Google+
Archive for September, 2012

What is Due Diligence?

By Hoke - Last updated: Monday, September 3, 2012

Due Diligence part of the sale process when the seller opens all aspects of the business to the buyer. In essence this is where the seller must convince the buyer that the business performs and is as represented. This convincing is done mostly via providing historical documentation and buyer observation. The buyer has an opportunity […]

Business Broker Industry Fees

By Hoke - Last updated: Monday, September 3, 2012

Business Broker fees are set by the individual Business Broker firm and vary. Most firms work on a “Success Fee” where they earn a fee only if the transaction closes. Commission is typically paid from the sale proceeds. Some firms require an upfront retainer fee. Although there are exceptions, the Commission Percent charged averages about […]

Escrow

By Hoke - Last updated: Monday, September 3, 2012

Typically after the successful completion of Due Diligence the acquisition process is ready to open escrow. The buyer should be committed to purchase the business without further doubts. At this time the Good Faith Deposit is deposited in the escrow’s bank Trust Account. The purpose of a business acquisition escrow is to provide free and […]

Written Offers

By Hoke - Last updated: Monday, September 3, 2012

Written Offers can range from Non-Binding Letter simple of Intent to binding Purchase Agreements. At minimum it should set the price and payment terms for sale of the business. The important issues with the written offer is that it should provide for a risk free or loss free means for the buyer to “walk-away” in […]

Asset Sale versus Stock Sale

By Hoke - Last updated: Monday, September 3, 2012

The Asset Sale is the favored means of acquiring a business. This is the form of sale in 95% of business sales. This is in lieu of acquiring the Corporation Stock. With an Asset Sale the buyer essentially acquires the Equipment, Furniture, Fixtures, Lease, Customer List, Inventory, Licenses, Permits and Trade Name. The employees are […]

Internet Acquisition Search

By Hoke - Last updated: Sunday, September 2, 2012

The most common, least effort and least costly is the internet search. See The best websites to find a California Business for Sale. The buyer can perform the search themselves and contact the sellers directly if they wish. Many Business Brokers will perform this service for the buyer. However there may be a disadvantage of […]

For Sale by Owner

By Hoke - Last updated: Sunday, September 2, 2012

The majority of businesses are not sold through business brokers. The owner puts out the word through their business network or it is sold to a family member, friend or employee. Some of these businesses owners are not aware of business brokers and the business for sale market. Some are so concerned about confidentiality they are […]

Pricing the Potential of a Business

By Hoke - Last updated: Saturday, September 1, 2012

I have a saying: The buyer buys a business that shows potential but pays for history.” If the buyer does not see growth potential, the buyer will usually not buy it. The buyer may see a potential but doesn’t let anyone know. As an example the buyer may be a marketing expert and sees an […]

Financial Due Diligence Checklist

By Hoke - Last updated: Saturday, September 1, 2012

This typical list is complete and detailed. Many smaller businesses may not have available this depth of detail. Bank Statements for the for past three years Cash Receipts Journals for the for past three years General ledgers for the for past three years Cash disbursement journals/check registers for the for past three years Copies of […]

Real Estate Broker as Business Broker

By Hoke - Last updated: Saturday, September 1, 2012

Although anyone with a valid California Real Estate License may sell business opportunities they should have a good understanding of accounting, business values and the business sale process. Some buyers want their friend or relative who sells homes to represent them and make a commission. Understanding the benefits of a recent termite inspection does not […]