The risk is much lower buying an existing business than it would be to build a business from the ground up. You'll be acquiring important assets, community standing and essential personnel.  Furthermore, you'll be acquiring a business with existing cash flow, which makes it much easier to obtain financing.

The term ‘mergers and acquisitions’ (also known as M&A) refers to the consolidation of companies and their associated assets. This can encompass many different kinds of business deals, including offers and sales of majority assets, where at least two business firms are involved.

A business brokerage helps individuals buy and sell businesses. Mergers and acquisitions are complex, and it may be beneficial to enlist the expertise of an experienced business brokerage firm to assist in the process.  Business brokers act as liaisons between buyer and seller, and help facilitate the deal.

Businesses come in all shapes and sizes, and so do purchase prices.  For as little as 10% down of the purchase price, you can own your own business.  Depending on the industry the business is in or the loan size, there are many options and avenues to becoming a business owner.

Since buying a business involves a major asset transfer, it's wise to have both an accountant and an attorney.  Not only will they help to decipher the legal and financial jargon, but they will be your advocates to help you through the due diligence process.

The Firm is usually paid by the seller and not the buyer.  Up until you actually purchase a business, there is no fee or payment required by you. 

However, keep in mind that when buying a franchise there may be some initial fees to pay after a purchase.

Much like buying a house or car, there is some room for negotiation with buying a business.  Most sellers will finance a portion of the sale, so most buyers do not end up paying the entire purchase price.  We generally require that the buyer and seller finance at least 20% of the purchase price, with the remaining 80% coming from a financial loan.

At The Firm, we take extensive care to ensure that what we present to you as a buyer is as accurate as possible.  After you have made an offer and it is accepted, due diligence begins and the seller is required to provide documents that verify the numbers.

The purchase of a business typically entails a mix of buyer’s equity, seller financing, and third party financing.  Which mix is right depends on your personal investment capability, the specific business’ dynamics, and economic trends.  Small Business Administration (SBA) loans are frequently used, as are retirement funds.  You're able to use your 401ks, IRA’s, or Company Pension Plans without penalty, to start a business!

Each business is different, and depending on your needs and the needs of the sellers, there will almost always be some training during transition.  Some buyers already have experience in an industry and need little to no training about the business, but some sellers like to take a period of transition that can last for months or up to a year.

After you've bought a business there will be a period of transition, where the managerial shift will take place and you get to know your new employees and customers. You’ll want to learn everything you can about the day-to-day workings of each area. This is the time to communicate with the former owner by picking their brain for insights and information.  Even though there will be much going on in the first few months of ownership, writing a business plan is still an excellent idea.  You'll need to consider the direction you want to take the business, how you'll do it, who will do it and your timeline for success.

The Firm is not a Real Estate Brokerage and therefore the staff will not handle any aspect of the lease, sale, or purchase of real estate.

Nine out of ten business owners do not have a current or written exit plan.  An exit plan needs to address many business, financial, legal and personal issues.  If it does not take into account all of these areas, you could be blindsided.

Knowing when you want to exit defines how much time, or how little, you have available to plan for a successful exit.  It also helps you to exit during favorable economic, market and tax conditions.  Lay out a 5-year range for your ideal date, and avoid vague timelines such as, "in the next ten years."  Busy owners will tend to let this answer keep rolling forward, but hard goals make for a better exit.

Before you can plan your exit, you'll need to know the value of your business.  Not only will this help in determining the selling price, but it can also help you to decide if you're financially ready to begin an exit or if you need to wait a bit longer.

Once you've decided to sell, and your business is valued at a fair price, engaging the services of a qualified business broker to help you market and prepare your business for selling is key.  A broker will walk you through the steps and help to advise you throughout the process. 

There are four key exit strategies: Selling to an Outside Buyer, Selling to a Key Employee, Legacy Sell, and Planned Liquidation.  Each strategy requires different approaches to maximize your financial return.  Once you know which exit strategy is most likely for you, consider your business growth and if it aligns with your exit strategy.  

Read the four statements below and decide which one most fits your situation:

a. My business has a transferable value significantly above book value, and that would be attractive to an outside buyer.

b. One of my employees has the ability and desire to run my business, and with the right preparation and support, could succeed me.

c. I want a family member, who has the ability and time, to one day own my company, so that I have a legacy to pass on. 

d. I want to liquidate my business assets when I'm ready to retire, so I'll need to slowly ease out the value along the way.

Most business owners focus most on maximizing the value that they can get out of their business.  You'll need to know how much you need from the business to achieve financial freedom.  The lower this amount, the less dependent you are on your business, and the more flexibility you'll have during your exit.

If you fall short in your estimation, you must either scale back your retirement lifestyle, take on higher investment risks, go back to work, or devise some combination of the three. 

Knowing your needs allows you to take advantage of tactics at the deal table that defer and reduce income, estate and gift taxes. Having a the most accurate financial picture will help you to consider estate tax sheltering strategies without undermining your financial freedom

There can be many obstacles you face before a successful exit , and even the best exit strategy can be detoured by an unexpected event.  

Consider these common obstacles below, and think about how they could impact your plans:

• Successors aren't prepared to take over
• Handling estate and gift taxes
• Protecting against losing any key employees
• Maintaining confidentiality
• Premature death or disability

Exiting your business is as important as the financial payout.  The end goal is to pursue a life afterward that is as rewarding as running your business has been.  A mistake here easily leads to regret about exiting or rethinking how you exited.  As part of your planning process, think about how you want to spend your retirement, and answer these three question:

1. What does your ideal calendar look like?

Think about how you would like to spend each day, week and month.  Take the time to be as specific as possible.

2. What are your best talents?

More than likely, your best strengths and talents played a large part in the success of your business.  List them and consider that they represent now only what your are good at but what you like to do.

3. Where can your talents be applied outside of your business?

There will be organizations, groups or causes that pique your interest and that could very much use your help and expertise.

The strongest plan involves team players providing support in legal, tax, financial, business, and personal matters.  All will need to collaborate to create and implement your exit strategy.  Identify the ideal candidates to be your advocates and engage them early on to help get the process started.  

Plan ahead who you need:

• A seasoned attorney to guarantee you are legally protected and that assets transfers go smoothly
• A well-trained CPA to finalize your financial documents and to help you determine your assets and liabilities before you put your business on the market
• An experienced mergers and acquisition professional with industry expertise to navigate the waters and to help you find the right buyer

Leaving behind a lifetime of work is no easy task, but with the right individuals in your corner, saying goodbye can be a whole lot easier.

In laymen's terms, this simply means doing your homework and researching your options.  A vital part of this process is studying a business' financial reports and securing more detailed information on the company and its operations.  

The due diligence process varies depending on the industry and company.  But generally speaking, it includes the following:

• General company information, including history, business plans and goals
• Management and employees
• Legal matters consisting of contracts, binding agreements and liabilities
• Products and services
• Marketing and competition information
• Financial documents consisting of balance sheets, tax returns, income statements and insurance coverage
• Customers
• Operations, pertaining to facilities, equipment and inventory vital to the success of the business

It may seem strange to act as a lender to the person purchasing your business, but in the end it gives you a bigger return and helps to ensure the ongoing success of the business.

Seller financing consists of the buyer signing a promissory note outlining interest rates, default penalties and more.

Pros of Seller Financing:

• Increased purchase price
• Attracting bigger pool of serious buyers
• Receiving regular interest payments in addition to down payment
• Lower income taxes *
• Better likelihood of sale

Some buyers won’t even look at a business unless seller financing is available. With more buyers interested in the business and able to purchase it, you'll be able to increase the price and the likelihood of a sale. 

Cons of Seller Financing:

• Increase of risk
• Involvement in business after sale
• Less immediate capital

*Seller financing allows you to save on income taxes since your taxable income is spread out over time instead of in a lump sum payment

The Firm was founded as a business brokerage.  Over time we have evolved, working with larger, more diverse sellers and targeted Private Equity buyers.  With more diverse services, from expert valuations, strategic acquisition and divestiture planning, deal structuring and other advisory services, we assist a business owner from start to finish.  Our network of professionals including attorneys, financials institutions and accounting professionals are an added value to the process.  We are no longer a business brokerage, we have graduated to the level of a nationally and internationally recognized M&A firm.    

The Firm is not a Real Estate Brokerage and therefore the staff will not handle any aspect of the lease, sale, or purchase of real estate.

While we do have an in-house attorney on our team, The Firm does not represent or provide legal advice to either the buyer or seller in a deal.  We encourage clients to seek outside counsel to act as their advocates, especially in situations where local counsel is needed for an out-of-state client.  If requested, we will provide referrals to counsel we have worked with on past transactions. 

A Professional Services Agreement defines the relationship between The Firm and either a buyer or a seller.  The Firm acts as a mergers and acquisition professional, which entails presenting potential acquisition opportunities to a buyer or business purchasers to a seller.  The Firm does not act as a legal, financial or real estate broker and strongly encourages our clients to seek out professionals, such as yourself, to work alongside us throughout the process.

If you have a client either looking to sell their business or to purchase one, they'll need the help of a mergers and acquisition professional.  Should you send a referral to us, we will work with you as we place them with a business or a buyer.  We will not ask or require any fees for a referral.

All it takes is a kind "hello" to let us know you're there! We'd like to meet you and get to know what you do best.  Of our 43 transactions in 2016, all but one required financing and most needed the assistance of outside attorneys.  If you're looking for a nice way to grow your client base, we'd be glad to help and work with you on deals.