logo

SPECIALIZING IN MERGERS AND ACQUISITIONS, VALUATIONS AND ADVISORY SERVICES

 

Sometimes entrepreneurs ask us how to buy a business. We tell them the best way is to enlist the help of a professional service to help you with the transaction. Below are some of the checklist items we discuss with our clients.

Review their financial documents. Determine how much cash flow you can expect in the near term after giving yourself a modest salary. Divide the cash flow by your cash investment to get your return on investment. Is the ROI acceptable for your perceived risk? If it is, make an offer. Rely on the process work and you’ll find the business that’s right for you.

Get expert advice – It’s always a good idea to speak to an accountant and a lawyer, before you buy a business. For instance, you may want to make sure the seller cannot open another similar business just around the corner. Don’t forget, mistakes made now may come back to haunt you in the future. Get advice about issues such as:
•  The expected return on invested capital.
•  Valuation of stock and work in progress.
•  Inspection of the seller’s accounts, tax returns, wages books, and any statements that must be given under the law, etc.
•  Find out why is the business being sold – Sellers will offer any number of apparently legitimate reasons to explain the sale of their business. But it is worth asking anyway, and attempting to judge how comfortable the seller is in releasing information. Sometimes the seller wants to sell the business for a reason that should discourage you from buying (eg it’s not making money!). Make sure an accountant looks at the business’ accounts.

• Determine what is a fair price – Usually a business that is a going concern is sold with a certain payment for “goodwill”. This is the price the buyer pays for the business’s “good name” that has been earned over the period of operation. An accountant can help you establish an appropriate figure for goodwill by examining the business’s financial accounts.

What are the sales prospects? Among other things, you should know:
• The sales figures for each month of the year.
• The profiles of buyers (eg their age, spending patterns).
• Who the suppliers are and what their relationship with the business is.
• What the stock figures are, including average costs and turnover.
• If the stock is realistically valued.
• Profits and expenses

Make sure the profit figures offered by the seller are analyzed by your accountant. For instance, it is important to know whether the business will generate enough profits to cover your financial needs and support your lifestyle. Make sure the seller’s figures presented as expenses are realistic and are also looked at by an accountant. For instance:

• Are the expenses listed in full?
• Are there hidden costs?
• What are the depreciation costs?
• Are there any cost increases likely in the future?
• What are the terms of the lease of premises?
• What is the cost of borrowings for the business?
• What is the business’s credit rating?
• What are the total costs of employees?
• What are the liabilities that will carry over with the sale?
• Are there likely to be any rental or leasing increases?
• Are there any outstanding maintenance costs that must be met?
• The assets – Make sure you understand what assets are included in the sale price. For instance:
• Are they priced at a fair value?
• What are the depreciation costs?
• What are the leasing costs?
• What is the cash flow?

Legal help – A lawyer can help with the following issues:
• Whether the business structure is suitable for your needs.
• Agreements with the seller to ensure they don’t compete in the same geographical area or the same market.
• The terms of the purchase agreement.
• Whether the purchase agreement should be subject to finance.
• Whether there should be a trial period built into the purchase agreement.
• Looking at existing leasing agreements.
• Whether the purchase agreement says what you think it does.
• Searching the council and other agency records to ensure there are no plans or council orders that could disrupt the business or lead to a drop in sales.
• Checking the zoning regulations.
• Drafting any restraint of trade requirements of the seller, including dealing with prior customers and conducting a similar business.
• Transfer of business names, trademarks, etc.
• Information to be supplied by the seller (eg a list of current customers and suppliers).
• Any agreement for the seller to work in the business for any length of time.
• Any specific requirements of legislation

Let an Exodus Business Solutions professional help you find the most appropriate business opportunity. Click here to learn more.

Among all of the companies for sale there are a few most wanted business opportunities. We are well equipped to help you because of our experience in buying and selling companies representing many different industries.

Don’t make a choice without examining the many choices, and learn from others what is popular and why. When you have the right information, it’s easy to make good decisions.

Most Wanted – The following is a list of some of the most wanted types of businesses in California.

• Retail
• Professional services
• Manufacturing
• Other types of goods & services
• Home based opportunities
• Distributorships

Here is more information on the most popular business opportunities that are in demand and most wanted by buyers.
• Visible and popular and have high re-sale
• Franchises
• Mom & pop
• Reoccurring revenue
• Easy to maintain

The four hallmarks of a good business:

• Many customers or clients – A point that is obvious in retail businesses, but also true in business to business … if a company is too dependent on a few or especially just one client, this may put the business at risk during shifts in the marketplace.
• Profitable – No amount of revenue will make up for a company that continues to operate in the red. Eventually it catches up. A company must have consistent profit margins.
• Smooth operations – A business which is making you a good living may not be worth it if it is filled with day-to-day headaches. Owners prefer smooth, trouble-free operations.
• Low debt – Some debt may be inevitable in today’s business climate, however, debt load must be manageable, and preferably light so as not to hurt the health of the company.

Let an Exodus Business Solutions professional help you find the most appropriate business opportunity. Click here to learn more.

The goal of most entrepreneurs is to be successful, watch the bottom line, reduce the tax burden, and eventually sell their business for a premium. Unfortunately, most entrepreneurs will not end their career so illustriously. The fact is most business owners will not make the decision until its to late. According to the Small Business Administration, your business will transfer to family, be sold, or closed down. Statistics show that one out four of businesses will sell in the United States. The biggest reason businesses do not sell is because the ownership never made the decision.

Helping Businesses Make the Right Choice

Exodus Business Solutions specializes in preparing small and medium size businesses for sale and implementing a sophisticated sales effort to obtain a premium price for your business. By conducting a valuation and preparing a professional marketing package before marketing efforts begin, we quickly attract qualified buyers. Our experience proves, the valuation and marketing package facilitates buyer financing, a critical component of most business transaction.

We believe our business model will be the standard model for most business brokers and intermediaries in California. Buyers are becoming more sophisticated and expect the financial records to be compiled in a professional manner. This will limit the amount of time buyers spend gathering and examining company records and allow for smooth and timely transaction. Everyone wins under this scenario.

Buyer Profiles

The Industry Buyer is typically a competitor and knows your business, customers, and industry. Many times they stand to gain the most by acquiring your business, but as often as not they are among the lowest price bidders and buyers of last resort. They generally determine price based upon the value of the business assets. They are the best buyers when they have a strategic reason to buy and know that you know the reason. Our job at EBS is to know the strategic reason and to drive the price they pay above asset value

The Financial Buyer is typically an individual looking to be his own boss. They expect a living wage and take pride in building upon your success. Our experience indicates the majority of these individuals are hard working family types with excellent credit ratings. These buyers constitute the largest pool of buyers for the vast majority of US businesses that gross less than one million dollars a year. These businesses form the backbone of the US economy. EBS has access to a large pool of these Financial Buyers. These buyers typically base value on the company’s historical cash flow.

The Strategic Acquirer is generally a larger business that has identified a strategic reason to be in your business. They currently may or may not be a competitor. This buyer is our buyer of first choice as they pay the highest prices. However, we base our valuations upon what Industry, Financial, and Corporate Buyers will pay to avoid the distortion caused by Strategic Buyer methods

The Corporate Acquirer typically comes from a large company background. They include high net worth individuals or group of individuals, investor groups, and small corporations. They are usually familiar with your business and quite sophisticated. Their primary focus is on current and future earnings. EBS maintains a database with many of these corporate acquirers.

We love helping people prepare for the most important decision for their business. Doesn’t our careful approach make a lot more sense?

What is a small business? According to the SBA a small business concern is “one that is independently owned and operated and which is not dominant in its field of operation.” The law also states that in determining what constitutes a small business, the definition will vary from industry to industry to reflect industry differences accurately. But what opportunities are out there, and what are the pros and cons in the different types of businesses?.

Smart Entrepreneurs Make an Appropriate Choice

The number one question should be in choosing a business venture: “have I ever done this before?” Most successful businesses are a natural outgrowth of a previous position working in that industry, or by expanding a leisure pursuit into a paying enterprise. The best opportunities are sometimes right under our nose. Don’t think you have to fly all over the country when there are plenty of local opportunities to choose from. Here are some of the pros and cons of each type of endeavor:

Distribution – When it comes to getting goods from the thousands of product manufacturers into the hands of consumers worldwide, the role of wholesale distributor is a crucial one, because neither manufacturers nor the businesses that buy their products for resale could survive without them. Quite simply, distributors are middlemen. They buy products from manufacturers, then sell them to retailers at a profit. This type of business may allow for great flexibility, low inventory investment, and stability in changing market conditions.

Manufacturing – Manufacturing is defined as the making or processing a raw material into a finished product. The profits traditionally associated with manufacturing are very attractive, and for manufacturers who have carved out a niche for their products, the business may have a stable market window which lasts decades.

Professional services – The service industry in America is growing rapidly. Professional services are provided to both business and consumer markets and make up a large part of our economy. A services business might be a large insurance company, or just one individual. Marketing an intangible, such as a service may be a challenge for some people. As a professional service provider you may face special challenges promoting yourself to potential clients.

Retail Businesses – Over ½ of all of today’s workers consider opening a retail business during their lifetime. That sub shop or hardware store might look interesting from the outside, but lifelong retailers know that survival requires long hours, patient bankers, deep pockets, and boundless energy and determination in addition to keen financial skills and location, location, location. 4 out of 5 retailers discover the painful way that a lot of their hard work is mostly for their landlord. “To make a small fortune in retail, invest a large fortune” is the old joke.

Some Possible Advantages of Buying A Franchise

Turnkey System – A franchise system is a proven system for operating the business and generating profits. If your skills are weak in sales & marketing or operations then a turnkey franchise may be best.

Franchise Support – Small business owners often have very little support or lack a support team with business acumen. Buying a franchise offers the opportunity to share your challenges with other like-minded entrepreneurs. As franchise companies state, you’re in business for yourself, but not by yourself.

Lower Inventory Prices – The collective buying power of a franchise group allows for lower costs in purchasing inventory and equipment. Independent businesses usually have less bargaining power with suppliers.

Brand Name – The more established franchises provide a market awareness & brand name to franchisees. This can amount to great savings in customer acquisition costs and allow for more time in the operation of the business.

Easier Staff Recruiting – Finding good employees is a critical success factor for many independent small business owners. A franchise business with a recognized name will have greater recruiting pull than an unknown business entity.

Possible Downsides to Buying A Franchise

Less Freedom – Franchisees are required to share financial information and conform to uniform operating procedures. An independent business owner makes all the business decisions.

Higher Start-Up Costs – Buying a brand name franchise is often beyond the financial capability of many potential business owners. An independent business may be more realistic financially if the owner is willing to focus on building a strong business operation.

Royalties – Each and every year franchisees are required to make royalty payments in return for support in operations and advertising. Some franchisers may not provide all the necessary resources for the success of your particular location. Talk to other franchisees for feedback on the level of support they receive.

Broken Promises from Corporate – The franchiser may not have the ability to provide market or field support. Owners can become reactive and expect the head office to solve all the problems. In your own business, the only person you count on is you.

The buying a franchise option works best for individuals who work well in a team environment and have limited business & industry background. For others, the road to “true” entrepreneurship could represent the ideal path to business ownership. Take the time to consider your options. Buying a franchise may be right for you.

Have you entertained the thought of buying a business or franchise or are you an owner looking to sell your business?

Business brokers, like real estate brokers, bring the buyers and sellers of businesses together. More business owners nationally choose to use a broker than to sell a business themselves, but some business owners do handle sales on their own. Try to use a business mergers and acquisitions specialist who focuses on business sales — in other words, avoid someone who does it part-time while selling real estate. A broker is an agent employed to effect bargains and contracts, as a middleman or negotiator, between other persons, for a compensation commonly called brokerage.

Finding the right business specialist is important if you are thinking about selling. Attention should be paid to success rates and experience, and determine how committed the professional is to selling your business. A business intermediary can bring more prospects to your business than you could ever do on your own. They’ll also separate the buyers from the lookers, which can save you valuable time. And, in most cases they will get you a better price than you could on your own — more than justifying the fees for service.

What type of professional should actually handle the sale?

What is your background/experience? It takes time and experience to be able to understand the nuances of businesses. The average Mergers and Acquisitions Specialist is 55, and for good reason. A competent professional needs experience in valuation, a fair amount of accounting experience, knowledge in the legal aspects of selling a business, salesmanship, and patience. In short, the firm or person you are looking for has been around the business block before entering the profession.

What services do you provide? – The M&A specialist should offer to help you price the business, and should be able to show you how to package and market your business. After you’ve heard two or three proposals, you’ll get a good idea of the type of services available to you. Remember you are hiring a sales professional with strong financial skills, so look for signs that your M&A specialist is just that.

Can I talk to the owner? – If you’re not personally dealing with the owner of the firm, it may be a good idea speak to him or her. Ask him or her the questions you asked of the person whom you initially contacted. Do you get the same answers? Also, ask what kind of recourse you have if you’re not getting any activity on your business.

What kinds of tools do you use to research buyers? Before the Internet, if you wanted to sell your business, you were probably stuck looking for buyers in your city or area. Today, the Internet has made the world smaller for sellers, and a good M&A specialist takes advantage of that. Additionally, the M&A specialist should have at his or her disposal research tools and use them to find buyers and general information about the profession or industry in which the seller is active.

How will you market the business? – Discovering what tools a firm has in its marketing arsenal will help you determine just how committed they are to selling. Every business needs a little different approach to its marketing campaign and every business brokerage firm is a little different, so there are many combinations of campaign strategies that might be appropriate.

Look for a variety of ways to that the broker reaches sellers – ads in local papers and trade publications, listings on Web sites as www.bizben.com. It’s also a good idea to get on the Internet yourself, act like a buyer, find out where listings for businesses similar to yours show up, and then ask the broker if they list there.

Ask to see the printed marketing materials the broker puts out for clients. Look at their brochures and presentations, assessing completeness and how well-written they are. Ask whether they approach similar or complementary businesses about mergers, which shows you they are casting a wide net for buyers.

There are many business brokers in California but Exodus Business Solutions can help you with their unique expertise to sell or buy a business in Southern California and beyond. At Exodus Business Solutions we can also help you price your business properly, tell you how you can make it more saleable, and simply be there as a resource throughout the sale.

For additional information call 619-688-0007

Business mergers and acquisitions are commonplace in our economy. One of the main reasons given for a merger is that it draws on the strengths of each company, who together can offer more than they can alone. Benefits of an acquisition typically include lowering risk by avoiding the start-up period’s initial losses and less capital depreciation.

Reasons for a Merger
Consolidation is everywhere and in all industries. Mergers are being announced at an unprecedented rate, and we can expect to see many more mergers during the next few years. An increase in the size of a firm can mean greater financial resources to cover the additional costs that may be necessary for the business to succeed in today’s business environment. Some of the factors which may encourage a merger…

Buyers may be motivated to merger activity for:
• Economic Efficiency Considerations: Companies want to gain (i.e., reduce average costs) from larger-scale operations. Merged firms can also have greater specialization of equipment and operators, high-speed automation, and high-tech equipment.
• Risk Spreading Through Diversification: Reduce risk of loss and/or failure by spreading risk throughout more companies and capital.
• Growth and Personal Aggrandizement: Some managers make it their personal goal to be the largest and most powerful company and achieve this through mergers.
• Monopoly Power: Firms merge to create or enhance monopoly power. Incentive? All of the individual firms worth more as a group than as individual firms
• Perhaps as a result of a general change in business climate
• Management retirement considerations
• Business succession planning
• To gain newer technologies and methods more quickly to keep up with their industry
• Larger market share through eliminating the competition (growth)
• Access to other markets – regional or channel marketing (growth)
• Additional, complimentary products or services which “fit” with the acquiring company

Tips for companies considering a merger.
• Deal from a position of strength. Don’t wait till things are bad and you need the money.
• It’s important to find a like-minded company which is a good match in terms of culture and personality.
• Explore many possible partnerships. Whether you’re shopping for a buyer or looking to buy, establish your criteria for evaluating deals.
• You need to explain how each employee’s role will change and communicate as things evolve.
• Let employees know what you are up to. During the exploratory phase, you don’t have to give details, but once the deal is done, explain the reasons behind the merger.
• Pay attention to employees. Once the deal is done, every employee wonders, “What will happen to me?”
• Once the papers are signed, the task of integrating the two organizations should be quickly handed off to the managers. Firms considering a merger should however take considerable care. The worst form of merger is inevitably where two firms with significant difficulties merge without proper planning, potentially causing their problems to be magnified. You will want to retain an experienced, professional firm to help manage your merger. For additional information call 619-688-0007.

Businesses for Sale San Diego
Exodus Business Solutions can help you find businesses for sale in San Diego. Being one of the areas leading specialists we are best equipped to help you because of our background and years of experience in working in San Diego.

Businesses of all sizes are bought and sold in San Diego County. From large medical research companies, to small mom and pop stores, the local business resale market sees movement in all sectors. The changing face of San Diego business is moving from aerospace and tourism to bio-tech and computers.

Businesses for sale in San Diego

We can help buyers find a particular San Diego based business quickly and efficiently. Sales come from the range of businesses which exist in San Diego today which include:

Advertising & Media – Businesses for sale in San Diego in this category might include advertising agencies, commercial printers, Hispanic marketing firms, small newspapers, PR agencies, or video production companies.
Construction & Design – Possible businesses might include architectural firms, contractors, engineering companies, environmental consultants, landscape contractors, or residential remodelers or builders.
Finance – In this category you may find opportunities to buy a small accounting firm, insurance agencies, money management firms, etc.
General Interest & Education – Businesses falling into this category might include Auto Dealers, trade schools, law firms, security companies, and others.
Health Care – Included in this area are medical offices, dentists, some manufacturers and benefit providers.
High-Tech – San Diego has really grown in this area in the past 20 years, and businesses offered in this area would include computer resellers, Internet service providers, Internet companies, Web developers, and business network services.
Hospitality & Travel – A long time staple of the San Diego economy, this category includes large businesses like hotels, and smaller ones like travel agencies and caterers.
Manufacturing – San Diego was once known for its large aerospace OEM’s, but has since diversified into several fields. There are many golf manufacturers, software companies and electonics manufacturers.
Business Suppliers – This category includes placement and temp services, office supply stores, and office furniture stores.
Real Estate – This area would include property management and real estate firms both residential and commercial.
Businesses based in Tijuana – Most people are familiar with the huge border factories, called maquiladoras, that churn out television sets and other electronics for export to the United States. But many mom-and-pop exporters exist – such as garage based businesses, all the way up to the huge international conglomerates.

Here’s how we help you find just the right local company to purchase:
• We meet and consult with you
• We deliver confidential support
• We supply detailed reports
• We carefully organize business opportunities which may match your criteria

Let an Exodus Business Solutions professional help you find the most appropriate business opportunity. Click here to learn more.