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Buying A Business -- A Due Diligence Checklist

Due Diligence is the last phase in the buying process. This is the time when you will have access to all of the company's books, records and files. You will have a pre-determined period of time to investigate the information that you have been given so far to verify its accuracy. The goal of an effective due diligence is to validate what the seller has represented and to allow you adequate time to review all of the other key issues of the business. The following is a checklist of information and documents that a buyer may wish to review during the due diligence period. Organization and Good Standing Accounting and Financial Information Physical Assets Real Estate Intellectual Property Employees and Benefits Licenses and Permits Environmental Issues Reports, Studies, Appraisals Taxes Contracts, Agreements, Leases Product or Service Lines Customer Information Litigation Insurance Coverage Vendors, Suppliers, & Profe ...

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Small Business Owners: When is it Time to Sell Your Business?

The Answer -- in a Nutshell: The best time to sell a business is when the business has upward trending revenues, when the industry is in an upturn, when the economy is strong, when there is a multitude of buyers looking for business acquisitions, and when interest rates are low. There are many questions that need to be answered before an informed decision can be made. Is selling the business your best alternative? Will one of the kids want to take over the business? Timing is everything. Is now the right time? You figure that you don't have to sell or decide right now. You are quite busy so maybe you will look into it after.....or maybe tomorrow.....or next year...... Facing the issue of succession or continuation of one’s business is not addressed with much enthusiasm by the average small business owner. But only one of three eventual fates exist for a business: Transfer to family, employee, customer, or vendor Sell to an outsider Close down Although the overwhelming majo ...

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Who Would Be the Buyer of Your Small Business? Part 2

Who are the Buyers for Privately-Held Companies and What is Their Acquisition Criteria? Understanding who the buyers are and their acquisition criteria will enable business owners to be better prepared when the time comes to sell. Unrealistic expectations of value and factors that drive value result in many business owners being unable to sell their business. When a business is on the market for a long period of time, pre-disclosure to employees, customers and suppliers can be detrimental to the business. Alternatively, proper valuation, packaging and presentation to the most likely buyers enhances the probability of a sale within a reasonable period of time. Already addressed in Part 1 of this subject was the Individual Buyer Category. Discussed here will be the Financial Buyer (sometimes called investment buyer) and Synergistic Buyer categories. Each have specific identifiable acquisition criteria. THE FINANCIAL BUYER There are approximately 200 well-known financial or investment buyers ...

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Who Would Be the Buyer of Your Small Business? Part 1

The Individual Buyer Category represents the largest number of prospective buyers for small to midsize privately-held businesses. Understanding who the buyers are and their acquisition criteria will enable business owners to be better prepared when the time comes to sell. The individual buyer category encompasses a variety of buyer types that include wealthy individuals, corporate executives, engineers and salespeople working for large firms, and immigrants entrepreneurs who have recently moved to the US. There are two other buyer categories that will be discussed in a future post: Financial Buyers (sometimes called investment buyers) and Synergistic buyers. Each buyer category differs in their purpose for making an acquisition and the types of businesses they target. Wealthy Individuals often are people who have taken early retirement from corporate America and after a brief period of being nonproductive decide to get into their own business. They tend to acquire midsize companies grossing in excess of ...

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Small Business Owners: Prequalify Your Business for a SBA Loan Early in the Selling Process

SBA prequalified businesses get more attention in the businesses-for-sale marketplace because it saves potential buyers a lot of effort and time to secure financing. More importantly, however, they know the business is financially sound. The more interest generated in your business, the better the chances for a quicker sale.

If your business is eligible for SBA financing, it will usually get a higher price.....especially if you provide a small amount of additional financing to the buyer. It makes the buyer feel more secure about purchasing your business knowing that you have enough confidence in the performance of the business to provide a loan. Or, based on the buyer's financial capabilities, you may get all cash instead of having to provide any portion of the financing yourself.

When your business is prequalified for financing, you will also get advice on what types of buyers would be approved for financing for your type of business, potential terms, and deal structure. You will also get a Letter of Prequalification you can present to qualified potential buyers.

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Houston is Booming -- It's Not Only the Weather That's Hot Down Here

"Texas is a land of buccaneering capitalism."- The Economist, 12/19/02 In addition to having a low cost of living and a great quality of life, Texas has one of the nation's most favorable business environments. By 2030 the U.S. Census Bureau projects Texas population will increase by 60 percent compared with 2000 and will be one of the three other states that account for nearly one-half of total U.S. population growth between 2000 and 2030. So........with all the environmental infrastructure in place, it's not surprising that we're off to a running start. Noted in New York Times article last week, Houston is experiencing its strongest resurgence in more than 20 years. The article cites energy, real estate development, and real estate investment as leading the way for the boom. There are, however, many other drivers contributing to the diverse economic health of Houston. The international trade and logistics sector is trucking along in the speed zone and will not be putting on the brakes anytim ...

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What Kind of Insurance is Needed for a Small Business?

It can be difficult to determine which kinds of insurance is needed for a small business. Different types of insurance have confusingly similar names. Your state, town, or county may have its own insurance requirements and many industries have coverage specific to them. To assist in determining which kind of insurance a business should have, you might want to check with the following agencies: The county or city clerk A local chapter of your industry association The state insurance office Here are three great website resources that provide helpful information regarding regulatory requirements: The Official Business Link to the U.S. Government The Official Site of Houston Texas Business Portal The basic business insurance package consists of four fundamental coverages--workers' compensation, general liability, auto and property/casualty--plus an added layer of protection over those, often called an umbrella policy. In addition to these basic needs, you may also w ...

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How to Choose a Business Broker To Sell Your Business in Houston

If you are an owner of a privately-held small business.....

You are the heart of American commerce. You are part of the engine that drives our economy and creates jobs. You have built your business up over time. We recognize and applaud your achievements. We are much like you in that nearly all of us have walked in your shoes by owning and running a company ourselves.

Now you are considering letting go. You are considering your options for selling the business.

You understand the importance of confidentiality and wonder how you can market your business without disclosing sensitive information prematurely, or disturbing the status quo. Your trusted advisers, such as your CPA, have helped you manage your business to minimize your tax liabilities. Now, however, you wonder if the income statements negatively impact your eventual asking price for the business. You wonder if you could discreetly line up a buyer yourself. Problem is, you know what you don’t know. You know about running your business, but in your heart you know this deal is the deal of your life. You need to know you’re getting the best possible exposure and price. You need to know how to qualify your buyer prospects and their offers. You don’t have the time or resources for a misfire. You know you will need help.


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More Fuel for Houston's Sizzling International Trade and Logistics Market

"Companies to service cargo and vessels at the Port of Houston and along the Houston Ship Channel will be in high demand for the foreseeable future and will continue to provide impetus to our city's economic vitality." -- Above is a quote from one of my posts earlier this month touting Houston Growth in International Trade and Logistics. Another major firm expanding operations to Houston's commerce hub Marlink, an international satellite communications provider, announced this week a visible step in its global business strategy. It is opening a Regional Headquarters operations center in Houston to meet growing demand from its maritime and offshore industry customers throughout North and South America. It will be located near the South Shore Harbor complex, with access to the ports of Houston, Galveston and the primary offshore oil and gas support bases in Louisiana. (Full Article in Houston Business Journal: "Marlink Picks Houston for Americas Headquarters" 03/12/2007) Houston's Gulf Coast has lon ...

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Immigrant Entrepreneurs Spark Houston's Economy

I recently posted a press release article citing the increased number of acquisition inquiries that business brokers in Houston are experiencing from business owners in foreign countries. It seems that Houston is not alone. The Center for an Urban Future, a New York City-based think tank, in a press release February 6, 2007, revealed a major new study indicating that immigrant entrepreneurs have become increasingly powerful economic engines for cities. The report, titled "A World of Opportunity: Understanding & Tapping the Economic Potential of Immigrant Entrepreneurs,” documents that immigrant entrepreneurs are starting a greater share of new businesses than native-born residents. The study takes an in-depth look at immigrant-owned businesses in New York City, Los Angeles, Houston and Boston. Based on 18 months of research, this study is built upon extensive data analysis, focus groups conducted with immigrant business owners and economic development experts, and interviews with business owne ...

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