1.   LIVE YOUR DREAM2.   BUILD YOUR WEALTH3.   CREATE YOUR LEGACY4.   GROW YOUR EMPIRE
   Savings   Stock i.e.Apple –no matter how many IPADs    you buy, you won’t change the stock value   Buying homes – Fl...
   Influence means you can affect the outcome    though not everyone does well   Plan and prepare well   Seek wisdom of...
   Inherit   Start up   Franchise   Existing – existing franchise and existing non-    franchise
   Fred Hervey   Ray Kroc   Howard Schultz   Cy Ansary
   1951 when Fred Hervey purchased three    Kay’s Food Stores in El Paso, Texas.   one of the nation’s leading convenien...
   Read: Behind the Golden Arches   April 15, 1955,[8] the ninth McDonalds    restaurant overall. Kroc later purchased t...
   Read: Pour Your Heart Into It   1987 acquires Starbucks
   a private, real life tale
Presented byLegacy Venture Group Business Intermediaries
   Over 50% close up in the first four years    according to an SBA.gov report   http://www.sba.gov/advo/stats/bh_sbe03....
   Realize it can still take years before the    franchise matures, if at all, to yield a profit   Just because you love...
   You can tell how well a business is doing up    until you purchase it   You should be able to improve the business  ...
   Have personal control (avoid    layoffs, ceilings…)   Be your own boss   Your efforts and investment help you   Exc...
   Lack of knowledge and / or experience   Under Capitalized (Remember Working Capital)   Wrong Location   Competition...
   Advantages               Disadvantages     You can create           May need to do a      just what you            ...
   Advantages               Disadvantages     It’s a “proven           No success      system”                   guara...
 Chances of you “discovering the next McDonald’s is very unlikely
   But just because it’s a franchise does not mean    you will be successful   Check out:    http://www.bluemaumau.org/6...
   Advantages               Disadvantages     Cash flow may            The initial      start immediately         purc...
Time Period                          % Sold1 to 3 months                         9.7%4 to 6 months                        ...
   Many hunt for months   Some find what they seek in days   But 90% of shoppers never buy   Financing can take weeks ...
“Understanding the business that is right for you” begins and ends with You!
   Personal background   Personal interests   Risk tolerance   Limitations   Financial resources   Credit report   ...
If married, these questions apply to you and to       your spouse: How comfortable are you with debt? Do you have a stro...
If married, these issues apply to you and to   your spouse: Geographic Cultural Industry type/knowledge Education Lif...
Write out your life priorities and put in writing what you are and are not willing to sacrifice of a businessi.e. Time fro...
   How near to home?      Don’t just get stuck   How many hours?         on an industry at   Maximum                 f...
   Put together your financial summary   Be aware of ways to finance your business   Did you know you can use your IRA/...
You will want information  about the businesses you         investigate;be prepared to share about    yourself to them.
1.    Understand your cash requirements2.    Make sure you have appropriate.      Working Capital set aside!!!3.    Rememb...
   Business broker/intermediary   Attorney (as opposed to a general    practitioner)   CPA   Commercial lender
Evaluate the business – and yourself –  regarding: Absentee ownership Generation of personal income Management style G...
   Family involvement   People skills   Travel requirements   Training requirements   Demand for extra hours     Wee...
   People are successful at lots of things   Kroc and Schultz were salesmen   Mike Lewis – MBA owns plumbing co   Sam ...
   Review preliminary written information    provided by the seller   Personally interview the seller to:     ▪ Verify p...
What business should I buy?Look for owner’s to say         you cant get good help         the equipment is no good     ...
   Has good records   Has good earnings (or is very well priced)   Has bank or owner financing offered
 Be wary of “Owner to Prove” Look for numbers from Taxes    and Profit/Loss statements         Request 4506TCall to dis...
You will probably have to sign a   NonDisclosure Agreement (NDA)or Confidentiality Agreement (CA) of these    to get more ...
Make an initial determination of business worth  based on: Written information provided by seller Interviews with seller...
 You should see evidence of earnings but you  typically don’t get copies of  taxes, leases, contracts and private details...
Research values including what  ratios similar businesses have             sold for –NOT what For Sales are priced at!  A ...
Or Owner’s Benefit  What did the business        generate forowner, assuming one (1) full   time working owner.
Profit on Income Taxes + Nonrecurring Expenses - Nonrecurring Income + Non-operating Expenses - Non-operating Income  + De...
Unless buying a discounted distressed business: Must cover debt service Should return 15-20% on down payment  investment...
   In some cases a “letter of intent” (LOI) might    be acceptable (See Letter of Intent)   You should submit a formal w...
An offer to purchase specifies price, terms, and  payment: Cash due at closing Assumption of debt (if any) Bank and/or ...
The offer to purchase usually has contingencies  satisfied prior to closing: Due diligence and confidential information n...
Other issues that are addressed in the offer to  purchase Agreement: Buyer and seller warranties Training Allocation of...
   Legal and tax Issues     Litigation     IRS audits/state sales tax   Accounting     Accurate picture of financial ...
   Purchase/sales agreement   Promissory note   Security agreements   Bill of sale   UCC filings   Board of director...
Pre-acquisition steps: Create buyer’s corporate entity and/or  register fictitious name     Federal ID number     Corpo...
NEVER CLOSE WITHOUT A CLOSING ATTORNEY Execute (sign) the pre-approved closing  documents Transfer proceeds of the sale ...
   Sellers will usually train    you for 2 weeks to 6    months   Anything beyond 2 weeks    is generally part of a    c...
SEARCH  QUALIFYING                                  BROKER                 DEAL MAKING                      CLOSING   PROC...
   Hire professionals who deal with buying    and selling businesses on a full-time basis   Do your homework   Know wha...
Legacy Venture Group Business IntermediariesCall for more information on subjects covered in thisbusiness buying overviewR...
Buy A Business   Begin A Dream 2012
Buy A Business   Begin A Dream 2012
Buy A Business   Begin A Dream 2012
Buy A Business   Begin A Dream 2012
Buy A Business   Begin A Dream 2012
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Buy A Business Begin A Dream 2012

  1. 1. 1. LIVE YOUR DREAM2. BUILD YOUR WEALTH3. CREATE YOUR LEGACY4. GROW YOUR EMPIRE
  2. 2.  Savings Stock i.e.Apple –no matter how many IPADs you buy, you won’t change the stock value Buying homes – Florida is still seeing declines in values and has been for years Commercial Real Estate – Around the Globe, developed land sites un-occupied Businesses
  3. 3.  Influence means you can affect the outcome though not everyone does well Plan and prepare well Seek wisdom of trusted advisors Use your vision and wisdom
  4. 4.  Inherit Start up Franchise Existing – existing franchise and existing non- franchise
  5. 5.  Fred Hervey Ray Kroc Howard Schultz Cy Ansary
  6. 6.  1951 when Fred Hervey purchased three Kay’s Food Stores in El Paso, Texas. one of the nation’s leading convenience store chains w over 6,000 stores
  7. 7.  Read: Behind the Golden Arches April 15, 1955,[8] the ninth McDonalds restaurant overall. Kroc later purchased the McDonald brothers equity in the company and led its worldwide expansion
  8. 8.  Read: Pour Your Heart Into It 1987 acquires Starbucks
  9. 9.  a private, real life tale
  10. 10. Presented byLegacy Venture Group Business Intermediaries
  11. 11.  Over 50% close up in the first four years according to an SBA.gov report http://www.sba.gov/advo/stats/bh_sbe03.pdf
  12. 12.  Realize it can still take years before the franchise matures, if at all, to yield a profit Just because you love the product does not guarantee success Do your research before selecting a franchise Visit sites like: http://www.wikidfranchise.org/
  13. 13.  You can tell how well a business is doing up until you purchase it You should be able to improve the business You “can” start making money right away Note: you must still run it right – there is no promise it will continue as is
  14. 14.  Have personal control (avoid layoffs, ceilings…) Be your own boss Your efforts and investment help you Excellent potential It can be exciting Satisfaction (workers less happy) Flexibility to meet your needs & desires
  15. 15.  Lack of knowledge and / or experience Under Capitalized (Remember Working Capital) Wrong Location Competition (Present & what is to come) Asset investment too high Rent too high Cash Flow Challenges * from SBA.gov – a great site for entrepreneurs
  16. 16.  Advantages  Disadvantages  You can create  May need to do a just what you great deal of want research  You don’t pay for  System and someone else’s location unproven efforts  Tough to get  Total control financing
  17. 17.  Advantages  Disadvantages  It’s a “proven  No success system” guarantee  Quick to start up  Upfront costs and  May have Royalties financing  Limited control
  18. 18.  Chances of you “discovering the next McDonald’s is very unlikely
  19. 19.  But just because it’s a franchise does not mean you will be successful Check out: http://www.bluemaumau.org/6776/25_worst_f ranchises_buy
  20. 20.  Advantages  Disadvantages  Cash flow may  The initial start immediately purchasing cost  Existing  Unseen / hidden customers problems  Easier financing  Customers may opportunities not stay … (*if, if, if)
  21. 21. Time Period % Sold1 to 3 months 9.7%4 to 6 months 28.3%7 to 9 months 38.0%10 to 12 months 15.9%13 to 18 months 7.6%19+ months .7% 4 to 12 months to sell 82% of businesses 7 to 9 months to sell 38% of businesses
  22. 22.  Many hunt for months Some find what they seek in days But 90% of shoppers never buy Financing can take weeks or months
  23. 23. “Understanding the business that is right for you” begins and ends with You!
  24. 24.  Personal background Personal interests Risk tolerance Limitations Financial resources Credit report Risk Tollerance
  25. 25. If married, these questions apply to you and to your spouse: How comfortable are you with debt? Do you have a strong belief in yourself? Do you believe it is a business you can handle? The answers relate to how much business you can buy
  26. 26. If married, these issues apply to you and to your spouse: Geographic Cultural Industry type/knowledge Education Lifestyle change People skills
  27. 27. Write out your life priorities and put in writing what you are and are not willing to sacrifice of a businessi.e. Time from family, investment limits, character of the business…
  28. 28.  How near to home?  Don’t just get stuck How many hours? on an industry at Maximum first but open you investment? mind to any Minimum return on business that meets investment? your needs and Type of tasks? desires!
  29. 29.  Put together your financial summary Be aware of ways to finance your business Did you know you can use your IRA/401K for your business without penalty and taxes? Contact us for advisors who can help with this service.
  30. 30. You will want information about the businesses you investigate;be prepared to share about yourself to them.
  31. 31. 1. Understand your cash requirements2. Make sure you have appropriate. Working Capital set aside!!!3. Remember there are other expenses such as rent and utility deposits. Request a Buyer Cash Requirement Form from our offices!
  32. 32.  Business broker/intermediary Attorney (as opposed to a general practitioner) CPA Commercial lender
  33. 33. Evaluate the business – and yourself – regarding: Absentee ownership Generation of personal income Management style Growth expectations Self-image Physical requirements Continued…
  34. 34.  Family involvement People skills Travel requirements Training requirements Demand for extra hours  Weekends  Day or night work?
  35. 35.  People are successful at lots of things Kroc and Schultz were salesmen Mike Lewis – MBA owns plumbing co Sam Champala – PHD runs many gas stations Kris VanOlst – Accountant owns restaurants Cy – Attorney owns Logistics Company Live Your Dream
  36. 36.  Review preliminary written information provided by the seller Personally interview the seller to: ▪ Verify preliminary written information ▪ Establish a rapport ▪ Review business facilities and location ▪ Observe business operations during normal work hours (if permitted) ▪ Collect additional data to determine value of business
  37. 37. What business should I buy?Look for owner’s to say you cant get good help the equipment is no good the competition is too fierce the economy
  38. 38.  Has good records Has good earnings (or is very well priced) Has bank or owner financing offered
  39. 39.  Be wary of “Owner to Prove” Look for numbers from Taxes and Profit/Loss statements  Request 4506TCall to discuss more things to watch out for when buying a business!
  40. 40. You will probably have to sign a NonDisclosure Agreement (NDA)or Confidentiality Agreement (CA) of these to get more details on a business.*Read carefully and do not get locked into a buyer fee obligation! Request a sample from our offices!
  41. 41. Make an initial determination of business worth based on: Written information provided by seller Interviews with seller and/or seller’s broker Personal observations of the business Analysis of historical records of the business Additional independent and outside investigations of the business
  42. 42.  You should see evidence of earnings but you typically don’t get copies of taxes, leases, contracts and private details until you get to the Due Diligence Phase following an accepted, written contract to purchase the businessInclude in your Contingencies the right to have acceptable evidence of claimed earnings
  43. 43. Research values including what ratios similar businesses have sold for –NOT what For Sales are priced at! A good brokerage can proved two or more resources on what similar businesses sold for!
  44. 44. Or Owner’s Benefit What did the business generate forowner, assuming one (1) full time working owner.
  45. 45. Profit on Income Taxes + Nonrecurring Expenses - Nonrecurring Income + Non-operating Expenses - Non-operating Income + Depreciation + Amortization + Interest Expense + One Owner’s Total Compensation = SDE
  46. 46. Unless buying a discounted distressed business: Must cover debt service Should return 15-20% on down payment investment Should provide a return on time (annual salary) Should meet the lender’s debt ratio requirements
  47. 47.  In some cases a “letter of intent” (LOI) might be acceptable (See Letter of Intent) You should submit a formal written “offer to purchase” (earnest money contract) with contingencies to the seller or seller’s broker (See Purchase Offer)
  48. 48. An offer to purchase specifies price, terms, and payment: Cash due at closing Assumption of debt (if any) Bank and/or seller financing: term, etc. Non-compete agreement Consulting income or earn-outs Continued…
  49. 49. The offer to purchase usually has contingencies satisfied prior to closing: Due diligence and confidential information not disclosed by the seller that the buyer still needs to review Lease assignment or negotiation of new lease EPA compliance Licensing requirements Franchise approval Continued…
  50. 50. Other issues that are addressed in the offer to purchase Agreement: Buyer and seller warranties Training Allocation of purchase price Desired closing date Date by which seller must respond
  51. 51.  Legal and tax Issues  Litigation  IRS audits/state sales tax Accounting  Accurate picture of financial position  Accounting method used (cash vs. accrual)  Inventory valuation State regulations  Environmental
  52. 52.  Purchase/sales agreement Promissory note Security agreements Bill of sale UCC filings Board of directors resolution (authorization to sell) Real estate documentation (if appropriate) Lease agreements Other side agreements Closing statements (prepared by attorney and/or title company)
  53. 53. Pre-acquisition steps: Create buyer’s corporate entity and/or register fictitious name  Federal ID number  Corporate bank account(s) Obtain appropriate licenses (occupational, state sales tax, local, etc.) Obtain insurance
  54. 54. NEVER CLOSE WITHOUT A CLOSING ATTORNEY Execute (sign) the pre-approved closing documents Transfer proceeds of the sale to the seller Transfer ownership of the Business to the buyer
  55. 55.  Sellers will usually train you for 2 weeks to 6 months Anything beyond 2 weeks is generally part of a consulting arrangement
  56. 56. SEARCH QUALIFYING BROKER DEAL MAKING CLOSING PROCESS DATABASE Explain Buying Process Business Interest Buyer/Seller First Meeting Coordinate Due DiligenceFinancial/Credit worthiness Qualify Buyer for Tour Business Loan Request Package A specific Business Business Review 1-Page Business Probe Buyer’s continued Lender Introductions Experience Summary Interest Licensing Determine Buyer Interest Motivate Buyer to Act – Assist in Resolving All Offer to Purchase Issues Life style changes Nondisclosure Agreement Facilitate Negotiations Formal Contract Geographic Review CBR LOI or offer to purchase Review Final Documents Location /Data Package Close!
  57. 57.  Hire professionals who deal with buying and selling businesses on a full-time basis Do your homework Know what you are willing to pay Prepare yourself for the purchase Enjoy the process and …
  58. 58. Legacy Venture Group Business IntermediariesCall for more information on subjects covered in thisbusiness buying overviewRequest listing updates or to get our e-newsletter.Info@BuyBizUSA.com813.571.7700
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