Archive for category: General

Owning a business takes commitment. As any successful business owner would tell you, it takes focus and effort  to get through rough patches, employee problems, customer complaints, short cash positions, excessive receivables, government regulation, etc.  However, much like running a marathon, owning a business is for the long haul, and getting to the finish line is amazingly rewarding.

The successful entrepreneurs see those rough patches as just challenges along the way and opportunities to improve the business and beat their competition. Others may see these events as impossible obstacles to their success, so they emotionally, physically, and financially quit.

Individuals interested in the dream of business ownership need to be prepared for the process of finding a business to buy, negotiating, financing the acquisition, and completing good due diligence of the targeted business. This is the beginning of overcoming obstacles and working odd hours to get the deal done. All businesses have some level of blemishes.

It’s how a buyer deals with those blemishes that will determine if the buyer will be a committed and successful entrepreneur.  Contact Apex Business Advisors for more information about Buying or Selling a business.

Most transactions, of any size, are solidified or collapse during the due diligence process. If there are ever mistakes made by a seller, they are the lack of planning and preparation for a deep review by potential buyers. The buyers not only have to get to the details for their own purposes, but also for their bank, accountant, and attorney.

The buyers will ask to see corporate records, bank account records, and invoices and bills to match the financial statements. They will want to review payables to ensure that accounts are not past due. The business needs to have a good database of customer records, last billed, last paid, service records, etc. Has there been proper insurance coverage for the business or will the buyers have to increase insurance expense to cover the shortfall?

Make sure the company has an operations manual and employee manual. Who are the professional contacts of the business? Who can the buyers call if there are questions regarding website and database service, computer service, suppliers? Make it easy for buyers to see the information to increase their comfort level and to improve the chances of getting to the closing table.

If the buyers have to beg for information, or if it takes weeks to pull the information together, the buyers will see red flags. And as always, time kills deals. Talk to an Apex Business Advisor for more information.

Fairly often, we get approached to assist in a transaction that is already well down the road. Certain agreements have been made, and expectations are set. In many instances a buyer and seller have a relationship by virtue of being an existing customer, family member, friend, or partner.

Over time the two sides have come together to discuss a potential deal and decide on price and terms. This might include a partnership’s buy/sell agreement.

Emotions are in play, trust has been developed, but generally there is a winner and loser because the parties don’t ask for outside assistance at the proper time. Due to the existing relationships, the tough questions don’t get addressed, the value doesn’t get analyzed, and due diligence might get waived. Someone in the deal is either paying too much for the business or getting a steal. In either situation there are going to be hard feelings and maybe future legal challenges.

The easiest way to make a deal happen and to improve the odds of a good deal for both sides is to have a third party review the proposed transaction, facilitate discussions, test the value, and bring professionals that are familiar with how to get deals done.

A third party could be an M&A professional, mediator, or neutral attorney. Keep in mind that whomever you bring in to help with a deal needs to have years of experience doing transactions and can familiarize both sides with the process of buying and selling businesses.

Before you agree to a value on the sale or purchase of a business, contact Apex Business Advisors. Any one of our team members would be happy to discuss your situation and assist you in your review.

Under-reporting your business income. It is a strategy employed by many business owners to reduce their tax burden. You’ve probably heard one of our Apex Business Advisors talk about how this strategy will also negatively impact the value of your business.  But, a recently indicted Business Owner took this strategy to an extreme (allegedly).

It’s hard to tell how much his business would have been worth had he played it straight. Besides using cash from the business (allegedly) to buy all those goodies, he also claimed he made under $20,000 which qualified him for Earned Income Tax Credits. Your tax dollars at work! Maybe he can beat the charges, but it looks a little suspicious.

An alternative:

Imagine a car wash owner who actually reports all the income on their tax return! This might be a rare event, but when it comes times to sell, the business will be worth substantially more than if the owner had cheated. Apex Business Advisors is in the process of proving this out.

We were able to quickly secure full-price offers on several car washes because the business owners had handled their financial situation in a straight and legal manner. Even better, the buyers of each of the car washes were able to get bank loans for the acquisitions because the complete, historical financial records of the businesses were clean.

Contact your Apex Business Advisor to review your business to determine current market value.

Many people have a dream of improving on their: status, financial stability, self-worth, career satisfaction, and wealth by owning their own business. Rather than working for others and conceding to the daily grind, they take control of their future. They can make their own decisions.

Others may want to advance their existing business by expanding and possibly diversifying by acquiring an existing business. The value of one business can increase by much more than just the value of the acquired business. One plus One does not always equal two. In the acquisition world, One plus One can easily equal 3 or 4.

The process of buying a business is not easy. Most people have the ability, but only a few can actually make it through the process of, dealing with the banks, lawyers, accountants, (and brokers), and still complete a transaction. But if everyone could do it, we would all be billionaires, and what would be the fun of that?

When buying a business, keep focused on the goal. There will be naysayers, rickety bridges to cross, and red flags flying. If a buyer can successfully manage the challenges, answer the questions, feel comfortable with the remaining risks, he/she is well on the way to success. After all, successful people don’t walk away from challenges and don’t rely on luck.

Rely on your Apex Business Advisor to get you to the goal line!