Friday, June 30, 2017

SOLD: Kitchen/Bath Remodeler - SW Florida

SOLD 6/29/2017

DESCRIPTION
Growing home improvement contracting business with fantastic reputation earned over 10+ years in the Southwest Florida market. Focus is on remodeling (kitchens/baths/laundry/etc), but also offering new construction and insurance renovation. License holder will stay on staff. Solid business, easily transferred.

ASKING PRICE
$395,000

SOLD PRICE
Within 5% of asking price.

For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall, CBI, CM&AP at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com. To search for Florida Businesses for Sale: CLICK HERE

Wednesday, June 28, 2017

Article Summary: 7 questions to ask before buying a business | CNBC

Kayleigh Kulp, Tuesday, 24 May 2016 | 10:00 AM ET

Source: RazzleDazzle Barbershop.

Now is a great time to buy an existing business. You can capitalize on a loyal customer base, trained staff and the opportunity for increasing cash flow in this post-recession environment.
Purchases of small businesses are among their highest levels since BizBuySell.com and BizQuest.com, which together feature 76,000 listings for sale, began tracking them in 2007.
Median revenue of sold businesses on BizBuySell in 2015 also grew to $449,462, up from $417,562 in 2014, while the median sales price also increased 7.6 percent to $199,000.

Whether becoming a first-time business owner or acquiring a business to expand your current company, ask the following questions before signing on the dotted line:

1. Will demand exist for the business' products and services for years to come? Make sure the business is profitable, has a competitive advantage and is not a fad.

2. Are there holes in the financials? Due diligence should include a thorough review of bank statements, profit & loss statements, contracts, lease agreements and tax returns.

3. Am I just in this for the money? Think long-term.

4. Do I really want to do this all day? Business ownership isn't a passive investment. You will need to be present to ensure success.

Source: Brandi Simons

5. What is the best way to finance this? SBA loans and seller financing are the commonly used options.

6. Why is the seller selling? Ask the seller what they would do differently if they stayed on.

7. Is the company's success tied to the owner? If yes, you may want to keep the owner on to ensure successful handoff of clients.

Article LINK

For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.

Monday, June 26, 2017

Article Review: Growing Your Business in Preparation for a Sale | Divestopedia

Erik Twohig , May 24, 2017

Takeaway: Follow these steps if you realize your business value is not where you want it to be.

Eric Gall: We have programs and consultants available to assist you in bridging the gaps.

Growing Your Business in Preparation for a Sale

Source: tuk69tuk/iStock

Many business owners realize too late that the value of their business is not what they need to meet their retirement goals/financial objectives.

Evaluate the Timing

If you must sell, then you will need to adjust your objectives to to accept a lower price.
If you have three to five years prior to the sale, you have time to grow the business and improve processes.

Find Help

There are business consultants who specialize in business growth and preparing a business for sale.
Of course, you the owner, must have the skills, discipline, time, focus and determination to help plan and execute the strategy.
The strategy starts with a "Needs Assessment" that is the basis of the growth and process improvement roadmap.
Process improvements may include building, training, documenting, reviewing and improving systems around quality, safety, communications, human resources, production, maintenance, sales, logistics, etc.

Identify Value Drivers

Clean and accurate financial information.
Sales history is trending upwards and not at the expense of margins.
You have "barriers to entry" that give you a competitive advantage.
You, the owner, are the strategist and visionary, but not required for day-to-day operations.
You have systems and documentation throughout your business to help your staff meet operational objectives.

Baby Steps

For companies less than $2 to $3 million in revenue it may be too costly to afford a consultant; however, it is never too early to start working on improving the key value drivers.

ARTICLE LINK

For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com. To search for Florida Businesses for Sale: CLICK HERE

Friday, June 23, 2017

Article Summary: What to Consider When Buying a Business with Partners | Flagstaff Business News

by FBN on March 28, 2016 in Columnists

Eric Gall: Sage advice on partnerships

It is early on a weekday morning and Karen is stepping out of the shower as Bill is stepping into it in order to get ready for the business day. As Bill turns on the water, Karen hears the doorbell. She wraps a towel around herself and runs to the front door only to discover their neighbor Jason standing there. Jason holds out five $100 bills and says, “I’ll give you $500 if you drop your towel.” Karen thinks for a few seconds and decides to accept the offer. She drops the towel and immediately Jason hands her the five bills and walks away.

Karen returns to the bathroom and tells Bill it was just the neighbor, to which he responds, “Did he give you the $500 he promised to repay me today?”

The business lesson is if you have a partner, it is critical they know everything going on or bad things may happen.

I do everything humanly possible to talk anyone out of starting or buying a business with a partner.
It is never a question of if the partnership will run into trouble, it is a question of when.
Every partnership will run into trouble; specifically, unfair division of responsibilities, working harder or longer, more vacation, not working weekends, etc..
Have a solid and well thought out Partnership Agreement; however, in 30 years of business, never seen a partnership survive.

If you feel the need to ignore my advice, only get a partner if the following apply:

you need help with the purchase price or capital requirement (loan?)
other partner has a skill you don’t have.
you share the same business drive/passion and can easily split roles and responsibilities.

Never communicate you and your partner are co-owners and will function as co-presidents. Having very clear roles and boundaries are important for the partnership and the sanity of employees.

If you partner with a spouse or significant other? Clearly define and separate roles and responsibilities.

If you can go without a partner, do it. If you need a partner, keep your eyes wide open. A business partnership is like a marriage, but without the fun stuff. And by all means, make sure you are communicating constantly so there are no surprises.

Article LINK

Thursday, June 22, 2017

Article Review: Advice for Buying a Business in a Small Town | FinanceTownhall.com

Cliff Ennico | Feb 10, 2016

Eric Gall: I believe there are some good bits of advice in the bottom half of this article beyond normal financial due diligence. I've highlighted them in red text.

The author was looking to buy a business he could work with his college graduate daughter who he expected would eventually take over and run the business full-time.

He found a hardware store in a small town an hour away with 50 year's history and financials compiled by a reputable accounting firm.

The Seller accepted the author's offer; however, they refused to disclose if there were hidden liabilities or if their equipment and inventory were in good condition.

The author recognized the following problems in this transaction:

I was not a "local," and therefore do not have local knowledge about the business, the community, and things going on there.
Financial statements show how the business performed historically. They say nothing about how the business will perform in the future.
There may be things happening in the community that will change the way the business will perform after acquiring it and the seller is under no legal obligation to tell you.

Here are the sorts of questions you need to ask:

Is a major competitor (such as Lowe's or Home Depot) moving into town?
Is a major corporate employer moving out of town and destroying the tax base?
Are the town's demographics changing in a way that won't favor a family-owned hardware store?
Is the DOT shutting down the road going by the store for major improvements?
Is the town changing its zoning laws so that the store will become a "nonconforming use" and difficult to sell to someone else?

If you do decide to buy a business on the seller's terms here are three things you need to do.

Hire a Good -- Local -- Accountant or Lawyer. You need to work with a local resident who can answer some of these questions, someone who's been around a long time.
Spend time in town. Spend a couple of weeks in the town, chatting up locals, read the local newspapers, and find out if things are happening that will affect the business.
Contact the local Police Department first and make sure they know what you are doing.

Article LINK

Wednesday, June 21, 2017

Article Review: 4 Deals That Failed and Why | Axial

By Shindy Chen | February 9, 2016

Eric Gall: Having led the post-acquisition of Jaguar, Land Rover, Volvo and Mazda into Ford Motor Company, I have seen first-hand many of the following post-acquisition conflicts that sink deals: poor workforce cooperation, leadership conflict, lack of product synergy, market misses, etc.. Here are four more:
After months of work, why are many deals at risk of failing post-closing?

According to Robert Sher, founder "CEO to CEO," the probability of success for mergers is 50 percent.

Those at the negotiation table are seldom the people rolling out synergistic initiatives. Investment bankers, and out-of-touch executives can’t compensate for solid post-merger execution and strategic leadership.

Financials are certainly important, but mergers fail due to consumer and workforce behaviors such as cooperation, allocation of bandwidth, streamlining operations and technologies, target markets, and customer profiles.

“The consequences of a bad deal are far greater for a mid-market company than for a big corporation,” says Sher. “Large companies usually have enough managers and resources to patch things up. Most mid-market companies lack the finances or bandwidth to absorb a bad deal.”

Consider these four failed mergers as examples.

eBay/Skype

Culprit: Customer profiles, culture clashes

In 2005, eBay bought Skype for $2.6 billion. eBay misunderstood its customer base. Buyers and sellers were fine messaging each other through eBay. Expecting them to call each other via Skype missed the mark.
A culture clash between the two companies also occurred. Skype had a lot of management turnover. eBay sold Skype for $1.6 billion.

Sprint/Nextel

Culprit: Operations and technologies, customer profiles, target market, culture clashes

In 2005, Sprint purchased Nextel for $35 billion. Cultural differences — Sprint bureaucratic; Nextel entrepreneurial. Widespread distrust between leadership. Sprint’s customer service was horrendous; Nextel’s was more attuned.

Poor coordination saw both companies maintain separate headquarters. Combined technologies didn’t mesh. Nextel’s walkie-talkie did not sync with Sprint’s mainstream model. By 2013, Sprint got rid of Nextel’s network entirely.

Arby’s/Wendy’s

Culprit: Target market

In 2008, Arby’s acquired Wendy’s for $2.3 billion. There were nearly double the number of Wendy’s (6,600) than Arby’s (3,600) franchises. Wendy’s accounted for 70 percent of revenues; Arby’s performed poorly. The combined group sold 81.5 percent of Arby’s for $430 million.

AOL/Time Warner

Culprit: Culture clashes, operations and technologies

In 2001, AOL acquired Time Warner for $165 billion. AOL wanted access to content and cable networks to evolve its dial-up technologies; Time Warner wanted an internet presence. Chaos ensued as the dot-com bubble burst, forcing a $99 billion goodwill write-off of the AOL division.

Time Warner developed its Road Runner internet service instead of marketing and evolving AOL. They bumped heads on converging mass media and content outlets. In 2003, Time Warner dropped AOL from the official company name.

Article LINK

Tuesday, June 20, 2017

Article Review: These CEOs Can Teach You Something About Growth Strategy | Axial

By Axial | February 4, 2016

Axial profiled 100 of the most innovative, interesting CEOs in the mid-market. (See all 100 here).

We singled out a few for their laser focus on growth strategy.

Ami Kassar, CEO of Multifunding

“When we started in the office of a CPA. We started by knocking on doors. In the first year, we closed 3 loans. It was a lot of banging our heads against walls as we built our reputation and relationships with lenders.”

Six years later, MultiFunding is still a good old fashioned loan broker, but they are now closing 170 transactions a year.

Jon Morris, CEO of Rise Interactive

From 2010 – 2015, Rise was named to Inc.’s list of the 5000 fastest growing companies. Rise’s growth is due to their data-driven approach and a “razor-sharp focus on client performance.” The company consistently reinvested profits back into the business, maintaining a strong emphasis on innovation and infrastructure. “We’ve done a great job growing the company organically.”

Dr. Alex Gianni, CEO of Blackford Dental Management

Alex was brought to the three-year old dental services organization in 2014 in a consulting capacity to patch holes losing the company over half a million dollars a month. By January 2015 Blackford was break-even, and by March they were making money for the first time.

Redickaa Subrammanian, CEO of Interakt

In 2007, Redickaa thought she achieved her dream when one of advertising’s big brands offered to buy the company. Interakt almost did the deal, until Redickaa met the founder and got a bad feeling.

David Rice, CEO of New Home Star

A bump in the road came two years after starting the company. “Pretty soon, I burnt through a lot of money. I got to the point where I had to borrow money from my dad. That was a low point.” Banks weren’t lending, and David had burned through his personal assets. “We were growing, and growth exceeded cash.” David paid back the $100,000 loan in less than a year.

See all the Growth 100 honorees nominated for growth strategy

Monday, June 19, 2017

Article Review: How Owners Can Bridge the Valuation Gap | Axial

By Gary Ampulski, Midwest Genesis | May 4, 2016

There is nothing more disappointing when selling a business than the gap between the seller's desired price and the buyer's offering price. Here factors generating gaps:

Timing issues between a “buyer’s market“ and “seller’s market.”
The value you perceive you’ve put into a business and the value a buyer perceives they can get out of it.
Gaps in the various approaches used to establish business valuation.
Differences between what you need to support a retirement lifestyle and what can be extracted from the transaction at time of sale.
Differences between the offer, what the buyer actually pays, and what the seller ultimately gets.
Buyer’s vs. seller’s perception of risk in the future growth and earnings flow for the business.

Why These Gaps Exist

Sellers aren’t quite convinced these gaps exist.
Since owners aren’t convinced that the gaps exist, they are reluctant to invest resources into bridging them.
Harvard Business School Professor Howard Stevenson states this common misperception is based on the inherent optimism and lack of knowledge of the entrepreneur.
These issues create a formidable obstacle to planning a successful transition killing a satisfying exit experience.
Undue optimism and lack of knowledge are extremely dangerous to an owner when they are forced to estimate:

The current value and likely growth rate of their business,
The future performance of their non-business assets,
The amount of money they will spend in their post-exit lives,
Their life expectancy, and
How to look after loved ones in the event of disability or even unexpected death.

Typically, owners overestimate business value because they:

Appreciate how difficult it was to start and build a business to its current state.
Believe what they put into the business is the same as what a buyer will get out of it.
Are bullish on future business growth and investment performance.
Are in denial about how much money they will need in retirement to maintain a desired lifestyle.

This warped ecosystem shaped by optimism and ill-informed assumptions:

Blinds owners to how wide the actual gaps are,
Handicaps their ability to appreciate how long it takes to bridge the gaps, and
Creates a toxic environment for disappointment, frustration, and failure.

Owners often use optimism and lack of knowledge as license to postpone taking the actions necessary to create the outcome they desire.
Knowing — not guessing — what you have and what you actually need is key to closing the gaps that exist.

How to Close the Valuation Gap

The goal of a business owner when considering a sale is to achieve perfect alignment (zero gap) between the various factors. For most owners, this is extremely difficult to achieve without the help of experienced advisors. The table below shows some of the many areas that skilled advisors can address.

Note: A CBI, CM&AP (such as myself) has the necessary skills to provide a very close approximate for current business value (only the market can confirm value), business value enhancement, and market/sell your business -- while working with your other advisors to ensure a satisfying exit.

Selling a business is largely uncharted territory for people who have spent their lives developing processes that provide, market, and sell a product or service at a profit. But when it comes to implementing an effective process that markets and sells a business, the game changes dramatically. In nearly every case, it takes a team of experienced subject matter experts to navigate a course successfully out of the briar patch of legal, accounting, valuation, planning, and marketing considerations that are involved.

An exit advisor can address the biggest gap of all: providing an understanding and knowledge on the difference between imagination and reality ahead of the negotiation process. It takes time and experience to bring everything into alignment and owners struggle to coordinate this unfamiliar process while still running the business. It was Mark Twain who said “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

Article LINK

Friday, June 16, 2017

Article Review: EBITDA Adjustments From Crazytown | Axial

By Brent Beshore, adventur.es | January 28, 2016

Appropriate financial recasting is critical to gaining buyer trust and completing a deal. Some examples of inappropriate recasting to determine Adjusted EBITDA. Note, this article is not addressing Seller's Discretionary Earnings (SDE).

Owner's responsibilities are not significant? Compensation should be a fair wage based on the owner's responsibilities, but it’s definitely not $0.

Leadership compensation varies from industry norms? If the leadership is staying on after the sale, their compensation cannot be changed just because it varies with industry norms.

Use of more costly sub-contracted labor during a busy season? You cannot adjust the extra cost of seasonal labor unless you add the cost of inactive full-time labor. And if the net is cheaper, why haven't you done it?

Ineffective online marketing campaigns? They are still real spending. You can't add back real spending on the business.

One-time expenses such as the cost to develop a company’s website or inventory write-offs conducted every year? If it’s a necessary cost of doing business, it shouldn’t be adjusted out.

Research & Development costs? New revenue streams aren’t delivered by stork. Sustainable businesses require ongoing investment, which a buyer will have to invest in as well.

Projected savings from recent, or even yet-to-be-fully-implemented, changes in process or software? You can’t change the past. The best method is to forcast how it might look in the future.

One-time litigation events? If the company must spend real money to defend itself against customers, suppliers, etc., that won’t change with ownership. Evidence of a legal history will tell a buyer such events must be accounted for in projections and valuation.

The best advice on creating a list of adjustments? Be honest and conservative. The relationship with buyers will start out on a much warmer and productive path.

Thursday, June 15, 2017

Article Review: Who Is the Right Buyer for Your Business? | Divestopedia

Adam Croft , May 29, 2017

Key Takeaway: With all the potential buyers out there, how do you choose the right buyer for you?

Who Is the Right Buyer for Your Business?

Source: Gazometr/iStock

Depending on the company’s profile, trading outlook, management structure and growth potential, shareholders who are considering their exit strategy may have more than one type of buyer for consideration to approach, in order to ensure they maximize the value they receive.

Types of Buyers

Defensive

A sale to a competing company. It can generate the greatest financial return, but also carries a confidentiality risk. Competitors acquire to enhance their business model, synergistic savings, buying power and market share.

Synergistic

A sale to a company in a different market. This buyer may or may not be aware of synergies between your businesses. The tactic is to make them aware. This type of buyer will not have identified your company as an acquisition target. It will take time to demonstrate why you are a good acquisition.

International Entity

A sale to an international entity. This buyer operates within the same markets, provides similar products and services in other countries, but will not have a presence in your area. The challenge is to convince them they need to pay a premium to unlock your customer base vs. growing organically. Again, it will take time to demonstrate why you are a good acquisition.

Financial or Private Equity

A sale to a financial buyer or private equity firm. Private equity invests in companies having potential for significant near-term growth that they can sell at a significant gain in 3-5 years. Private equity firms either invest capital to unlock growth, or convert the company into a platform to consolidate a fragmented market.

Private equity firms typically value lower, but they allow management equity to be rolled over, offering the potential of a much higher, long-term gain based upon the future sale.

Conclusion

You will only get to sell your business once, so you owe it to yourself to ensure it is to the right buyer.

Wednesday, June 14, 2017

You have one shot at selling your business. Who would you pick?

Results:

2016 & 2014 #1 Top Dollar Producer in Southwest Florida
$140M total transaction value lifetime

Certifications:

Certified Business Intermediary (one of two in SWFL)
Certified Mergers & Acquisitions Professional (only one in SWFL)
MBA University of Michigan

Associations:

Member Business Brokers of Florida
Member International Business Brokers Association (one of 4 in SWFL)
Member M&A Source (only one in SWFL)
ABBA Best Practices Forum Leader

Tuesday, June 13, 2017

Contact your Representatives and Senators Now!

Email your US Representative NOW!

The language of HR 477, The Small Business Mergers, Acquisitions, Sales & Brokerage Simplification Act of 2017 has been included as Title IV, Subsection A, of HR 10, a Bill to Create Hope and Opportunity for Investors, Consumers and Entrepreneurs, also known as the Financial CHOICE Act.

On June 8th, the US House of Representatives passed HR 10 by a recorded vote of 233-186. The next stop for this bill will be when it is introduced in the US Senate, and referred to the Senate Committee on Banking, Housing, and Urban Affairs, sometimes also referred to as the Senate Banking Committee.

Click here to read the complete text of HR 10, The Financial CHOICE Act.

Your US Senators urgently need to hear from YOU that this bill - especially Title IV, Subsection A, The Small Business Mergers, Acquisitions, Sales and Brokerage Simplification Act - is important to you, and to buyers and sellers of privately held businesses in your state.

Passage of this small but important bill will codify the regulatory relief envisioned in the SEC M&A Broker No Action Letter, and will harmonize federal law with coming changes in state securities laws.

NO NEED TO LOOK UP YOUR SENATORS NAMES, ADDRESSES, AND HONORIFIC SALUTATIONS. NO NEED TO COMPOSE YOUR OWN LETTER. JUST CLICK HERE, AND ENTER YOUR ZIP CODE, NAME AND ADDRESS, AND EDIT /SEND A LETTER THAT HAS ALREADY BEEN DRAFTED FOR YOU!

Email your US Representative NOW!

Monday, June 12, 2017

Eric J. Gall Joins The Certified Business Intermediary Community

June 12, 2017 (Bonita Springs, FL) -- Eric J. Gall, Managing Partner of Edison Avenue (offices Bonita Springs and Tampa), has been granted the Certified Business Intermediary (CBI) certification from the International Business Brokers Association (IBBA). The CBI, which represents the gold standard in the business brokerage industry, was awarded to individuals who completed the required course work and passed the required exam at the 2017 IBBA Annual Conference in Dallas, Texas in May.

“As the number of CBIs continues to grow, business brokers, buyers, and sellers realize the importance of demonstrating a commitment to excellence in this profession,” stated Louis Vescio, 2017 Chair of the IBBA Board. “I congratulate all of our new CBIs on their hard work and welcome them to this elite community.”

IBBA Press Release Link

For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com. To search for Florida Businesses for Sale: CLICK HERE

Thursday, June 8, 2017

Podcast Review: How to Sell Your Business for a Crazy High Price | Divestopedia

Noah Rosenfarb , November 30, 2014

Takeaway: "There will always be a market for outrageous prices as long as the buyers are looking to grow, which for big companies, that's what they do."

How to Sell Your Business for a Crazy High Price

In this podcast, Kevin M. Short, Author of "Sell Your Business For An Outrageous Price", talks about:

How to exploit your company's competitve advantage to get the highest price:

You need to cause a market leader pain via a competitive advantage,
You need a "big" buyer that does not need bank financing,
You need a seller who is patient and willing to invest in the strategy,
You need an advisor who can do the business case and convince the buyer;

Aligning investment banking fees to incentivize them in getting the highest selling price; and
Success stories on deals selling for crazy high prices.

About the Guest

Kevin is the author of Sell Your Business For An Outrageous Price. This book synthesizes Kevin’s experience in selling mid-size companies ($10MM - $250MM in value) for up to twice the multiple of the industry average.

Listen here:

You can also get this Podcast by: