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--Hear
Talk Radio Interview with Kathryne Pusch, Atlanta Business Broker, ConsultKAP
(click link)
Watch
SHINE: The Entrepreneur's
Journey, A short film by Dan
McComb & Ben Medina, produced by Biznik.
-How to find the
right business broker for you
READ
THIS ARTICLE
-- Tips
on Selling Your Business from the Better Business Bureau-- Read
this Article
--Restrictive
Covenants Update, Nov 2010-- READ
THIS ARTICLE
--
Who
Needs a Buy-Sell Agreement?--READ
THIS ARTICLE
-- The
High Cost of Inaction!
Understand funding
a Buy-Sell Agreement
READ
THIS ARTICLE
--Selling a small business is
tough--Case Study-- READ
THIS
-Georgia still among
fastest growing states (Scroll
down)
-Building
an Entrepreneurial Legacy-Actual Case
Read
this Article
---You had
your business appraised, now what? READ
THIS ARTICLE
Contact
us for a Business Valuation Today
-- Valuations for SBA
7(a) Loans
READ
THIS ARTICLE
--
Business
Fraud Alert READ
THIS ARTICLE
-- Do
We Always Have to Pay Those Capital Gains Taxes? READ
THIS ARTICLE
-Whom do business
leaders really trust? (Scroll
down)
_ SBA Help for Women
Business Owners (Scroll
Down)
-Businesses Looking to
Cash Out Sometimes Need to Step in With a Loan as Credit Crunch Continues to
Stymie DealsREAD
THIS ARTICLE
-Fund
YOUR Business with YOUR Money --Not Impossible
(Scroll
down)
--The Seller Finance Solution READ THIS ARTICLE
-- Small Business Tax
Advice from a Former IRS Auditor(Scroll
down)
-- LLC
or S-Corporation?READ THIS ARTICLE
--Cash-Out
Now or §1031 Exchange
READ
THIS ARTICLE
-SELLING YOUR BUSINESS IN A WEAK ECONOMY
READ
THIS ARTICLE
-Surprise. . . this business is Yours.
READ
THIS ARTICLE
-Training & Business
Development: Slippage
(Scroll
down)
-Business Due Diligence Process -
Article and Two Checklists
READ
THIS ARTICLE
|
-ANSWERS from the Experts!!
Question:
Can I sell a business NAME as opposed to assets?(Scroll
down) |
-Finding the perfect
U.S.
retirement tax haven READ
THIS ARTICLE
|
Atlanta Business Chronicle - |
How to find the
right business broker for you
.
Tom Barry
Contributing writer
When Trisha and Larry Scheffler decided to sell their small
manufacturing company in Jasper,
Ga.
-- one they had founded 10 years before -- their first instinct was to sell it
themselves. Why pay a hefty commission to a business broker?
"Things didn't go well," Trisha said. "We didn't
know what steps to take or when to take them. When were we supposed to show a
prospective buyer our financials? Who was really serious about buying our
business, and who was a competitor [trolling for information] to use against
us?"
The Schefflers eventually hired a business broker, (Kathryne Pusch
of ConsultKAP, Inc.) selling their 15-employee company to a larger competitor. Trisha
said she believed they made more money that way than they would have flying
solo. "Even more than that, selling a business is a very stressful
process," she said. "A business is like a member of your family. You
want it to grow and thrive. It was good just to have someone to answer our
questions."
Increasingly, business owners are selling their business through a
broker, a formal middleman who did not exist in
Atlanta
until roughly a quarter-century ago. Previously, someone selling a business had
only his attorney, accountant or banker to call on for advice, not that this
doesn't suffice still for many owners.
READ
THIS ARTICLE
All
contents of this site © American City Business Journals Inc. All rights
reserved.
 In
the News . .
Monday, December 22, 2008, 2:05pm EST
Georgia still among fastest growing states
Atlanta Business Chronicle
The state of Georgia continues to rank among the fastest growing in the
nation, according to new figures released Monday by the U.S.
Census Bureau.
New statistics show Georgia was apparently on the minds of 162,447 people
who decided to move to the Peach State between, July 1, 2007 and July 1, 2008,
according to the U.S. Census Bureau.
The state added the fourth most of any in the union. Its growth rate of 1.7
percent was ninth nationally. Since 2000, Georgia has added an estimated 1.5
million residents.
Texas added the most people –483,542 – while Utah had the fastest
growth rate (2.5 percent).
The only states to lose population were Michigan, which declined 0.5
percent or by 46,000 people, and Rhode Island, which saw its population fall
0.2 percent or by 2,000 residents.
Three of the 10 fastest growing states – Georgia, North Carolina and
South Carolina — are from the Southeast. Six Rocky Mountain states –
Arizona, Colorado, Idaho, Nevada, Utah and Wyoming – also made the top 10.
In
the News . .
Selling a small business is tough
By DAVID
MARKIEWICZ
The Atlanta
Journal-Constitution
Sunday, June 14, 2009
Alex Volpe was returning to
the corporate world and a demanding new job at Georgia-Pacific.
His wife, Deb, hoped to
stay home with their two young children.
For the couple, that meant
one thing: they’d have to sell the family business, which required time they
no longer had. READ the
Rest of this ARTICLE
In
the News . .
How Do Small Businesses "Fight Back" in this
Economy?
Like many, the
client company was having a real crisis. Its
CEO was witnessing many friends and
colleagues filing for bankruptcy. Her banker, CPA, and attorney told her to
close her doors. Over 50% of the
companies in her industry have gone out of business since 2002, and her company
faced a variety of problems across the board:
Losing key customers. Facing tight cash flow. Low
employee morale. Inconsistent productivity. Increasing customer demands. Competition
from low labor rate countries. Rising
raw material prices.
Seemingly
attacked from all sides, a
determined CEO was seriously
considering closing down after 40 years in business—but she decided to fight
back!
How
our Strategic Partner, Cycle of Success Institute, stepped in to change the
course of the future for this company and several others in these REAL
LIFE CASE STUDIES. READ
the rest of this ARTICLE
In
the News . . .
Building
an Entrepreneurial Legacy
Steve Marsden of Alpharetta, GA had a dream
for his family. He wanted to build a
Marsden Family Portfolio of small businesses and create an entrepreneurial
legacy. He imagined his “boys”
working together productively, being their own bosses, sharing their passions
for business, and supporting their families, long after he was gone. When Steve first met Kathryne Pusch, of ConsultKAP, Inc. Business Brokers
in late 2002, he was in transition
out of his long time corporate career with IBM. Steve heard Kathryne speak on the topic “So, You Think You Want to Buy
a Business?” at an entrepreneurial seminar, and he said “Yes, I Do.”
Read
the rest of this Article
In
the News . . . .
Do We Always Have to
Pay Those Capital Gains Taxes? "How to eliminate capital gains
tax on Real Estate & Goodwill"
Case Study-- Highlights:
Elimination Tax on the Goodwill
allocation of a business sale.
Alternative 1031-Exchange strategies when real estate is a component of the
business.
Avoid depreciation recapture
READ THIS
CASE STUDY
In
the News . . . .
Who do business leaders really trust?
Those studied preferred Trustworthy Partners 86% of the
time
Cathleen McGrath and Deone Zell,
 Peter MacDiarmid / REUTERS
What creates trust? Research indicates that people look for three essential
things: ability, benevolence and integrity. In our research, we examined the
relationship between support-seeking behaviour and these traits by studying
the support networks of 50 senior executives at a Fortune 50 technology firm
and developed eight profiles of executives' contacts. We then looked at how
the senior executives looked to these profiled groups in different ways and
divided forms of support into four categories: raw information, actionable
advice, strategic or political help, and emotional support. We discovered that
the leaders rely on different types of trust, depending on the kind of support
they want.
To elaborate, the four groups of support entail:
* First, raw information involves facts and figures like budgetary
numbers, meeting dates, competitors' activities or inventory levels. It's the
most explicit form of assistance and one of the easiest to obtain through
technological means.
* Second, actionable advice means recommendations or suggestions
aimed at accomplishing something. This type of advice has low emotional
demands, but can be intellectually complex. It involves not just data but also
draws on a person's experience.
* Third, emotional support involves someone wanting help in working
through difficult issues.
* And, finally, strategic or political help is the most complicated,
and requires high emotional and intellectual demands.
How do you best enlist support? When do you decide to try to diffuse
tension among colleagues? Strategic help gets into questions of this nature.
We broke down the executives' network contact profiles into eight
categories. "Harsh Truthtellers" are honest, regardless of whether
the truth is painful. "Moral Compasses" have an unwavering sense of
right and wrong. "Loyal Supporters" align their values closely with
those who are seeking support. They are sympathetic, even if not experts in
the relevant material. "Star Players" are experts in their fields,
but not necessarily empathic. "Average Joes" have moderate levels of
ability, benevolence and integrity. "Dealmakers" get things done.
They want to help and can, but sometimes handle issues in ways that clash with
the support seeker's values. "Cheerleaders" provide unconditional
support, but may not be the most capable colleagues. "Trustworthy
Partners" are capable, display high integrity and have the
support-seeker's best interests at heart.
We gathered data from 50 of a Fortune 50 organization's leaders -- vice
presidents, directors, general managers and other executives -- who were part
of a senior leadership development program. Those surveyed reported on 661
contacts who they trusted enough to go to for personal support.
Those studied preferred Trustworthy Partners 86% of the time when they were
looking for actionable advice and 57% of the time when looking for strategic
or political help. They also looked often to the Harsh Truthtellers, despite
the fact that people in this category display little benevolence. The
executives looked to the Harsh Truthtellers 73% of the time when looking for
actionable advice and 45% of the time when looking for strategic or political
help. Those involved in the survey next turned to the Loyal Supporters and
Moral Compasses for these types of support.
When the executives were looking for emotional support, they sought out
those who displayed integrity and benevolence - and were less concerned with
seeking out those who were most skilled. This meant that they turned to Loyal
Supporters 78% of the time. And when the executives were looking for raw
information, they looked to the Average Joes most often -- again, 78% of the
time.
Finally, it seems that high integrity is what support-seekers look for in
their networks. When executives perceived that someone among their support
group had high integrity, they would go to that person for support that had to
do with either intellectual or emotional concerns.
Also of note: While executives sought Trustworthy Partners and Harsh
Truthtellers most often, and then looked to Loyal Supporters and Moral
Compasses, they didn't generally turn to Star Players. Ability, it seems, is
not enough. Further, executives almost never turned to Dealmakers or
Cheerleaders, probably because they don't display as much integrity.
This article is adapted from "Profiles
of Trust: Who to Turn to, and for What," by Cathleen McGrath and
Deone Zell, which appeared in the Winter 2009 issue of MIT Sloan Management
Review. The complete article is available here.
Copyright Massachusetts Institute of Technology, 2009. All rights
reserved.
In
the News . . . .
Thursday, October 15, 2009,
10:25am EDT
SBA offers help to women business owners
Atlanta
Business Chronicle
Women small businesses owners
will be able to use a new online training course to learn how to identify and
take advantage of federal contracting opportunities.
The course being offered by
the Small
Business Administration is part of a government-wide initiative
to promote opportunities for women-owned businesses in the area of government
contracting.
SBA noted in a news release
that it is committed to ensuring that women-owned businesses receive at least 5
percent of federal contracts.
“Federal contracts can
provide unique opportunities for women entrepreneurs and small business owners
to grow their businesses and create jobs, particularly during these tough
economic times,” SBA Administrator Karen Mills said in a news release.
The course, which is designed
to help women entrepreneurs learn about the federal procurement process and to
prepare them to compete for contracting opportunities can be accessed at http://www.sba.gov/fedcontractingtraining/
In
the News . . . .
Businesses Looking to
Cash Out Sometimes Need to Step in With a Loan as Credit Crunch Continues to
Stymie Deals
By ARDEN DALE and SIMONA COVEL
Wall Street Journal
November 13, 2008
For small companies looking to cash out, this may be an ideal time -- if they
are willing to give sellers a financial hand.
The reason is that fewer businesses are on the block these days as owners fret
over the ability to live off their proceeds during the economic and market
downturn. A smaller supply of sellers means those companies that show stability,
profits and steady cash flow can command a premium price.
But there's a catch: Buyers are generally finding greater difficulty getting
commercial loans from banks. Loans backed by the Small Business Administration
have dropped off precipitously in recent months. Even private equity firms --
long known for taking a chance on scrappy young companies with high growth
potential -- are acting more conservative.
Christina and David Sloan, former co-owners of Li'l Guy Foods, at the company's
production facility
The upshot is that some businesses are finding they also need to provide some of
the financing themselves in order to get a deal done.
Seller financing "is almost a mandatory piece of the deal," says
Domenic Rinaldi, owner and managing partner of Chicagoland Sunbelt, a
Chicago-based broker that helps people buy and sell businesses. "When we
bring deals to the banks, they want to know that the seller will be in for some
portion."
READ
THE REST OF THIS ARTICLE
In
the News . . .
Fund
Your Business or Franchise with Your IRA
(ARA) - Aaaah. Life without
a boss or the fear of firings or layoffs. A life in which you are free to think
outside the box and direct your own employment destiny. A familiar dream, right?
But how many of us, when talking about our dream of self-employment, begin our
sentences with, "If only I had the money, I would?"
Well, now there's a way you can get your hands on the money that will allow you
to live out your dream of business ownership. And the amazing thing is -- you
probably already have that money in your own possession.
Do you have an IRA, 401(k), Keogh or other retirement plan? If so, you're
sitting on a potential goldmine, because those funds can be used right now
before retirement age to either buy a business outright or to leverage a loan
that will let you secure the enterprise of your dreams. And you can tap into
those funds without incurring additional taxes or early withdrawal penalties.
By using a structure similar to that of a self-directed IRA, your purchase of a
business or franchise is considered by the IRS and Department of Labor (DOL) as
an investment into your business made on behalf of your retirement account.
Under this structure, your business profits are realized tax-deferred inside
your retirement account or are reinvested back into your business. It's an ideal
way to launch your business with lower overhead while building up your
retirement account.
Don't have enough money in your retirement account to purchase the whole kit and
caboodle? Then use what you do have to secure a good loan and reduce your
overall debt.
The more you can put into a down payment for an SBA or other loan, the more
favorably the lending institution will look on your request. As
a general rule, borrowers will need 20 percent or more down, regardless of
whether they're buying a new business or an existing one.
The same account structure that allows for IRA monies to be used as loan
leverage also allows for multiparty purchases. So you're free to combine your
IRA money with the retirement funds of a spouse or partner.
Low- and no-debt financing strategies require careful structuring of various
accounts and entities, so they're not for the do-it-yourselfer. Fortunately,
specialized financial services companies set up these types of accounts, so you
don't have to. By combining your
retirement account money or your home's appreciated value with your
entrepreneurial zeal, you may discover the perfect recipe for business success!
 Fund
Your Business with YOUR Money
Article
Courtesy our Affiliate
In
the News . . . .
The Seller Finance Solution
Seller
financing can be a great way to get a business sold without slashing the price. Some
sellers are hesitant because they need a large lump sum of cash VS installment
payments. . . read on to learn more about how to accommodate this common need.
By recognizing
the millions of people who can't get traditional financing as potential buyers,
resourceful sellers (and their agents) can minimize their time investment in
getting a property sold. Even better, sellers who offer financing can usually
get a higher asking price for their property, even in the slowest markets.
Clearly this is a win-win situation.
Most sellers
never consider financing the buyer directly because they are not aware of the
benefits or don't fully understand how creating a note works, and what can be
done if the installments will just not work for them.
Let's take a closer look at the advantages of owner/seller
financing, as well as the option to sell that note. READ
THE REST OF THIS ARTICLE
Article
courtesy our Strategic Partner, Pierre Stokes In
the News . . . .
Tax Advice from a Former IRS Auditor
Small businesses face a relatively higher risk of audits than
individuals. Here are some pitfalls to avoid to make sure your returns are
accurate
By John
Tozzi
Everyone wants to maximize their tax deductions and reduce what they owe
the government. But remember: If you report income as a small business
owner, you face a higher risk of getting audited than individuals with just
payroll or investment income. That's because it's much easier for small
business owners to understate their income or overstate their write-offs
than it is for individual employees, who have their wages reported by their
employer. Indeed, the IRS devotes the greatest share of its enforcement
budget—41 percent in 2006—toward small businesses. The agency in recent
years has tried to increase compliance through education and enforcement.
The Schedule C, which sole proprietors use to report income, is the single
most audited business form, says Jeff Collins, a tax attorney and former IRS
auditor in Schaumburg, Ill.
Small business owners can save themselves grief by avoiding common tax
slip-ups. One big trap some fall into: failing to pay payroll taxes. These
contributions, which include the employer's half of Social Security and
Medicare taxes, are due monthly, but business owners with cash-flow problems
sometimes fail to pay them because they need to cover other fixed costs like
wages and rent first, says Collins. Companies can avoid that temptation by
hiring a payroll service to make the tax contributions along with each
payday.
Independent Contractors
Some small business owners try to avoid payroll taxes entirely by
classifying workers as independent contractors. That's legitimate if workers
truly are independent—the distinction has less to do with the hours they
work than it does with the degree
of control the business owner has over them. Misclassifying workers can
come back to bite businesses if the IRS determines the company should have
been withholding taxes and contributing the employer's share of payroll
taxes. "If you have a payroll of $100,000 and you did that, well now
you've got a $15,000 bill," Collins says.
Businesses that pay workers and vendors in cash are also at risk in an
audit. If a company doesn't have a paper trail to back up those costs, the
deductions will be lost. Collins says this is often an issue among
first-generation immigrant business owners or those who pay undocumented
workers with cash. Such practices can put employees at risk as well.
"If those expenses are deducted and you can't show documentation, you
also jeopardize the employees. Then they become subject to the willful
failure to file taxes," Collins says. Those who don't have records
might be tempted to tell an auditor that they were lost in a flood or fire.
But Collins says in that case, they should be prepared to produce an
insurance claim—otherwise the auditor has no evidence to show that there
was any damage to records.
But even though small businesses face a relatively higher risk of tax
audits, Collins says business owners shouldn't worry—as long as their tax
returns accurately reflect their business records, and their deductions are
reasonable. And businesses shouldn't be afraid to take a legitimate
deduction for fear of explaining it to an auditor. "Who cares if it's a
red flag?" says Collins. "Bring the audit on."
Tozzi
covers small business for BusinessWeek.com.
In
the News . . .
One of the questions I get most is should a buyer
form an LLC or an S-Corporation?
Most of the time people form an LLC without getting adequate legal and tax
advice because someone told them “ that is
the best way to do it. “
There is no standard answer to this question. Each individual situation
should be analyzed for the best choice of entity. A buyer should always seek
legal counsel regarding liability and business reasons for the choice of
entity.
Here are a few of the main differences between the two in layman’s
language. READ
THE REST OF THIS ARTICLE
Article
courtesy our Strategic Partner, Greg DeFoor
In
the News . . .
Cash-Out Now or §1031 Exchange:
A
Look at the Potential Effects of Higher Capital Gain Rates on the Effectiveness
of a §1031 Exchange
By: John
Harman– Our strategic partner with The Blue Oak Group, LLC
With the Change Administration set to take the Executive Stage this month,
the eyes of investors and their trusted advisors have focused on what effects
the incoming president will have on the tax codes that so many have benefited
from in the past and the rates of which determine the impact of those codes.
As a
core business market, Blue Oak has heard many investors and tax professionals
say that since it is clear that the Obama administration intends on increasing
the capital gains rates, now is the time to sell investment real estate, elect
not to do a §1031 tax-deferred exchange and “cash-out” while rates are low. But is that the right choice?
. . . . . . READ
THE REST OF THIS ARTICLE
In
the News . . . .
SELLING YOUR BUSINESS IN A WEAK ECONOMY
contributed by Jim West, Vice President of Dynasty
Capital Advisors (Article
Courtesy our Affiliate)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The stock market is crashing. Government bailouts are rampant. The political
climate
is uncertain. Credit has all but disappeared for ready buyers if you can even
find
one. Yet, your dreams of retirement remain. What can you do? There is an answer
that you may have overlooked. By understanding the power of an ESOP you could be
well on your way to your retirement in the next 90 days.
READ THE REST OF THIS ARTICLE
For more information about how an ESOP could be the solution to your exit
strategy,
e-mail us today. We will facilitate initial information collection and put you
in touch with our ESOP specialists.
In
the News . . .
Friday, October 5, 2007 Surprise. . . this business
is Yours. (An ESOP Case Story)
Atlanta Business Chronicle - by Justin Rubner, Staff Writer
Nearing retirement, 68-year-old entrepreneur John Farra had a decision to make
about
his Norcross-based printing supply company. Sell the quiet, but lucrative, small
business empire he had created -- or hatch a surprise twist for what might
have
been an unassuming legacy.
On Aug. 22, Farra, CEO of Laser Supply & Service Inc., treated his 13
employees
to dinner and delivered the big news -- he was retiring. Furthermore, he said,
the
company no longer belonged to him. Visions of layoffs filled the room.
Instead, he explained, the company had been sold and now belonged to new owners.
It belongs to you, he told his workers.
READ
THE REST OF THIS ARTICLE
In
the News . . .
Training & Business
Development: Slippage & Real Estate
By Kathryne Anne Pusch,
ASR
RISMEDIA,
July 18, 2007
—I read a lot of Stephen King. Many
of his stories involve people crossing some invisible boundary lines into the
realm of evil. King uses a term
“slippage” to describe the events, behavior, and conditions surrounding a
gradual, sometimes nearly imperceptible (except in retrospect) decline or
crossing over to the “dark side.” As
you read the story, you start to get “the creeps,” the feeling that
something wicked this way comes. I
think slippage also applies to our integrity in our business dealings as well.
We have certainly seen a great deal of slippage in our
world in recent years. The business
world is tough and extremely competitive these days. Some people might be feeling that it would be easy to lower their own
standards of honesty and ethics, and rationalize that they are still
“better” than a lot of other people we have read about and seen on the daily
TV news. Allowing yourself to be
weak in your own values may allow others to misguide you into behavior that will
later strike you as very poor judgment. One
poor decision has a way of leading to more bad decisions, often to cover up the
first one. This creeping decline in
values is slippage, and is accompanied by denial which allows people to convince
themselves it is OK to behave this way.
In fact, it is not possible to keep your positive self
image and integrity while lowering your own standards to the level of mediocrity
or even worse. The late Dr. Norman
Vincent Peale was a prolific writer and a wise man. He had a “test” for integrity. When
evaluating any given situation and choices for behavior, he suggests that we ask
ourselves:
- Is
it legal and in line with the organization’s policies?
- Is
it fair to all concerned—both short & long term?
- How
will I feel about myself in the end?
Being dishonest saps energy, adds to the “bad stress” in our lives,
and damages personal and professional relationships. In our business, you could be at risk for loss of license, fines, or
legal sanctions. Who needs that? If you or someone close to you seems to be succumbing to slippage, take
action (before you wind up in a Stephen King story.)
q Get in the habit of constant evaluation using the three-question
test
q Practice encouraging and supporting the best behavior in others
q Live up to your commitments, taking responsibility for your own
actions and expecting others to do the same
q Communicate truthfully and clearly, without casting aspersions or
shifting blame
NAR surveys confirm that your prospective clients are looking for Brokers
and Agents that demonstrate honesty and integrity, so you will see your business
blossom and referrals increase. As
a bonus, you will feel good about yourself and be healthier, happier, and more
confident! You deserve it.
About the Author:
Kathryne Anne Pusch is president & broker of ConsultKAP, Inc. She is a
Licensed RE Instructor in
Georgia
You can contact Kathryne at kap@consultkap.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com
In
the News . . .
| Business Due Diligence Process
by Kathryne A. Pusch, ConsultKAP, Inc. |
| Published
on EvanCarmichael.com
March, 2007 |
|
|
|
Due Diligence
Considerations, Process & Timing
Buyer Due Diligence (DD) on a business (going concern) acquisition is the
process of verifying that a
prospective buyer is purchasing what he THINKS he is purchasing, and that
the information he has been provided thus far by brokers and sellers is
accurate within a reasonable degree of tolerance to the buyer. Due to
serious concerns about confidentiality, disruption of current and future business,
and time and expense, in depth DD is generally conducted after a
binding agreement is in place and earnest money has been provided. Earnest
money is refunded only if specific contingencies cited in the agreement
are not met, (such as financing) or if due diligence uncovers
material facts in dispute with the prior representations on which an
Offer, or at least an LOI (letter of intent) was based.
Some degree of exploration and analysis of the business, its
viability, its fit with the buyer prospect’s experience, skills, and
financial resources should begin the minute a buyer starts considering the
opportunity. No one in the process wants to waste time, money and
energy on a deal that cannot or will not happen. Many times the
exploration process will not get past the first look at the
offering prospectus or first meeting, as one side or the other recognizes
this deal is not mutually beneficial. If there are brokers or alternative
advisors representing the buyer and seller, he or she will understand the
buyer’s need for information to make a decision, and also the need to
respect the seller’s confidentiality. So, the process will go
step by step with additional information provided as a buyer is apparently
more qualified and serious. This article focuses on the DD that will occur
when a buyer gets past the initial stages and has come to some terms with
the seller.
Once there is an agreement in place, DD is a mandatory step in purchasing
any business. Put simply, a buyer must do his homework, and know
precisely what he is buying. This may be relatively painless with an
honest seller and well organized business, presented by a
professional broker. But, it can be a trying process, especially if
a business is not well organized, the seller has something to hide,
and/or a buyer is not both reasonable and prepared for the investigation.
Buyers are encouraged to engage the assistance of a CPA with some small business
experience to make the process far more efficient and
productive. In depth due diligence is not a ‘free look period’
in which a buyer can decide if he likes or does not like “anything at
all” about the business. Extensive DD simply cannot occur with
every prospect on a business. The seller cannot be asked to commit
the kind of time and energy, and expense for advisors, potential exposure
to employees, vendors and customers required for due diligence of
his ongoing business unless a buyer is committed to the purchase.
Measurable contingencies and due diligence requests should be
precisely listed at the outset of the process, often in the LOI or
Offer document, or through the provision of a DD list. READ
THIS ARTICLE & See Checklists
NOTE: BROKERS DO NOT WARRANT ACCURACY OR COMPLETENESS OF FINANCIAL OR BUSINESS
INFO PROVIDED BY SELLERS. CONSULTKAP RECOMMENDS THAT ALL PARTIES TO BUSINESS
TRANSACTIONS SEEK APPROPRIATE FINANCIAL, LEGAL, ACCOUNTING, AND TAX
ADVICE FROM PROFESSIONALS IN THESE FIELDS. PROSPECTIVE BUYERS OR USERS OF
INFORMATION PRESENTED BY BROKERS ARE RESPONSIBLE FOR THE PERFORMANCE AND
THE EXPENSE OF DUE DILIGENCE REVIEW PRIOR TO ANY FINANCING, MERGER
OR ACQUISITION CONSIDERATIONS.
Fund
Your Business with YOUR Money
 In
the News . . .
Kathryne
Pusch, Author
Buyer’s Due Diligence Checklist
#1(asset sale)
READ
THE ARTICLE & See Checklists
This is just a basic list with those items most commonly done. Buyer is
responsible for assuring their own due diligence is done to their
satisfaction, and at their expense. Broker is not able to give legal or
accounting advice.
Due Diligence Checklist # 2 (More
Depth)
Following is a common list of the
information needed for a more thorough Due Diligence. Some of the
information may not be applicable to a specific business. Some of
the information will be obtained through examination of the data on-site,
through the business accountant, or it could be provided directly
by the seller via interview or written response. Buyers should always take
into consideration the capabilities and systems of the business and
its owners when requesting information.
READ
THE ARTICLE & See Checklists
This is just a basic list with those items most commonly done. Buyer is
responsible for assuring their own due diligence is done to their
satisfaction, and at their expense. Broker is not able to give legal or
accounting advice.
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ANSWERS from the Experts!! |
Question:
Can I sell a business NAME as opposed to assets? Hi, I
own a tour company. The customer comes to me via
Internet ads, print ads, brochure racks. We will do
about 380,000.00 gross and $150,000 net this year, and
have for several years. My situation is unique. I run
tours on a piece of property, it's privately owned and
we are losing the lease. Don't want to stay in
business, but we know the phone will continue ringing,
so were wondering: If someone wanted to get in the
same tour business we're in, and had some property on
which to do the tours, would selling my company, which
is really just a name and good will, referral and
repeat business and new business , be of interest to
him, and how to arrive at a price/value?
Answer
#1: The business NAME is, in fact, one of the many
intangible assets that someone buys when they buy a
business. A large part of the business goodwill
is vested in the name, as this is how customers
identify the company providing them with goods and
services that the business provides. Many
businesses have little, or virtually no, tangible
assets, so the greatest portion of the business value
is attributable to the goodwill, a large portion of
which IS the business name, along with the customer
and vendor lists.
You could sell just the business name, but most buyers
would also want the customer and vendor lists, unless
you are planning to license your name or set up
franchises. It sounds to me like the specific
location is not relevant, so long as it is close
enough to be the your market area.. The value will be
dependent upon what the name can bring to a buyer in
terms of revenue and profits. I am unsure if you
are saying that the PIECE of property is, in fact, the
ATTRACTION site. If so, it will really not be
the same business if you lose the attraction, so this
will heavily impact the perceived value to any buyer.
Kathryne Pusch
BBN Atlanta, ConsultKAP, Inc.
kap@consultkap.com
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In
the News . .
Finding the perfect U.S. retirement tax haven By Kay Bell • Bankrate.com
It seems like it would be easy to find a tax-friendly place
to while away your golden years. Nine states don't have an income tax. Five
don't levy any sales tax. By this measure, a perfect state to retire to is
Alaska
, since it falls into both groups. There's just that minor issue of the weather.
Think a little snow -- OK, maybe a lot -- is a fair trade to
avoid state taxation? Don't pack your parka just yet.
Alaska
isn't totally tax-free.
Some Alaskan municipalities do charge local sales taxes. Some
cities and boroughs (roughly equivalent to counties) also collect property
taxes, although the first $150,000 of assessed value is exempt if it's owned by
residents 65 or older. And for the time being, the state still has an estate
tax, something to think about if you're worried about what you'll leave the
grandkids.
The Land of the Midnight Sun is a prime example of the
complexities you could face when looking for a domestic retirement spot on the
basis of tax considerations. You've got to sort through 50 states and the
District of Columbia
, each with its own set of tax rules, not to mention the assortment of local
taxing jurisdictions they contain.
Even then, if you simply use tax rates as the overriding factor
in deciding where in the
United States
to retire, you could make a big mistake.
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