Year-End Planning

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celebrationtimeSounds boring right? If you made it this far, thank you. Keep reading.

For business owners there is a fair amount of planning that goes into finishing up the year and preparing for next year.  Year-end expense adjustments and tax planning can consume a ton of time. But I don’t want to talk about that.

We really need to take some time for celebration. I have to admit that I am not known for over-celebrating (note of sarcasm). I tend to look for the next deal, meeting, connection, or activity of interest. It can be hard for us to take the time to appreciate the successes and let people know that they are important to our businesses and our lives.

It’s been a great year for Apex and for many of our partners and clients. I first want to thank my fantastic team at Apex! There is not a better team anywhere. They work hard, in a very stressful environment to help our clients and customers be successful.

To all of our professional friends who make it possible to get deals done: the attorneys, accountants, and bankers (you know who you are), Thank You!

Of course, I want to thank our clients and customers for the trust they’ve had in us over this past year and we look forward to a fruitful 2015!

Doug Hubler
President

Choosing a Lender

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SBA logoThe majority of acquisitions require some level of bank debt to facilitate the transaction and to greatly enhance returns for the buyer. In most cases, buyers want to use as much bank money as possible and utilize their own personal funds for working capital and for family needs.

Banks will generally require about a 20% down payment to consider lending on a transaction, and most banks will use the SBA guarantee program to cover the intangibles such as Goodwill. Without the SBA guarantee, banks would only be loaning on a percentage of hard assets, i.e., machinery, trucks, equipment, and real property.

Since the vast majority of businesses sell for much more than just the value of hard assets, a buyer will need to seek an SBA lender experienced in acquisition lending. There are many SBA lenders, but few who are proficient at financing business purchases.

We have witnessed buyers wasting lots of time (weeks and months) in an effort to meet with 5 or 6 banks.  Often, this results in endless promises and confusion, only to leave the buyer disappointed in the end. Loan Officers want deals, but they have to get them approved internally and most times the loan committees are more conservative and cautious than the loan officer. Apex has experience dealing with the various local and regional bankers and knowing what they are looking for in a deal. We are here to help.

To be very clear:  We do not work for the banks or get paid by the banks. Our relationship with banks involves knowing who is doing deals and assisting buyers and sellers with getting financing for a transaction. We try to find the path of least resistance because we know that time can kill deals.

Talk to your Apex Business Advisor to answer any of your questions regarding buying or selling a business.

Other Apex News:
Please join me in congratulating Apex’s Valerie Vaughn for obtaining her Certified Business Intermediary (CBI) designation!

Doug Hubler
President

Raising the Price After an Offer

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Bang HeadNumber One Way to kill any deal? Raise your price after receiving a full-price offer! (Bang head on wall now.)

Fortunately, this doesn’t happen frequently, but I’m afraid it does occur. We spend quite a bit of time establishing a business value with the seller, and then publishing the price in the marketplace. We have also spent years developing a database of ready and willing buyers, so when there is quick interest in a new business for sale, it’s not because the business is priced too low.

Emotions can take over and beat common sense out of just about anyone, and this is a perfect example of emotions taking the lead over logic. Whenever this situation occurs, the buyer interest completely dries up. Buyers can be waiting for months for the right deal to pop up, and when they find out the price just increased because they had interest, they get a little “aggravated”. The buyer (and broker) then question the seller’s motivation and wonder how difficult a transaction is going to be with the one-time-seller.

If you are a seller, remember, buying a business is a difficult and stressful process. A buyer will be looking for a good business with a seller they can trust and who will assist them in a smooth transition, improving their chance for success.

We love to assist sellers and buyers especially when they listen to their Apex Business Advisor!  We’ve done this a bazillion times!

Doug Hubler
President