It's called a 504 loan. Here's what you need to know about it.
By Marshall Eckblad
WSJ.com: Small Business
June 21, 2010
The government is trying to entice more small businesses to tap one of its loan programs. Before applying for one of these loans, though, there are some fine points borrowers should consider.
The Small Business Administration's 504 loan program lets companies take out fixed-rate financing to buy property, build or expand facilities, or refinance some existing mortgages. The borrower typically needs to put down just 10% of the transaction's total price.
With the weak economy deterring many small businesses from expanding in the past couple of years, demand for these loans plummeted: Last year, the SBA approved $3.8 billion in 504 loans, down 28% from 2008 and 40% from 2007. Hoping to spur expansion among small companies, the SBA is offering inducements like lower rates and no-fee deals.
To read the full article... click here.
Friday, June 25, 2010
Tuesday, June 15, 2010
When is the right time to exit?
By Pete Sokoloff
Security Systems News
The number one question I get asked in speaking with company owners is, "When is the right time to sell my business?"
There is a great deal of emotion that goes into selling a business. In terms of stress, it has been rated right up there with divorce and the death of a loved one. Though there are numerous logical reasons to sell or not sell a business, at the end of the day all decisions about making an exit are most heavily influenced by the emotions of the owners. This commentary will discuss not only the elements that should be considered, but what constitutes the right and the wrong mindset.
The logic of the right time to sell any company is indisputable. It is when multiple buyers are interested and the highest price can be commanded. This "perfect storm" occurs when the following elements are in place: 1. There is a history of financial improvement in your business over the last few years, both in revenues and earnings. 2. There is strong evidence that revenues and earnings will continue to increase in future years. 3. Market conditions are such that the investment community believes there is good upside ahead for the industry segment your company serves.
When these conditions are met, the owners of the business are in the enviable position of being able to find many interested buyers and a premium price for their company. So, why would a potential seller disregard this logic?
To read the full article … click here.
Security Systems News
The number one question I get asked in speaking with company owners is, "When is the right time to sell my business?"
There is a great deal of emotion that goes into selling a business. In terms of stress, it has been rated right up there with divorce and the death of a loved one. Though there are numerous logical reasons to sell or not sell a business, at the end of the day all decisions about making an exit are most heavily influenced by the emotions of the owners. This commentary will discuss not only the elements that should be considered, but what constitutes the right and the wrong mindset.
The logic of the right time to sell any company is indisputable. It is when multiple buyers are interested and the highest price can be commanded. This "perfect storm" occurs when the following elements are in place: 1. There is a history of financial improvement in your business over the last few years, both in revenues and earnings. 2. There is strong evidence that revenues and earnings will continue to increase in future years. 3. Market conditions are such that the investment community believes there is good upside ahead for the industry segment your company serves.
When these conditions are met, the owners of the business are in the enviable position of being able to find many interested buyers and a premium price for their company. So, why would a potential seller disregard this logic?
To read the full article … click here.
Monday, June 14, 2010
The Hidden Values in Your Business
Surveys have shown that a majority of business owners have no idea what their business is worth, that they have a majority of their net worth tied up in their business, and that they do not have an exit strategy. A business broker professional is a good person to call on to get an idea of what the business might sell for in the marketplace.
Certainly, the financials carry a lot of weight in figuring what a particular business will bring in the marketplace. However, a professional business broker can also tell you about those hidden values your business most likely possesses. It's these hidden values that often capture the interest of buyers and make a business more valuable than what the numbers suggest. Keep them in mind when placing a price on your business, and make sure that a prospective buyer is made aware of them. They might be called the non-financial value of the business.
To learn about the hidden values in more detail... click here.
Certainly, the financials carry a lot of weight in figuring what a particular business will bring in the marketplace. However, a professional business broker can also tell you about those hidden values your business most likely possesses. It's these hidden values that often capture the interest of buyers and make a business more valuable than what the numbers suggest. Keep them in mind when placing a price on your business, and make sure that a prospective buyer is made aware of them. They might be called the non-financial value of the business.
To learn about the hidden values in more detail... click here.
Friday, June 11, 2010
New Stimulus Package for Businesses
John Kielich, Managing Director, Kolb+Co. M&A Advisers
LeAnne Foster, Business Analyst, Kolb+Co. M&A Advisers
No, you did not miss an eight million dollar first-time-business-buyer tax incentive or a sales tax break. However, there currently is a window of opportunity for businesses in regard to Federal Capital Gains Tax. The current Federal Capital Gains Tax rate of 15 percent is due to sunset at the end of 2010. How high it goes starting in 2011 is anyone's guess at this time, but as discussed and illustrated in this article, even an increase to 25 percent should provide a business owner the needed "stimulus" to strongly consider a sale or partial sale in 2010.
To read the full article... click here.
LeAnne Foster, Business Analyst, Kolb+Co. M&A Advisers
No, you did not miss an eight million dollar first-time-business-buyer tax incentive or a sales tax break. However, there currently is a window of opportunity for businesses in regard to Federal Capital Gains Tax. The current Federal Capital Gains Tax rate of 15 percent is due to sunset at the end of 2010. How high it goes starting in 2011 is anyone's guess at this time, but as discussed and illustrated in this article, even an increase to 25 percent should provide a business owner the needed "stimulus" to strongly consider a sale or partial sale in 2010.
To read the full article... click here.
Wednesday, June 2, 2010
How do Business Broker and M&A Commissions Work?
Here is a great article answering the age old question, what and how does the Broker get paid.
By: Ney Grant
AllBusiness.com
Business Brokerage
There is no law or regulation that sets pricing, but business brokers typically charge a 10% commission (also called a "success fee") on the value of the business and 6% on any associated real estate. The exceptions are gas stations, grocery stores and hotels which can be less. We have heard of some brokers charging 12% and others readily dropping a few points in order to get a deal, but most hold firm at 10%. If another broker is involved in finding a buyer, the fee is split between the listing-side broker and the sell-side broker.
M&A Commissions
It is standard practice to provide a discount above a $1 million selling price, and many M&A firms will say they use the Lehman Scale although in reality they probably use the Double Lehman Scale. The Double Lehman Scale pays a commission of 10% on the first million, 8% on the second million, 6% on the third million on down to 4% for the remainder.
As a general rule, business brokers don’t charge an upfront fee, while M&A advisors do. It makes sense too. A business broker is operating essentially alone much like a real estate agent, while an M&A firm applies a team of writers, analysts and dealmakers on your project and also must pay for a marketing campaign.
This was a synopsis... to read the full article... click here.
By: Ney Grant
AllBusiness.com
Business Brokerage
There is no law or regulation that sets pricing, but business brokers typically charge a 10% commission (also called a "success fee") on the value of the business and 6% on any associated real estate. The exceptions are gas stations, grocery stores and hotels which can be less. We have heard of some brokers charging 12% and others readily dropping a few points in order to get a deal, but most hold firm at 10%. If another broker is involved in finding a buyer, the fee is split between the listing-side broker and the sell-side broker.
M&A Commissions
It is standard practice to provide a discount above a $1 million selling price, and many M&A firms will say they use the Lehman Scale although in reality they probably use the Double Lehman Scale. The Double Lehman Scale pays a commission of 10% on the first million, 8% on the second million, 6% on the third million on down to 4% for the remainder.
As a general rule, business brokers don’t charge an upfront fee, while M&A advisors do. It makes sense too. A business broker is operating essentially alone much like a real estate agent, while an M&A firm applies a team of writers, analysts and dealmakers on your project and also must pay for a marketing campaign.
This was a synopsis... to read the full article... click here.
Tuesday, June 1, 2010
Hard Times?
Now may actually be a good time to sell a business.
Given the state of the financial markets and general economy, now may seem like an unlikely time to sell a company. But selling in the current market can actually be less challenging than you think -- and may even provide benefits you haven't considered.
Determining whether to sell is always a difficult and complex decision, involving many considerations specific to your plans and business. For example, how urgent is your exit plan and how much do you hope to realize from the sale? Although the current economic environment may factor into your decision, it shouldn’t be your primary consideration.
To read the full article... click here.
Given the state of the financial markets and general economy, now may seem like an unlikely time to sell a company. But selling in the current market can actually be less challenging than you think -- and may even provide benefits you haven't considered.
Determining whether to sell is always a difficult and complex decision, involving many considerations specific to your plans and business. For example, how urgent is your exit plan and how much do you hope to realize from the sale? Although the current economic environment may factor into your decision, it shouldn’t be your primary consideration.
To read the full article... click here.
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