with small businesses on a daily basis are well aware that many of them will fail in the first five years. In fact, these odds are a big reason why I assist people in buying well-established businesses that will provide a higher probability of success than a start-up. But what are the real numbers of small business survival? Many people believe that 80 to 90 percent of start-ups will fail in their first 5 years, but is that accurate? Let's take a look at the facts: 

"About half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firm's age. Survival rates have changed little over time." - Source: U.S. Bureau of Labor Statistics, BED

How Owners Can Bridge the Valuation Gap

There is nothing more disappointing when selling a business than realizing the gap between what you, as the seller want to put in your pocket and what potential buyers are willing to pay. But in a sale process there are more gaps than you might imagine. Many more.

There are valuation gaps generated by timing issues between a "buyer's market" and "seller's market." There are gaps in the value you as the owner perceive you've put into a business and the value a buyer perceives he or she can get out of it. Even the various approaches used to establish business valuation generate gaps in assessments.

There are also differences between what an owner needs to support a retirement lifestyle and what can be extracted from a transaction at the actual time of sale, as well as differences between an offer to buy, what the buyer pays, and what the seller ultimately gets. (Yes, death and taxes play a significant role in the outcome of a transaction.) And finally, the timing of retirement and buyer's vs. seller's perception of risk in the future growth and earnings flow for the business play a significant role is the size of the valuation gap.
Tax Inversion Rules May Hamper Cross-Border M&A in the Middle Market

Fallout from the new rules won't be limited to mega deals like Pfizer's scuttled purchase of Botox maker Allergan.
Mega deals, like the killed $160 billion merger of Pfizer Inc. (NYSE: PFE) and Botox maker Allergan Plc (NYSE: AGN), aren't the only transactions that will be affected by the U.S. Department of the Treasury's new rules aimed at curbing tax inversions. There will also be consequences for cross-border M&A in the middle market.

Tax experts warn that the rules, some of which went into effect in April, could have an impact well beyond their intended purpose, which is to hinder mergers in which a U.S. company is acquired by a smaller non-U.S. company so that the combined company's assets will enjoy lower taxes under the foreign domicile. For the middle market, the list of possible negative consequences is long-even for deals not aimed at tax inversions. The consequences include: increased legal and compliance costs for cross-border deals; discouraging foreign investors; and hampering tax-exempt investors.

The proposed rules would even redefine debt and equity in certain situations, making them "the biggest fundamental change in tax law in decades--it's that big," says Steven Schneider, a Baker & McKenzie partner in Washington, D.C. "It's very ambitious what they're trying to do."

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VR in Sacramento, CA Finalized the Sale of an Automobile Transport Broker for $1,300,000

VR's Sacramento location has recently finalized the sale of an automobile transport broker. The business moves new and used vehicles from dealers or private citizens to a dealer or end user in another location. The bulk of the business has been transporting vehicles in California and the company did a lesser volume of vehicles moving across state lines. Let's congratulate Michael Langford on an another successful transaction!
VR Continues to Match Qualified Buyers with Businesses for Sale

In today's business climate, our clients demand quality and professionalism. We applaud our VR business intermediaries for a job well done!! Here is a small sample of transactions that have closed across the VR network recently:
HVAC Specialty Co. | $1,500,000 | Apollo Beach, FL
Popular Brew House | $250,000 | Aspen, CO
In-Home Senior Care | $635,000 | Waukesha, WI

Thinking of selling your business or looking for an established business to purchase?
VR Office in Waukesha, WI has been Engaged to Sell a Steel Fabrication Company

Our VR Office in Waukesha, WI has been engaged to help facilitate the sale of a steel fabrication company with annual sales of $28 million, EBITDA of $1.6 million and SDE of $1.6 million. The business serves customers in Illinois in structural building steel fabrication for commercial and industrial buildings. The owner is willing to agree to a long-term transition for the right buyer. Congratulations to Tim Bullard on another engagement!
VR Office in North Tampa, FL has been Contracted to Sell an Upscale Clothing Boutique

Our VR Office in North Tampa, FL will be assisting in the sale of an upscale clothing boutique in a downtown atmosphere. The boutique's inventory is very unique and not at all what you would find in the mall.  The store has a great address with constant walk-in traffic. Congratulations to Curtis Stokes on an awesome new listing!
In This Issue
Hedge Funds
Selling Tips
Featured Transaction
Featured Engagement
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Businesses For Sale
Your dream business awaits you...take advantage of these featured opportunities 
VR has for sale now!

Italian Restaurant, Bakery, Coffee Shop
Artesia, CA

Online Wholesale Business
Coral Springs, FL

Upscale Bar/Restaurant
Wyomissing, PA

Steel Manufacturing Co.
Waukesha, WI

Uniform Supplier
New Haven, CT

AC & Refrigeration Co.
Boca Raton, FL

Pack, Ship & Gift Shop
Wilmington, NC

Landscaping Co.
Naples, FL

Cabinet & Flooring Sales
Fort Lauderdale, FL

Party Supply Store
North Tampa, FL

Meineke Car Care Center with Land
Charlotte, NC

Detailing & Undercoating Business
Charlottetown, PEI Canada
The time has been better to become a part of the VR team!
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.

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Consistency, Trust, Success
By: Bob Burg 
The boss is one way one day, and the next day...she's totally different.

The food and service at that restaurant just out of town is really good...sometimes. Other times? Not so much.
Our new salesperson works till the job is finished. Well, a lot of the time he does. But, come to think about it, some days he seems to quit closer to lunch than to dinner.
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