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October 2016
                             Volume 17 Issue 10
Considering Earn-Out Provision

By: Peter C. King, VR Business Brokers\Mergers & Acquisitions, CEO

An earn-out provision is language in a purchase and sale agreement that commits the buyer to make payments to the seller if the business achieves agreed-upon financial targets following the sale. Earn-outs also may be referred to as payouts or contingent payments.
Earn-outs often useful when buyers and sellers can't agree on a price or when buyers and sellers can't agree on a price or when the transaction is only possible if the seller finances a portion of the purchase price. The seller may believe the business has good financials prospects and merits a higher sale price, but the buyer is unwilling, or unable, to pay it.
To break the deadlock the seller agrees to accept a lower payment at closing with a held interest and the promise of additional remuneration if the business meets certain financial milestones. The seller release held interests as these remunerations are paid and may maintain rights to assets of the company if the buyer fails to meet a specified schedule.

Click Here to Read Full Article
What Factors Enhance Value and Acquisition Success

By: George D. Abraham, Business Evaluation Systems, CEO and Chief Appraiser
Business value and acquisition success are about measuring risk. Less risk increases value and makes the company more attractive to potential buyers. The following are significant factors when measuring risk:

Motivated Realistic Seller
Sellers go through many emotional stages before they are realistic and motivated to sell. I have witnessed many successful business sales and some spectacular failures where intermediaries were involved. Both were the fault of the intermediary. The intermediary that does not recognize an unmotivated and unrealistic seller will fail. That said, the rest of this article will assume a motivated and realistic seller as you can't enhance value and acquisition success without this.
Organized Up-To-Date Professional Financials

In-house quick books financials are useless as many accountants make changes at the end of the year. There should be no item on the financials that the seller cannot explain and provide backup. This is where a professional appraisal will be the best.

 Click Here to Read Full Article
Steps to Successful Deal Flow - AKA CLOSINGS!
By: Shelli Bushway, Stearns Bank, Vice President of SBA Lender

Over the past decade, many banks have entered the SBA lending arena without dedicating the proper focus and resources to the process. Working with a lender with a proven track record as a producer is an imperative step to your success in financing the acquisition of a business.

It is important to know what the lender needs in order to facilitate a quick decision. Understanding the process is a great point of reference when talking with a lender. Below is a comprehensive list of items needed for the review of a loan request, along with a summary of the loan process.

Click Here to Read Full Article
20 M&A Mistakes to Avoid
Via Axial
Deals can be difficult. Whether you're exiting, recapitalizing, going public, or making an acquisition, it can be hard to balance the transaction with day-to-day operations, get the support you need, and be confident you're making the right choices.

We talked to 10 professional CEO coaches who have worked with hundreds of business owners to get their advice on mistakes to avoid when going through a transaction.

1. Conflating your identity and your business

"Although business owners intellectually understand their identity is not their business, it can be hard to separate the emotional attachment. Understand what your business goals are and what your personal goals are. Remember that you have a value as a person, and not just a business - this is crucial. There is a life after the business."
-Bob Berk, Master Chair, Vistage Chicago

2. Forgetting the three P's

"Your purpose, your people, and your processes. If you focus on the three P's, you'll have a successful acquisition. Do we have the right people in place? Do the cultures align? Do we have the processes and systems in place to execute properly?"
-Roger Blackstock, Vistage Chair, Atlanta, GA

Click Here to Read Full Article 
VR in Savannah, GA Facilitates the Sale of Parker's Gas Station and Convenience Store 

The VR office in Savannah, GA facilitated the sale of a single unit gas station and convenience store that was part of a local chain voted "Best Convenience Store" by local residents. The brand focuses on selling guaranteed fuels and familiar products at competitive prices, not just on convenience. Congratulations to Michael Shah on a 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:
Pizza Franchise | $315,000 | Waukesha, WI
Industrial Cleaning Business | $209,000 | Naples, FL
Fitness & Crossfit Facility | $118,500 | Charlottle, NC
Thinking of selling your business or looking for an established business to purchase?
VR Office in Charleston, NC has been Contracted to Assist in the Sale of an In-Home Care Agency

Our VR Office in Charleston, NC has been contracted to assist in the sale of an In-Home Care Agency. The In-Home Care Agency focuses on keeping their clients safe and comfortable in their own home. They provide in-home companionship and care which includes meal preparation, laundry, light housekeeping, transportation, grooming, and 24 hour care with a private duty nurse. Booming business demographics produce high profits and room for growth. The company is well-positioned with full franchise support for marketing and advertising.
 Congratulations to Bruce Rockwell on your new engagement!
In This Issue
Considering Earn-Out Provision
What Factors Enhance
Steps to Successful Deal Flow
20 M&A Mistakes to Avoid
Featured Transaction
Featured Engagement
Businesses for Sale
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Small businesses make up over 56% of the annual U.S. GDP and every year a large amount of them change hands.

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Discussing "Scammy" Competitors
By: Bob Burg
"Speaking respectfully about your competitor to your prospect shows you are confident, you are successful, you are safe."
While most respondents agreed and provided some excellent examples, one young business person, Michael, wrote with a challenging question:
"What if you know for a fact your competitor is a scammer; hurting people and ripping them off?"
Here is my reply:
Michael, while thankfully this is not often the case, sometimes it is. Thus, you've asked an excellent and very legitimate question. For the sake of this post, let's assume you have in fact accurately described this person. Well, it's tricky.
Let me run a scenario past you. For example, if your prospect has already talked to your scammer competitor (and they like him or her) how do you feel it will come across if you say, "oh, that person is a scam artist and if you're not careful they'll rip you off big-time!"

Click Here to Read Full Article

Bob Burg is coauthor of the International Business Bestseller, The Go-Giver (over 500,000 copies sold in 21 languages). To read Chapter One and connect with Bob visit www.thegogiver.com. You can listen to his popular, The Go-Giver Podcast at www.thegogiver.com/podcast.
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