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Buying Bus.Presentation
 

Buying Bus.Presentation

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    Buying Bus.Presentation Buying Bus.Presentation Presentation Transcript

    • Joe Cacopardo laska COMPANY www.laskacompany.com The Secrets of Buying & Selling a Small Business
    • Workshop Goal No Secrets by the End of The Workshop laska COMPANY
    • What Potential Buyers Need To Know laska COMPANY
    • Over 25,000,000 Approximately 20% Receptive to Selling laska COMPANY
    • Reasons Owners Want to Sell
      • Retirement
      • Burn-Out
      • Divorce
      • Health
      • Cash Out
      • Other Business Interests
      • Re-Location
      • Death of the Owner
      • Any number of Simple Reasons
      laska COMPANY
    • Business Brokers
      • Do You Need One?
      • “ Yes……… But ”
      • The But is Related to Understanding the Business Broker’s Role
      laska COMPANY
    • Business Broker
      • Business Brokers Almost Always Represents the Seller
      • Seller Pays their Commission
      • Fiduciary Duty to the Seller
      • No Multiple Listing Service in Idaho
      laska COMPANY
    • Business Broker
      • Access to Businesses For Sale
      • Details about the Business
      • Majority of Businesses in Idaho are Sold through Brokers
      laska C OMPANY
    • Business Broker
      • Buffer Between Buyer and Seller
      • Paperwork is Astounding
      • Closing the Deal
      laska COMPANY
    • Buyers Need To Know
      • Identify the Type, Size and Location of the Business you Want to Purchase
      • Know How Much Money to Put Down
      • Know Where the Down Payment/Purchase Money Will Come From
      • Professionals Should Be Lined Up
      laska COMPANY
    • Buyers Need To Know
      • Making an Offer is not Buying….. Get the Process Started
      • Keep the Negotiating & Communications Moving Forward
      • Get the Signed Purchase Agreement into Escrow
      laska COMPANY
    • What Potential Sellers Need To Know Timing is Everything! laska COMPANY
    • First and Foremost Step
      • Determining Value
      • Basic Factors that Influence Value
        • Value of Hard Tangible Assets
        • Value of Intangible Assets
        • Amount of Re-Cast Cash Flow
        • Growth Rate
        • How Long in Business
      laska COMPANY
    • Multiples laska COMPANY
    • From the introduction to the Rules of Thumb by Tom Parker
      • “ A Rule of Thumb is a homemade recipe for making a guess. It is an easy-to-remember guide that falls somewhere between a mathematical formula and a shot in the dark…….. Multiples/ Rules of Thumb are a kind of tool”
      laska COMPANY
    • Multiples
      • Earnings before, interest, taxes depreciation and
      • amortization (EBITDA)
      • Earnings before interest and taxes (EBIT)
      • Seller’s Discretionary Earnings (SDE)
      • % of Annual Sales
      • Many Others
      laska COMPANY
    • So What is the Definition of Fair Market Value? laska COMPANY
    • Definition of Fair Market Value
      • “ What any seller is willing to sell their business for and what any buyer is willing to pay”.
      laska COMPANY
    • Scenario #1
      • My business is well established and is profitable
      • Option:
      • Price the business at the highest possible value based on sound valuation methods that will satisfy all requirements of the final test to a prospective buyer.
      laska COMPANY
    • Scenario #2
      • My business has no earnings, however it does provide me with a salary and a few tax benefits.
      • Options:
      • Sell the business for the current fair market value of the assets plus a small amount of goodwill.
      • The buyer is “buying a job” and will probably not want to pay much goodwill for an equivalent advanced salary.
      • Buyer may have a hard time finding financing for this case.
      laska COMPANY
    • Scenario #3
      • My business does not have net income, does not provide me a
      • salary and there doesn’t appear to be any value of goodwill, but the doors are still open.
      • Options:
      • Sell the business as a going concern for the current fair market
      • value of the assets…maybe a new owner will have good ideas
      • to improve profitability.
      • Almost impossible to find financing for this case; seller may
      • have to carry a promissory note.
      • Close business; liquidate assets by auction, etc.
      laska COMPANY
    • Scenario #4
      • My business is only one year old; can I sell it?
      • Same as Scenario #3
      laska COMPANY
    • Deal Breakers
      • Neglecting the Operation of the Business
      • Placing too High a Price on Business
      • Not Preparing Far Enough in Advance…… No Planning
      • Not Anticipating the Buyer’s Request
      • Wanting to Retire Immediately After the Business is Sold
      laska COMPANY
    • Deal Breakers
      • Being Inflexible in Structuring the Transaction…..Seller Carry
      • Negotiating Every Item
      • Allocating too Much Time for the Selling Process
      laska COMPANY
    • laska Company Joe Cacopardo 877 Main St. Boise,ID. 83702 208.331.1116 [email_address]