florida business brokers

With negative economic news grabbing the headlines in the United States, business owners may think it is not a good time to sell their company. But fortunately for owners looking to sell, that is not necessarily true.

Business sales are still taking place with sellers capturing attractive prices and favorable terms, when the deal is structured properly.

One of the the most important foundations of constructing a successful deal has always been a solid buyer, one that is creditworthy. Whether it is an individual, another company, or a Private Equity Group, qualifying criteria are demonstrated business acumen, significant assets to pledge as collateral, or a committed fund behind them.

With a proven, credible buyer at the negotiating table, lenders are more likely to support the transaction.

In today's environment, some seller financing should be expected to get the deal done. It is not uncommon during a tight economy that sellers must share the risks with the buyer and the lender in order to achieve the highest value.

Therefore, now, more than ever, it is in the seller's best interest to find the right buyer. This has resulted in the advantage going to buyers with a strong balance sheet

In today’s tight lending environment, a seller can still get a strong value for the business, but the seller may need to finance more of the purchase price than before. Regardless of the capital structure or finance considerations, a professionally-crafted and creative deal structure is the key.

Typically, seller financing has been somewhere between five percent and 15 percent. With the current lending climate, seller financing may approach 15 percent to 40 percent amortized over 10 years.

After the buyer has proven themselves in the business and shown that the debt payments will be made, the lender may allow restructuring of the seller’s note. As a result, the seller could receive full payment within three years to five years.

While the economy has put a crunch on available financing, it has not had a dramatic impact on the number of potential buyers. We continue to have strong buyer interest in acquisition opportunities and equity capital is still available. With the right buyer, the right portion of owner financing, and the right structure, deals are still getting done across the U.S.

What are the silver linings in today's market? First, the government has a strong focus on freeing up the credit market and the new administration will continue that effort. And, second, although there have been many high-powered, high-paying jobs eliminated over the past several weeks, we are starting to see an influx of contacts by highly-educated individuals who have money and want to acquire their own business as a result.

The American entrepreneurial spirit is still alive.

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The International Business Brokers Association® is the largest international, non-profit association operating exclusively for the benefit of people and firms engaged in the various aspects of a business brokerage and mergers and acquisitions. IBBA® has 1,950 members worldwide, with corporate headquarters in Chicago, Illinois.

©2008 International Business Brokers Association® (IBBA®) all rights reserved. Permission to reuse any or all of this material should be directed to the IBBA at 888-686-4442 and is restricted to IBBA members.

  • Despite the current credit crunch, well capitalized community banks still have money to lend for business acquisitions. The SBA 7(a) loan program is an excellent way for both bank and borrower to tread through this troubled business environment.

    While many large financial institutions are licking their wounds from the mortgage mess and the credit market contraction, community banks who are well capitalized and who traditionally don’t participate in these arenas are still a viable source of funds for small business acquisitions.

    Because SBA loans have features that reduce risk for banks, they are a valued tool for banks in this environment. And because they offer lower down payments and longer terms, the resulting lower monthly payments are attractive to borrowers.

    The US Small Business Administration (SBA) enables private lenders to make loans that they ordinarily would not be able to make by guaranteeing that a portion of the loan proceeds will be repaid to the lender in the event of a default by the borrower. Among many other uses, the SBA 7(a) lending program is the primary vehicle through which small business acquisitions are financed.

    Experienced and well-reputed business brokers / intermediaries will have a list of lending institutions with whom they have worked in the past and who are well-versed in getting deals done.

    Buying a business can certainly be an emotional ride. It’s a time to work with deal makers and specialists who will help to minimize the stress and help everyone move forward toward the timely completion of the business sale.

    Visit our full Selling a business and walking away can be very difficult. But in many cases, as part of the sale, there's a transition period that can be as short as a month or as long as a year or two, depending on the size of the company and the role of the owner.

    In most situations, once the seller passes the baton to the buyer, the new owner wants the seller to remain on board as part of the team. It helps shorten the learning curve and provides a seamless transfer of key relationships.

    In the typical business sale, a transition period of several weeks is included. Sometimes a telephone consulting period is added that can span six months or so with specific time limitations alloted so the seller is not overly burdened. Also, the seller may additionally be retained as a consultant at a negotiated rate. In some instances, a long-term employment contract is transacted and the seller maintains daily involvement for a much longer period of time.

    For the owner who wants to sell the company and leave quickly, the focus should be on the development of a strong management team. Be sure to introduce key employees/managers to your major customers and vendors and look at ways to delegate responsibilities. The more the customers think they are interacting with "the company" versus the "owner" the easier the transition.

    If you've established a good management team, less time will be required for the transition to the new owner. In addition, a well developed team usually adds value to the sale.

    Occasionally there are owners who want to sell but just aren't ready to quit working. They may be looking to sell early to get a premium price while the market is in their favor or to get away from unwanted or overwhelming administrative and management duties.

    Either way, long-term employment contracts can be included in the sale agreement. The seller can stay on board and work with the business a few more years while still drawing an income and benefits.

    If you're selling your business, in most cases you won't be able to walk away the day after the sale and in most cases you probably don't want to. Talk to your business intermediary about the true timeline of the sale and transition. If you want to sell while the price is right, but you're not quite ready to leave immediately, consider the options available to sell now and maintain a role with the company.

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    The International Business Brokers A