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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.

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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Master Ten Value Drivers to Sell Your Business at the Highest Price

Evaluate your company through the eyes of a buyer. Master these ten value drivers and sell at the higher range of the multiples normally associated with your industry.

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Buying a Business? How Do Brokers Screen Buyers?

Prior to discussing confidential information about businesses for sale, business brokers require prospective buyers to complete certain forms that serve two purposes. They protect the interests of the business owners during the sale process and enables a business broker to competently assist buyers in their acquisition search. These documents are necessary to the process and are defined below.

Confidentiality Agreement

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The Non-Compete Agreement - A Negotiated Contract in a Business Sale Transaction

Non-compete agreements are typically included as part of the terms of a business sale transaction to protect the buyer from direct or indirect competition from the seller. A buyer would not want to purchase a business if the seller could relocate down the street. For this reason, buyers usually require that this threat be eliminated.

There are two main issues about which buyers and sellers should be aware. First, a non-compete agreement has limitations on time, industry, and geographic range of competition if it is to be enforceable, and, second, there are tax implications for both the buyer and the seller.

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Buying a Business - What is the Value of Goodwill for a Buyer?

Since the biggest part of the purchase price of a profitable small business is goodwill, it is important for a buyer to have knowledge and understanding of just what goodwill is and why there is value in it. Much of the value of a business is not to be found in its hard assets such as the fixtures and equipment, but in the intangibles that create the income. A simple way to describe goodwill is the difference between the current market value of the tangible assets of the business and the total value of the business.

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Due Diligence - A Must-Do Process When Buying a Business

Performing due diligence on a business being considered for purchase should be conducted much like a surgical procedure. The operation should be an organized examination of the vitals of the company.

This stage of buying a business begins once you have made your offer and the seller has accepted. A contractual agreement has been entered into between the buyer and seller outlining the price and terms of the sale. The contract is contingent upon the business passing "inspection," which is the due diligence period allotted to the buyer.

Since it is the buyer's responsibility to uncover any potential problem areas of the business, it is important to be prepared. This is the time to cut to the chase with checklist in hand to confirm all material facts of the business and validate what the seller has represented. The buyer, being the leader of the procedure, may call in specialists, such as an attorney to examine the legal aspects of the business and an accountant to scope the numbers. Depending on the size of the business, a buyer will typically have about two to four weeks to complete the process.

The following checklist represents vital aspects of a business that a buyer may wish to examine during the due diligence period. This checklist is not meant to fit all scenarios or to be all-inclusive, but to serve as a guideline.

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How is Inventory Handled in the Sale of a Small Business?

Inventory (stock held for resale) is a significant part of the tangible assets of most businesses. It is customary to include a normal inventory level in the purchase price of a business for sale that can sustain current revenues being generated by the business.

Just as tangible assets like machinery and equipment are included in the purchase price of a business for sale, the same holds true for inventory. Such assets as these are needed to generate the profit upon which the business is valued.

If a buyer is required to replenish the inventory or purchase additional equipment after purchasing the business, this additional working capital requirement would need to be taken into consideration prior to the initial valuation of the business if the sale is to be successful.

The agreement that both the buyer and seller sign into contract for the purchase of the business usually outlines the details of how inventory will be handled. The following are several aspects of inventory that are usually covered:

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