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http://sellyourbusinessflorida.com/buy-a-business-jacksonville-florida/ - Buying a business can be exciting and overwhelming. To help you understand the process, this short 30 minute video will walk you through the keypoints on what you need to do.
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Buying Your First Business
Kimberly Deas / William YankeeBusiness Broker904-683-6655
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Agenda• Understanding the Local
Economy• Process of Buying a Business• Avoiding Common Mistakes• Using a Business Broker
2www.SellYourBusinessFlorida.com
904-863-6655
Local Economic Outlook• 96% expect business to grow or be stable*• 92% expect FL economy to improve or be stable*• 80% expect US economy to improve or be stable*
• * BMO Harris Bank Survey published in Jacksonville Business Journal, 1/15/14
3www.SellYourBusinessFlorida.com
904-863-6655
Business Buying EnvironmentBoth Buyer and Seller market (Industry Dependent)Interest rates are lowSteady Flow of New Businesses SellingGood, well organized profitable businesses sell
faster, higher – Be prepared to move quickly4
www.SellYourBusinessFlorida.com 904-863-6655
The Buying Process
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Buying AbilityPrequalify First!•Cash = Down payment– Friends and Family– 401(k)
•Bank Financing / Non Conventional Loans•Seller Financing
6www.SellYourBusinessFlorida.com
904-863-6655
Financing OptionsBank Lending (SBA)
• Business / Buyer must qualify for Lending
• Lenders 80% with Seller 10% and Buyer 10%
• 60-90+ days to closing• Not available for all
businesses / buyers
Seller Financing• Some industries not
financeable with banks• Seller acts as bank• Affect on price: More
seller financing, higher asking price
7www.SellYourBusinessFlorida.com
904-863-6655
Searching For The Right Business• Online websites• Craigslist• Ask Friends• Approach Directly• Work with a Business Broker
KEEP CONFIDENTIALSign NDA
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3 Steps to Evaluating a Business1. Cash Flow2. Talents3. Opportunity Evaluation
www.SellYourBusinessFlorida.com 904-863-6655
Evaluating Businesses1. Cash Flow Requirements– SDE (aka Cash flow, Owner’s
Benefit, Adjusted Net)– SDE = Profit + Owner’s Salary
+ Personal Expenses + 1 time expenses + Adjustments to normalize to current situation.
10www.SellYourBusinessFlorida.com
904-863-6655
www.SellYourBusinessFlorida.com 904-863-6655
Valuing a Business
Worth what a willing, able buyer is willing to pay!
Common Valuation Methods: 1.Based on Multiplier of Cash flow2.Based on Tangible Asset Values
www.SellYourBusinessFlorida.com 904-863-6655
Evaluating Businesses2. Your Talents / Skills vs. Business Operation Requirements– Sales– Marketing– Operations– CEO
13www.SellYourBusinessFlorida.com
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Evaluating Businesses3. Evaluate the Specific Opportunity / LocationQuestions to ask about business: -What differentiates your business? -How would you grow the business? -What would you do with a windfall of cash? -Why are you selling?
14www.SellYourBusinessFlorida.com
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Reasons Sellers Sell• Burned Out• Retirement – No Heirs• Divorce, Dispute or Illness• Insufficient Capital to Grow• Achieve Estate Liquidity • Outside Investors Want Liquidity• Get Discovered – Receive an Offer
(Order of frequency)
15www.SellYourBusinessFlorida.com
904-863-6655
Offering Memorandum• Narrative About Business (Complete
Disclosure)• Comparative Historical Financials (Recast)• Forecasted Financials • Synopsis of Contracts, Leases & Lawsuits• Given to just a Few Prospective Buyers
16www.SellYourBusinessFlorida.com
904-863-6655
Meeting the Seller• Purpose: Learn the business,
understand the seller• Ask Questions about the
business• Tour the facility, look at inventory• CEO level questions
www.SellYourBusinessFlorida.com 904-863-6655
Making an OfferPoints to Consider:•Price / Earn Out•Seller Financing Terms•Non Compete Terms•Training Period•Escrows•Contingencies
– Financials– Lease– Franchisor Approval
www.SellYourBusinessFlorida.com 904-863-6655
Buyer’s Due Diligence• Goal: Reduce Risk and Verify
Offering Memorandum • Create Priority List of What to
Ask (focus on priorities)• Using Outside Advisors– Attorney– Accountant– Specialists
19www.SellYourBusinessFlorida.com
904-863-6655
Confidentiality• Harder to maintain during Due
Diligence• Shorter time for Due Diligence• Finish Document Review before
contacting Suppliers, Customers & Bankers
20www.SellYourBusinessFlorida.com
904-863-6655
Negotiating & Closing• Maintain Positive – Flexible
Attitude.• Add Addendums as needed• Focus on what’s really
important
21www.SellYourBusinessFlorida.com
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Post Closing• Indemnifications:
Representations & Warranties• Earn Outs, Escrows & Offsets• Seller to Buyer Transition– Extending Courtesies Pays Off– Play Nice.
22www.SellYourBusinessFlorida.com
904-863-6655
Common Buyer Mistakes• Overlooking Talent
Requirements• Incomplete Due Diligence• Gotta-Do-This-Deal Mentality• Over Paying – Too Much Debt• Under Capitalized
23www.SellYourBusinessFlorida.com
904-863-6655
Advantage of 1 Broker vs. Many Brokers For Buying a Business
1 Broker• FOCUS, FOCUS, FOCUS!!• Broker completely knows you and
your needs• Accumulated knowledge of your
interests• Business Advisor to guide process• Insight to Early Listings
Many• No Focus• Keep retelling your story• No broker looking for you• If talking to every broker,
some brokers might not work for you.
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www.SellYourBusinessFlorida.com 904-863-6655
Working with a Broker• To Qualify– Complete intake interview– Complete Personal and Financial Profile– Provide Resume
• Pre-qualify for purchases (as needed)• Complete NDA’s in timely fashion• Provide feedback on each business evaluated
www.SellYourBusinessFlorida.com 904-863-6655
Why Use Us? • High Level Professionalism• Confidential• Dedicated Networks of Brokers to
find Listings• Responsive• Experienced• Partnership Creates more Results
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Search for businesses for sale
http://bit.ly/1dpJHiS
Contact us for Intake Interview:
Kimberly Deas / William YankeeBusiness Brokers
Questions: k.deas@murphybusiness.comw.yankee@murphybusiness.com
904-683-6655
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Search for businesses for sale
http://bit.ly/1dpJHiS
Contact us for Intake Interview:
Kimberly Deas / William YankeeBusiness Brokers
Questions: k.deas@murphybusiness.comw.yankee@murphybusiness.com
904-683-6655
28
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