Undeterred by the weak economy, a surplus of buyers remains ready, willing and able to purchase businesses of every size, and contrary to the ever-present scuttlebutt about banks not willing to lend, they are, in fact, making loans, including loans for purchase/sale of businesses. After all, that’s what commercial banks do. They must make loans to earn a profit.
Business Purchase
Remove Roadblocks to a Timely Closing
The biggest barriers to business sale bliss are low or declining profit and revenue source concentration. After all, it’s steady and dependable profit that drives value. Add consistent growth and buyers will line up at your door. But many a slam-dunk deal is derailed by latent defects uncovered during due diligence.
How To Handle The Balance Sheet When Buying A Business
The buyer of a business, having selected his minimum required rate of return, justifies purchase price of a “going concern” by the cash he expects the business to generate.
Q&A: 50-50 Partner Buyout
Question: My partner and I started our business 31 years ago. We share ownership 50-50. He’d like to retire and wants me to buy him out. We don’t have a buy-sell agreement of any kind in place. How can we agree on price? And, if we can’t and he just quits working, would he be entitled to compensation?
Due Diligence: Penny Wise, Pound Foolish?
You decided two years ago you wanted to acquire a competitor. You’ve spent months talking to a host of different companies and have finally found the perfect acquisition. You know it makes sense, you’ll be able to expand geographically and you’ll be able to add a couple of great products to your existing product line. You’ve heard people talk about due diligence before, but you’ve been in this industry long enough to “know” this is the right company for you.
Checklist For A Safe And Smart Acquisition
Seller financing: Not only does seller financing help minimize the equity required, it provides ready and meaningful recourse in the event the seller breaches duties, obligation, representations or warranties. Try to get “right of offset.”
Assets, not stock: Buying stock is risky. A foolproof method for reducing risk is to buy only assets. Asset purchases also reduce taxes.
Checking Purchase Price for Reasonableness
When we estimate the value of a business, we are estimating the price at which it could be sold. Of course, buyers will only buy a business when it makes “financial sense” to do so. A purchase makes financial sense when the proposed price and terms allow for the following three tests to be met:
Are You Really Ready to Buy a Business?
Why might a person want to own a business? Buy a business? Certainly, the reasons are unique to each person. Motives range from the material (i.e., money, possessions) to the spiritual; may originate from within (i.e., reside within oneself) or outside us (i.e., be socially or relationship-motivated); may be substantially selfish (i.e., greed, power) or altruistic; may be healthy and rational (i.e., strategic or self-actualizing*) or unhealthy and irrational (i.e., an inappropriate and unwise response to pressure, fear or deficiency).
Business Broker or Merger & Acquisition Advisor? Know the Difference
M&A Advisors typically represent owners of businesses valued in excess of $2 million. These businesses may be multi-unit retail establishments, dealers and franchisors, but are more often manufacturers, distributors or service businesses with regional, national or international clientele.
Ask The Expert: How the IRS Will Value Your Business?
Question: How will the IRS value my estate when I die?
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