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VR Business Brokers, VR Mergers & Acquisitions, Buyer Alert Program,

VR Franchise Opportunity, VR Office Location

By JoAnn Lombardi, President VR Business Brokers/Mergers & Acquisitions

Acquisition talks are proceeding smoothly. Then the subject of price comes up. The buyer

thinks the seller’s asking price is based on overly optimistic financial projections. The seller

believes the buyer’s valuation of his company is far too low. Is the deal dead? Not

necessarily.

An earnout agreement can help resolve a dispute when a buyer and seller disagree about the seller’s business prospects. They are especially useful when dealing with the unknown — when the target is young and unproven, or it is emerging from a difficult financial situation. In short, earnouts offer a way for the parties to bridge expectation gaps.

Understand the Benefits

Once you decide an acquisition is the best, or only, way to reach your corporate goals, focus. on finding the best target. Fit is important: If you’re considering an acquisition based solely on opportunity, the deal is likely to result in disappointment.

Instead, ask how the target company will specifically support your strategic vision. Will new products, for example, be well received by your existing customers? And will your current lineup of products meet the target company’s customers’ needs. Are the cultures of the merging companies compatible? Depending on your goals, you might also consider the target’s market reach, competitive landscape and customer satisfaction levels.

Your M&A advisors can help you structure your due diligence plan so that you spend the bulk of your time and effort scrutinizing only the target company’s assets and financial details that are most relevant to your goals. For example, if you’re acquiring a competitor to gain access to its research and development staff, it’s unlikely that you’ll want to devote excessive due diligence to its real estate holdings.

All components of an acquisition may carry future liability, however, so a thorough investigation is critical to accurately assess potential risks. Your business unit managers should assist in due diligence to ensure the review process includes the items they feel are most important.

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

Normalizing earnings can provide insight into a company’s history and future. Performing

this step is vital to valuing a business. Remember it’s also difficult work, involving more than merely reading the company’s financial statements. Normalizing earnings requires detailed analysis as well as an understanding of the company’s current and future operations. However, once you have that knowledge at your disposal, you can begin to see the true picture.

Adjustments to normalize earnings typically fall into three categories: Economic,

Discretionary and Nonrecurring.

Economic Adjustments

Economic adjustments relate to items affected by a company’s accounting methods. For

instance, the most common economic adjustment is for the basis of accounting. Many

small businesses use the income basis. In addition to accelerating expenses such as

depreciation, it also can ignore expenses (such as vacation pay and bad debts) or defer revenue (such as completed contracts).

Other companies use the simple cash basis of accounting. This method records income

only when cash is received and records expenses when they’re paid. An analyst typically

converts earnings to an accrual basis – this records income and expenses in the period earned or incurred to determine normalized earnings.

Inventory also is important to examine. Some businesses record inventory on a last-in

first-out (LIFO) basis. This often understates inventory values and depresses earnings.

Converting to first-in first-out (FIFO) may provide a clearer picture of the company’s balance sheet (financial position) but might not be the best picture of cost of sales (earnings).

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The Avoidable Mistakes That Derail Deals

By Kaitlinn Thatcher, Axial

Small business exits fail half the time.

But many of the reasons behind why they fail are preventable. 

Last week, Axial CEO Peter Lehrman presented on this topic at Main Street Summit, a two-day event for SMB owners, operators, and investors. Peter presented on failed exits – when business owners that engage in a process to sell their business aren’t successful – and what business owners can do to prevent them. 

Below are a few highlights from the presentation, assembled using Axial platform data and insights from Axial investment banking members.

Exit Preparation

We recently surveyed our Investment Bank membership on the topic of Exit Preparation and will share the responses and various data points over the next couple months in our Exit-Ready newsletter.

The BIG 8 Avoidable Mistakes That Derail Deals

66% of Investment Bankers say that less than 1/4 of the sellers are prepared to sell before hiring them.

What percentage of sellers are “prepared” for a transaction prior to an engagement?

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A Highly Profitable Unique Spa Located in North Carolina

Don’t miss out on the chance to acquire a highly profitable and one-of-a-kind spa located in North Carolina. This spa is unlike any other on the East Coast and has already established itself with exceptional margins, a great team, and top-notch facilities. With all these advantages in place, the spa is poised for continued growth and profitability under new ownership.

The business in question has great potential for growth through service expansion and efficient utilization of existing capacity. Due to operational excellence, a unique setting, and growing spa industry trends, it is set for continued success.

The business has a dedicated team in place, ensuring smooth operations and consistent service quality. The knowledgeable staff contributes to the business’s success and offers valuable expertise to the new owner.

The business has a steady and expanding clientele, which includes returning customers, groups, and couples from all age groups. It generates demand at both local and regional levels and has established a strong reputation among its clients. Furthermore, the business has an impressive and engaged social media presence.

For more information contact: Adam Petricoff

Thinking of selling your business or looking for an established 

business to purchase? Contact a VR Office Near You!

VR Office in Charlotte, NC Sold an Industrial and Energy Manufacturing Business

Since its establishment in 1981, this business has been a reliable partner to the industrial and energy-related industries. With years of experience under their belt, they have established themselves as experts in their field, offering a variety of products and services that cater to their clients’ needs. Their extensive product lines include control valves, odorization systems, filtration solutions, safety relief valves, heaters, and many other essential products that are critical in these industries.

The company is dedicated to providing its customers with the highest quality products and exceptional customer service. They pride themselves on their attention to detail and their ability to offer quick and experienced service to their clients. Their team of experts is always ready to assist their customers with their projects.

If you are looking for a reliable partner for your next industrial or energy-related project, this business is the right choice for you. With their expertise and commitment to excellence, you can trust them to deliver outstanding results every time.

Congratulations to Adam Petricoff for your successful closing.

How To Avoid Lack Of Authenticity, Personality, And Warmth of a Real Person When Using ChatGPT

by Gundo Kahle, CEO CBA Cross Borders Associates

Replace the humorless robot content with more human content.

Maintaining authenticity, personality, and warmth when using ChatGPT can enhance your interactions and make them more engaging. Here are some tips to help you achieve that:

1. Use natural language: Instead of treating ChatGPT like a search engine or a robot, engage with it as you would with a real person. Use conversational language and express yourself naturally.

2. Inject personal anecdotes and experiences: Share personal stories or experiences relevant to the conversation. This adds a human touch and helps create a more authentic exchange.

3. Show empathy and understanding: Acknowledge the emotions and feelings expressed by the other party. Respond with empathy and understanding, just as you would in a real conversation.

4. Ask questions and show interest: Demonstrate curiosity by asking questions and showing genuine interest in the other person’s thoughts, opinions, and experiences.

5. Use humor and wit: Incorporate humor and wit when appropriate to lighten the mood and make the conversation more enjoyable. Just like in real-life interactions, humor can help establish a friendly atmosphere.

6. Avoid robotic responses: Try to avoid using canned or generic responses. Instead, tailor your messages to the specific context of the conversation to make them more personal and authentic.

7. Be patient and attentive: Take the time to listen actively and respond thoughtfully. Avoid rushing through the conversation and show that you’re fully engaged in the interaction.

8. Be yourself: Lastly, don’t be afraid to let your own personality shine through. Whether you’re witty, compassionate, or quirky, embracing your authentic self will make the conversation more genuine and enjoyable for both parties.

By following these tips, you can maintain authenticity, personality, and warmth when interacting with ChatGPT, making your conversations more meaningful and enjoyable.

VR is the Only Remaining Founding Firm of The International Business Brokers Association (“IBBA”).