June 2013

Volume 14: Issue 4

June 2013

What Buyers Look For In A Business Opportunity

You have built a great business with love and care. It has grown larger than you'd ever imagined, and generates a nice profit that has allowed you and your family to live comfortably. Now you're ready to sell. You assume there's a buyer out there who will pay you a fair price and then nurture the company with the same attention you have. What's more, selling the business is a major part of your retirement plan.

Needless to say, buyers look at businesses differently than sellers. So to achieve the outcome you want, it's important to think like buyers and understand how they evaluate a business.

What Buyers Look For

There are many types of buyers: strategic and financial, individuals, companies, and private equity funds. Despite differences, all buyers consider how much they'll invest to acquire a business, the amount of risk they'll bear and the potential return on their investment. To evaluate an opportunity, buyers focus on three major areas:

1. Cost and terms.

What will it take to acquire the business? How much cash and how much debt? What are the deal's terms and conditions?

2. Continuity

Will the business continue to operate similarly after the sale? Much of the risk of buying a company relates to continuity. For example:

The current owner has personal relationships with customers, distributors or vendors that the new owners may have to struggle to maintain,

The owner has special expertise that is undocumented and difficult to learn,

Key personnel aren't committed to staying, or

Outside competition looms.

Sellers armed with solid responses to these types of continuity concerns are more likely to get their desired price. Even if you don't want to sell your business for a few years, take steps now to ensure it can run smoothly without your personal involvement. That independence could be worth millions when you sell.

3. Growth

Are there unexploited opportunities? You may have focused your sales efforts in one geographic region, but there may be many opportunities to take the product national or international. A buyer that believes it can increase revenues substantially will pay more for the business than one that believes the current owners have already maximized opportunities.

What sellers should do?

It may seem counter intuitive, but the things you may be most proud of can work against getting the best price for your company. Not many entrepreneurs like to boast that their company could run just fine without them or that there are plenty of opportunities they've failed to exploit. Yet these may be the very factors buyers seek, along with lower cash requirements. Please call us for help in understanding how to best present your company for sale.

Check out more helpful articles on the VR Blog - Updated Weekly!

EB-5 Immigration Program - Part 2

Job Creation, Capital Infusion, and Immigration through Investment

EB-5 Legislation: From Past to Present
The EB-5 program is the result of a legislative effort to promote job creation and the infusion of foreign capital into the U.S. economy. This structure was developed during a time when the U.S. economy was thriving and represented an underlying promise of continued strength. However, this writing, in light of the restricted credit market and elevated unemployment rate, it is evident that the U.S. is in the midst of tumultuous economic times. Unlike the financial strength that the U.S. exuded at the time that the EB-5 program was enacted, a new source of capital investment received through foreign investors, which will result in the development of numerous new employment opportunities for Americans, provides a promising opportunity for growth and redevelopment across the nation. The EB-5 program provides a glimpse of hope to political leaders, developers, U.S. workers, and foreign investors alike.

It has taken many years to improve and enhance the benefits of the EB-5 program in order to ensure that it meets its goals and the expectations of its beneficiaries. The USCIS is actively engaged in the process and works diligently to continuously modify its regulations. Together, with the various regional centers across the U.S., the USCIS is expanding its knowledge through the daily successes and challenges of the program. Although Congress has extended the program numerous times, at present the EB-5 program is scheduled to sunset on September 30, 2012, Congress now understands that to ensure its continued success the program must receive a permanent extension to guarantee the security of duration and consistency. This permanent extension is contemplated in the Comprehensive Immigration Reform Bill of 2010

Furthermore, the employer must demonstrate that it is financially solvent during the entire process time period in order to ensure that the employee will continue to be gainfully employed at the end of the process.

Consequently, we are left with the "Money" alternative. The EB-5 program was created as a job creation and foreign investment program specifically to encourage high net worth individuals to migrate to the US, stimulate the US economy, and make a valuable contribution to society. While there are no English language skills requirements, the individual has several other qualifications which they are required to meet.

The Role of Governmental Agencies in the EB-5 Program

The organizational structure of the EB-5 program can be quite complex. Let's take this time to clarify the various US governmental agencies associated with the program. To begin with, there is the United States Citizenship and Immigration Service or USCIS, which is at the forefront of the EB-5 field. This agency is charged with the review and approval of all regional centers across the United States from its headquarters in Laguna Niguel, California. It is also responsible for the review and determination of all petitions for conditional residency with the filing of a form called the I-526-Immigration Petition by Alien Entrepreneur. This essential, yet seemingly simple form, will be discussed in future chapters. Upon receiving regional center designation, a regional center agrees to abide by the regulations governing the program, and verifies such compliance in their annual compliance report. This annual report is submitted to and reviewed by the USCIS. Upon submitting the I-829 petition, requesting the lifting of conditional residency, the USCIS is also responsible for determining the legitimacy of the application.

As you can see, USCIS oversees the entire EB-5 process. Therefore, it is imperative for you, as a sponsor or investor, to be well organized throughout the process right from the beginning. Please consider acquiring a large three ring binder with many transparency pages to contain all of your U.S. immigration documents and receipts. You will receive many documents from your attorney and from the government; therefore it is essential that you maintain all records in a sensible and orderly fashion. Keep a list of each and every document, receipt or instruction you receive as it is easy to get confused with the multitude of documents and legal complexities.

The other government agency that you, as an investor, will need to address is the U.S. State Department. This agency will review the individual immigrant investor application and assess whether there is any basis for inadmissibility. There are various reasons to support a rejection of the application which include but are not limited to: prior criminal record, fraud convictions, etc. Thus, while an approval of the I-526 application is laudatory, it is not the final step until the State Department issues its sealed envelope of approval.

Following the State Department's approval, the investor and his or her family will physically enter the US and will be inspected at a port of entry. This inspection is conducted by the Department of Homeland Security. An officer will review the approval notice and stamp, an approval called an I-551, to ensure and date the formal entry into the U.S.

Once the new resident has been admitted, he or she will undertake all normal internal applications with which a U.S. resident must comply. These include but are not limited to acquiring: a U.S. social security number from the Social Security Administration, a driver's license from the Department of Motor Vehicles of the State in which he or she will live with his or her family, and we also recommend a state identification document.

Check back next issue for more on EB5 Immigration and investment discussion. Questions? Reach out to Larry J. Behar

Google+ For Franchises - More Important Than You Might Think

Google+ is becoming an increasingly important component to the success of businesses trying to acquire more customers through Google.

In 2012 there was an average of 925,000 new profiles created each day.
The Google +1 button was used 5 billion times a day during the same year.
Google Local listings have now merged with Google+, making your businesses' Google+ profile into your most vital profile (besides your website) online.

The objective of this article is to give you a 30,000 ft. overview of Google+ and describe different ways that you can utilize Google+ to generate more brand awareness and bring your franchise business more customers.

What is Google+?

For those of you who haven't heard much about Google+, for now just consider it to be Google's version of / response to Facebook (though the two channels have a variety of unique differences - click here for great Google+ information).

Getting The Most From Your Google+ Business Profile

If you haven't set up a Google+ or Google Local account for your franchise business then go to Google Places for Business and create one.

If you're new to Google+ or Google Local and have 10 or more locations that you'd like to upload click here.

If you already have a Google Local listing set up, go log into that profile (it should have automatically merged with Google+ in May, 2012).

Here's the first step to getting the most from your Google+ Business profile - be sure to fill in all the blanks (i.e. hours of operation, phone number, address, services that your business offers, general business information, pictures of your business). That way, when customers or prospects visit your profile, they see a great snapshot of your business and easily find your contact information (example of a good profile: the VR of New Haven).

Google +1 Button

Go and get a Google +1 button installed on your website and/or the microsites associated with your franchise business. Check out the Google+ Webmaster FAQ to help address any questions that you or your web designer may have about add this button to your web pages. What's the benefit of adding a Google +1 button to your site? Keep reading.

Google+ and SEO

The main reason, in my opinion, why you want your business and your target audience to get more involved in Google+ is this: it's going to have an "SEO-like effect" on your website! Let me explain in more detail:

When someone is signed into Google (through accounts like Gmail or Google+), Google tracks and remembers their history of actions (i.e. what places they visit, how long they stay at those places, what websites they +1, what people they connect with on Google+). From this wealth of data Google is able provide you with personalized search results based on your previous online behavior - pretty creepy and cool at the same time.

The people at Google also understand that, more than anything, people trust the opinions of their friends and family when making a variety of decisions (i.e. what car to buy, what books to read, what doctors to see). So what have they done? They've modified your personal search results based on how you AND your Google+ connections (if you have any) have used the +1 button.

For example: let's say I'm looking for a new dentist in Nashville and I perform the search "dentist Nashville" on Google. Dr. Richard Gaw is a dentist in Nashville and he ranks on Page 4 for the search, "dentist Nashville."

It's very unlikely he's going to be found by any potential new patients performing that search when his website is so far down the rankings. However, it just so happens that three of my Google+ connections have clicked his website's +1 button. The result? When I'm signed into Google and perform the search "dentist Nashville," I'll find Dr. Gaw on Page 1 of my personalized search results!

To reiterate: Google knows that three of my connections trust Dr. Gaw enough to +1 his website; if my friends trust him then I'm more likely to trust him too, so they put his website right in front of me versus leaving it in the abyss that is Page 4. This is a smart play by Google - it makes it easier for people to find what they're looking for and keeps them from attempting a search query on Bing or Yahoo.

The takeaways? The more people you can get to +1 your website:

The better chance it has of ranking higher in people's personalized search results.
The better chance you have of generating more online business from your current customers' network of connections.
The more visibility your franchise business will have online.

A few final best practices to end on:

Don't just go and add a bunch of new, random connections to your Google+ profile. Google judges your profiles "authority" based on the company you keep - if you're connected with a bunch of spammy profiles you'll see no added benefit. However, if you're connected to people who have large followings, are in your local area and post well-regarded content - you'll look more credible to Google.

Connect with Google Authorship. People are more likely to click on a link with a picture next to their description (see example picture below). Plus, when you post original content at different places and link it back to your Google+ profile, you'll make it easier for Google to assess your level of topical authority based on people's interest with your content across the web - basically it helps ensure you get credit from Google for any excellent content that you post. Need more on Google Authorship? Click here.

Start posting valuable content on a weekly basis.

What is valuable content? Here are some examples:

Funny pictures or videos that your customer base would enjoy.
Information on promotions or discounts that your business is offering.
An article on the top 10 restaurants in your local area.
A post on one of your employees getting engaged.
A quick post on an award that you were recently nominated for.
A link to a video testimonial or positive review.

What isn't valuable content?

Posts about how your business is super awesome and cool.
Posts telling people to come and do business with you.

Get the idea? The more that a business or person brags about themselves the less likely people are to believe them. Does Red Bull talk about how many sales they make every year? No. Does Red Bull promote ads about people performing amazing feats? Yes. Do you like Red Bull ads? Probably.

In conclusion, Google+ is only going to become more influential to the success of your business online. Get a Google+ profile for yourself and your business, start growing your connection base and add a "+1" button to your websites and/or microsites. You may not see any immediate benefits but it's better to be ahead of the curve than behind.

Written by:

Matthew Job Vice President of Sales and Marketing at Local Search Masters

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 business intermediaries for a job well done!! Here are a small sample of transactions closed across the VR network in the last month:

Power Sports Sales & Service Business, $900,000 - Edmonton, AB

Construction Equipment Company, $395,000 - Austin, TX

Cocktail Lounge, $150,000 - Artesia, CA

Established Cocktail Lounge, $100,000 - Naples, FL

Commercial Building Cafe, $70,000 - Coral Gables, FL

Thinking of selling your business, or looking for an already running business purchase? Contact a VR office today!

FEATURED TRANSACTIONS

Import Distribution Business

VR Business Sales | Mergers & Acquisitions of Dallas/McKinney, Texas - a leader in the sale of privately-held companies, recently facilitated the strategic sale of a very successful importing and distribution business for $5,675,000.

The transaction - which closed last month - was handled by Jeff Goldblatt, a business intermediary specialist.

This company has become an industry leader in import sales and distribution of home & lifestyle consumer products. This business owns the leading market share in the portable infrared heat category and has a significant presence in the other counter-cyclical lifestyle products that they market & distribute. They distribute to the largest retailers in the United States including Wal-Mart, Sam's, Costco & The Home Depot. Additionally, they service the largest "non-brick & mortar" retailers and excel at servicing Retailer Direct Ship to Consumer programs. The warranty for the products they produce is considered best-in-class. In summary, this company has been able to surpass the needs & expectations of the mass market & big-box retailers, allowing it to grow 900% from 2005 to 2011.

Industrial Manufacturing Company

VR Business Sales, located in West Milwaukee/Waukesha, Wisconsin, the leading business intermediary firm in the area, has recently facilitated the strategic sale of an industrial manufacturing company for $975,000.

This manufacturing company delivers $1.3 MM in revenue, close to $1/2 MM in owner's annual earnings, and has huge growth potential. Revenue has grown on average of 40% annually over the last 4 years and projected to continue. This is a long-established industrial manufacturing company for many years that has grown into an industry leader with a very good reputable brand name. Plenty of additional manufacturing capability is available to support major growth without needed capital expenditures.

Larry Heck, a VR business intermediary, represented the seller throughout the transaction.

FEATURED ENGAGEMENTS

Taxi Company
Listed at $3,750,000

VR Mergers & Acquisitions, located in Sacramento, CA, announced it has been engaged to sell a successful urban-based Taxi Company.

This Company is an excellent stand-alone taxi company, with a virtual lock on the "Number One" position for paid personal transportation in its market. The offering price of $3,750,000 is justified by the Company's net income (EBIT) and the value of its assets. A new operator may find additional efficiencies by eliminating redundant administrative positions.

Population greater than 1 million in the Urban Market

Major and Minor League sports teams

The Company is the Number One (#1) taxi operator in the market by fleet size, revenue, net income, and name recognition. The Company is 50% larger than the largest competitor

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

Catering & Banquet Company
Listed at $3,200,000

VR Business Sales, located in San Antonio, TX the leading business intermediary firm in the area, has recently been engaged to assist in facilitating the strategic sale of a very successful and profitable catering and banquet business.

For the past 20+ years, this catering business has become one of the top destinations for a person or group's banquet and meeting needs. They have worked towards and have earned the reputation of a premiere banquet destination in San Antonio. Several years ago, the business bought a banquet hall and a lunchtime eatery that allows them to deliver a unique experience unlike any in the market. The eatery is also used as a banquet hall and for private parties. In addition to the business' successes, there is the option for further growth by adding additional parking and a courtyard to the existing building. Not only will this increase revenue, but build upon the reputation that the business already has.

The business deals a lot with wedding banquets and 80% of the catering is done off premises to such venues as The Witte Museum, The Pearl Stable, and The McNay Art Museum. There is the opportunity to bring more catering functions onto the location. The business also has won numerous awards for being the number one caterer in San Antonio.

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

MORE BUSINESS ENGAGEMENTS

Specialty Electrical Contractor, $2,100,000 - Austin, TX

Freight Forwarding Company, $1,600,000 - Orlando, FL

Sports Arena, $1,429,000 - Savannah, GA

Auction Company, $675,000 - Cincinnati, OH

Rare Tavern Offering, $375,000 - Greensboro, NC

Pressure Washing Business, $82,500 - St. Petersburg, FL

CLICK HERE TO VIEW ALL BUSINESSES FOR SALE!

VR is celebrating over 34 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