Preparing your exit

Employment/Industry

Transworld Business Advisors, LLC. - Director and Partner

International Business Brokers Association

Business Brokers of Florida

Nestle Waters of America – Market Manager

PepsiCo – Distribution Center and Territory Manager

Airborne Express – Terminal Manager

US Army : Platoon Leader / Company Commander

Community Service

JMJ Life Center

Family Promise of Greater Orlando

Coalition for the Homeless

Awards/Recognition

Deal Transaction Volume 2013 & 2014

BBF Million Dollar Producer 2006 – 2014

BBF Deal Maker in Deal Volume

Transworld Presidents Club 2006- 2014

CFl MVP Deal Volume 2006 to 2014

CFL MVP Commission Volume 2006 – 2014

BA Providence College History / Military Science

Board Certified Intermediary

Florida Licensed Real Estate Sales Agent

In 2006 after a career in consumer products sales and distribution, Mike came to Transworld looking for a business to

buy rather than continue the never ending cycle of relocation up rooting of his family. He joined the firm as a sales

agent believing that access to the systems and data base he would be able to find a business of his own. Nine plus years

later and over 200 transactions completed he is consistently one of the leading sales producers in the state and the

nation. He has completed transaction ranging from $25,000 to $40,000,000 in sales volume. Mike is also a Partner in

Transworld Business Advisors with over 90 offices worldwide.

Increasing the Value of Your

Business

now and in the future

Valuation Methodology 101

Three Approaches

Income Approach Methods

Cap Rates

Present Value

Market Approach Method

Revenue & Profit Comparison

Asset Approach Method

Quality and Quantity of Earnings

Profits/Owner Benefit Levels. (EBITDA vs. Owner Benefits)

Growth Potential

Trends

Owner Financing

Bank/SBA Financing

Ease of transfer

Diversified Client Base

Top 10 Ways to Increase the

Value of Your Business

Here’s how to rig the system with hot input

and information to increase the value!

• It will be the first thing everyone wants to see when buying or valuing your business. With today’s computer technologies and programs you have zero excuse not to have your business records completely automated and accurate to the minute.

#1 Keep good books and records

• Up trends are very important. A buyer will value the future earnings based on past results. If the chart is going up, the future earnings must have a growth trend too, and the value will be higher. Would you buy a business that made $150k, then $200K, then $250K in successive years? (YES) Would you buy the reverse business? (NO) Would you buy a business that was flat? (PERHAPS) Would they be equally valued? NO!

#2 Grow earnings before you sell.

• I know none of you business owners expense unnecessary items in your businesses. But many legitimate expenses could even be declared by a valuation expert as discretionary. (Did you really have to visit Filta HQ During Bowl Week) Keep a separate credit card, or accounting notation, or a journal.

#3 Separate fringe benefits from real expenses.

• Small businesses are valued on one owner operator working the business. If your spouse performs a job that must be replaced, the value will be negatively impacted. Your best bet is to phase the family out and have staff that will stay on after a sale. Also, no buyer wants to work 60 plus hours a week. If you do, you had better get some staff before you try to sell. Chief cook and bottle washer business owners will find it very hard to sell. Transfer the knowledge NOW!

#4 Have proper management and staff in place.

• If your business is cramped and the business is limited by the current facility and equipment, you business valuation will reflect that ceiling of revenues and profits. Either sell before you need to invest, or buy the equipment and move the business, and sell in a few years.

#5 Have the capacity to grow and make capital expenses.

• (Getting the picture yet?) There are several great accountants and CPA firms in your area. PICK ONE AND USE THEM!

#6 Keep good books and records.

• Your business is primarily valued based on the profit to you! And yes, they do use multiples, and the multiple increases as the profit increases, i.e. a business making $100K may be worth 2x’s ($200K), but a business making $500K may be worth 3x’s ($1.5M)….but remember #2, the trend also affects multiples.

# 7 Increase the bottom line.

• The value of equipment and businesses will be higher if everything works and looks nice. Also, buyers will want everything in working order at the day of closing…even that old piece of equipment that you do not use anymore.

#8 Keep everything in good repair…and if you do not use it THROW IT OUT!

• You got it now right!! FYI. Any bank looking to finance the acquisition of your business will look at least at three years of earnings (this is not owner benefit) to decide how much they can lend. If a buyer cannot get enough money from a bank, you have two choices. Seller financing, or sell for less. Good books and records will allow your business to sell fast, for a high valuation, and be financed with third party financing. ALL GOOD FOR YOU.

#10 Keep good books and records.

Increase Owner Benefits/Earnings

Keep good books and records

Increase sales over a two year period

Have management in place

Have inventory/assets documented, controlled and managed

Make capital improvements or investments now (not too much)

Have excess capacity to grow

Plan to exit

Hire a professional (Broker* as well as accountant)

Comparable business

marketplace Specifics

Actual Sold Stats - Florida

Sales Sold Price

Adj Net / SDE

Sold Price/ Sales

Adj Net / Sales

Sold Price/ Adj Net

Rent to Sales Ratio

Sold Price to Sold Down

Stock / Inv

Days on Market

144078 65000 56069 .451 .389 1.16 NA 1 NA 269

102800 115000 89950 .119 .876 1.27 NA .791 NA 134

280626 125000 73066 .445 .260 1.711 NA .76 NA 609

500000 125000 115000 .25 .23 1.087 .0018 1 NA 182

346291 280000 126282 .809 .365 2.217 .035 .286 NA 52

789689 1645022 425102 2.083 .538 3.87 .086 .0856 NA 252

Filta avg high of 2.12 to a low of .61 at the Sold Price to Sales Ratio

Big marketing budgets produce large corporate clients

increasing sales

Process, support and buying power not available to

competitors

Your Franchise adds value. Could push up multiple.

Franchise recognition

Availability of Franchise financing

Safety addresses the Subliminal Fear Factor

Added Value for Franchises

Questions?

Thank you