Are we dealing with a buyer's market?

Are we dealing with a buyer's market?  
 
Buying a business has changed enormously over the course of the past decade, with the recession shaking things up more than we could have predicted.

We've seen a dramatic increase in administrations as unstable companies failed to cope with the drop in cashflow that followed the economic crash, while buyers themselves showed increased levels of caution when acquiring new businesses.

Things are far from steady again now, but we are seeing signs of a return to a new kind of normality; one in which buyers have the upper hand.

An abundance of easily available credit resulted in the widespread adoption of the auction as the preferred method of selling a business. It allowed sellers to maximize tension between competing buyers, keeping the pressure on and pushing the price up.

However, as the number of buyers capable of still affording to make an acquisition reduced in the wake of the crash, the remaining bidders demands increased.

Buyers were no longer happy to hope for the best and instead have started to demand more tailored information at earlier stages of the buying process in order to guarantee their success. 

In essence, these factors combined to bring two key changes to the market. Firstly, the number of bidders for each business has been drastically reduced, lowering pressure and competition. And secondly, caution among buyers has increased significantly, prompting investors to be more demanding when making new acquisitions.

Obviously, sellers need to keep these issues in mind when they put their business on the market. But we hope our subscribers who are out to buy a business are also keeping an eye on the broader business atmosphere; a company's worth (and the price worth bidding for it) will of course change in different economic periods and it is clearly the case that now is looking like a good time to buy a business for less. 

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Life After Selling A Business - Forbes

Life After Selling A Business :

The one question that a business owner needs to answer when I interview them concerning selling their business is, what will you do after selling your business? If a business owner doesn't have a good answer to this question, they usually aren't really to go through the complex process of selling their business

This article highlight what one business experienced regarding this key question.

Read: Life After Selling A Business
 
For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Avoid These Mistakes When Buying A Business

Buying a Business? Avoid These 5 Major Mistakes

Here is a quick summary of items to check so that you have a better chance of buying a business and ensuring a successful outcome years down the road.

Avoid these 5 major mistakes when buying a business:

1) Due Diligence, Due Diligence, Due Diligence
Doing a solid job of due diligence will help you avoid buying the wrong business or paying too much for the business. Executing a structured plan is critical to ensure by the financial and business operations aspects of a business are understood

2) Not Having Enough Cash Reserves
Do not buy a business until you have the necessary funds to both buy the business and the necessary funds to keep it open after the purchase. 

3) Assuming Cash Flow will Cover Debt
There will always be a transition period when buying a new business. The transition can impact cash flow. Most buyer under estimate this impact.

4) Paying for Potential 
In many businesses the value of the business is based on the condition at the time that you purchase it.  There may be circumstances where potential is worth $, such as in a franchise or other proven situation, areas such as patents, devices and other situations where there is value in potential.  Potential is something that typically requires your expertise & research to continue & make prosper, then it becomes your choice to gauge the potential and possibly negotiate the price through an earn-out agreement to avoid full risk. 

5) Wrong Entity Structure
Consult an attorney and possibly an accountant or financial advisor to help determine what the best entity structure for you is.

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Business Valuation Assessment

What Information is Needed to do a Business Valuation Assessment?

This video provides outlines the basic information needed to approximate the range of the most probable selling price a business might achieve in the marketplace.

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Aiding Sellers In Receiving The Maximum Price For Their Business

Aiding Sellers In Receiving The Maximum Price For Their Business

According to the International Business Broker Association IBBA), businesses valued at less than $2 million dollars tend to take seven months or less to close. Those valued between $2 and $5 million take eleven months or less to successfully close while those valued at $5 million or more take anywhere from six to nine months to sell. Of those businesses valued at $5 million or more, 8% took two years or longer to successfully close. Brokers do expect to see an upward trend in this market over the next three months.

Adequate seller representation is needed during this process to generate a satisfactory outcome. According to the IBBA, unrealistic expectations are the number one reason why sales are not completed. My goal is to ensure each client understands the sale process. In order to achieve this goal, the first step is to have the value of the company calculated. Sellers often make use of the net income on the federal tax return to determine cash flow. In all actuality, non-cash expenses must be added back into earnings along with discretionary expenses. Market conditions and valuations must be added in along with buyers' and lenders' approaches. I can be of great assistance during this process as I provide reasoning and rationale to back up the valuation."

When the valuation is complete, I develop a customized and confidential marketing plan to target those buyers most likely to pay full value for the business. My company, Florida Business Exchange, maintains databases of potential buyers which meet necessary requirements such as ability to run the company successfully and have the funds necessary to purchase the business. My goal is to find a number of potential buyers to ensure each company sells for the highest price possible.  

Once a buyer has been located, I manage the period between receiving the offer and closing the transaction.  I facilitates the due diligence process while coordinating with outside legal counsel to ensure all necessary legal documents are drafted. As the broker I also coordinate the final closing date and obtain approval from all parties. I will attend the escrow closing to ensure all documents are in order.   

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

What Information is Needed to do a Business Valuation Assessment?

Two of the most common questions business owners ask is, "How much is my business worth," and "What information is required to do a market valuation of my business."

The answer to the first question is ultimately answered by the market itself. What we do is approximate the range of the most probable selling price a business might achieve in the current market.

In order to determine the most probable selling price range, we ask for the following information. This is the bare minimum of documentation needed:

• three years of tax returns
• three years of income statements (profit/loss statements)
• interim (current year-to-date) income statement
• current balance sheet
• a list of Furniture, Fixtures, and Equipment (FF&E) included in business operations
• an estimate of fair market value of FF&E

Tax Returns (Corporate or Schedule C)

We use tax returns in combination with income statements to help determine owner's discretionary cash flow..

Profit and Loss Statements

These statements, along with a Discretionary Earnings analysis, are used to create the spreadsheet that will be used for analyzing the business across a span of years for trends and anomalies.

Interim Profit and Loss Statements

This report will be included in the spreadsheet analysis to project the current year-end numbers and compare the current year trend to previous years. It will play a role in the assessment.

Balance Sheet

The balance sheet is a tool to understand the position of the company in terms of assets and liabilities that may impact valuation.

List of Furniture, Fixtures, and Equipment

This is a complete list of all the tangible assets being used in the business to generate income and is being sold with the business. It is important because it ultimately becomes part of the final purchase and sale agreement. There should be no miscommunication regarding what is included and what is not included.

Fair Market Value of FF&E

In simple terms, this means the value that your FF&E would fetch on the market in its current condition and is not at auction or a forced sale of the items. As defined in a legal dictionary, "a price at which buyers and sellers both having reasonable knowledge of the property and being under no compulsion are willing to do business."

The owner's DISCRETIONARY EARNINGS will be presented in a RECAST FINANCIAL statement that reflects the monetary benefits of owning the business. Discretionary earnings, operations, processes, and other characteristics of the business that drive value will all come into play in determining marketability and the most probable price range.

Posted by Certified Business Brokers (CBB)

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Are Baby Boomers Ready to Exit Their Businesses? - NYTimes.com

Are Baby Boomers Ready to Exit Their Businesses?:

It’s official: as of January 1, 2011 the oldest of America’s baby boom generation started 65 at a rate of 10,000 a day — a trend that will last for the next 19 years. As articles like this one point out, the coming wave will mean big business for many industries. This means that largest wealth transfer in our nation’s history officially begins.

Read: Are Baby Boomers Ready to Exit Their Businesses?: 

For a complimentary consultation:
Contact  Cecil Williams (cecil@bizbrokerflorida.com) or call  at 888-925-5055 ext.206.  Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com  Also, visit our Florida Business Exchange website at www.fbxbrokers.com