buying bus.presentation
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TRANSCRIPT
- 1. Joe Cacopardo laska COMPANY www.laskacompany.com The Secrets of Buying & Selling a Small Business
2. Workshop Goal No Secrets by the End of The Workshop laska COMPANY 3. What Potential Buyers Need To Know laska COMPANY 4. Over 25,000,000 Approximately20% Receptive to Selling laska COMPANY 5. Reasons Owners Want to Sell
- Retirement
- Burn-Out
- Divorce
- Health
- Cash Out
- Other Business Interests
- Re-Location
- Death of the Owner
- Any number of Simple Reasons
laska COMPANY 6. Business Brokers
- Do You Need One?
- YesBut
- The But is Related to Understanding the Business Brokers Role
laska COMPANY 7. Business Broker
- Business Brokers Almost Always Represents the Seller
- Seller Pays their Commission
- Fiduciary Duty to the Seller
- No Multiple Listing Service in Idaho
laska COMPANY 8. Business Broker
- Access to Businesses For Sale
- Details about the Business
- Majority of Businesses in Idaho are Sold through Brokers
laska C OMPANY 9. Business Broker
- Buffer Between Buyer and Seller
- Paperwork is Astounding
- Closing the Deal
laska COMPANY 10. Buyers Need To Know
- Identify the Type, Size and Location of the Business you Want to Purchase
- Know How Much Money to Put Down
- Know Where the Down Payment/Purchase Money Will Come From
- Professionals Should Be Lined Up
laska COMPANY 11. Buyers Need To Know
- Making an Offer is not Buying.. Get the Process Started
- Keep the Negotiating & Communications Moving Forward
- Get the Signed Purchase Agreement into Escrow
laska COMPANY 12. What Potential Sellers Need To Know Timing is Everything! laska COMPANY 13. First and Foremost Step
- Determining Value
- Basic Factors that Influence Value
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- Value of Hard Tangible Assets
-
- Value of Intangible Assets
-
- Amount of Re-Cast Cash Flow
-
- Growth Rate
-
- How Long in Business
laska COMPANY 14. Multiples laska COMPANY 15. From the introduction to the Rules of Thumb by Tom Parker
- A Rule of Thumb is a homemade recipe for making a guess. It is an easy-to-remember guide that falls somewhere between a mathematical formula and a shot in the dark.. Multiples/ Rules of Thumb are a kind of tool
laska COMPANY 16. Multiples
- Earnings before, interest, taxes depreciation and
- amortization (EBITDA)
- Earnings before interest and taxes (EBIT)
- Sellers Discretionary Earnings (SDE)
- % of Annual Sales
- Many Others
laska COMPANY 17. So What is the Definition of Fair Market Value? laska COMPANY 18. Definition of Fair Market Value
- What any seller is willing to sell their business for and what any buyer is willing to pay.
laska COMPANY 19. Scenario #1
- My business is well established and is profitable
- Option:
- Price the business at the highest possible value based on sound valuation methods that will satisfy all requirements of the final test to a prospective buyer.
laska COMPANY 20. Scenario #2
- My business has no earnings, however it does provide me with a salary and a few tax benefits.
- Options:
- Sell the business for the current fair market value of the assets plus a small amount of goodwill.
- The buyer is buying a job and will probably not want to pay much goodwill for an equivalent advanced salary.
- Buyer may have a hard time finding financing for this case.
laska COMPANY 21. Scenario #3
- My business does not have net income, does not provide me a
- salary and there doesnt appear to be any value of goodwill, but the doors are still open.
- Options:
- Sell the business as a going concern for the current fair market
- value of the assetsmaybe a new owner will have good ideas
- to improve profitability.
- Almost impossible to find financing for this case; seller may
- have to carry a promissory note.
- Close business; liquidate assets by auction, etc.
laska COMPANY 22. Scenario #4
- My business is only one year old; can I sell it?
- Same as Scenario #3
laska COMPANY 23. Deal Breakers
- Neglecting the Operation of the Business
- Placing too High a Price on Business
- Not Preparing Far Enough in Advance No Planning
- Not Anticipating the Buyers Request
- Wanting to Retire Immediately After the Business is Sold
laska COMPANY 24. Deal Breakers
- Being Inflexible in Structuring the Transaction..Seller Carry
- Negotiating Every Item
- Allocating too Much Time for the Selling Process
laska COMPANY 25. laska Company Joe Cacopardo 877 Main St. Boise,ID. 83702 208.331.1116 [email_address]