Archive for the ‘Articles on Buying Selling A Business’ Category
JoAnn Lombardi on Buying a Business Instead of Starting One
By JoAnn Lombardi, Pres. VR Business Brokers
When you buy an existing business as opposed to starting one from scratch, you have the best overall chances financially and emotionally of succeeding.
With an existing business, you are purchasing a proven customer base, steady suppliers and hopefully loyal employees.
Another intermediate option is buying a franchise that combines the start-up component with a time-proven product and service…
… there are an extraordinary abundance of quality business out there to choose, based on your interests and needs.
… there are thousand of possibilities to choose from in a given metropolitan area.
Read full article here Buying a Business Instead of Starting One
What You Get When You Buy a Franchise | article by JoAnn Lombardi
When you are looking to buy a business, a franchise can be a smart investment. Anyone can run a franchise as long as you adhere to the company guidelines.
There are many reasons why you should consider buying a franchise:
Successful Business Model
Established Franchise Brand
Business Foundation in Place with Franchisor
Support from Corporate
Read more about What You Get When You Buy a Franchise
JoAnn Lombardi is President of VR Business Brokers
For more information about owning a VR Business Brokers Franchise please contact our VR Headquarters at 1.800.377.8722
Business Valuation Article – VR Business Brokers
Setting the Record Straight on Business Valuation
Many people can become incredibly confused about understanding what business valuation means. Many misnomers exist regarding the subject, which can be a complex financial discipline that consists of unintelligible jargon, reason and underlying mathematics to any outsider who may be looking to buy or sell.
Therefore, let’s reveal the truth behind a few myths of business valuation.
1.) Net income and net free cash flow are identical
First of all, there is nothing remotely similar to these two concepts. Net income includes a deduction for depreciation expense that many small businesses base on accelerated tax schedules. In addition, net income excludes debt service, financing proceeds, owner distributions, capital expenditures and changes in working capital.
Net free cash flow is more inclusive and relevant to value because it represents the amount of cash available to investors (equity and debt holders) in excess of the current operating needs of a business – the essence of value.
Therefore, a novice who substitutes net income for net free cash flow risks overvaluing the business because the former may disregard a company’s imminent need to update such things as equipment and the shareholder’s reluctance to reinvest in future operations. Net free cash flow takes into account capital expenditures and working capital requirements.
2.) Unprofitable companies have no value
Remember that fledgling businesses will possess value because they have potential to generate future cash flow, hard assets and internally generated intangibles such as patents, customer lists and proprietary software. Just because historically there may have not been profits in the past doesn’t mean there’s no value in a company that you may be looking to buy. For instance, startups and high-tech ventures my incur losses until they are up and running.
3.) If a competitor sold for 1.5 times revenues two years ago, a comparable business could do the same for a similar price-to-revenues multiple today
Nothing could be further from the truth in this instance. You may think comparable transactions provide objective, convenient evidence; but one, single transaction doesn’t provide a representative sample.
Remember that each transaction is unique. For example, a competitor’s sale might include buyer-specific collaboration like an earn-out or a seller’s employment contract. Ask yourself if the informant is reliable. Like an old wives tale, transaction details can become exaggerated and evolve over time as the story passes from one individual to another.
4.) Business value only matters when considering buying or selling
The granddaddy of all valuation myths, every business can benefit from studying the subject regularly, not once in a full moon.
Most owners have no clue what their business is worth from just an operational perspective. Therefore, having an informal valuation can teach management what drives value and show how to increase cash flow for both the short and long terms.
A valuation can shed light on economic conditions and industry trends that can help you improve operating efficiency and increase sales inevitably. It can be an integral part of contingency planning that can help management assess the adequacy of commercial and key person life insurance coverage as well as serve as an underpinning of effective buy-sell agreements, succession plans and individual wealth management planning.
– Peter King; CEO, VR Business Brokers
For assistance with Business Valuation please contact VR Business Brokers at 1-800-377-8722
The VR Advantage – Buying A Business with VR Business Brokers
VR Advantage – Buying with VR
By JoAnn Lombardi, President VR Business Sales and Mergers & Acquisitions
VR’s International Network of Professional Business Intermediary’s offers over thirty years of successful experience to the buyer of a small or mid-size business around the world.
Our tradition of bringing qualified buyers and committed sellers together is the cornerstone of the VR organization.
VR boasts as being the only network of business intermediary’s that requires a fulltime commitment on behalf of its franchisees and associates.
VR has never allowed part-time offices and part-time associates to represent our clients, and makes the promise that it never will in the future. Our responsibility and obligation to the general public is taken seriously, therefore, we do not allow part-time, work-at-home individuals help find the correct qualified business opportunity for you.
Our Intermediaries are continually trained on market trends and conditions, financing options and techniques, and transaction structures, which allow the VR network to better serve its acquiring clients.
Every highly trained and experienced VR Business Intermediary is dedicated to your needs, and eager to share their knowledge and expertise with you.
Choosing VR gives you the ability to search for qualified business opportunities on a local, regional, national, and international basis.
VR will aid you with your financing requirements, help package the transaction for the lender approval, and give you access to our national banking relationships. No transaction is too small or too large for VR to lend its expertise.
You can also benefit from the VR Business Franchise Opportunity by opening your own VR office.
Contact our Franchise Development specialist at 800-377-8722 or send us a VR Franchise Information Request
Also check out the VR Webinar Presentation here…
How To Sell a Business – Training from VR Business Brokers
Article by JoAnn Lombardi, Pres. of VR Business Brokers
All business owners will one day exit their company. This fact is inevitable. Therefore the sale or divestiture of the business is one of the most important decisions an owner will ever undertake.
Every step in a business sale demands an extremely specialized effort, and at VR we know that there are no shortcuts to a successful transaction. Transition to an entrepreneur about to sell a business, means exploring new options in life and making a decision to change. Owners of businesses view this decision to sell as an opportunity to reap the rewards of years of sacrifice, dedication, and hard work.
Making quick, objective decisions comes naturally to the business owner. So why is the decision to sell the company so difficult? Because it’s made by weighing the advantages of moving on against the time and energy that’s been devoted to growing to operation. The decision to sell a business usually goes far beyond the economics. It involves defining lifestyle, and redirecting personal energies, resources, and values into the next stage of life.
The VR organization prides itself on recognizing the importance of being a trusted advisor to our clients. VR intermediaries around the world guide business owners through the transition of divesting their businesses. Individuals joining VR have made the commitment to a profession that over the next 25 years will aid over ’70 million “Baby Boomers” change from corporate careers to entrepreneurs and from entrepreneurs to retirement.
Hundreds of thousands of businesses change ownership each year, and though the reasons for selling vary, there is one common goal…maximizing the proceeds from the sale. This is what a VR business intermediary is trained to achieve.
VR defines small business sales as those transactions with a value of less than $2 million. As you begin your new profession this is the market place that most people gain their experience. For the past thirty years, twenty percent of the businesses in this value range change ownership ever year. That’s 1 in 5, in every town, in every city, in every state. That’s the market and opportunity for successful business intermediaries.
Valued Representation of a business by a VR intermediary is a complex process that is fulfilling emotionally and financially upon successfully completing a transaction. As a VR intermediary you will be trained in a manner that draws upon years of substantial knowledge, professional experience, and success.
Upon joining VR you will be trained on how to:
- Build an inventory of quality businesses to sell
- Value and price a business
- Formulate different transaction structures to maximize value
- Prepare a VR Business Profile
- Confidentially launch a marketing campaign
- Educate buyers and sellers on the transaction process
- Recast financial statements for the privately-held company
- Facilitate negotiations
- Prepare all necessary documentation
- Navigate successful due diligence
And of course… how to successfully close business sales!
As a professional VR business intermediary you will manage the process of selling businesses with the goal of successful transactions, while the owners continue to manage their businesses. You will be an invaluable advisor during the process, offering proven valuation and marketing techniques, along with unmatched negotiation skills.
VR offers extensive training to all of the VR Business Franchise owners. Through the VR training specific methods and techniques on every aspect of being a successful business broker are covered in full detail.
For information on how to become a VR Business Broker and open a VR Business Franchise office, please call (800) 377-8722 or visit Owning your own VR Business Franchise, also visit VR on Facebook at VR Business Franchise Facebook Welcome page and VR Franchise Facebook Updates.
VR Business Brokers Tips – How To Prospect for Businesses For Sale
Knowing How to Prospect Effectively for Businesses For Sale
A successful business intermediary will always meet business sellers and build a strong listing portfolio through using six essential methods of prospecting:
- Personal call;
- Telephone call;
- Direct mail;
- For sale by owner (FSBO);
- Referral;
- Centers of influence (attorneys, accoutants, etc.).
It has been proven that the most effective approach to prospecting is by utilizing a combination of personal and telephone calls with direct mail. The important point to remember when performing this process is the timing and follow-up elements. This is how you will be able to produce results. Selling businesses is not a one-call profession. To be successful, you must do so through multiple conversations with an owner. This is based on the steps of a business owner’s “Ownership Cycle.”
Understanding the “Ownership Cycle”
To correctly prospect, you have to understand that every business owner moves through an “Ownership Cycle.” There are three main phases: Building – focusing on growing the business; Plateau – the business has its momentum; and Selling – deciding to do something different with career.
In each area of the “Ownership Cycle,” you need to determine which phase the business owner is currently in, and when to follow up next. As a business intermediary, you should be introducing each owner to VR as early as possible. This will work beneficially towards both the seller’s and your common goal: a successful transaction.
Every VR office should be fully utilizing their tools available on the VR WebManager (only available to VR Business Brokers).
You can find the professional resources you need to prospect in the following categories when you login:
- Build your customer base;
- Build your listing inventory; and
- Build public awareness.
VR offers extensive training to all of the VR Business Franchise owners. Through the VR training specific methods and techniques on every aspect of being a successful business broker are covered in full detail.
For information on how to open a VR Business Brokers Franchise office, please call (800) 377-8722 or visit Owning your own VR Business Franchise, also visit VR on Facebook at VR Business Franchise Facebook Welcome page and VR Franchise Facebook Updates.
Understanding How To Find and Buy The Right Business
Understanding Your Strengths and Weaknesses before Buying a Business
by Peter King, CEO of VR Business Sales
Finding the Right Business for You
by JoAnn Lombardi, Pres. of VR Business Sales
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About VR Business Sales
VR Business Sales is the world’s premier business intermediary firm. With a combination of global strength and local experience, VR’s 30 years of successful business sales through Valued Representation, is the reason more and more business buyers and sellers demand our proven skills and resources to help them succeed in an increasingly complex market.
VR offers the best opportunity for owning a successful Business Sales Brokerage.
Contact our Director of Franchise Development at 800-377-8722 for more details about owning your own VR Business Sales Franchise Office.
