Thoughts on Selling a Business By Peter C. King, VR Business Brokers/Mergers & Acquisitions, CEO The business you’re now looking to buy may one day become the business you’ll be looking to sell. The business that today looks like a one-in-a-lifetime opportunity may become the financial and psychological albatross you have to unload. A Question of Timing: When to Offer the Business for Sale Too often a business owner allows devotion, optimism, inertia, or a combination of the three to deflect him or her from offering the business for sale until it’s too late. In the interim, a number of things occur that make matters worse. If the problem had been poor sales, sales may get worse, caused in part by the owner’s short-timer’s attitude. To keep the business afloat, owners will often borrow money, placing more debt on the business’s assets, causing the value of the business to decline and even jeopardizing the business’ retention of the assets. As the slide continues, owners attempt to cut costs, often eliminating muscle along with fat. The elimination of salespersons and advertising and public relations expenses may lower overhead, but it also inhibits the ability to generate sales. A large- or medium –sized business becomes a small business in the process. |
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Facing the Marketspace By JoAnn Lombardi, VR Business Brokers/Mergers & Acquisitions, President Since the beginning of the 20th century, advertising drove our economy in the form of a pre-packaged, one-way story. Today, it's a different story. We've gone from three channels to 500, from no web pages to a billion web pages. The choices that consumers have today are astronomical. There are more than 100 brands of nationally-advertised bottled water. Starbucks offers 19,000 different ways to order a beverage. With all the options available to the consumer, the shift of power cannot be understated. The old way of selling on the street corner to anyone that will hear is over. People can easily ignore advertising today instead of being forced to listen. They can choose what they want to hear, and this is where permission marketing comes into play. It’s better to deliver personal, anticipated and relevant ads to people who want to get the public. Once an idea is in the hands of people who care about its success, it may be lucky enough to benefit from digitally-augmented word of mouth. Modern ideas spread online and off, and this is faster and more effective than the old-fashioned centralized way of selling. |
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The Amazon Factor: How Companies Are Contending With a Monster Competitor What is your strategy for dealing with Amazon? That’s a question an increasing number of companies in an increasing number of industries are being forced to ask themselves. No longer impacting just retail, Amazon has been throwing its weight around in various end markets including artificial intelligence, business and cloud services, clothing and accessories, financial services, food, hardware, home services, media and entertainment, publishing, transportation, and even healthcare.
This has big implications for private equity: “With every deal an investor has to ask itself what is the competitive set. In asking that question, you have to consider Amazon and its incredible strength. You can’t ignore Amazon. If you are not comfortable you can make money with their presence, then this is not the right business for you,” says Richard Kestenbaum, a partner with Triangle Capital, a middle market investment bank. “Amazon as a competitor is a monster. They are highly creative and have endless resources and fantastic human capital. They are hurting a lot of people and keeping others sharp.” |
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Seller Financing Under the New SBA Rules As to be expected, the SBA released an update to its Standard Operating Procedure that went into effect on January 1, 2018, known as SBA SOP 50 10 5 (J). These updates were extensive as they relate to the change of ownership of a business, whether that be through a completely new buyer coming in to buy a company or through a current owner buying out their partner(s). The new SOP has removed the requirement for a 25% equity injection for processing a loan under a bank’s SBA preferred lender processing authority when the transaction results in more than $500,000 in goodwill/intangible assets. Regardless of the type of change of ownership, the use of Seller Financing in conjunction with SBA financing has historically been a key component to the transfer of ownership. The good news is that Seller Financing can still be used as a mechanism to finance a change in ownership. The bad news is that the SBA SOP update has created a lot of confusion relating to the amount and terms of the Seller Financing. The following explanation will hopefully bring some clarity on the use of Seller Financing under the new SBA rules. |
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Your dream business awaits you...take advantage of these featured opportunities VR has for sale now! Busy Full Service Car Wash | $2,000,000 | Miami, FL Mini Market with ATM, Lotto, EBT | $109,000 | Artesia, CA |
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VR Located in Miami, FL is assisting in the sale of a Busy Full Service Car Wash |
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Busy full service car wash that is well established and uses the best technology, with high-pressure water and mild detergents to clean cars. This business is well known and well maintained with a history for performance and customer satisfaction. The real estate, all improvements, the business and all existing equipment, inventory and supplies are included. Highly trained staff in place and performing. |
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Congratulations VR in Waukesha, WI for Facilitating the Sale of an Assisted Living Facility |
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Highly profitable and extremely well run Assisted Living/CBRF operation in SE Wisconsin was sold. A total of 40 beds in two facilities. The owners maintained historic occupancy of 95% or better and had excellent referral sources for filling beds. Word of mouth was their primary form of marketing and they achieved a sterling reputation in the community. Was very steady over the years with profits and earnings. |
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We congratulate Tim Bullard on this successful transaction! |
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Established Medical Oxygen Supply Business| $350,000 | Aspen, CO Thinking of selling your business or looking for an established business to purchase? Contact a VR Office near you! |
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Have you ever considered selling businesses? |
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