April 2013

Volume 14: Issue 2

April 2013

Taking The Necessary Steps

How VR Helps You Obtain a Fair Market Price

Business owners face a myriad of challenges on a daily basis. One challenge no owner wants to grapple with is financial distress. But, if you've struggled with declining profits, rising costs, fierce competition and other overwhelming problems for some time, and the situation doesn't seem to be improving, selling may be the best solution. There are steps VR M&A Advisors can assist with to maximize your business's value.

Assessing Value

Deciding to sell your company is never easy. You've invested significant time and emotional energy in your business. But once you determine that selling is your best option, VR will help you begin the process by making a hard-line assessment.

First, we will find out what your business is worth. A professional valuation gives you a basis for negotiating the sale price and terms with potential buyers. VR will review your financial statements and determine values for assets such as real estate and equipment.

We also can assess the value of your sales volume and determine whether it might be attractive to another company. Your intangible assets, such as people, knowledge and intellectual property, can be just as important as tangible property; recognized brands, copyrights, trademarks, proprietary customer or client mailing lists, and long-term contracts all can have significant value. Values placed on intangible property, however, are likely to be scrutinized closely by potential buyers.

Once you understand your company's market position, financial status, and strengths and weaknesses, you'll have some idea of what you can expect from a sale.

Give Buyers What They Want

What's valued in the sale of a distressed company is usually different from what's considered in the sale of a stronger, more profitable company. If they're not simply looking to liquidate assets, buyers generally want to see potential for improvement and signs that internal problems can be fixed relatively easily.

Typically, buyers look for the following three qualities:

Sales volume potential.

A loyal customer base and complementary products and services are major draws. Buyers often seek opportunities to cross-sell with their current product lineup. If, for example, your company manufactures heating and cooling systems and a potential buyer is in the business of selling, installing and servicing these types of systems, acquiring your line of merchandise could help them strengthen existing customer relationships and cut out competition.

Facilities. A transferable long-term lease in a good location can be valuable to potential buyers because it can mitigate rent inflation risk. Buyers also are interested in acquiring unused facilities and equipment that can be repaired or upgraded and used to increase productivity and generate new business.

People. Buyers look for opportunities to maximize underused talent by restructuring job roles and placing them in the right positions. Existing management and company operators, however, must be amenable to a change in ownership. In their efforts to increase productivity, potential buyers might also eliminate marginal performers or replace overcompensated employees.

Finally, growth potential won't necessarily garner a higher sales price with a distressed company, but it will make the difference regarding whether buyers are interested.

Positioning for the Sale

Because selling a distressed company can be a complex and delicate operation, it's essential to get professional advice as early in the process as possible. VR M&A Advisors, who are experienced in selling financially-troubled companies, can help you improve your competitive position and your final sales price. We have a large pool of qualified buyers interested in the kind of opportunity your company offers and can help you devise a strategic plan to identify such buyers.

Allowing VR M&A Advisors to handle the difficult work of selling also can free up your time to continue managing your company's day-to-day operations - including maintaining regular communication with lenders and investors. Communication with major stakeholders is critical at this stage, as they are likely to be very concerned about the future of their investment. Also, their approval will be essential to selling the business.

Where there's a Will, There's a Way

Selling your company is a difficult decision. But with adequate planning and preparation and the assistance from VR, even a company in dire financial straits may prove attractive to a buyer and sell for a fair market price.

Healthcare and Your Small Business

How will recent healthcare changes impact you?

Taxes and government spending are going to be on the agenda in Washington during 2013. Where does that leave health care reform, the legislation passed in 2010 overhauling the health care system in this country?

Here's a quick update that covers provisions in the health care legislation that have already gone into effect and those that, absent any changes made in the coming months, will go into effect in 2013 and thereafter.

The following provisions have already taken effect:

* A 10% tax is assessed on indoor tanning services.
* Small businesses with fewer than 25 full-time employees may qualify for a tax credit for the cost of purchasing health insurance for their employees.
* Children can remain on their parents' insurance policies up to age 26. Private lending for student loans is replaced with loans directly from the federal government, cutting loan fees.
* A 50% discount on brand-name drugs for those with Medicare drug coverage helps to offset costs in the "doughnut hole."
* Over-the-counter medications can no longer be paid for with funds in health savings accounts (HSAs), flexible spending accounts (FSAs), and health reimbursement accounts (HRAs).
* The additional tax on non-qualified distributions from health savings accounts (HSAs) increases from 10%to2O%.
The provisions that will take effect in 2013 include the following:
FSA limits

* The amount that can be contributed to a health flexible spending account (FSA) is limited to $2,500 per year, indexed annually for inflation,

Medical expense deduction

* The 7.5% income threshold for deducting un-reimbursed medical expenses increases to 10% for those under age 65. Those 65 and older may continue to take an itemized deduction for medical expenses exceeding 7.5% of adjusted gross income through the year 2016.
Executive pay limit
* The compensation deduction for certain health insurance companies is limited to $500,000 per year for high-level executives.
Medicare tax increase
* The payroll Medicare tax will increase from 1.45% of wages to 2.3 5% on amounts above $200,000 earned by individuals and above $250,000 earned by married couples filing joint returns. The income threshold levels are not indexed for inflation.
* A new 3.8% Medicare tax will be imposed on unearned income for single taxpayers with income over $200,000 and married couples with income over $250,000. Examples of unearned income:
interest, dividends, royalties, rental income.
Medical device tax
* A 2.3% excise tax is imposed on the sale of certain medical devices.
Provisions scheduled to take effect in years after 2013 include the following:
Coverage required starting in 2014
* Individuals who are not covered by Medicare, Medicaid, or other government health insurance are generally required to maintain health insurance coverage or pay a penalty. Penalties are calculated using a percentage of the taxpayer's income or a flat dollar amount. Subsidies and tax credits are available to help lower-income taxpayers pay for coverage.
* Health insurance exchanges are established by states to enable people to comparison shop for coverage.
* Large employers generally must provide coverage for employees or face penalties.
* Tax credits increase from 35% to a maximum 50% of premiums paid by qualifying small businesses that provide coverage for their workers, The credit available to nonprofit employers increases from 25% to 35%.
Health industry fee in 2014
* An annual fee is assessed on the health insurance industry, starting at $8 billion in 2014 and increasing over the following years.

The SBA has a helpful reference site covering small business and healthcare.

Tax on "Cadillac plans" in 2018

* Insurance companies will be assessed a 40% excise tax on health insurance plans with annual premiums exceeding $10,200 for individual coverage and $27,500 for family coverage. An increase in the threshold amount is allowed for retired persons who are age 55 or older (an additional $1,650 for single coverage and $3,450 for family coverage). These increased thresholds also apply for plans that cover those engaged in high-risk occupations.

Certain provisions in the original health reform legislation have already been changed or repealed. For example, the law originally required Form 1099 reporting for payments over $600 made to corporations. That requirement has been repealed, and reporting is again generally required only for payments over $600 made to unincorporated businesses.
Congress may amend or repeal provisions in the health care reform law, either before their scheduled effective date or retroactively. Or the law may survive largely intact. Clearly, the massive law will affect every taxpayer.

VR - Publisher of "Today's Business Owner - Pursuing Aggressive Expansion

Launching Targeted Pay-Per-Click and Email Campaigns

Many leading economic indicators have begun their swing back to the positive, not the least of which is the equities market, which has fully recovered and in fact set all time highs this spring. Additionally, metrics coming in from VR offices throughout the network show a general uptick in the amount of engagements and successful transactions on a year over year basis. After 4 hard years in the business marketplace, it seems that the recovery is well underway.

After much discussion VR Corporate has decided now is the time to begin expanding the VR network both domestically and internationally. To accomplish this a multi-pronged strategy was developed and implemented. It encompasses multiple mediums and methods.

First, VR launched a new Franchise Opportunity website at www.franchisevr.com. This new site is a total reboot of the strategy put in place to attract new office owners. A new visual design, updated information, and a more interactive platform highlight the new site. In the near future VR will add a "Franchise Marketing White Paper", to be made available for download.

Second, www.vrlatinamerica.com was developed with McKinsey & Company to attract Latin American entrepreneurs to begin a dialogue with VR about bringing our business sales expertise to bear on the burgeoning Latin American marketplace. The Puerto Rico site is now live, with others to follow as the project moves forward.

In conjunction with this effort, a domestic Pay-Per-Click campaign was developed and implemented targeting domestic expansion. Specific metropolitan areas, as well as hundreds of relevant keywords are included in this robust campaign.

Finally, a comprehensive outreach effort was initiated to reach franchisee prospects to join the VR network. After compiling internal studies analyzing the network from 2008 to 2012, the outreach was spearheaded via an electronic flyer campaign, which can be viewed here.

The quality of the leads coming in as well as the conversion rate and quality of successful candidates has been growing on par with the commitment to these new efforts and VR is optimistic that the network will see significant growth in the coming months.

NEW BUSINESS TRANSACTIONS

VR Continues to Match Qualified Buyers with Businesses for Sale

In today's business climate, our clients demand quality and professionalism. We applaud our VR network for the recent successful transactions - here is a small sample of recent closed transactions.

Prosperous Retail Store $1,500,000 - Wichita, KS

Leading Sound Studio, $450,000 - New Haven, CT

Extraordinary Beauty Salon, $380,000 - Coral Gables, FL

Child Care Center, $195,000 - Lakeland, FL

Mid Mall Ice Cream Kiosk $95,000 - Artesia, CA

To learn how you can become a successful owner of a business, contact a VR office today!

FEATURED TRANSACTIONS

Precision Metal Fabricator

VR Business Sales | Mergers & Acquisitions of Waukesha, WI - a leader in the sale of privately-held companies, recently facilitated the strategic sale of a successful fabrication company for $4,000,000.

The transaction, which closed last month, was handled by Timothy Bullard, a business intermediary specialist.

The business was a precision metal fabricator capable of reaching diverse end markets by working with virtually all metals, including milled and stainless steel and aluminum. Laser (soft tooling) allows quick and cost effectively adapting to customers' design changes. With more than $8M in sales and an 18 month backlog, this precision fabricator has weathered the economic downturn and is well on its way rebounding to high sales levels.

Internet Sales Business

VR Mergers & Acquisitions, located in Ozark, MO, the leading business intermediary firm in the area, has recently facilitated the strategic sale of an internet based resale company for $1,150,000.

This business sells a particular line of consumer products via the internet, most of which are imported. It is an easy business to operate, and could be expanded a number of ways - additional related or unrelated product lines could be added, or a buyer could choose to ship internationally instead of to U.S. addresses only.

Michael Becker, a VR business intermediary, represented the seller throughout the transaction.

FEATURED ENGAGEMENTS

Automotive Part Manufacturer
Listed at $8,000,000

VR Mergers & Acquisitions, located in Boca Raton, Florida, announced it has been engaged to sell a one of a kind custom automobile manufacturer.

The Company incorporated May 22, 1997. It developed and built two prototype mid-engine, super-exotic sports cars. The Company has pilot production, engineering, design. prototyping and R&D is complete and patented. The company has identified key suppliers for the first production runs. The Company owns all manufacturing equipment necessary, including chassis fixtures and over 90 production molds. The first pre-production model is now road ready.

Please head to the VR Web Site and contact the office in Boca Raton for further details.

Spectacular Hunting Club
Listed at $1,995,000

VR Business Sales | Mergers & Acquisitions, located in Milwaukee, WI the leading business intermediary firm in the area, has recently been engaged to assist in facilitating the strategic sale of a hunt club.

Located on nearly 200 acres, this business will provide customers with a tremendous platform to be a part of scheduled hunts, catered parties, and special events. Deer, pheasant, wild turkey, ducks, quail, geese, and chukars are habitat species found on this unique game farm destination that offers 8 ponds, over 20,000 trees, shrubs, streams, hardwoods switch-grass fields all surrounded by the beautiful Niagara Escarpment. Property also adjoins a 300 acre waterfowl conservatory.

Click here for more details on this truly one-of-a-kind business.

MORE BUSINESS ENGAGEMENTS

Successful Bar, $795,000 - Austin, TX

Profitable Home Care Business, $575,000 - Akron, OH

Taqueria w/ Beer and Wine, $490,000 - Anaheim, CA

Prestigious Optical Center, $250,000 - Hallandale, FL

Direct Mail Business $90,000 - Cincinatti, OH

CLICK HERE TO VIEW ALL BUSINESSES FOR SALE!

VR is celebrating over 33 years as the world's only network of full-time professional business intermediaries that addresses the needs of small and mid-sized businesses.

VR Has Sold More Businesses In The World Than Anyone.®

Now is a Great Time to Become Part of VR!

With baby boomers selling their businesses to retire, corporate executives frustrated with their jobs and managers looking to buy a business to replace their corporate position, NOW is a great time to become part of VR!

VR Office

Artesia, California

Click Here for More Information