Some of the assets that a seller needs to address include:

Equipment: Is the equipment old or new? What condition is it? What’s the replacement value?

Trade name, Trademarks, & Patents: Does your name and product represent value to your customers?

Inventory: How much inventory do your have? What condition is it in? What’s the value?

Customer & Database Contacts: How many contacts do you have? How many are repeat customers?

Key Employees: Will a Key Employee stay on with a new owner? Will any customers be lost by replacing a Key Employee?

The Lease: What are the terms & conditions of the Lease?

Business Records: You might not think of your financials as a hard asset but if you have great records to show, you will more likely stay close and validate your asking price.  Positive Cash flow is the most common measure of the Good Will component of a Business’s Valuation.

In order to calculate and understand the overall value of a business, you need to look at many different components of the company. As a Business Broker, I look at the many variables, including assets, in order to properly value a company. A business with little assets but has a high asking price makes sense, only if it has a lot of Goodwill applied to the value. Goodwill is anything above the value of the assets for the company.

By Business Broker Robert Dean, BizEx Profile 310-793-6757

Robert Dean’s website: http://www.robertdean.biz

Assessing the Assets of Your Business is a post from: The Biz blog

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5 Essential Items to Sell Your Business Quickly is a post from: The Biz blog

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If your business has lots of assets or if you look at it from a debt free standpoint and it’s profitable, then there is a good chance that someone would want to buy it.  So how do you take a business that is laden with debt and turn it into a debt free enterprise?  The key is understanding creditor positioning in a bulk sale.  Basically when a business is sold and there is not enough cash in the transaction to pay off the creditors and less consideration in the purchase than the indebtedness, then the creditors are paid off according to a state schedule.  This usually amounts to the creditors receiving a fraction of the amounts owed or nothing at all, but leaves the business in a much stronger position to survive.  Usually this allows the business to maintain its employees, service its clients, purchase from its vendors, etc.  This is a far better outcome than having the business simply collapse and go bankrupt.

So what happens to the business owner in this process?  In most cases there is little if any cash going to the owner and the creditors could still pursue the owner for the balance of the debts, but again it is likely a better way to go than bankruptcy for the business and there may be some advantages to the owner as well.  The key to this process is to find a knowledgeable bulk sales escrow company and retain the services of a good business law attorney to help you navigate these waters.  Having a business broker who understands this process is a must as he or she will be able to properly articulate the value proposition to the buyer and get the most out of the transaction for the business owner.

Business short sale is a post from: The Biz blog

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When qualifying a buyer, you want someone who is both financially capable, and also someone who has the business knowledge & experience to take the company to the next level.

Business Brokers will look at many aspects of the buyer in order to qualify them. The key is to make sure that they are the right fit for the company. In regard to their business experience, a broker will examine several factors, including:

• Educational Background
• Have they owned a business
• General Management Experience
• Marketing & Sales Experience
• Operational Experience
• Inventory Management
• Do their skills compliment the company
• Communication & Customer Service skills

In regard to their financial qualifications, a Business Broker will also look at several different factors, including:

• Net Worth
• FICO Score
• Income Requirements
• SBA Requirements
• Any Bankruptcies or Foreclosures
• Down-payment
• Any Judgments filed against
• Are they Currently Employed

Selling a business is a painstaking process and may take 6- 9 months to complete a successful sales transaction. Finding the right buyer is one of the many challenges a Business Broker has to deal with. In order to protect a seller, a good Business Broker will examine the buyers qualifications before they will disclose any information on the business. A broker wants to make sure that the buyer is fully capable of not only of purchasing the company, but also of successfully running the business.

Matching the right buyer with the right business is how we define success.

Qualifying A Buyer For Your Business is a post from: The Biz blog

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I bring to BizEx more than forty years of successfully assisting people with the purchase and sale of businesses. I have sold businesses as diverse as car washes, mail centers, medical clinics, and manufacturing companies. My background includes law, finance, and government. I am a skilled negotiator and very persistent in the pursuit of the goals of my clients.

As a BizEx Business Broker, I will provide all relevant services business owners and business buyers require to be successful in the buying and selling of a business including: valuing businesses, marketing and listing businesses for sale, the creation of Confidential Business Reviews, pre-qualification of businesses for SBA business acquisition loans, working with Buyers to identify acquisition targets in relevant industries and facilitating transactions.

BizEx is a Los Angeles Business Brokerage firm specializing in the sale of small and medium sized businesses.  Selling a business is more than just a financial transaction; it’s a life changing event for both the Buyer and the Seller. Matching the right buyer with the right business is how we define success.

“I selected BizEx because I have known Michael Davidson, the owner of BizEx, for many years and appreciate his honest and sophisticated approach to serving clients.  I believe BizEx offers the most complete and comprehensive approach to the acquisition and sale of businesses.  I am honored to join Michael and the very professional staff at BizEx.” – Arthur B. Kessler

“We are happy to welcome Arthur to our team.  He brings a wealth of brokerage experience to our organization and embodies the core qualities of integrity, service and expertise the industry has come to expect from a BizEx Business Broker.”  – Michael S. Davidson, founder of BizEx.

Arthur Kessler

Business Broker

310-882-2200 Ext. 126

akessler@bizex.net

http://www.bizex.net/business-broker/arthur-kessler

Arthur B. Kessler joins BizEx Business Brokers in Marina Del Rey is a post from: The Biz blog

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Now look at the business that you started fifteen years ago.  Isn’t it doing the job today that you built it for in the first place?  You’ve taken care of it, invested in keeping it current, it does the job it was designed to do; so, why in the mind of the buyer is it worth less than what you think?  The first reason is financially driven.  Just like selling the used car, there is a market for used businesses.  Look up the specifics on any used car and you’ll find a range that the car will sell for.  The same is pretty much the case for a business.  The second reason is emotional.  The buyer does not have fifteen years of their life invested in your business and doesn’t care what it took you to get it to this point.  You may have invested more money over that time into this business than it is even worth today.  The same is most likely the case with that used car.  The car has gotten you down the road literally and the business figuratively.

So if you love that old car and can’t sell it for what it is worth to you then why sell it at all?  Maybe your life needs have changed and you need a truck instead of a car.  Maybe there just isn’t room in the garage now that you’ve gotten a new car.  Whatever the reason, it must be compelling enough to cause you to let go.  The same is true for the business.

Selling a “used” business is a post from: The Biz blog

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There are many nightmares that the wrong buyer can cause:

• Fear and concern among your employees: Buyers often stop by your business and the wrong buyer will talk to your employees, and accidentally alert them that you are selling the business. This invariably causes fear and concern from your people. Often employees start looking for a job when they know the business is for sale even though they would likely have a job with the new owner.
• The release of confidential information: The wrong buyer might talk to your competitors and perhaps even share your confidential or financial information with them.
• A very expensive waste of time: The worst of all is having your business essentially off of the market for several months while you are working with them on due diligence and find you have lost all that time and opportunity because they can’t or won’t complete the transaction.

Your plans to move to Montana or to buy that other business are shattered.

The good buyer:

• Will be asking lots of questions which are perfectly normal and necessary. You need to engage the buyer in conversation. If the buyer is not willing to answer your questions it is likely that they are not genuinely interested and/or qualified
• Will agree to sign a “Non Disclosure Agreement.”  Before you move beyond the general information about your business to the more confidential and financial information, Again, authentic buyers will be willing to do this.  Your broker will have the appropriate form
• Will respect your confidentiality
• Will be as honest with you as he expects you to be with him

At the risk of repeating myself;

• genuine interest in your business
• the skills to operate it effectively
• and the financial resources to make the purchase

These are the key characteristics of a good buyer for your business. If they do not have these traits, they may cause many problems; they are probably not your buyer and are likely to be a waste of your time.

When you do find a qualified buyer who has taken serous interest, you should be forthcoming and as helpful as you can be to help move the process forward. In most cases you will have some financial interest in his success.

A good Business Broker is experienced in handling buyers and eliminating some of these nightmares. The broker can help make a fair deal for both of you, guide you through the complicated process and help create successful transition for the buyer too run his or her new business. The best deal is one that works for everyone.

Selling Your Small Business? What Makes a Good Buyer? is a post from: The Biz blog

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All of us who deal in the world of business may agree that success can be simple, but most of us know in reality that it rarely is. Many of us are confronted with obstacles on a daily basis that are not of our own making. We may have the best business plans in place, yet often find ourselves dealing with problems that distract us from following those plans. We may have goals to grow our business but spend every day feeling overwhelmed.

In the enclosed video I tell a story that I hope you find both inspiring and educational. The first video is only 6 minutes long. I am interviewed in the last 3 minutes if you want to fast forward to my story..

If you find this helpful, please let me know.

Can positive thinking really make a difference? is a post from: The Biz blog

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The next thing you need to do is become emotionally prepared and committed to the process of selling your business.  Up to now, you have been the boss, but now you are going to have to take direction from the broker and deal with the demands of the buyers.  This is not an easy challenge for many owners.  The broker is your partner in this process so you’re going to want someone you can trust.

Lastly, make sure your priorities are in alignment with the marketplace.  If the reason you have decided to sell your business is purely financial then you are in for a tough time.  I have had only one client who thought their business was worth less than was ultimately realized.  During the process you will probably work harder than you ever worked prior to deciding to sell.  In the February issue of Inc. magazine a seller regrets not hiring a broker because he said the process took up 75% of his time over a year period and he still didn’t sell the business.

A good broker will be able to paint a picture of how the process will unfold.  He or she can prepare  you so that your expectations will be aligned with the realities of the market and in the end you will be successful in attaining your goal.

How to be successful in selling your business or why you need a broker! is a post from: The Biz blog

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I have dealt with Business Owners with both immaculate Books & Records and owners with improper Books & Records. If your looking to acquire a business, which business would you rather buy? I think you know the answer. It is very difficult to properly value a business with poor books & records.

If you want to get optimum value for your business, make sure you have a solid grasp on your company’s business financials. Make sure you have Profit & Loss Statements and Tax Returns and for 3 years, a Balance Sheet, a General Ledger and Bank Statements. You will also need this to qualify for SBA business acquisition financing.

1. If you don’t have a Profit & Loss, this is where I would start. This will show a buyer exactly how your company operates. Break it down into Gross Revenue, Cost of Goods Sold, Gross Profit, Company Expenses, and Net Profit.
2. The Balance Sheet is a snapshot of your business at this exact period of time. This will show a buyer where he is at that time, and what he will need to do next. This will greatly help if the business deals with a lot of inventory.
3. Tax Returns will help corroborate gross revenue, but your Tax Returns do not necessarily state the exact Discretionary Earnings for the owner. Everyone has their legal deductions for their business, and it does affect their taxes, but will not affect your company’s value.
4. You’re General Ledger and Bank Statements should corroborate your gross earnings and match up with your Profit and Loss Statements. This is one of the primary elements of Buyer Due Diligence on your company

As a BizEx Business Broker, I analyze the financials to determine the Discretionary Earnings of the business owner. The more confident the buyer is in the financials of the company, the more likely they are to purchase the business. This improved buyer activity will ultimately result in increasing the company’s overall value.

So if you are thinking of selling your business, make sure that the financials are in order to help make the sales transaction a smooth one.

A Company’s Business Records Will Affect The Company’s Value. is a post from: The Biz blog

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