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From the category archives: Certified Business Brokers News

Tips, tricks and long term strategies you should consider when buying a business in a Texas town near you.

What Serious Buyers Look For When Looking For A Business To Purchase

Serious buyers want to carefully look at the financials of a company under consideration and all of the other major aspects of the company. However, there are a few other areas that the serious buyer will investigate that sellers may overlook. The Industry – The buyer will want to take a serious look at the industry itself, the customers, the suppliers, the competition, etc. This investigation will cover the strengths, weaknesses, threats from competition, and opportunities of the potential acquisition. With the growth of the “big box” retailers, much power has shifted from the manufacturer to the retailer. A manufacturer may want to increase prices, but if Wal-Mart says no, it’s a very powerful no. Discretionary Costs – Some sellers will reduce their expenses in discretionary areas such as advertising, public relations, research and development, thus making for a higher bottom line. However, these cuts will hurt the future bottom line, and smart buyers will take notice o ...

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Buying A Business? | Buyer Beware: Do You Really Want to Meet Employees Prior to Closing?

As intermediaries, we always look to protect our clients. When a buyer wants access to employees before closing, the risks to the seller are numerous and obvious (loss of confidentiality, disruption to the business, concerned employees, etc.). However, if these are the only arguments made when representing a seller, the buyer may not see the entire picture and perhaps even feel that some of their concerns are being validated. The key is to express to the buyer why it is not in their own interest to let the cat out of the bag prior to closing.

Now, there may be some exceptions, such as a key employee, manager or member of a bona fide executive management team (rare for a small business). Even in these instances, you will want to carefully consider the timing and nature of bringing others into the fold. Also, please note this advice pertains primarily to main street transactions and some at the low end of the lower middle market.

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Buying Or Selling A Business? -- Is It SBA Financeable?

There is a general misconception in the small-business acquisition marketplace that a person could easily purchase any type of business through the SBA with a low down payment and get a loan for the rest. Most people also believe that SBA loans are a major source of small business financing. But data shows that SBA-guaranteed loans make up a small portion of the value of the overall small business lending market.

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10 Tips - Negotiating a Business Purchase from a Buyer's Point of View

Having a formula and understanding the fundamentals of successful negotiation can help you make the best deal possible and avoid lost opportunities.

Negotiation may seem a daunting task, but when handled in a balanced manner, negotiation can be a positive experience rather than a negative one. The negotiation strategy should be one that results in a winning deal for both parties. It's not about who strong-arms the other. Nor is it a game with a winner and loser. It’s a complex process for sure.

A good deal is never one-sided. Negotiation isn't about capitulation, it's about finding a mutually acceptable solution. If the parties can determine the factors that are most important to each, the price and the terms of the deal can be structured to meet those needs.

The following are some key negotiating tips. While they can't guarantee that you will always get what you want in a negotiation situation, they will certainly enhance your chances for success.

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Buying an Existing Small Business Beats Starting a New Franchise

Last Friday afternoon I was a guest on KSEV Radio AM 700 with host Aubrey Thoede and had the opportunity to discuss a subject that many call-in listeners wanted to learn more about....starting their own franchise. But buying a new franchise is not the best way to go about achieving the "American Dream."

Once you've hit five years, your odds of survival go way up," Birch said. "Only two to three percent of businesses older than five shut down each year." http://usatoday30.usatoday.com/money/smallbusiness/columnist/abrams/2004-05-06-success_x.htm

Everyone reads or hears about big corporate mergers and large company acquisitions. However, big corporations aren't the only companies being bought and sold. Profitable, privately-held small businesses are changing hands everyday. These transactions are done behind the scenes and are not reported along with the daily stock market news. These business exchanges fly under the radar of the public at large -- which may be part of the reason that it is not commonly understood that buying an existing small business is the most viable path to being a successful business owner.

If you are considering your options for going into business for yourself, buying an already established profitable business should be the first option on your list and starting a new franchise the last. Here are six slam-dunk reasons why:

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Selling a Business: The Problem of Overvaluation

Last week I met with a business owner after an introduction by his accountant. He was thinking of selling his profitable waste recycling business, a business he had been running for nearly 30 years. The business had a reliable management team, an enviable customer base and a strong balance sheet. Unfortunately, the owner had a vastly inflated idea of the value of his business.

His thought process went something like this:  “I’ve built this business over 30 years so it must be worth a lot of money.  A couple of years ago we built a nice place to retire to and need to clear the mortgage. We also need a couple of million to create a pension pot that will maintain our lifestyle. The business has provided us a very nice lifestyle and will do the same for the new owners – it has to be worth about $3 million.”

It’s difficult to be objective about something you’ve built from the ground up; a business that has shaped your life and underpins your standing in the community. Coincidentally, $3 million happened to be about the figure he needed to meet his retirement aspirations.

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11 Things You Should Know Before Selling Your Business

Know why you want to sell your businesss.
Having a solid reason and a committed resolve to a sale is essential in achieving a successful transaction. In addition, one of the first questions buyers ask is, "Why is the owner selling?" They want to know that it is for a good reason and not because there's something wrong with the business that might be hiding in the shadows.

Know what you will do after your business is sold.
If you don't have a plan in mind, you might find yourself getting cold feet or feeling a little off balance when that first offer to buy the business comes along.

Know the value of your business.
Get a business valuation by a reputable firm to understand what you could expect in the current marketplace. This is an initial step in determining if the sale would meet your objectives.

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You Can Purchase a Business Using Retirement Funds

Don't let your retirement dollars idle away! Put your money to work! Invest it in your own business and let your money work for you!

You can use cash from your 401(k) or IRA account to purchase a business without incurring early distribution penalties, with no taxes, no loan repayment, and no hassle.

For example, a Texas resident using $100,000 from a qualified retirement fund can keep the extra 31% that would have been paid in taxes, leaving an additional $31,000 to fund the new business by adopting a transfer trust plan versus withdrawing the funds outright.

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Emotion and Due Diligence Should Play a Roll When Buying a Business

When buying a business, both emotion and due diligence are elemental and essential.

When you find that magical business for which you've been searching, the following are ten key issues to consider. They cover important points that are sometimes overlooked when your head is in the clouds during the emotional excitement of a deal.

1) Know that when you own a business it is a lifestyle change. The business becomes part of your family and demands attention. Make sure both you and your family are ready for it.

2) Is it a business that you know and understand? If not, do the research and make sure you learn about the business, its competitors and any changes that are due in the marketplace. There is usually public information available for almost any industry. Find out if there are any industry issues that will positively or negatively impact the business.

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How Goodwill Impacts Business Value

Identifying and articulating the goodwill in your business can have a significant impact on buisness value. Essentially, goodwill is the life force of the business. Tangible assets are just “stuff."

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