Business Buyers Can Leverage SBA Lending

Finding the money to start your own small business can be a challenge.  Over the decades, countless people have turned to the Small Business Administration (SBA) for help.  A recent Inc. Magazine article, “Kickstart Your Business Dreams with SBA Lending,” by BizBuySell President, Bob House, explored how SBA lending can be used to the buyer’s advantage. The article covers the basics of an SBA loan and who should try to get one.  House notes that the SBA doesn’t provide loans itself, but instead facilitates lending and even micro-lending with a range of partners.  The loans are backed by the government, which means that lenders are more willing to offer a loan to an entrepreneur who might not typically qualify for one.  The fact is that the SBA will cover 75% of a lender’s loss if the loan goes into default.  Entrepreneurs can benefit tremendously from this program.  In some cases, an SBA loan even means skipping the need for collateral.  SBA loans can be used for those looking to open a … [Read more...]

5 M&A Myths and How to Deal with Them

Where your money is concerned, myths can do damage.  A recent Divestopedia article from Tammie Miller entitled, Crazy M&A Myths You Need to Stop Believing Now, Miller explores 5 big M&A myths that can get you in trouble.  Miller points out that many of these myths are believed by CEOs, but that they have zero basis in reality. Myth 1 The first major myth Miller explores is the idea that the “negotiating is over once you sign the LOI.”  The letter of intention is, of course, important. However, this is by no means the end of the negotiations and it is potentially dangerous to think otherwise.  The negotiations are not concluded until there is a purchasing agreement in place. As Miller points out, there is a great deal that can go wrong during the due diligence process.  For this reason, it is important to not see the LOI as the “end of the road.” Myth 2 Another myth that Miller wants you to be aware of is that you don’t have to take a company’s debt as part of the purchase price.  Many … [Read more...]

10 Questions Everyone Should Ask Before Signing on the Dotted Line

Before buying any business, a seller must ask questions, lots of questions.  If there is ever a time where one should not be shy, it is when buying a business.  In a recent article from Entrepreneur magazine entitled, “10 Questions You Must Ask Before Buying a Business”, author Jan Porter explores 10 of the single most important questions prospective buyers should be asking before signing on the dotted line.   She points out to remember that “there are no stupid questions.” The first question highlighted in this article is “What are your biggest challenges right now?”  The fact is this is one of the single most prudent questions one could ask.  If you want to reduce potential surprises, then ask this question. “What would you have done differently?” is another question that can lead to great insights.  Every business owner should be an expert regarding his or her own business.  It only makes sense to tap into that expertise when one has the opportunity.  The answers to this question … [Read more...]

A Step by Step Overview of the First Time Buyer Process

A recent article on Businessbroker.net entitled, First Time Buyer Processes by business broker Pat Jones explores the process of buying a business in a precise step-by-step fashion.  Jones notes that there are many reasons that people buy businesses including the desire to be one’s own boss.  However, he is also quick to point out that buyers should refrain from buying a business that they simply don’t like.  In the quest for profits, many prospective owners may opt to do this, but it could ultimately lead to failure. Step One – Information Gathering For Jones, there are seven steps in the business buying process.  At the top of the list is to gather information on businesses so that one has an idea of what kind of businesses are appealing. Step Two – Your Broker The second key step is to begin working with a business broker.  This point makes tremendous sense; after all, those new to the business buying process will benefit greatly from working with a guide with so much experience. … [Read more...]

Should I Get an Attorney?

Our clients often ask us if they should get an attorney to assist in the buying process.  It is a good idea to have an attorney review your documents.  However, make sure that this attorney is familiar with the process of buying a business.  You will also want to select someone who can accomplish the process  in a timely manner. We have recommendations of qualified attorneys with ample experience helping buyers through the process.  Keep in mind that while your we are extremely knowledgeable about the process, we can't give you legal advice.  On the other hand, many attorneys aren't qualified to give business advice. While, of course, you will want your attorney to look out for your interests, keep in mind that throughout the process the seller's interests must also be protected.  A seller's attorney could instruct him or her not to proceed if it seems that the seller's interests aren't being considered.  Obviously, any transaction should be fair for both parties. If you are … [Read more...]

Do I need a business broker?

How can Provest help you buy a business?  First of all, we can give you an array of businesses to choose from and in many cases you wouldn't have found them on your own.  It is important to note that 90% of the time, business buyers end up with something other than the business they first inquired about. It should go without saying that we can also give you a lot of information about the buying process and small businesses in general.  We are entrenched in the market and can give you invaluable information about trends, pricing and even local considerations. Throughout the sale, we handle the fine details.  If it is necessary for other professionals to assist you in any way, we can give you recommendations. All in all, you can share your business needs and requirements with Provest, and expect to get results. … [Read more...]

I have found a business I want to buy, what now?

It is at this stage that Provest can be quite invaluable.  We will be there to answer any questions you might have or do the relevant research.  Next, we will prepare an offer based on the price and terms you feel are appropriate.  Typically, you will have final approval upon review of the actual books and records supporting the figures that have been provided.  You will find out at this stage if the buyer will accept the price and terms you offered. It is essential that you and the seller agree on price and terms. When the seller receives your offer, he or she can approve it, reject it, or counter it with his or her own offer.  If you receive a counter proposal, you can accept or reject it. Once a price and terms have been agreed up, “due diligence” is next.  The burden is on you – the buyer – no one else.  You have the opportunity to bring in outside advisors or do your own due diligence.  If there are no areas of concern, you can allow the closing documents to be prepared and … [Read more...]

How can I be successful with my new business?

With a new business, you'll have to work hard and put in many hours.  Of course, even aside from the capital necessary to buy the business, you'll also need money to make improvements.  Buying a business doesn't mean you can sit at a desk from now on.  You must also get out there and handle a variety of elements including upkeep, promotions, hiring and bookkeeping.  All of these elements and more contribute to success. … [Read more...]

What should I look for?

The bottom line is that you want to find a business you would feel comfortable operating.  To succeed, it is important that you are proud to own your business.  Of course, there are also financial considerations.  You also want to find a business that fits your price range and you want to make sure you'll make enough income to pay your bills. Keep in mind that when you see a business you want to buy, it is beneficial if you have ideas of how to improve it and make it more profitable.  As a new owner, odds are that you will be making improvements to strengthen and grow the business.  In our opinion, unless you can take the business to a new level, it is probably not the right business for you.  The ultimate success of the business is in your hands, and that is why we advise clients to find businesses they feel optimistic about owning. … [Read more...]

How does a seller price his or her business?

Typically, a seller will come to a Provest for advice on what a business' selling price should be.  After carefully reviewing financial information, we suggest a range of prices.  We take market considerations into account.  While a seller may already have a figure in mind, we will recommend a price range.  When more cash is required by the seller, the price will be lower.  In contrast, when there are lower cash requirements, the price is generally higher. In today’s market, many business sales have a seller-financed component.  As a result, the down payment and terms are essential. In many cases, the structure of the sale is more important than the actual selling price.  The fact of the matter is the terms of the sale can mean success and failure. … [Read more...]

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