VR Has Sold More Businesses In The World Than Anyone.®
Buying or Passing
By Peter C. King, VR Business Brokers/Mergers & Acquisitions, CEO
Knowing When to Move on a Business as a Buyer
As a business opportunity arises, you as the buyer have to determine the level of desirability. The assumption is that any business opportunity will be a creative and innovative one. Therefore, think about these points when you are examining a business opportunity as a buyer.
Due Diligence is Limitless
You can spend as much time as you want on due diligence. If you are looking to seriously buy a business, you want to look at every aspect of that business. However, keep in mind a few factors when doing due diligence because you won’t have all the time in the world before the seller moves to another qualified buyer:
- Will you know enough about the industry the gain a grasp on the business?
- Is there enough to research the business prior to closing?
- Will the seller be willing to allow you to contact former customers?
- How much money do you have available to spend on due diligence?
Setting Up for Selling Your Business
By JoAnn Lombardi, VR Business Brokers/Mergers & Acquisitions, President
How to Develop a Successful Exit Strategy
Recently, many entrepreneurs fulfilled their life-long dreams of buying a business. Others have seen their businesses grow gradually over the years. They are pursuits these business owners have enjoyed and cherished.
However as a business owner, you have to remember there will be a time you will have to pass your dream along to somebody else – owning the business you have started.
Whether you’re selling the business because of burnout, retirement or the desire to move on, when the time arrives to do so, do it right and receive the optimal sales price.
Often when you contemplate, plan or pursue the opportunity to sell your business, you discover the selling process doesn’t give you the flexibility needed to make the best deal. But you don’t need to fear, feel manipulated by or go through the resale process alone.
You will be at an advantage as an owner if you start thinking about selling the business before you actually proceed. You will easily be able to identify the important elements of the resale process, and have some control over them in the future. Preparing to sell before you move forward will help you better understand the business transaction, your needs as an owner and be in a better position to develop a strategy to make it through the resale efficiently and profitably.
There are five obstacles in the resale process you will have to examine as you proceed. With each one, there are some helpful tips every VR business intermediary will recommend to you. This will assist you in understanding the process better and successfully sell your business.
- Position Your Business for Sale.
- Determine a Fair Listing Price.
- Running Your Business during the Marketing Period.
- Finding the Qualified Buyer.
- When to Consider Selling Your Business.
Dealmakers Optimistic into 2019
By all measures 2018 was a busy year for the M&A industry. M&A volume in the U.S. reached a near-record pace through the first three quarters of 2018, with $1.3 trillion in deals announced — a 50 percent increase in activity compared to the first nine months of 2017. On the private equity front, activity remained strong as well. The first three quarters of 2018 saw 3,501 deals completed for a total of $508.8 billion, according to Pitchbook. Additionally, in the first three quarters of 2018, private equity firms raised $121 billion for investment.
As we turn our attention to 2019, Middle Market Review asked readers what their expectations are for the new year. Most survey respondents believe M&A activity in 2019 will increase, citing the booming economy, baby boomers’ need to sell businesses, expanding GDP, and a lower barrier to growth given the more favorable business environment promoted by the Trump Administration. What’s more, corporates have increased cash, in part due to tax reform, and M&A is high on their priority list. Private equity firms have lots of dry powder as well.
The responses from Axial’s readers were in line with Deloitte’s The State of the Deal M&A Trends 2019 Survey. According to Deloitte’s survey, about 80 percent of respondents expect the average number of deals they close on to increase over the next year. Additionally, 70% expect that the size of those transactions will be larger than the ones brokered in 2018,
The Deloitte survey, which surveyed 1,000 U.S.-based M&A and private equity professionals, also found that corporates are now focused on acquisitions that will expand their customer bases in existing geographic markers or expand and diversify their products and services, which is a shift from when they were focused on acquisitions that gave them more technological capabilities last year.
EBITDA Can Be Misleading
EBITDA, otherwise known as earnings before interest, taxes, depreciation, and amortization, has become the buzz word of the century, touted by many as the measure of company performance and indicator of value. Not so fast, it is only one of the methods used to measure performance. It is exactly what it is and should be used as one indicator of earnings for comparison purposes. By itself, EBITDA does not measure how healthy a Company is.
Understanding the amount of asset depreciation is of limited value in determining the present viability of a company; instead, it is a measure of what the company has spent, in the past, on capital expenditures. If you are trying to evaluate the health of the company, depreciation and amortization are “non-cash” items and are irrelevant. Calculating the company’s future capital expenditures is much more meaningful. The assets purchased in the past, can be a measure of calculating needed purchases in the future, and the future is what is important.
EBITDA is only one indicator of how much debt the company can service after it is acquired, but is not a measure of the company’s health. EBITDA does not address working capital requirements, which are critical to a company’s health. Again, EBITDA is only one method for evaluating a company’s performance.
Social Internet Platform Company| $4,000,000 |Artesia, CA Commercial Laundry Business| $550,000 | Aspen, CO Amusement and Recreation Company | $346,000 | Raleigh, NC
VR Located in North Dallas, TX is assisting in the sale of a Design Build and Decor Business
The owner is ready to retire after 35 years. This business is unique in that it provides multiple services involving construction and remodeling. A well trained staff in place including office management, accounting, designer, dealer accounts, and a freeway frontage location. Most of the established business is based in the metroplex area including both residential and commercial design, however, referrals have provided nationwide opportunities.
The Structured Sale - For Sellers of a Business or Real Estate
A Flexible Option to Taking All Cash
The all cash, or financed sale by Addendum or Agreement, is modified into a unique type of installment sale, whereby specific installment payments are secured by U.S. Treasury Obligations.
The Structured Sale is a unique opportunity for a seller to maximize the return on their sale dollars while receiving management free, tax-deferred income that’s guaranteed. Using pre-tax sale dollars, a customized scheduled of installment payments is designed to meet the seller’s specific needs. Created by Agreement or an Addendum to an existing Sale Agreement between the seller and buyer, the establishment and documentation is done so in accordance withInternal Revenue Code Section 453(b),installment sales.
The program is available to sellers in all fifty states and there’s no out-of-pocket costs to seller or buyer.
Most sellers are unaware of the fact that capital gains, in some situations, can trigger the Alternative Minimum Tax. It’s a complicated issue in determining whether the gain is to be treated as a capital gain, as ordinary income or maybe a little bit of both. To be considered is the method of depreciation used, the amount of income, as well as the scheduled phase-out of the AMT exemption. As such, it is imperative that the seller seeks the advice of a CPA.
Congratulations VR in Charlotte, NC for Facilitating the Sale of a Computer Software Company
This excellent software company had a significant recurring revenue. The company provided software for service professionals such as accountants, CPA's, tax preparers, and to a lesser extent, engineers and lawyers. Products offered by the company focus on improving efficiency in the office. They are modular in nature and include time and billing, and due date tracking with optional work flow management. The software add-on modules included mobile phone integration via both Android and IOS, a calendar module that integrates with Microsoft Outlook, document management and credit card processing, QuickBooks integration, and a wide variety of leading tax software products. The company's software is available for download on the desktop or via a Software as a Service (SaaS) as a cloud based application.
French Restaurant Business | $575,000 | Miami, FL
Thinking of selling your business or looking for an established
Have you ever considered selling businesses?