Wall Street Journal Article

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WSJLogoBuying an existing business is a smart, lower risk proposition when compared to starting a new company from scratch. It is also a good solution for people that don’t have a unique idea or long term, sustainable cash flow to get a new business up and running. This is a message we have been sharing for years and we saw a great article in the Wall Street Journal that backs up our view.

The following is an excerpt from the Wall Street Journal, July 31, 2011:

“If you’re interested in entrepreneurship, but lack ideas or time to create a new business, buying an established company may be a wise alternative. You’ll inherit a working infrastructure complete with resources you’d otherwise have to secure on your own, such as equipment and employees. You’ll also ideally be taking over a known brand built on a positive reputation over many years’ time.”

For more information, click here to see the full article on WSJ.com.

If you have been on the fence, not sure how the process works, or now is the time to get serious, we can help. Contact your Apex Business Advisor.

Seriously… Tax Returns Have to be Filed and Recorded

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IRSLogoTax time is looming. As a business owner, it is important to actually FILE your tax returns. This might sound strange to you and it is… we actually have clients that have provided us with three years of tax returns as part of the due diligence process. As the deal progressed and the buyer’s bank was verifying financial information, they discovered that the tax returns were never filed. The IRS had no record of the tax returns.

The motivation behind this could be a couple of things. It is a way to delay paying taxes. If the business was showing a loss, they might have assumed they didn’t have to file a return. In either case, by not filing, there are going to be penalties and interest that will cause a lot more expense in the long run. This can also seriously delay the actual sale of the business and can put the deal at risk because the potential buyer could and should start asking serious questions about the business and other information that was supplied. The bank funding the deal will raise a series of red flags as well… the beginning of an uphill battle.

The fact that you did not file your taxes will be discovered at some point in the process of selling your business. This issue, as well as many others, comes up often. We can help you prepare for the sale of your business and you need to start now… it may take years of appropriate practices to make sure your business is as attractive and valuable as you think it is. Call us for a free consultation.

No Pain, No Gain

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angry-manWe recently helped a buyer and seller close a transaction. This is an example of a deal that worked because the buyer and seller overcame obstacles to get it done. The following happened over the course of two months.

From the seller’s perspective
When the deal got to the lender, the seller had to provide a lot of paperwork, which is normal. The seller supplied the information and the bank lost the paperwork. (Believe it or not, this happens.) The seller submitted the packet again. The bank asked for additional information, piecemeal versus all at once. Finally, the seller had filed his tax return, but it was going to take six weeks before the bank could verify the information. The seller had to go directly to the IRS to get documentation for the bank. This can obviously be a frustrating process, but you have to hang in there. These deals happen all the time, but there are often challenges like this to get the deal done.

From the buyer’s perspective
From the moment a business goes on the market, to the time the business is sold, every day activities continue. Business needs to keep going. It is important for a potential buyer to keep this in mind.The negotiations were done. In the time between the signing of the offer to purchase and the closing of the deal, one of the current customers called and asked to be released from a portion of their contract. The buyer understood this to be part of the normal course of business and did not overreact. Also during this process, the biggest customer contract came up for renewal. The buyer and seller worked together to make sure the contract was renewed with that customer. These are the times that a buyer might throw in the towel because they forget that this is normal business activity.

All Right!Be Patient and work through it
We are dealing with attorneys, accountants, bankers, friends of friends and more. Everybody is asking for documents and the process takes time. The parties and their advisors have different agendas and points of view. When you work with Apex, we filter these requests. We collect as much information as possible. This allows us to aggregate and facilitate the sharing of information with everyone involved.

Make sure you involve your Apex Advisor through the entire process. We will help bring everything together and save you time.