Ready for a promotion?

If you can’t be the big Boss where you work, then maybe it’s time to promote yourself!

When you own the company ,you’re the big Boss!

Why Work for Myself?

I will have control my future. I deserve the profits of my

hard work and good ideas! Investing in me will provide

the best for me & my family!

Acquire or Start a Business?

U.S. Government surveys suggest that6 out of 10 business start-ups will fail

within their first 3 years of operations .

Risks are high for unproven:Locations

Products or Services

Marketing Plans

Budgets – How much will it really take?

Why?

Reasons People Sell Good Businesses

• Retirement• Illness• Partnership dispute• Divorce• Too diversified and

spread too thin

• Relocation• Want a change• Biz has outgrown

them• Change in

personal situation

Components for a Successful Business

Right location available on good terms.

Products or Services people want & will buy.

Resources & skills suitable to the business.

A successful, going business has what it takes!

Acquiring a Proven Business

You acquire 2 essential components: Proven location Proven products or services

Customers and revenues prove that the seller’s location, products and services work!

The Remaining Component

Resources & Skills:• Your Investment

• Your Skills

• Your Experience

• Training from Seller

Is it affordable?

For most good businesses, 20% to 40% down will get the deal done.

Your new business then pays for itself!

How?Seller’s Discretionary Earnings

(SDE)

Definition:Cash benefit to you, as new

owner, that you use to pay the debt and yourself.

SDE = Owner’s BenefitsOwners(s)/Officers Salary, if included in expenses

$

Discretionary Expenses, if included in expenses $

a. Auto Expense $

b. Travel $

c. Insurance (excess) $

d. Interest, if not applicable $

e. Entertainment $

f. Meals $

g. Non-employed spouse salary $

Non-Recurring Expenses (explain) $

Non-Cash Expenses $

a. Depreciation $

b. Amortization $

TOTAL ADJUSTMENTS $

Net Profit (Loss) from P&L $

SELLER’S DISCRETIONARY EARNINGS $

Financing OptionsSeller financing Institutional financing

Lower Interest Rate Various Financing Options

at longer termsLow Down Payment Low Down Payment

Simple Credit Checks & Loan

Application, Processing & Loan Closing

Business serves as collateral for the loan

Business serves as collateral for the loan

Personal Guaranty & possible additional

personal collateral

Personal Guaranty & possible additional personal collateral

Greater Owner Commitment

Greater Independence

Use

other

people’s

money!

Valuing a Business1. Rules of

Thumb 2 to 3 times earnings Equipment +

Inventory + 1 Year Net

1 Year Gross Sales

2. Comparables Multiple of revenue Multiple of SDE

3. CAP rates

4. Return On Investment

5. Other Valuation Methods

What’s It Worth to You?

If you can buy the business for the amount you have to put down… AND, from its profits make the living you need… AND, also pay off the business…THEN, that business is priced right for you!

It’s worth its price to you!

Getting Your Business Meet With Broker to Discuss Your Needs Preview Suitable Opportunities Discreetly Tour Businesses Meet with Sellers for More Information Make a Contingent Offer with Earnest Money Begin Formal Due Diligence Remove Contingencies Complete Financing Requirements Close Escrow You’re in Business

A Contingent OfferA contingent offer expresses your interest to purchase subject to your

contingencies and acceptance of your price and terms.

Typical contingencies are:Equipment must be of type and condition satisfactory to you. Books & records must be satisfactory to you. Lease assignment or sublease must be obtainable on satisfactory terms. Ability to get necessary licenses and/or financing Business must pass any required inspections Business must be transferred free & clear of debt, except as agreed.

Getting to an Agreement

Contingencies do allow you: To examine all the business details To secure financing To obtain necessary leases To investigate qualifying for licenses &

permits To investigate anything important to you …

Before you’re offer becomes fully binding!Before you’re offer becomes fully binding!

You You mustmust be satisfied! be satisfied!IF not,IF not, you have the option to adjust your offer or

to cancel and have your deposit refunded.

Business Brokers Do…Save you time & $$ Have many businesses to offer.

Assist with financing process..

Educate Help find you the right

opportunity. Guide the parties through the deal.

Provide ExpertiseHave valuable tips & resources

for assistance in getting starting

Bridge the Gap Negotiate, coordinate and facilitate a meeting of the

minds – a deal.

Assist in Lease Issues Coordinate and facilitate your application with Landlord

Provide Information Give you the key numbers you need to make an offer

Business Brokers Don’t…

• Make your decisions

• Do your due diligence

• Manage your business

• Open Seller’s confidential details until formal due diligence begins

Advisors Talk to…

Business owners for mentoring on buying your business

Qualified Attorneys for legal matters

Qualified Accountants for taxes & bookkeeping

Escrow OfficersNeutral: Don’t represent either the Seller or the Buyer

1. Prepare all closing documents

2. Hold all funds until closing. Distribute funds.

Escrow fees usually paid equally by Seller & Buyer

The ClosingWho’s there : You & Seller Business Broker Escrow Officer

What happens:Documents reviewed, approved & signedYou and Escrow Officer release check to SellerSeller gives you the keys

Congratulations!

You are now in business for

yourself and your family!