buyers: Credit Crunching Small Business Sales - 09/08/07 04:34 PM
Easy Money Fueled a "Subprime Meltdown":  We have all watched the meltdown of the "subprime" loan industry with shock and awe.  The industry had been offering loans with more flexible terms and criteria for borrowers who could not qualify for traditional loans.  Subprime loan use and abuse exploded in recent years, as both a cause and an effect of skyrocketing real estate prices.  Many subprime borrowers now face rising payments, or even foreclosure.  The subprime lenders themselves face the prospect of foreclosing on loans secured with little or no equity in this cooling real estate market.
Meltdown Created a "Credit Crunch":  In … (0 comments)

buyers: Business Sale Leases & Franchises - 06/10/07 10:21 AM
Value of Leases & Franchises:  A Lease or Franchise contributes to the value of a small business.  The Lease may provide a prime retail location that enhances sales and reduces the need for advertising, or require below-market rent that keeps overhead low.  A Franchise may provide a well-known Brand that attracts customers, "secret recipes" or other intellectual property that competitors cannot match, or efficient operations that raise profits.  When it comes time to sell a business, the Lease and Franchise will play an important role.  If they are properly transferred, value and price can be preserved.  If not, the sale price … (0 comments)

buyers: Business Due Diligence & Escrow - 06/03/07 03:22 PM
Sale Contingencies:  The Business Sale begins with the Seller's acceptance of the Buyer's offer.  The resulting Asset Purchase Agreement is subject to certain "Conditions," also known as "Contingencies."  These almost always include "Due Diligence," often include "Leasing" and/or "Financing," and sometimes include "Franchising," "Liquor Licensing," or other conditions.  Escrow helps protects everyone, by ensuring that the agreed conditions are met before title and funds are transferred.
Due Diligence:  The best time for Due Diligence is usually once the offer has been accepted, but before escrow has been opened.  Remember that Due Diligence is a two-way street.  It gives the Buyer an opportunity … (0 comments)

buyers: Business Sale Agreements - 05/28/07 08:00 PM
Sale Begins with an Offer:  Most business sales begin with an offer from a Buyer to the Seller.  In all but the largest and most complex deals, it is best to avoid a "Non-Binding Letter of Intent," and go straight to a Purchase Offer, accompanied by a Deposit Check.  This saves time and demonstrates that the Buyer is serious.  Once the Seller accepts the offer, it becomes a "Sale Agreement," which in turn will become "binding" upon the completion of specified conditions-such as the Buyer's approval of the books and records.  The offer is best prepared by a Business Broker on … (6 comments)

buyers: The Market for Small Businesses - 05/21/07 10:09 AM
Stable Market:  Every owner wants to sell when the time is right.  In selling a small business, the right time depends more on the owner and the business than on external events.  Unlike stocks, bonds and real estate-which rise and fall with interest rates and other factors-the market for small businesses tends to remain stable.
Best Time for the Owner:  Since a business exists primarily to benefit its owner, the best time to sell is when it is best for the owner.  Owners tend to sell when their lives change significantly-through retirement, burn-out, illness, divorce, financial difficulties, or other events.  These events … (0 comments)

buyers: Showing Businesses to Buyers - 05/08/07 07:39 PM
Showing Process:  An effective marketing and advertising program should make the telephone ring.  If the Seller has chosen to handle the inquiries himself, then maintaining confidentiality and smooth business operations will be a constant challenge.  Hopefully, the Seller has hired a Business Advisor to handle buyers and the sale process.  Buyers must be led politely yet firmly through a deliberate education and screening process.  This process will save time and effort for everyone involved.
Educating & Screening:  All buyers need some education.  Of course, novice buyers will need more.  But even "experienced" buyers must understand the process ahead for this particular business.  … (2 comments)

buyers: Business Value & Price - 04/11/07 08:23 PM
Buyers want Businesses that Make Money:  The typical buyer of a small business is looking to "buy a job" that will support his family, pay off his debt, and provide a return on his investment.  Most buyers are considered "Financial Buyers," because they are chiefly concerned with profitability.  Less common are the "Strategic Buyers," who find synergies with their other business interests.  Regardless of type, none of these buyers wants to pay more than fair market value for a business.
Recasting Financials to calculate Seller's Discretionary Earnings:  The financial statements must be "recast" to determine the Seller's Discretionary Earnings (SDE), which is … (0 comments)

 

Alan Lippincott

Seal Beach, CA

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Southern California Business Advisors

Address: 240 1/2 Main Street, Seal Beach, CA, 90740

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Business -- Real Estate -- Sales --Consulting www.SouthernCaliforniaBusinessAdvisors.com 240 1/2 Main Street, Seal Beach, CA 90740 (562) 795-0500 This blog represents the opinions of the contributors, and not professional advice. Alan Lippincott and Southern California Business Advisors provide professional advice and/or assistance only under separate, written and signed agreements.


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