You Know the Old Saying About Loose Lips? How Does It Impact You?
The saying “loose lips sink ships,” doesn’t have ancient origins. While it sounds like one of those sayings that has been around forever, the saying was actually invented during World War II. It was taken quite literally. The idea was that a lack of secrecy could lead to the loses of actual ships or other wartime deaths. So in other words, this saying was serious business. It should come as no surprise that this saying is alive and well in the business world.
Few things are more important than safeguarding your business from leaks. Leaks can, simply stated, spell disaster for your business. Leaks can be particularly damaging if you are looking to or are in the process of selling business. A leak that you are planning on selling your business can have a range of consequences. Everyone from employees to customers, suppliers and, of course, prospective buyers and competitors could all take notice and this could have ramifications.
Yet, confidentiality stands as a bit of a Catch-22 situation. Sellers want to get to the best price possible for their business and that means letting prospective buyers know that the business is for sale. The greater the number of potential buyers contacted, the greater the chances of receiving top dollar. However, the more potential buyers that know you are interested in selling, the greater the risk of a leak. Clearly, this situation represents a considerable dilemma.
As a buyer, you may discover that owners can be overly, perhaps even irrationally concerned, about leaks. It is important to remember that for most owners, the business represents their largest asset and often their greatest professional accomplishment in life. In other words, they have a lot riding on their business. It is important to remind sellers that the less time a business is on the market the lower the risk of a leak. Also, the longer the negotiations go on, the greater the risk of a leak.
Sellers should always remember to keep all important documents related to the potential sale or sale literally under lock and key. Everything should be considered confidential and only transferred to buyers in a highly secure fashion. Confidential information shouldn’t be emailed or faxed, as this makes a leak much easier. Sellers and buyers alike should remember that they shouldn’t discuss the sale or potential sale with anyone. Confidentiality should be stressed at all times.
Working with a business broker is one way to dramatically reduce the risk of a leak occurring. For business brokers, confidentiality is a cornerstone of their operations. Business intermediaries require buyers to sign very strict non-disclosure agreements. While loose lips may sink “ships,” there is no reason that your business, or the one you are interested in buying, has to be one of those ships.
Copyright: Business Brokerage Press, Inc.
Read MoreNon-U.S. Nationals Can Qualify for the E-2 Investor Visa
The E-2 Investor Visa is a non-immigrant visa that allows foreign entrepreneurs to enter the U.S. and manage/develop their U.S. business. The E-2 visa program also allows an accredited investor, their spouse and children under the age of 21 to enter the U.S. as well.
The E-2 Visa program does not have an established minimum investment, but the initial investment must be sufficient to establish, or purchase a viable business. Platinum business brokers can help you with developing your business plan, purchase contract, and obtain bank statements, business tax returns and utility bills for the business you are buying, all of which are needed to support an E-2 visa application. We have a network of attorneys, accountants and banks to make sure you get the professional guidance you need throughout the application process.
For further information about the conditions for granting an E-2 visa can be on the US Citizenship and Immigration Services website. “E-2 Treaty Investors”.
Top Four Statistics You Need to Know About Ownership Transition
If you own a business, then ownership transition should definitely be a central topic in your planning. A few years ago, MassMutual Life Insurance Company conducted a very interesting and thought-provoking survey of family-owned businesses. Obviously, family-owned businesses have their own unique needs and challenges. The MassMutual Life Insurance Company survey certainly underscored this fact. While the survey was conducted a few years ago, the information it contained is more relevant and actionable than ever. Let’s take a closer look at some of the key conclusions and discoveries.
Founder Control
One of the most important findings of the survey was that a full 80% of family-owned businesses are still controlled by the founders. The survey also discovered that 90% of family-run businesses intend to stay family-owned in the future.
Lack of Leadership Plans
Leadership is another area of great interest. Strikingly, approximately 30% of family-owned businesses will in fact change leadership within just the next five years. Moreover, 55% of CEOs are 61 or older and have not chosen a successor. When a successor has been chosen that successor is a family member 85% of the time. Succession is often a murky area for family-owned businesses. A whopping 13% of CEOs stated that they will never retire.
Failure of Proper Valuations
According to the survey, valuation is another surprise area. 55% of companies fail to conduct regular evaluations, meaning that they are essentially flying blind in regards to the true value of their company. Adding to the potential confusion is the fact that 20% of family owned businesses have not completed any estate planning and 55% of family-owned businesses currently have no formal company valuation for estate tax estimates.
Lack of Proper Strategic Plans
The financials for family-owned businesses are often just murky as their succession issues. The MassMutual Life Insurance Company survey also discovered that 60% of family-owned businesses failed to have a written strategic plan and a whopping 48% of family-owned businesses were planning on using life insurance to cover estate taxes.
Simply stated, many family-owned businesses are not organized properly and are, in the process, not fully taking advantage of their opportunities. In short, family-owned businesses are frequently insular in their approach to a wide range of vital topics ranging from succession and leadership to valuation, planning and more. In the long term, these vulnerabilities may serve to undermine the business making it harder to sell when the time comes or opening it up to other problems and issues. Family-owned businesses are strongly advised to work with professionals, such as experienced accountants and business brokers, to ensure the long term profitability and continuity of their businesses.
Copyright: Business Brokerage Press, Inc.
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Reasons for Sale
The reasons for selling a business can be divided into two main categories. The first is a sale that is planned almost from the beginning or by an owner who knows that selling is or should be a planned event. The second is exactly the opposite – unplanned; the sale is motivated by a specific event such as health, divorce, business crises, etc. However, in between the two major reasons, are a host of unpredictable ones.
A seller may not even be thinking of selling when he or she is approached by an individual, group or another company, and an attractive offer is made. The owner of a business may die, and the heirs have no interest in operating it. A company may bring in new management who decides to sell off a division or two; or maybe even decides that selling the entire business is in the best interests of everyone.
A major competitor may enter the market, forcing an owner to elect to sell. And the competition may not just be another company. The owner of a business may realize that an external threat is such that the company will lose a competitive advantage. New technology by a competitor may outdate the way a company produces its products. Two competitors may merge, placing new pressures on a company. The growth of franchising and big box stores can promote themselves on a much larger scale than a single business, no matter how good it is. National advertising can create the perception that a large business’s pricing, inventory or service is better than the smaller competitor, even if it isn’t.
Although these issues may not push a business owner or company management to consider selling, they are certainly causes for consideration. Unfortunately, most sellers fail to create an exit strategy until they are forced to. Professional athletes want to go out on top of their game, and business owners should do the same.
15 Reasons to Hire a Business Broker
When the time comes to sell, many business owners grapple with the question of whether to hire a business broker. So what can Platinum Business Brokers do for you?
Here is a list of reasons that explain how you will benefit from the assistance of an experienced and qualified business broker at Platinum Business Brokers.
1. Perform Financial Analysis and Valuation
2. Provide a Brokers Opinion of Value
3. Locate Qualified BuyerInstalled Pluginss that will Compete for the Purchase of Your Business
4. Produce Effective Marketing Materials
5. Provide Confidentiality, Discretion and Protection
6. Promote Your Business “Confidentially” to the Buying Public
7. Act as Buffer Between You and the Buyer
8. Assist with Negotiation
9. Let the Owner Focus on Running the Business
10. Assist Buyers in Obtaining Financing
11. Draft Agreements
12. Help Throughout the Deal
13. Manage the Due Diligence Process
14. Utilize Years of Brokerage Experience
15. Act as Friend and Advisor
- Perform Financial Analysis and Valuation:
We’ll produce an effective financial analysis of your company that shows an attractive and accurate picture of your earnings. We work with you, and sometimes your accountant, to produce a cash flow analysis (Discretionary Earnings) that will clearly demonstrate the TRUE profitability of your business. The net income line on your tax return is for tax purposes only and does not reflect how much money your business actually makes. We will produce materials that PROVE to the buyer the real cash flow of your business.
2. Provide a Brokers Opinion of Value:
At Platinum Business Brokers we will use the financial analysis that we prepare to help you arrive at the best selling price for your business. One that is not too high that it scares the good buyers away and one that gets you a fair value for the business in which you have invested so much in. Our ‘Broker’s Opinion of Value’ is produced at no additional cost to you.
3. Locate Qualified Buyers that will compete for the Purchase of Your Business:
We’ll help you locate the best buyers for your business – those with the money, experience and desire that will get a deal done! We continuously advertise your business through various means such as internet advertising, email advertising and more. Our goal is to interest as many good buyers simultaneously to the deal, which creates competition for your business and gets you the best possible price for your company. Our database contains the contact information of over 3000 buyers from the local area, all of whom directly contacted us in the past regarding a business for sale opportunity. These are real buyers, not just purchased email addresses. We’ll advertise your business (anonymously, so that no one would ever know which business was for sale) on the most popular business-for-sale websites at our own expense and we don’t charge you anything for this service.
4. Produce Effective Marketing Materials:
An experienced and qualified Platinum Business Broker will know how to produce a professional presentation package of your company that gets results! First impressions matter. Lots of care should be put into creating a nice marketing piece in order to gain interest from buyer prospects. We want to INSPIRE buyers to take an interest in your business so they become motivated to look further into the opportunity and eventually make an offer. The marketing materials will show your business in a positive light and justify the asking sales price.
5. Maintain Confidentiality:
Rest assured that we will handle your business sale very confidentially. We will help you maintain your ‘secret’ by asking the buyers the right questions and setting up appropriate steps of delivering information. We require that ALL buyers sign a Non-Disclosure Agreement (NDA) and Buyer Registration Form before we proceed with providing information because we don’t want to reveal who is for sale until we are sure that the buyer is financially qualified and will keep your sale plans confidential. By this time, we have not only spoken with the buyer, but we have also received the buyer’s registration information, where the buyer has provided personal financial data. We want to know about the buyer’s financial ability to make a deal happen before they learn who you are! We also want to confirm that the buyer is a serious and genuine candidate to acquire your company. We CARE about your confidentiality.
Effective and discreet management of your buyers will always be our first priority. We’ll arrange meetings only when it can be done in such a manner that it will prevent your employees from finding out that your business is for sale. The last thing you want is for an uncontrolled buyer to bother you at your business and potentially let your employees and customers know you are for sale. By controlling the actions of your buyer, we prevent them from becoming an annoyance to you and potentially causing a breach of confidentiality.
6. Promote Your Business to the Buying Public in a Discreet and Confidential Manner:
We will promote your business continuously on the most well-known business-for-sale websites. We will also utilize direct email advertising to our database of over 3000 local buyers. Platinum Business Brokers covers all aspects of advertising. We are confident in our ability to succeed so we provide this service.
Of course, the public ads for your business will never reveal to the buyer which company is for sale. We are careful not to reveal anything that would let a buyer find out who is for sale. As the business owner, you will be asked to approve all advertising before we place any ads. We want to make sure that you are comfortable with the wording that we are using.
7. Act as Buffer between You and the Buyer:
A very important function of a business broker is to act as a buffer between you and the buyer. We’ll assist in communicating the things that are said so that the needs of the parties are more effectively relayed to one another. A broker is able to have educated discussions with the seller acting as a voice of reason in the very emotional process of selling a business. We help you to strategize the best way to handle the buyer negotiations over price and terms of a deal and we communicate your requirements to the buyer in a productive manner that has a better chance of producing a positive result. We also relay requirements and comments from the buyer to you in an honest and candid fashion and we clarify how the differences in viewpoint can be ironed out effectively.
8. Assist with Negotiation:
Platinum Business Brokers will be representing YOU during the negotiation of price and terms of a deal. Being represented by an intermediary will give you a tremendous advantage in the necessary negotiating process. We are highly experienced negotiators and can really help you through this important step in the sales process. We’ll usually have a good idea about what the buyers are thinking, what their negotiating strategy is and can help you get to an acceptable price for your business. We negotiate deals almost every day and are very familiar with the best strategies to arrive at a successful conclusion.
9. Let the Owner Focus on Running the Business:
Platinum Business Brokers will manage the deal process for you. As the business owner, it is very important for you to continue focusing on the proper management of your business. If an owner doesn’t have a competent broker running their transaction for them, they might get overly distracted by the details of marketing to buyers and pay less attention to running the business once the sale process begins, only to learn that it is taking longer than originally anticipated to sell. If the owner’s lack of attention on running the business profitably causes business performance to suffer, and then a highly motivated buyer is located, negative news about how the business has been doing ‘lately’ can result in a lower valuation or worse, a lost buyer. Starting from our initial meeting with a buyer, to qualification, offer agreement, negotiations, removal of contingencies, purchase and sale agreement and finally the closing, we work the deal every step of the way, and at no additional cost to you. We get paid to succeed in the end so you can be sure that we will run your transaction effectively, leaving the management of your business to you!
10. Assist Buyers in Obtaining Financing:
A very important step in most transactions is helping the buyer obtaining financing to complete the transaction, which helps you get the maximum amount of money at the closing. We work with several lenders who will want to support your buyer and get you your money. We also use other strategies to help the buyer find cash through retirement account savings, another very common source of deal funding.
11. Draft Agreements:
We are experienced with the documents needed to make a deal for your business and in most cases we can take care of the offer agreement, the purchase and sale agreement and other important details, saving you and money throughout the sale process. Creating agreements that are well organized that support the transaction really can add value to your transaction.
12. Help throughout the Deal:
It’s always a rocky road to the closing! You can rest assured that Platinum Business Brokers is thoroughly familiar with the pitfalls of a business sale and we’ll deal with the lawyers and the accountants and put out all the fires along the way. We know how to solve the problems that will prevent a deal from moving forward. We are accustomed to the needs of the buyer, (which are just as important in order to close a deal), and we’ll work to solve problems as they come up. To make a deal happen, both the seller and the buyer need to feel like they are winners. We work very hard to obtain that result, usually with creative strategies that get the parties what they each need to finish the deal and get to the closing table.
13. Manage the Due Diligence Process:
Once your business is under agreement the buyer will perform a thorough due diligence of the legal and financial aspects of your business. We will assist throughout this process by scheduling meetings and helping you provide requested documents. We make sure that the needed information gets to the buyer in an effective way, in order to produce a positive outcome.
14. Utilize Years of Brokerage Experience:
We at Platinum Business Brokers have many years of experience selling businesses and we know what to look for when dealing with the buyers and can sense when troubles in the deal might occur. Isn’t it a relief knowing that there’s someone working for you hand in hand and looking out for your best interests? We are thoroughly familiar with each step in the business sale process and will provide you with valuable counseling and advice every step of the way to the closing table.
15. Act as Your Friend and Advisor:
We’ll work with you as your advisor and confidant as we proceed together through the difficult business sale process. We are there for you! We are on your side!
Hiring a business broker makes good $ense!
