Archive for July, 2010

What Is An Earn Out? How Is It used?

By Hoke - Last updated: Friday, July 23, 2010

An Earn Out is a Note or Contract with variable payments. The payments are usually a Percent of Revenues over a fixed period for usually a fixed maximum. It can be used to provide the Business Seller with a higher potential Purchase Price if the business performs well, or conversely reducing the potential Purchase Price […]

Who Is The Best Buyer For My Business?

By Hoke - Last updated: Thursday, July 22, 2010

In most cases your ongoing business will present the most value to a new First Time Business Buyer. They will need training and will respect the Business Seller’s expertise. More experienced, Industry Insiders may only value the Customer List, disregarding the Employees and Equipment.

Are Ask Prices On The Internet An Accurate Means To Gauge The Market?

By Hoke - Last updated: Thursday, July 22, 2010

Most Ask Prices on the Internet are too high. Because they do not sell, overpriced businesses are perpetually displayed. They influence other Business Sellers who look on the Internet to price their business creating an ongoing parade of businesses that rarely sell. Further compounding too-high pricing some Business Brokers look to the Business Seller (who […]

I Don’t Want Employees Or Competitors To Know The Business Is For Sale

By Hoke - Last updated: Thursday, July 22, 2010

An experienced Business Broker requires that all Business Buyers sign a confidentiality agreement before exposing the name of the business. In addition, the advertising must provide enough information to encourage a Business Buyer to inquire without exposing the business to an employee or competitor. There are various ways to provide a heavier level of confidentiality […]

My business makes a great living yet shows little profit.

By Hoke - Last updated: Thursday, July 22, 2010

A skilled Accountant will minimize Income and therefore taxes. A skilled Business Broker will be able to professionally recast the Financial Statements and Tax Returns to maximize Income and therefore business valuation.  As an example, Interest and Depreciation increase Discretionary Income for the purpose of a Financial Statement Recast. An understated Financial Statement Recast can […]

What Should I Look For In A Business Broker?

By Hoke - Last updated: Thursday, July 22, 2010

Selling a business is a personal effort with a complex product (The Business). An experienced Business Broker has the ability quickly size up your business. He can explain what factors make your particular business successful and desirable in terms of the Business Buyer.  You should ask the prospective Business Broker; “What makes my business attractive […]

How Many Months Should The Exclusive Representation Agreement Be?

By Hoke - Last updated: Thursday, July 22, 2010

An Exclusive Representation Agreement is a written contract which can be difficult to rescind so the Business Seller must be careful with Business Broker selection. The length depends upon the length of time the Business Broker estimates it will take to sell the business, usually six to twelve months. A Business Broker who is confident […]

Is an Exclusive Listing necessary?

By Hoke - Last updated: Thursday, July 22, 2010

A high quality Business Broker views the Representation Agreement as a commitment that he will do the best he can to get a listing sold. The Business Broker makes a time and financial investment in Listing. The Business Broker has a right to expect a commitment from the Business Seller.

The Attributes of an Attractive Business

By Hoke - Last updated: Thursday, July 22, 2010

Stable or growing Revenues. Over three years in business (more is better) Good Accounting Records Easy to Run (or the Business Buyer has experience in this industry) Good Lease situation

The Month to Month Lease can be Problematic

By Hoke - Last updated: Thursday, July 22, 2010

The value of a month to month lease depends upon the disposition of the Landlord. A Landlord who values a new long-term tenant will be pleased to issue a favorable new lease. An opportunistic Landlord may attempt to dramatically raise the rent or add tough conditions thereby reducing the sales value of the business and […]