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Buying the Right Business: The Keys to Unlocking the Mystery

Capital Business Solutions offers comprehensive services for buying businesses, including international listings, co-brokering, and extensive marketing campaigns. They also offer additional services such as financial brokering and business valuations. Discover the benefits of using Capital Business Solutions and learn about the 90% rule of buyers in the business-buying process.

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Buying the Right Business: The Keys to Unlocking the Mystery

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  1. CAPITAL BUSINESS SOLUTIONSwww.capitalbbw.com The Keys To Unlocking The Mystery Of Buying The Right Business

  2. About The Company Capital Business Solutions has 100s of years of combined experience with offices throughout the US and Internationally. CBS has a website that showcases businesses for sale and links every individual business to 30+ different sites to attract buyers worldwide. CBS works with over 100’s of equity firms in locating M & A transactions CBS has relationships with commercial lenders nation wide. CBS can support immigration programs for various visa programs.

  3. What CBS Offers: • International Affiliation. • International Listings Database. • Co-Broker with other Offices. • Extensive marketing campaign • Comprehensive Buyer & Seller Education • Comprehensive Business Data Presentations • Buyer/Business Match Notification • No Upfront Fees www.capitalbbw.com

  4. Benefits of using Capital Business Solutions Maintains confidentiality • Coordinates the key participants • Interfaces with professionals: attorneys, accountants etc. • Keeps players focused and manages every step of the deal • Maintains deal momentum • Negotiates the broad strokes • Meters frustration levels • Finds a pool of potentially qualified buyers • Qualifies the buyer POINT: You would not hire a regular doctor to perform heart surgery. Don’t hire an untrained Advisor / Broker to sell your business.

  5. CBS ADDITIONAL SERVICES • Financial Brokering • Business Valuations • Equipment Appraisals • Franchise Development/Franchise Sales • Strategic Alliances • Commercial Lenders  Financial Planners • Collection Agencies  CPA • Credit Card Processors  Collection Agencies • Commercial Real Estate Appraisers • Commercial Insurance Agents • Payroll Services/Employee Benefits providers

  6. The 90% RuleFacts About Buyers  90% of buyers are first time buyers. In other words, they have never been in business before.  90% of all sales will be financed by the seller.  90% (or more) will not buy the business that was advertised or the one that they called in on. 90% of all buyers have from $15,000 to $60,000 in the bank that they are wiling to risk.  90% of all buyers are terrified and/or uneducated in the business buying process.

  7. A Business of Your OWN If you’re never going to be President of the company you’re with, perhaps you need a new company!

  8. Why? • Job Security • Control my own destiny • Financial Independence

  9. Why Buy an Established Business? • Government Surveys show over 60% of new business fail in the first three years • Why? • Poor Location and product &/or Service Mix • Under Capitalized • Poor Planning

  10. Reasons People Sell • Retirement • Illness • Partnership dispute • Relocation • Tired, wants change • Upgrading • Can’t Handle the Growth

  11. Three Components of a Successful Business • Location • Product/Service Management • Management www.capitalbbw.com

  12. Buying an Existing Business… • …provides two essentials to success: • Proven Location • Right Product/Service • = Positive Cash flow www.capitalbbw.com

  13. Who Pays for the Business? The only monetary investment you have in your new business is… …the down payment. The Business should pay for itself out of its cash flow. www.capitalbbw.com

  14. How? Cash flow It’s the Seller’s Discretionary Cash Money that you’ll take home as the business owner after paying the debt. www.capitalbbw.com

  15. Example Sales Price $100,000 1/3 down 33,000 Mo. Cash Flow 4,000 25% for Debt Service (1,000) Monthly Cash Flow 3,000 x 12 Annual Net 36,000 www.capitalbbw.com

  16. Addendum to P&L Summary Cash Flow = Seller’s Discretionary Cash

  17. Seller Financing Lower Interest Rate Low Down Payment Simple Credit Checks & Loan Closing Business Serves as Collateral for the Loan Personal Guaranty & possible additional personal collateral Greater Owner Commitment Financing OptionsUse other people’s money! Institutional Financing Various Financing Options at much longer terms Low Down Payment Application, Processing & Loan Closing Business Serves as Collateral for the Loan Personal Guaranty & possible additional personal collateral Greater Independence

  18. How to Finance the Purchase • Family, friends, partners • Commercial banks • Home equity, pension funds, insurance cash value • Government agencies • Strategic partners • Leasing companies • Additional acquisition elements: • Buyer’s cash • Seller financing • Institutional financing

  19. Valuing a Business • SOME OPTIONS • 2 to 3 times earnings • Equipment + Inventory + 1 Year Net • One Year Gross Sale …and Many More Methodologies!

  20. Value of the Business to You! • If you can buy a business… for the amount you have to put down… and it will still earn the desired profit… • THAT is what the business is worth to you! www.capitalbbw.com

  21. Buying Process • Tour business • (How does it make you feel?) • Can you make improvements? • Make Offer • (Safe Decision Certified Earnest Money)

  22. What is an Offer? An offer expresses your interest to purchase & does not become an agreement to buy unless your price and terms are accepted in full.

  23. What is an offer? (cont.) • Further, it may be contingent upon: • All equipment being in working order • Books/Records check to prove Seller’s gross sales • Lease Assignment or Sublease • Ability to get necessary licenses or financing • Business passing necessary inspections • Business being sold free & clear of debt, except as noted

  24. Getting to an Agreement • Removing Contingencies • Your protection • You must be satisfied • You are in control of your money • Each contingency removed, one-by-one • IF they don’t check out, you have the option to: • Make another offer • Cancel the offer and get your money refunded • Make an offer on another business

  25. Brokers Do… Facilitate funding your purchase with either the seller or lenders Identify professional support – attorneys, accountants, and appraisers Provide tips and resources on incorporating and starting out Coordinate any inventory tabulations Arrange and facilitate Franchisor meeting We’ll even • Save You Time and Money • Educate • Negotiate • Bridge gap between you and seller • Aid in your meeting your landlord • Present Facts drive you to the closing!

  26. Brokers Do Not… • Make your decisions • Manage your business • Show you the Seller’s books and records without an offer

  27. Advisors • Work with… • Businessmen for mentoring on buying your business • Your Attorney for legal matters • Your Accountant for Taxes & Bookkeeping • Your Lenders

  28. Escrow Attorney • Does not represent Seller or Buyer • Draws up all closing documents • Cost shared equally by Seller & Buyer

  29. The Closing • Who’s There: • You & Seller • Broker • Escrow Attorney • Lender • What Happens: • Documents briefly reviewed, approved, & signed • You and Lender release check to Seller • Seller gives you the keys

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