From the monthly archives: July 2011

We are pleased to present below all posts archived in 'July 2011'. If you still can't find what you are looking for, try using the search box.

Maximize Value When Selling Your Business - Get Rid of Excess Inventory

When selling a business, maintaining proper inventory levels is essential to maximizing value.  Don't let poor inventory management drag down the value of your business. 

Inventory is an ever-renewing, moving, and perishing thing. The longer it hangs around, the less valuable it gets, and eventually dies as a viable product.  If it's not turning over fast enough, the inventory begins to stop-up cash flow and drain capital coffers. Inventory is a dollar-for-dollar part of the buying and selling process and buyers will make a close assessment of it prior to closing a deal.

So, when operating a business, the goal is to tie up as little cash as possible in inventory, while having enough inventory to meet ordinary business needs. And, when selling a business, prospective buyers looking at your business as a possible acquisition would rather see fully flexible cash, not less flexible inventory weighing profits down. Any free cash flow that can be found to help bottom line earnings when selling a business will be rewarded by a higher price when the business is sold.

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Creative Financing for Buyers Looking to Purchase a Business

The evaporation of small business capital markets and other economic factors have made creative financing the norm for today's business buyer. During these turbulent times there are a number of creative financing options that you can consider. Seller Financing - Increasingly, buyers and lenders are looking to the seller for financing as they try to put a transaction together. In such a scenario, the seller will hold a note at an agreed upon interest rate for a specific term or amortization – generally ranging from five to 10 years. The terms of the sale may include a balloon payment three to five years after the purchase date. It’s a way of giving the buyer time to get up and running and to establish a successful track record with the business. Seller financing makes the bank more comfortable with the transaction. Lenders know they have a seller who has a vested interest in the success of the business rather than one who will take their money and run. SBA Loans - In sales of a business, co ...

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Should You Consider an Unsolicited Offer from a Competitor to Buy Your Business?

"A major competitor made an unsolicited offer to acquire my small business. The amount seems significant, what should my next step be?" While the offer may sound great, the real question is whether or not it is an offer that truly reflects the value of the business you have built. So, in order to make an informed decision, the first step is to seek an independent valuation from a firm who knows the marketplace. Secondly, you need to educate yourself about what drives value and what motivates buyers. The fact is that competitors usually pay the least for a business. There are other types of buyers that would probably pay more. Each category of buyer has distinctive characteristics and motives for making an acquisition. The price each is willing to pay is directly proportional to their motive. Should a valuation determine that your competitor's offer is less than it should be, then you should let the marketplace compete for your business in order to achieve the best possible deal. &nbs ...

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Buying a Business - Make Your Acquisition A Good Investment

Future profit potential, and how much you can impact that future, is the most important intel you can have when purchasing a business. Future growth will ultimately be the measurement of the merits of the investment and is key to your achieving a good return.

One the most serious shortcomings when evaluating an enterprise is to focus only on historical performance without considering what the business might be capable of under new management. While its history provides some insight, it is what will happen to the company in the future that is key.

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