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American Fortune Mergers

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Business Valuation sample, Business Valuations, Sample Business Valuations, American Fortune Busines

Business Valuation sample, Business Valuations, Sample Business Valuations, American Fortune Busines

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  • 1. "If you are looking to sellyour business, you owe itto yourself to read thisreport now" By Brian Mazar, CEO American Fortune Mergers & Acquisitions, LLC 800-531-2591 www.FortuneBTA.com
  • 2. Why Do More Than 80% Of Businesses Never Sell?Sometimes business owners are their own worst enemies when they try to sell a business.Statistics show that less than twenty percent of businesses sell when they are marketed for sale.This means that more than eighty percent of businesses never sell.A survey of merger and acquisition (M&A) advisor(s) and business brokers showed some veryinteresting insight. They were asked to identify top issues that were problematic in the ability of abusiness to sell successfully. The top response was seller valuation expectations; sixty ninepercent of merger & acquisition advisor(s) and business brokers indicated this issue as being themost problematic in selling a business.Starting on the next page are some other reasons why many businesses do not sell. American Fortune Mergers & Acquisitions, LLC Maximizing Business Value - Transferring Business Success 800-531-2591 www.fortunebta.com (502) 244-0480
  • 3. Why Do More Than 80% Of Businesses Never Sell?The Top 10 Key Reasons Why Many Businesses Do Not Sell 1. The valuation of the business is too high, in some cases by as much as 100%. 2. The business has several family members in top management positions. 3. The owner is the business. The business cannot effectively run without the efforts and know-how of the owner. 4. One or two customers constitute more than 25% of the total business. 5. The business industry is diminishing or threatened by globalization. 6. The owner(s) is aging and has slowed-down, resulting in diminishing revenues. 7. The owner did not take time to perform exit or succession planning. To properly prepare the business for sale, the owner should have engaged in exit planning 2-5 years prior to selling. 8. Many of the financial rewards of the businesses were taken by the owner in various “perks” which, from a business valuation perspective, will not make it to the EBIDTA as add backs. 9. The seller did not take time to become educated on the selling process, especially on the possible ugliness of the due diligence process by the buyer and their advisor. 10. The owner did not utilize the professional services of trusted mergers & acquisitions advisor or, in the case of a retail company or a small business, the services of a business broker.Without properly preparing your business for sale and arming yourself with a proven mergers andacquisitions process, there will be a huge business valuation gap between what the business sellerexpects to receive and what a reasonable buyer sees as fair market price. American Fortune & Acquisitions, LLC Maximizing Business Value - Transferring Business Success 800-531-2591 www.fortunebta.com (502) 244-0480
  • 4. Why Do More Than 80% Of Businesses Never Sell?Selling a business takes years of preparation and the use of a proven process. Additionally, it istime consuming. A business owner trying to keeps their business running smoothly while, at thesame time, trying to sift through streams of bargain hunters can be daunting. Without a provenprocess, a formal business valuation, and a good amount of preparation, these bargain hunterswill chip away at the sellers asking price.What About B2B and Larger Businesses?For owners of B2B businesses and large businesses, your buyer will not be an individual, butrather a corporation or a private equity group. If the potential buyer has revenues up to $100million, the mergers and acquisitions contact is usually the president.If the company is larger, the contact is typically the head of strategy, business development ormerger and acquisition services. The first task is to recognize that reaching these corporate buyersis a very difficult and a labor intensive process. In these situations, it is wise to enlist the servicesof a mergers & acquisitions advisor firm that specializes in reaching these targeted buyers.SummaryIn summary, it cannot be stressed enough that there needs to be proper preparation of a businessfor sale. The process to properly prepare a business for sale takes approximately 2-5 years, it isnot very costly, and it does not take much time but the results can be phenomenal and will bringabout a much higher business valuation, better terms and a faster sale. American Fortune Mergers & Acquisitions, LLC Maximizing Business Value - Transferring Business Success 800-531-2591 www.fortunebta.com (502) 244-0480
  • 5. Why Do More Than 80% Of Businesses Never Sell?Eight Tips to Sell a Business Successfully 1. Price It Right. A typical mergers and acquisitions advisor or business broker just cant bring themselves to tell you that your business is overpriced. Dont shoot your merger and acquisition advisors for valuing your business realistically and dont choose a mergers & acquisitions advisor on the basis of which one values your business at the highest price just so that they can get a listing. The price (valuation) of your business needs to be realistic. The best way to accomplish this is to have your business valued by a third party valuation expert knowledgeable in the science of business valuations as well as the market forces that shape the business valuation. Businesses that use a third party business valuation are much more likely to sell at a higher price. Those who do not use mergers & acquisitions advisor services or a qualified business broker combined with a third party business valuation service only have a 10% chance of selling a business at all. Your tendency will be to overprice your business. Overpricing the business will result in taking a longer time to sell the business or it may never sell at all. Additionally, a business that stays on the market for more than 18 months has an increased chance that employees, competitors, clients and other parties will learn that the business is listed for sale. Such information in the wrong hands could devastate the health of any business for sale. Furthermore, a business listed for sale for too long is often viewed by buyers as shopworn merchandise by the time it finally sells, if it sells at all. Nothing raises the doubts of a prospective buyer more than to find out youve been trying to sell your business for a long time (18 months or longer). Prior to marketing the business for sale, have a professional business valuation performed. A credible and defensible business valuation will greatly solidify a true market value of a business. Depending on the type of a business being valued and the detail and length of a valuation, the price can be anywhere from $2,000 to $8,500. The money spent on a good business valuation will more than pay for itself in the end. American Fortune & Acquisitions, LLC Maximizing Business Value - Transferring Business Success 800-531-2591 www.fortunebta.com (502) 244-0480
  • 6. Why Do More Than 80% Of Businesses Never Sell?2. Fixtures, Equipment & Facility. Business buyers expect that all the equipment be routinely serviced and in good working condition. Prepare a detailed list of equipment with model numbers and serial numbers. Buyers may also want to have a third party inspection as well a formal valuation of the equipment and fixtures. Businesses with clean financials, good records, clean facility and premises, and quality and up to date equipment will receive good consideration by buyers. Most buyers will likely deduct a significant amount from the asking price if one or several areas of the business is not presentable or poses shortcomings.3. Have A Good Reason To Exit & Sell A Business. Buyers are always concerned about the reason for the sale of a business. They are afraid you may be selling a business because of a declining industry, the effects of globalization, competitor dominance or some undisclosed fact that may negatively effect and hurt the business in future years. Buyers want to hear a valid and logical reason for the sale. Without a good reason for a sale, business buyers may assume the worst and either offer you a lower price (valuation) or just walk away.4. Form An Advisory Team. To sell a business successfully you need to have the right group of experts. Start by searching for the services of a credible mergers & acquisitions advisor followed by an attorney with merger and acquisition transaction experience. Your accountant will also need to be involved in some aspects of the business sale. Your merger and acquisition advisor will play the most critical role in the sale of your business therefore, they need to be qualified and experienced with mergers and acquisitions services, exit planning, business valuation and many other matters so you can achieve a predictable and successful outcome in the sale of your business. Today, selling a business is so specialized it becomes imperative to engage the services of a mergers & acquisition advisor, investment banker or business broker (for retail or small businesses). The best attorney or accountant is no substitute for a specialized and knowledgeable merger and acquisition advisor who is experienced in all areas of selling businesses American Fortune Mergers & Acquisitions, LLC Maximizing Business Value - Transferring Business Success 800-531-2591 www.fortunebta.com (502) 244-0480
  • 7. Why Do More Than 80% Of Businesses Never Sell? including business valuation, tax matters, deal structuring, problem solving and creative solutions.5. Prepare A Good Marketing Package. A good and proper marketing package to sell a business is absolutely critical. Additionally, being prepared to answer questions during the buyers due diligence process takes extensive preparation. To anticipate the buyers due diligence, it is best to prepare a detailed offering memorandum package to present to buyers when marketing your business for sale. In the age of computers and readily available data and information, buyers can become quite informed. Business buyers will likely solicit a professional expert in business valuation services. The buyers and their experts will challenge you to justify your price and terms of sale based upon their understanding of normal investment returns and risk factors found in the open financial markets. Having a professional business valuation report will go a long way in defending your price against such challenges. You also have to compete for a prospective buyers attention against an ever-increasing number of sophisticated groups trying to sell other types of businesses and investments.6. Target Buyer Prospects. After you have performed a thorough review and due diligence and prepared a marketing package (offering memorandum), you are ready to sell your business and look for buyers. You must educate yourself about the types of buyers that exist in the marketplace. After studying buyers you will have a better idea which buyer to seek out for your business: a financial buyer, a corporate buyer, a private buyer or a strategic buyer. To assure that the buyer is qualified to buy and operate your business, you must learn how to carefully screen and qualify the buyer. Your mergers & acquisitions advisor or business broker can set-up a process to target and qualify these prospects. Desire to buy is not proof of a business buyers’ ability to buy and operate a business successfully. Be very careful in the review and qualification of buyers. Many buyers do not have the money, skills or vision to successfully buy and operate a business. American Fortune & Acquisitions, LLC Maximizing Business Value - Transferring Business Success 800-531-2591 www.fortunebta.com (502) 244-0480
  • 8. Why Do More Than 80% Of Businesses Never Sell? Depending on myriad of factors, it may take 6 months to 2 years to sell a business. It is critical to keep your marketing efforts confidential except to very qualified prospects. A qualified mergers and acquisitions advisor will be aware of all of these issues and will walk you through the process of selling your business with successful results.7. Negotiate Professionally. When you identify an interested and qualified buyer prospect, plan your negotiation strategy carefully. Your mergers and acquisitions advisor will facilitate the process, so follow their advice. Remember that your goal is to sell a business and not beat the buyer at some negotiation game. You and the merger and acquisition advisor should carefully strategize on all of the negotiation points. Give in slowly and carefully and always ask for a concession point in exchange from the buyer and his team of advisors. Have clear goals in mind to sell the business and do not get hung up on technicalities otherwise you will win the battle but lose the war. Dont allow yourself to get bogged down in disputes or become emotionally involved with the buyer. Dont allow your ego and pride to distract you from satisfying your underlying goal to sell your business. You do not need to become friends with the buyer, but understanding their circumstances and goals will help you negotiate better. Focus the negotiation on things that are common to you and the buyer. Spend time brainstorming numerous options with your mergers and acquisitions advisor and you will likely come up with many solutions before deciding what to do about any particular problem. Begin by negotiating the easier points and then move to resolving the more difficult points.8. Wrap-it-Up Quickly. Even the best buyer prospects can change their minds overnight. After the buyer prospect makes a commitment to buy your business, get an offer to purchase in writing and get a good-sized, non-refundable earnest money deposit. American Fortune Mergers & Acquisitions, LLC Maximizing Business Value - Transferring Business Success 800-531-2591 www.fortunebta.com (502) 244-0480
  • 9. Why Do More Than 80% Of Businesses Never Sell? After the offer to purchase agreement is signed begin to negotiate the finer points and begin the process of drafting a definitive sales agreement along with all of the other closing documents and prepare to close on the business as soon as possible. Your business isnt sold until the money is in your hand. Make sure your check clears before you set plans in motion for investing, spending the money or taking a well deserved exotic vacation. American Fortune & Acquisitions, LLC Maximizing Business Value - Transferring Business Success 800-531-2591 www.fortunebta.com (502) 244-0480
  • 10. Why Do More Than 80% Of Businesses Never Sell?How American Fortune’s "How to Sell a Business" ServicesOutperform the Function of a Business BrokerYOUR ADVISOR......should be experienced and qualified in all of the service aspects of the sale of businessesincluding exit planning, business valuation, taxation and other disciplines. Many advisors andbusiness brokers will tell you they can sell a business but they lack essential knowledge andexperience to produce successful and consistent results.At American Fortune, we have been excelling in the preparation and sale of businesses in theUSA since 1998. Our advisor team consists of mergers & acquisitions experts with exceptionalcredentials and experience in how to successfully sell a business, mergers & acquisitions advisorservices, exit strategy planning services, and business valuation services.We specialize in working with businesses with revenues ranging from $3 Million to $100 MillionYOUR NEEDS......may be broad and American Fortune understands that. Thats why we offer comprehensiveservices to help our clients meet their short and long-term business planning goals. We providethe following services:  Strategic business planning and growth strategies  Development of business exit and succession strategy planning services  Business valuation services  Maximizing and increasing the valuation of businesses  Selling businesses for the best price and termsYOUR ADVANTAGE......when selecting American Fortunes services will be in the process and the results. American Fortune Mergers & Acquisitions, LLC Maximizing Business Value - Transferring Business Success 800-531-2591 www.fortunebta.com (502) 244-0480
  • 11. Why Do More Than 80% Of Businesses Never Sell?  You will not pay commissions/fees related to the real estate of the business sale  American Fortune has historically sold businesses at an average of 98% of the valuation price  While the national average is below 30%, American Fortune sells over 90% of the businesses it takes to marketYOUR LOCATION......does not matter. American Fortune corporate offices are located in Los Angeles, California andLouisville, Kentucky. We serve clients nation-wide (USA). We have merger and acquisitionsadvisor (s) in Chicago Illinois, Detroit Michigan, Louisville Kentucky, Lexington Kentucky,Cincinnati Ohio, Dayton Ohio, Columbus Ohio, Cleveland Ohio, Toledo Ohio, IndianapolisIndiana, Nashville Tennessee, Atlanta Georgia, Tampa Florida, St. Louis Missouri, Kansas CityKansas, Lexington Kentucky, Denver Colorado, Dallas Texas, Los Angeles California, San DiegoCalifornia. If you are located in the USA, we can help you!Simply put, we outperform the function and services of a business broker. To get started or tospeak with a qualified business advisor, visit www.FortuneBTA.com or call 800-531-2591 now. American Fortune & Acquisitions, LLC Maximizing Business Value - Transferring Business Success 800-531-2591 www.fortunebta.com (502) 244-0480

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