Negotiating the Price Gap Between Buyers and Sellers

The terms of the deal are extremely important to both parties involved in the transaction. Many times the buyers and sellers, and their advisors, are in agreement with all the terms of the transaction, except for the price. Although the variance on price may seem to be a "deal killer", the price gap can often be resolved so that both parties can move forward to complete the transaction.

Listed below are some suggestions on how to bridge the price gap.

• If the real estate was originally included in the purchase price, the seller may choose to rent the premises to the acquirer rather than sell it outright.
• The purchaser can acquire less than 100% of the company initially and have the option to buy the remaining interest in the future.
• A subsidiary can be created for the fastest growing portion of hte business being acquired.
• A royalty can be structured based on revenue, gross margins, EBIT, or EBITDA.
• Certain assets, such as automobiles or non-business-related real estate, can be carved out of the sale to reduce the actual purchase price.

Although the above suggestions will not solve all of the pricing gap problems, they may lead the participants in the necessary direction to resolve them. The ability to structure successful transactions that satisfy both buyer and seller requires an immense amount of time, skill, experience and most of all - imagination.

Creating Value in Privately Held Companies

Creating value in the privately held company makes sense whether the owner is considering selling the business, plans on continuing to operate the business, or hopes to have the company remain in the family. Building value should focus on six components:

• the industry
• the management
• products or services
• customers
• competitors
• comparative benchmarks

Click here to read the full article Courtesy of the Business Brokerage Press.

Why Your Company Needs a Physical

Complements of Business Brokerage Press

Many executives of both public and private firms get a physical check-up once a year. Many of those same executives think nothing of having their investments checked over at least once a year - probably more often. Yet, these same prudent executives never considering giving their company an annual physical, unless they are required to by company rules, ESOP regulations or some other necessary reason.

A leading CPA firm conducted a survey that revealed:

• 65% of business owners do not know what their company is worth;


• 75% of their net worth is tied up in their business; and


• 85% have no exit strategy

They are many obvious reasons why a business owner should get a valuation of his or her company every year such as partnership issues, estate planning or a divorce; buy/sell agreements; banking relationships; etc.

No matter what the reason, the importance of getting a valuation cannot be over-emphasized...

To learn more... click here to read the full article.

Do You Know Your Customers?

Courtesy of Business Brokerage Press

It’s always nice, when eating at a nice restaurant, for the owner to come up and ask how everything was. That personal contact goes a long way in keeping customers happy – and returning. It seems that customer service is now handled by making a potential customer or client wait on a telephone for what seems forever, listening to a recording saying that the call will be handled in 10 minutes. Small businesses are usually built around personal customer service. When is the last time you “worked the floor” or handled the phone, or had lunch with a good customer? Customers and clients like to do business with the owner. Even a friendly “hello” or “nice to see you again” goes a long way in customer relations and service.

The importance of knowing your customers and/or clients could actually be extended to suppliers, vendors, and others connected with your business. When is the last time you visited with your banker, accountant, or legal advisor? A friendly call to your biggest supplier(s) can go a long way in building relationships. A call to one of these people thanking them for prompt delivery can pay big dividends if and when a problem really develops.

Owning and operating your own business is not a “backroom” or “hide behind the business plan” business. It is a “front-room” business. Go out and meet the customers – and anyone else who has an interest in your business.

This subject and others are important considerations in owning a business and can affect the sale of a business in a positive or negative manner. If you are thinking of selling your business, or just want to discuss possible exit scenarios down the road, please call to speak to one of our brokers here at Sunbelt Indiana... 317-573-2100. The consultation is free with no obligation!

Recap of the Year at Sunbelt Indiana

Well everyone, 2011 is coming to a close and we are proud to announce that we have successfully closed over 25 sale transactions this year... the following tombstone sheets show just a sampling of our recent transactions... click on the subject line to review just a few.

• Recent Completed M&A Transactions


• Recent Completed Mainstreet Transactions

To take your business from "for sale" to "sold" contact us at indyinfo@sunbeltindiana.com or 317-573-2100 to speak to a broker about your exit planning strategy.

Check out this great article on financing a business from BusinessNewsDaily...

Today there was a great article on BusinessNewsDaily.com, "7 Ways to Finance a Small Business" By David Mielach, Staff Writer.

What makes this article great is not only its inciteful synopsis of the 7 ways to finance, but also the breakdown of each one including advantages and disadvantages. According to Mr. Mielach, the 7 ways to finance are...

• Small Business Administration Loan


• Friends and Family


• Home Equity Loan


• Credit Cards


• Angel Investors


• Venture Capitalists


• Strategic Investors

The only one he may have missed, is of course financing the purchase of an existing business through use of retirement funds. Other than that, this is a great read for both buyers and sellers alike to educate themselves. It is definitely worth a read.

Click here to read the full article.

Staffing Decisions - 2 Options if you are going to sell

One area that has the potential to affect the value of your business is the staffing of your business. If you are thinking about selling, you may want to consider two different options.

1. Outsourcing

Many services, especially in today's environmen of the self-employed, can be outsourced. Replacing workers is not pleasant and should only be done if substantial savings can be realized, but outsourcing is worth investigating.

When evaluating the potential savings, you will want to compare the total costs related to the employee (salary, benefits, bonuses, etc.) to the total costs related to outsourcing. You will also want to consider how the change could affect customer service and the morale and productivity of the other employees.

2. Removing Negativity

Now may be the time to get rid of any disgruntled employees. Negative employees hurt a business in several ways. Their attitudes can create a sour environment for their co-workers; their criticisms and complaints can rub off on their coworkers; and their demeanor can leave a negative impression on the customers of the business.

Happy and contented employees make for a profitable business - and it is evident to anyone looking at the business.