Successfully Buying A Business In A Down Economy

Successfully Buying A Business In A Down Economy

June 11, 2010

Successfully Buying A Business In A Down Economy

You want to get out of the corporate rut, leave the traffic behind, and stop worrying about whether your job is on the line each and every day…. sound familiar?

So, you think to yourself “maybe I should buy a company?”

I would like to give you few pointers to help you make an informed decision if you decide to pursue an acquisition, even in this difficult economy.

Ask yourself the following questions:

1. Do I have the ‘entreprenurial spirit’ to own my own business? To many it looks easy, and it may have the potential for great money, but it’s NOT as easy as it looks. Do you have passion, ambition and the ability to lead others? These are all traits that entrepreneurs share and will help you in your quest to be a successful business owner.

2. Do I have adequate capital resources? We all know you need money to buy a business! However, there are many factors to consider other then purchase price when determining how much money you will need to acquire and then run a business. Make sure you have a clear understanding of what you will need to protect your investment. Please seek the advice of an intermediary or your accountant.

3. Do you know HOW to evaluate a business that is for sale? Most people THINK they do, but they don’t really know how to peel back the onion to make an informed decision about the true value of the business. Again, seek expert counsel on this subject with either a business broker or M&A intermediary. These professionals have an intimate understanding of the valuation process. The thorough evaluation of a business will allow you to make an educated decision.

4. Can I get financing? We live in tough times. Getting proper financing takes into account many factors. Do YOU have what it takes to get past underwriters? Ask your intermediary or financial consultant to evaluate your abilty and capacity to obtain a loan before you go to the banks.

5. Do you have a financial bottom line that you need to earn if you are buying a business? Many people think by buying a business they will become rich immediately after closing. The truth is, you are not. Take inventory about what you need to survive, pay necessary bills, and be aware that you may have to live at a level less than you are accustomed to for a while after you purchase your “dream” business.

Need help answering any of these questions?

Contact the professionals at Calder Associates. We can help you reach your goals!

Getting Loans for Business Acquisitions in 2009

Getting Loans for Business Acquisitions in 2009

April 22, 2009 | Susan Rosner

Getting Loans for Business Acquisitions in 2009

Getting a loan to buy a business is not as easy as it used to be. Are you prepared? Will you be able to buy that company you want?

If you want to prepare, start by making good decisions.

First, look for companies that your past experience has some relevance to.

Second, make sure you have a good credit history, as the banks, lenders, and Seller will check.

Third, buy a company within your means. The cash you have for a downpayment should be at least 15% of the purchase price.

Last, make sure you have good control of your personal financial needs. When you start a business, or buy a business, make sure it will pay you what you need to SURVIVE without having to dip into savings.

It’s only when you look at these factors, and addressed each one will you be able to obtain the loan required to help you on your way to financial success!

About the broker blog

The Blogger- Susan Rosner

Susan is a Managing Partner in Calder Associates and is responsible for Calder’s Pennsylvania, Delaware, and surrounding area. Susan’s past experience has served hundreds of business owners and buyers in their pursuit to sell or acquire the right business. A past President of the Lower Bucks Chamber of Commerce, business coach, and speaker at local business events and exit planning conferences, Susan has helped thousands of companies and individuals to success!

Are You Ready?

Are You Ready?

July 7, 2008 | Joe Kerr

Are You Ready?

Are you ready to exit your business? Have you given it any thought? Think you may want to sell or retire within 5 years? It is not an easy task and if you are unprepared, it can not only be difficult, but costly and it may not bring the kind of rewards you anticipated.

You need to consider several factors including: family, your employees, the emotional attachment, the market, taxes, and your wants and needs among other things. You even have to think about what you will do the day after you exit.

You need to overcome the obvious obstacles to selling your business, determine where you want to be post sale, decide how best to get there and execute the plan.

How many family members are in the business and what are their expectations? How will your management team react and what are their needs and expectations?

Are there shareholders in the company and how do you handle them in the course of a sale?

Can you identify the key employees and mangers that would ensure continued success for a new owner? Will they stay or feel betrayed and leave?

Is your management team strong enough to run the company without you? This is critical if an investor or Private Equity Group is going to consider your company for acquisition.

There is a true balancing act in exiting a privately held business and many issues need to be addressed. There is a need for Attorneys, Accountants, Financial Planners and a qualified intermediary or broker who understands all the aspects of business transfers and succession planning. The last professional is one of the most often ignored people, but with the right individual selected, the one who usually leads the team and manages the eventual transaction to a successful conclusion. Your intermediary is the one who has the skill set to maximize the value of a sale for the benefit of the business owners.

Still don’t understand why certified and qualified intermediaries make a world of difference in a business sale? You are not alone. Contact us to learn more about how to make any planned sale a profitable one.

So, what is your equipment and machinery worth?

So, what is your equipment and machinery worth?

March 28, 2007 | Joe Kerr

So, what is your equipment and machinery worth?

Do you know the value of all the equipment and machinery that drive your business? All the machines, vehicles, tools, trucks, and equipment that allow you to generate the profits and cash flow you’ve grown accustomed to. You know its not book value, and you are uncomfortable about guessing its true value. You should have your machinery and equipment appraised by an unbiased and certified appraisal professional. You may ask yourself “Why should I pay for an appraisal?” The answer is simple… The fact is, in your business, the machinery and equipment may hold the greatest tangible value and be your biggest asset. If you own stocks, you more than likely check the value of your holdings on a regular basis so that you know what you have and what action you may need to take. Given that machinery and equipment can be a key element of any assets transferred in a sale, used for collateral on a loan, or used to help solidify value in estate planning, knowing the real value of your machinery and equipment is crucial.

Let’s briefly go over a few of the basic reasons why you need an appraisal on machinery and equipment. First, if you want to borrow against your asset, you will need to know and prove the Fair Market Value (FMV). Changing the tax status of a corporation (i.e. from a C Corp to an S Corp) requires a certified appraisal, as does elections to sell via an ESOP. Estate planning requires an appraisal. And finally (but not least), if you don’t properly value your business (including the machinery and equipment), the IRS will determine the value for you, and you will be doing a disservice to yourself and your heirs. When you are selling your business or doing a recapitalization through an SBA lender, your bank will require a valuation, possibly including a certified machinery and equipment appraisal. If your business is publicly traded, you must comply with Sarbanes-Oxley and FASB 141 and 142 that require the assets of the business valued on a periodic basis. When it comes time to exit your business, the proceeds of the sale will have to be allocated for the IRS and it will have tax implications for you!

Statistics prove that businesses that are properly valued prior to a sale sell within 7% of the asking price based on the valuation. Businesses that sell without a valuation sell for 80% or less of the asking price and take much longer to sell. Machinery and equipment appraisals are a KEY COMPONENT of a business valuation and are used by valuation professionals to insure accurate assessed value of all assets transferred.

If you want to give yourself the leg up on getting value for your machinery and equipment, contact us MEappraisals@calderassociates.com. Learn how successful businesses keep ahead of the game by knowing “what’s my equipment and machinery worth?”

How to Buy a Business

How to Buy a Business

February 21, 2007

How to Buy a Business

If you are unsure about how to buy a business, don’t feel alone. More so than almost any time you will ever make a business decision, this one will require more from you than anything else you’ve ever worked on. Calder Associates can help turn the impossible into the probable with or Buyer Service offering.