Sunbelt Business Brokers of Louisiana

Small Business Survival Index - 2/17/2012

2012-02-17T07:23:00.000-08:00

Louisiana ranks #26 in the Small Business & Entrepreneurship Council's latest Small Business Survival Index. Here are the highlights:

Louisiana

Rank: 26th

SBSI Score: 60.120

Highlights:

• No death tax
• No individual or corporate alternative minimum tax
• Fairly low personal income and unemployment taxes
• Low property taxes
• Low wireless taxes
• Low electricity costs
• Relatively low gas and diesel taxes
• No Internet access and Amazon taxes
• Strong education reforms
• Very high consumption-based taxes
• High workers' compensation costs
• High crime rate
• High level of state and local government employees
• High level of state and local government spending
• High level of federal revenue as a share state and local revenue
• Very high five-year rate of increase in state and local government spending

See the full list here: http://www.sbecouncil.org/survivalindex2011/

Small Business Lending Rises in January

2012-02-10T07:57:00.001-08:00

Small-business loan approval rates by community banks and nonbank lenders spiked in January to their highest levels in the past 12 months, according to Biz2Credit's monthly Small Business Lending Index. It analyzes roughly 1,000 loan applications on the Biz2credit platform connecting borrowers with more than 1,100 lenders nationwide.

Last month, approximately 47.5% of loans at small community banks were approved in January, while credit unions approved 57.6% of loan applications and alternative lenders approved two-thirds of applications. Lending at banks with more than $10 billion in assets also rose, though more modestly to 11.7% from 9.7% in December, Biz2Credit says.

"Optimism seems to be returning. We have seen a 35% increase in month-to-month volume of new loan applications, which is a good sign," Biz2Credit CEO Rohit Arora says. "The strong holiday sales combined with the latest jobs report showing that the U.S. unemployment rate fell to 8.3% in January -- its lowest level in two and a half years -- indicates that brighter days may be ahead."

With the entry of bigger players in alternative financing, the cost of funding in this asset class has begun to drop from an average 27%-28% to 16%-18%, Biz2Credit says, adding that it expects more players to join the alternative funding space. That will drive up competition and lower overall barriers to credit access as well as interest rates, it says.Biz2Credit points to the rise of alternative lenders -- including Community Development Financial Institutions, accounts receivable financers, merchant cash advance, microlenders and others -- as viable sources of funding for small businesses.

"There is an increase in start-ups looking for funding, and many of their needs are not fully addressed by traditional lending institutions," Arora says.

Sunbelt Joins Google+!

2012-01-18T09:46:00.000-08:00

Add us to your circles and keep up to date with all the latest news. Follow the link:

https://plus.google.com/100795883346203785101

Sold! More Small Businesses Exchanged Hands Last Year

2012-01-18T08:37:00.001-08:00

Follow the Link:

http://online.wsj.com/article/SB10001424052970204555904577167453900358474.html

Consumer Sentiment Index Increases

2012-01-17T12:04:00.001-08:00

The University of Michigan’s preliminary January consumer sentiment survey showed further improvement, with a gain from 69.9 to 74.0; the best reading since last May and better than the 71.5 economists polled by Reuters anticipated.

Sunbelt of Greater Louisiana Works with Benetrends - 1/17/2012

2012-01-17T07:47:00.000-08:00

Sunbelt of Greater Louisiana works closely with Benetrends, Inc. to help entrepreneurs roll over their 401(k)/IRA into a loan to fund their small business start-up or purchase. We also work with Benetrends to provide small business loans. Contact us today to receive more information.

Office - 225-201-0202
Email - andre@sunbeltnetwork.com

Small-business lending up 18% in 2011

2012-01-12T08:41:00.000-08:00

Loans made to small businesses hit a four-year high in November, at the same time delinquent small-business loans declined, according to Reuters, citing theThomson Reuters/PayNet Small Business Lending Index. Between November 2010 and November 2011, the index jumped by 18% and is now at the highest level since February 2008.

The positive news is that sales seem to be increasing and businesses are becoming more creditworthy, the article says. On the other hand, obstacles remain, such as higher interest rates for business owners who pay off loans in monthly installments as opposed to all at once
.

2011 Year-End Report Shows 3.3% Increase in Business Sales

2012-01-10T09:20:00.000-08:00

For 2011, the number of small businesses reported as sold to BizBuySell.com across the U.S. was 6,703, an increase of 3.3 percent over the 2010 total of 6,486.* This follows a similar 3.0 percent jump in closed transactions from 2009 to 2010.

The slight rise in closed transactions was accompanied by an equivalent 3.3 percent increase in the median selling price, from $150,000 in 2010 to $155,000 in 2011. However, median revenue for sold businesses was up more (6.7 percent) indicating that improved business performance contributed to increased sales activity. This also shows that business owners are adjusting their pricing expectations and selling their businesses for less relative to revenue and cash flow to get deals done.

"While 2011 continued to be a tough year for the nation's small business owners, we were pleased to see that business performance is improving and more people are buying small businesses," Mike Handelsman, group general manager of BizBuySell.com and BizQuest.com said. "Helping this is the fact that business sellers are adjusting their value expectations, something that should continue to spur deals in 2012."

Follow the link for the entire story (along with graphs):
http://www.bizbuysell.com/news/article079.html?utm_source=bizbuysell&utm_medium=bbs_email&utm_campaign=brokerb011012

Sunbelt Radio - 12/16/2011

2011-12-16T07:31:00.001-08:00

This week's show
This Friday, December 16 at 2 p.m. (Eastern), Matt and Pino will discuss Preparing Your Business For Sale and The Show Finale with John Davies, CEO, Merrymeeting, Inc. To listen to the show at VoiceAmerica, the world leader in internet talk radio, click HERE. If you have a question for our hosts or guests, you can submit it in advance to insights@sunbeltnetwork.com; please identify the topic you are writing about in the subject line of the email. You can also call in during the broadcast hour by dialing (toll-free) 866-472-5790.

Archived Shows
Last week's show was on Garage Door Installation and Repair Companies and featured Steve Freitas. Click HERE to listen to that show. All past episodes are archived and available on the Sunbelt website, and on the Voice America website. For more information on Sunbelt or the show, contact a local Sunbelt office or visit the Sunbelt website.

Sunbelt Radio - 12/9 - Garage Door Installation and Repair Companies

2011-12-09T08:39:00.000-08:00

Each week, Sunbelt hosts an internet radio program in order to provide our franchisees and their clients with information about buying, selling, and managing privately-held businesses. The show, Entrepreneurial Insights, is broadcast every Friday at 2 p.m. Eastern, and is hosted by Pino Bacinello (Sunbelt office owner in Vancouver) and Matt Ottaway (Sunbelt's President). Each episode features the insight of guests who are experts on the industry or topic discussed.

This week's show
This Friday, December 9 at 2 p.m. (Eastern), Pino will discuss Garage Door Installation and Repair Companies with Steve Freitas, President, Precision Door Service of Detroit and Sunbelt Office Owner. To listen to the show at VoiceAmerica, the world leader in internet talk radio, click HERE. If you have a question for our hosts or guests, you can submit it in advance to insights@sunbeltnetwork.com; please identify the topic you are writing about in the subject line of the email. You can also call in during the broadcast hour by dialing (toll-free) 866-472-5790.

Archived Shows
Last week's show was on Signs and Graphic Design Companies and featured Mark Cline. Click HERE to listen to that show. All past episodes are archived and available on the Sunbelt website, and on the Voice America website. For more information on Sunbelt or the show, contact a local Sunbelt office or visit the Sunbelt website.

Sunbelt Radio - 12/2/2011 - Signs and Graphic Design Companies

2011-12-02T07:10:00.000-08:00

Each week, Sunbelt hosts an internet radio program in order to provide our franchisees and their clients with information about buying, selling, and managing privately-held businesses. The show, Entrepreneurial Insights, is broadcast every Friday at 2 p.m. Eastern, and is hosted by Pino Bacinello (Sunbelt office owner in Vancouver) and Matt Ottaway (Sunbelt's President). Each episode features the insight of guests who are experts on the industry or topic discussed.

This week's show
Today, December 2 at 2 p.m. (Eastern), Matt will discuss Signs and Graphic Design Companies with Mark Cline, Director of Development, Signs By Tomorrow. To listen to the show at VoiceAmerica, the world leader in internet talk radio, click HERE. If you have a question for our hosts or guests, you can submit it in advance to insights@sunbeltnetwork.com; please identify the topic you are writing about in the subject line of the email. You can also call in during the broadcast hour by dialing (toll-free) 866-472-5790.

Archived Shows
Last week's show was an Encore Presentation on Trucking Companies and featured Dan Elliott and Justin Molavi. Click HERE to listen to that show. All past episodes are archived and available on the Sunbelt website, and on the Voice America website. For more information on Sunbelt or the show, contact a local Sunbelt office or visit the Sunbelt website.

Sellers - Selling Your Business

2011-11-21T08:55:00.000-08:00

Selling the Business

Once you have prepared the business for sale, the best way to get the best price for the business is to confidentially present the business to the largest audience of potential qualified buyers. This is where our company, Sunbelt Business Brokers can be of assistance. For our clients, we discreetly yet aggressively market the business worldwide using a sophisticated portfolio of techniques.

The Major Ones Are:

1) We start by developing a simple profile sheet on the business. This profile sheet describes the essential elements of the business that are most likely to be of interest to a potential buyer. The profile is generic and DOES NOT identify the specific business.

2) Utilizing our existing Sunbelt database compiled over the years, the profile is sent to venture capital groups / funds along with CPA firms and Legal firms that specialize in handling mergers and business acquisitions. The profile is sent using email, fax or

mail depending on the preference of the recipient.

3) Using another one of our proprietary databases, the profile is sent to industry specific “consolidators” and others within the industry seeking to expand and grow through acquisitions and/or mergers.

4) Using another one of our proprietary databases, the profile is sent to high net worth individuals and merchant bankers.

5) An electronic profile is posted on our corporate website (www.SunbeltNetwork.com) and numerous other websites that Sunbelt participates in. They are the largest and most heavily accessed websites in the world of businesses for sale.

6) Where appropriate, generic ads are placed in local newspapers and National Business Publications such as the Wall Street Journal and USA Today. The top industry specific publications are also identified and ads are placed in them.

7) A few days after the profiles are distributed, we embark on an extensive telemarketing effort where we call those receiving the profiles to determine any interest generated and to procure feedback. This feedback is especially important in that it allows us to hone, refine and precisely focus our marketing effort.

8) From our marketing efforts, we develop screened, serious buyers that we present to the business owner. After meetings between the seller and the buyers, with mutual agreement, the buyers are then allowed due diligence. A specific Cut Off Date is established and the buyers must have completed their due diligence and submit an offer to purchase.

9) Once a prospective buyer is in place with a signed purchase agreement, we can turn to the vast resources of the Sunbelt Network to securing financing if needed. Corporate lenders usually have a profile of the particular types of loans that they specialize in. We maintain relationships with a large array of lenders that will finance any financially sound business sale transaction. These lenders can be commercial loan companies (i.e., CIT, GE Capital), private venture groups, and national banks (i.e., PNC, Wachovia, Chase, Banco Popular, etc.). In many cases, they have the capacity and will lend when the local traditional banking and lending community will not. We maintain a strong working relationship with these lenders as an active and important client. We possess a working knowledge of which lender will be best suited for a particular transaction based on the transaction’s characteristics.

12 Interesting Facts on SBA Type 7a Loans

2011-11-15T09:37:00.000-08:00

Here are 12 interesting facts regarding SBA Type 7a loans:

(1) SBA Lending is up, base on the dollars volume of loans approved.

(2) Less than 12% of submitted applications get approved, partially due to poor credit ratings of the applicant (or spouse who has to cosign), a poor business plan without the required cash flow projections, and assumptions to projections, and poor applicant experience and personal liquidity. Personal liquidity is discussed in Section 20 at www.sbafacts.com.

(3) Few brokers and applicants understand Debt To Income (DTI), which is Section 7 at www.sbafacts.com.

(4) Almost all banks and non-bank SBA approved lenders will not touch deal where the loan amount is less than $350,000. Many want to see loan amounts of $500,000 and up.

(5) Only a few lenders will go for SBA 7a loans between $2,000,000 and $5,000,000.

(6) The listing of top SBA Lenders has drastically changed. CIT was on top is no longer there, Wells Fargo and Chase are the sudden new leaders.

(7) Most lenders want to see a credit score of 680 (FICO). up from 650 a year ago.

(8) The SBA interest rate remains at 6.0% for variable or fixed rate. Few lenders will go for fixed ratel, if real estate is involved in the purchase.

(9) If buying a business, the seller must provide the last three years of business tax filings, a current year profit and loss statement, and a listing (with dollar values) of all furniture, fixtures and equipment (FF&E), and inventory. A current business balance sheet is also needed.

(10) If buying a business with real estate, the above is needed, along with the exact address, photos, copy of the last tax bill, survey, last appraisal, and Environmental Phase One, if one has been performed.

(11) If a business is buying a building to expand operations, or to get out of an expensive lease, (10) above applies, as do documents in (9) above for the applicant’s current business.

(12) If buying a franchise site, the franchise must be on the SBA Franchise Registry (http://www.franchiseregistry.com/), and provide the applicant with a copy of the Franchise Disclosure Document (FDD), earlier known as the Uniform Franchise Offering Circular (UFOC). If the site includes real estate the documents discussed in (10) above are needed.

Note: Most lenders stray away from franchisee loan requests where the are not more than 100 successful franchisee locations, namely sites that have a proven success rate, like Subway, for example.

(12a) If buying a non-franchise business, being sold by the provider or a turnkey business that operates like a franchise, but without royalty payments on gross sales, there is no FDD required at all. An example of such a turkey business is Americlean Dry Cleaners. Americlean business buyers pay no royalty fees, are not subject to annual reviews, and are free to purchase supplies from anyone of their choice.

Sunbelt Radio- 11/11- Cost Analysis and Reduction for Business Owners

2011-11-11T07:42:00.001-08:00

Each week, Sunbelt hosts an internet radio program in order to provide our franchisees and their clients with information about buying, selling, and managing privately-held businesses. The show, Entrepreneurial Insights, is broadcast every Friday at 2 p.m. Eastern, and is hosted by Pino Bacinello (Sunbelt office owner in Vancouver) and Matt Ottaway (Sunbelt's President). Each episode features the insight of guests who are experts on the industry or topic discussed.

This week's show
This Friday, November 11 at 2 p.m. (Eastern), Pino will discuss Cost Analysis and Reduction for Business Owners with Michael Webb, Managing Director, Expense Reductions Analysts. To listen to the live show at VoiceAmerica, the world leader in internet talk radio, click HERE. If you have a question for our hosts or guests, you can submit it in advance to insights@sunbeltnetwork.com; please identify the topic you are writing about in the subject line of the email. You can also call in during the broadcast hour by dialing (toll-free) 866-472-5790.

Archived Shows
Last week's show was on Planting Seeds for Growth- Building Your Business Through Sales and featured Patti Choby and Mark Smith. Click HERE to listen to that show. All past episodes are archived and available on the Sunbelt website, and on the Voice America website. For more information on Sunbelt or the show, contact a local Sunbelt office or visit the Sunbelt website.

Sellers - How A Potential Buyer Will Value Your Business (Part 4)

2011-11-04T12:01:00.001-07:00

19) Tax Returns

During the due diligence process, the prospective buyer and/or his agents (CPA’s, Business Advisors, Acquisition Team, Lawyers) are going to request the three (3) most current Federal Tax Returns. Usually they will want to see monthly or quarterly profit and loss statements (P & L’s) from the last filed tax return to the present date. Nothing will send up “Red Flag” more than not having current tax returns. A substantial number of businesses consistently file for extensions on filing their taxes - usually for very good business reasons. In preparing a business for sale, it is imperative that all tax returns be filed promptly without extensions. Also, P & L statements should be prepared promptly and accurately no later than 30 days after the close of the period that they are being run for.

20) Get a Second Opinion on the Company’s Financials and Tax Liability

Most businessmen, when starting a business, use an individual practitioner or small accounting / CPA firm to keep their books and prepare their taxes. Usually they stay with that entity even as they grow large. Unfortunately, many of these firms are very conservative in their accounting and do not keep up with the latest and most advantageous tax law changes. The big boys, most likely to be the buyer, hire the biggest and the best accounting firms. Their own financial people also stay on top. In particular, on those changes that are industry specific to their industry. If in due diligence, they find a business doing poorly here, it is to their advantage and they won’t tell you. It is not unusual for a buyer in a stock sale to file an amended tax return to recoup past tax overpayments. On both asset and stock sales they will immediately implement any advantageous tax strategies to increase cash flow, that had the business captured prior to the sale, would have increased the value of the business. Business owners should strongly consider hiring a notable outside accounting firm to audit their financials and tax returns for their accuracy and appropriateness.

21) Licensing

Registrations, licenses, permits, patents, franchise agreements, distributorship agreements, corporate charter, etc. are items that a buyer will have a keen interest in. These items can be critical to the viability of a business. Some in particular, such as patents, environmental permits, banking, insurance, gaming licenses can have very significant value. Be sure to check on a regular basis to see that all of these items are current with all associated fees paid. It can be quite embarrassing or even disastrous if a potential buyer finds that one of these items has lapsed - particularly if someone forgot to renew or pay the associated fees. A particular positive for a buyer would be that the seller has made inquiries and gotten all the necessary information, including costs on what it would take to transfer these items to the buyer.

22) Insurance

Having insurance coverage in place or having coverage at particularly good rates can be a distinct competitive advantage that will be highly valued by buyers. This is particularly true for some insurance coverages that are hard to obtain (or obtain at a reasonable cost). Check to make sure that all of the insurance coverages are current and that the policy limits are appropriate to current exposures. It is a big plus for the buyer when the seller has met with his insurance agent or company and has all the information on the transferability of insurance coverage: time frames, costs, limitations / exclusions, etc.

23) Corporate Business Plan

Marketing Plan / Sales Forecast

As mentioned previously, buyers of businesses are dominantly buying a future stream of net income. Of vital importance to them is the current owner and his management team’s perception of the future of the company. This is best presented in the format of a corporate business plan. The business plan should have as an integral part a marketing plan with a sales forecast showing sales predictions for at least the next three (3) years, preferably the next five (5) years. The marketing plan should also address management’s perception of the strengths and weaknesses of the company’s competition.

This document is particularly important because it will show a buyer, in particular a corporate buyer, the current owner and his management team’s grasp of the future outlook for the company and the industry. In addition, it will help the potential buyer accurately gauge the future of the company.

24) Development of New Services / Products from Existing Capabilities

Having new service / product development projects in progress is viewed extremely positively by buyers. Its major contribution is that it shows a strong commitment and belief in the future of the company. Also, it is very indicative of management’s awareness of the direction and desires of the market place.

25) Financeability

Financeability is the ability of a potential buyer to acquire borrowed funds to facilitate a purchase. Funds can come from commercial lenders, private equity groups, mezzanine lenders, etc. The first and most critical decision factor in the eyes of the lenders is a strong past financial performance AS SHOWN ON THE COMPANY’S TAX RETURNS. The lenders are going to want to see 3 years of past tax returns along with the most current P&L (profit and loss) statement. The historical financial performance must show that the company has more than sufficient cash flow to meet debt service.

Some business owners are tempted to not declare all the company’s income on their tax returns to save on taxes. This not only hurts the financeability of the business, but it also hurts the value a buyer is willing to pay for a company. A seller is much better off to declare the income and pay the taxes.

The next most important consideration to lenders is the value of assets that can be pledged to secure a loan. Assets of high value to lenders would be real estate, account receivables, titled equipment such as cars, trucks, etc., high value machinery and equipment whose value can easily be established and which can be easily sold, and high value inventory, etc. Having a current, accurate value of these items, even if it means getting a current appraisal, is very valuable in both the eyes of the buyer and the lender.

26) Diverse Customer Base

If one or more of a company’s customers accounts for more than 5% of sales, this hurts the value of the company. The higher the percentage, the greater the loss in value. Where this situation exists, the company should put a strong emphasis in its marketing activities to generating new customers and diversifying its customer base.

Summary

In summary, the existing business owner planning to sell his business should be very aggressive in cutting costs to maximize net cash flow, while simultaneously improving revenue streams that will also maximize net cash flows and in general, improving the overall physical appearance of the business.

Sunbelt Radio 11/4/2011 - Planting Seeds Through Growth - Building Your Business Through Sales

2011-11-04T07:47:00.000-07:00

Each week, Sunbelt hosts an internet radio program, in order to provide our franchisees and their clients with information about buying, selling, and managing privately-held businesses. The show, Entrepreneurial Insights, is broadcast every Friday at 2 p.m. Eastern, and is hosted by Pino Bacinello (Sunbelt office owner in Vancouver) and Matt Ottaway (Sunbelt's President). Each episode features the insight of guests who are experts on the industry or topic discussed.

This week's show
This Friday, November 4 at 2 p.m. (Eastern), Matt will discuss Planting Seeds for Growth- Building Your Business Through Sales with Patti Choby, Principal, Cobalt Group, Inc. and Owner, Inner Circle Cleveland and Mark Smith, Principal, Cobalt Group, Inc. and Owner, Inner Circle Cleveland. To listen to the live show at VoiceAmerica, the world leader in internet talk radio, click HERE. If you have a question for our hosts or guests, you can submit it in advance to insights@sunbeltnetwork.com; please identify the topic you are writing about in the subject line of the email. You can also call in during the broadcast hour by dialing (toll-free) 866-472-5790.

Archived Shows
Last week's show was on Quick Oil Change Companies and featured Bill Ancona, Justin Molavi, and Gordon Taylor, Communications Manager, Automotive Oil Change Association. Click HERE to listen to that show. All past episodes are archived and available on the Sunbelt website, and on the Voice America website. For more information on Sunbelt or the show, contact a local Sunbelt office or visit the Sunbelt website.

Sellers - How A Potential Buyer Will Value Your Business (Part 3)

2011-11-02T08:29:00.000-07:00

10) Sales Trends

Take definitive action to reverse any stagnant or declining sales trends. Nothing will negatively impact the value of a business or kill a potential sale more than declining sales trends. Buyers are making a financial investment in a future stream of income. A declining stream is viewed very negatively.

11) Grow by Acquisition

Many business owners know of attractive acquisition opportunities, but pass on them because they are thinking of selling their business. If the company has the financial resources available, it may be in their best interest to pursue good acquisitions. Acquisitions can help in several ways.

1) The most important is that the larger the company, the better visibility it has in the eyes of the bigger and better buyers.

2) Acquisitions in a majority of the cases add value to a business greater than the cost of the acquisition. Acquisitions can bring increased market share, more diverse pool of customers, larger geographic trade area, economies of scale, key people or larger talent pool, wider range of products or services, intellectual property, etc. All of which can increase value in the eyes of the buyer.

12) Joint Venture Opportunities

Joint venture opportunities have long been used to increase market presence and corresponding sales growth. This is particularly true when the venture partner has high market visibility and presence. Joint ventures can also be used for product/service diversification or to reduce the costs associated with new product/service development. Buyers like quality joint ventures. They see lots of future value in being teamed with a quality venture partner. They also see management acuity in the market place and a sign of quality management that is appealing to the venture partner. Where practical, management should pursue any joint venture opportunity of quality. Even if not consummated, just having talks with a venture partner or being in a feasibility study stage or planning stage adds good value to the company.

13) Overtime

Eliminate or reduce as much as possible, overtime pay. Buyers view overtime (paying a premium for labor) as very poor management. Workers get used to the extra income that overtime produces. A tendency can develop for workers to create situations to continue that income. If this tendency to create overtime becomes entrenched, new owners quite often feel it will be very difficult if not impossible to correct. Damaged labor relations may result if new management has to implement corrective action.

14) Long Term Contracts

Lengthen and firm up all long term contracts with customers, critical suppliers, and labor unions. The last thing you want to happen in the middle of delicate negotiations on the sale of the business is a labor union strike, loss of a major customer or critical supplier.

15) Long Term Commitments

Conversely, avoid entering into any long term commitments not critical to the business operation. For example, building leases, purchase of expensive computer systems, fleet leases, purchasing high tech / high cost equipment. It is likely that a new buyer will want to do his own purchasing and negotiating when upgrading a computer system or creating leases.

16) Long Term / Short Debt

The business owner should review with his lenders if his debt structure can be assumed by a buyer. If so, this can be very valuable in negotiations and in structuring a purchase offer / agreement. With fluctuating interest rates, the business owner should do a review of all outstanding long and short term debt to determine if it can be refinanced under more favorable terms or if better alternatives of funding are available.

17) Processing Receivables / Payables

You should make a concentrated effort to speed up the processing of receivables and slow down the payment of payables while not incurring late charges or losing prompt payment discounts. This will definitely improve your income statement if you are on a “cash” accounting basis versus “accrual”.

18) Key Man

Protect the new buyer against the loss of a “Key Man” during the sales negotiations or after the sale where the Key Man will be instrumental in the transition to the new owner. Often, the existing business owner is required in the sales transaction agreement to perform certain duties for a specified period of time after the sale. This can be training the new owners, introductions to key business relationships, advice and guidance on running the business.

The best strategy is to develop a #2 Key Employee so that the owner is not critical to the survival of the business. A second, highly regarded strategy is the acquisition of an assignable “Key Man” life insurance policy. This policy could be payable to the buyer after the sale, used to payoff debt and improve liquidity prior to sale, or to payoff heirs so they will not hinder the sale.

Sunbelt Radio- 10/28- Quick Oil Change Companies

2011-10-28T07:35:00.000-07:00

Each week, Sunbelt hosts an internet radio program, in order to provide our franchisees and their clients with information about buying, selling, and managing privately-held businesses. The show, Entrepreneurial Insights, is broadcast every Friday at 2 p.m. Eastern, and is hosted by Pino Bacinello (Sunbelt office owner in Vancouver) and Matt Ottaway (Sunbelt's President). Each episode features the insight of guests who are experts on the industry or topic discussed.

This week's show
This Friday, October 28 at 2 p.m. (Eastern), Pino will discuss Quick Oil Change Companies with Bill Ancona, Owner/Operator, Bill's Kwik Kar Lube and Tune, Justin Molavi, Senior Analyst, IBISWorld and Gordon Taylor, Communications Manager, Automotive Oil Change Association. To listen to the live show at VoiceAmerica, the world leader in internet talk radio, click HERE. If you have a question for our hosts or guests, you can submit it in advance to insights@sunbeltnetwork.com; please identify the topic you are writing about in the subject line of the email. You can also call in during the broadcast hour by dialing (toll-free) 866-472-5790.

Archived Shows
Last week's show was on “To the Cloud!”: What It Really Means & How It Affects Your Business and featured Chip Reaves. Click HERE to listen to that show. All past episodes are archived and available on the Sunbelt website, and on the Voice America website. For more information on Sunbelt or the show, contact a local Sunbelt office or visit the Sunbelt website.

Sunbelt Announces Sale of Company

2011-10-27T08:03:00.000-07:00

Sunbelt Business Brokers of Central and South Louisiana is pleased to announce the sale of a large regional trucking firm for $3,500,000. The firm has been established for over 30 years carrying a well respected name and successful track record. Its services include line hauling, packaging and crating, courier services, warehousing, distribution, air freight, residential and commercial pick-up and delivery, etc. Currently, the company covers most of the state of Louisiana.

Sunbelt completed the deal on Friday, October 21.

Deloitte Survey Suggests 3 in 5 Corporate M&A Professionals Expect Deal Activity to Increase

2011-10-27T07:57:00.000-07:00

Despite the soft employment growth statistics, the budgetary crisis in Washington and overseas, and an anemic economy, a recent survey by Deloitte indicates that businesses plan to move forward with their plans for growth and expansion. Nearly 60 percent of corporate M&A professionals surveyed by Deloitte said they expected an increase in the number of deals their companies will pursue each year for the next two to five years.

Interestingly, the initial optimism reflected in the survey, "Corporate Development 2011," is put into context when you consider that only 7 percent of respondents felt that previous deals exceeded their expectations and more than 31 percent believed that past transactions failed to live up to expectations.

"As the economy stabilizes and slowly recovers, many companies are refocusing on growing their businesses, and they're looking to mergers and acquisitions as a way to accelerate growth," said David Gladden, a managing director in MidCap Advisors' Dallas office. "The days of double digit annual organic growth may not return for some time so corporate leaders are looking to acquisitions as a way to fuel that growth."

Additional survey findings include:

Almost half (49 percent) of respondents say their companies seriously consider four M&A transactions per year.

SBA Bulletin - Released October 5, 2011

2011-10-27T07:53:00.000-07:00

Jobs Act Loan Incentives led to record SBA loan approval volume, supporting over $30 billion in Small Business Lending.

Record $12 billion 1st Quarter followed by return to pre-recession levels.

Washington - Spurred in part by unprecedented loan volume in the year's first quarter, small business loans backed by the U.S. Small Business Administration in FY2011 reached the highest mark in the agency's history, supporting over $30 billion, continuing the rebound begun in 2009 and returning to healthy pre-recession levels in the final three quarters of the year.

"SBA-backed lending continued the upward trend we saw last year," SBA Administrator Karen Mills said. Due to the Small Business Jobs Act and a return to pre-recession lending levels, over 61,000 small businesses had access to capital.

Sellers - How A Potential Buyer Will Value Your Business (Part 2)

2011-10-26T11:53:00.000-07:00

What Else Can A Business Owner do to

Increase the Value of Their Business

1) Poor Performing Units

Shut down or sell off poor performing, zero or negative cash flowing units, locations and product lines, etc. unless they are crucial to the operation of the business. Any money received here will be a direct benefit to the business owner as a buyer will view them as having little or no value.

2) Personnel

Eliminate any personnel that a new owner would terminate. Many business owners have strong personal relationships (or obligations) to long term employees. The new owners could care less. They will be looking for increased productivity / profitability. If these employees are to be terminated, the current business owner will likely treat these employees with more compassion and in a more financially equitable manner than the new owner who has no loyalty to them.

At this point, you should also seriously look at other personnel reductions.

3) Receivables

Sell off all receivables, in particular delinquent receivables that have been written off. In most cases, the receivables of a business stay with the current owner. Selling the receivables will make the balance sheet and income statements look much better.

4) Lawsuits

Settle all legal suits outstanding where possible. This includes both plaintiff and defendant suits. Outstanding suits project poor management at best and a lot of problems for the new owner at worst.

5) Margins

When buyers evaluate the cash flow value of a business, they pay particular attention to gross profit margins (gross profit divided by sales) and pretax net profit (or free cash flow) margins (net profit divided by sales). The higher the margins the greater the perceived value. A sophisticated buyer will almost always compare a company’s margins against industry standards. Margins are strong indicators of the pricing flexibility of the company.

The two best ways of improving margins are to raise prices and reduce operating expenses. A concentrated effort here will yield big benefits when selling the business.

6) Raise Prices

Where competitive conditions allow, raise prices 5% to 20% across the board or selectively. Many business owners become passive or conservative over time with their pricing. With a solid product and/or customer base, most modest price increases can be implemented with negligible impact. Virtually all of this revenue increase goes directly to the bottom line as net income.

7) Unproductive Marketing

Eliminate any unproductive marketing expenditures such as charitable giving and charitable advertising placements. As a business grows and prospers, most hometown American businessmen give back to the community through charitable giving and charitable advertising placements for church, school functions, etc. Large national companies buying a local business will immediately end these types of expenditures as will most new individual business owners - so you might as well do it. Drive up net income and the sales price for the business. Then give some of the sale proceeds to charity.

8) Clean Up / Clean Out

Physically clean up the appearance of the business. Things that sparkle and shine sell faster and for a higher price than things that do not - it’s just human nature. You don’t get a second chance to make a good first impression. Start with a thorough cleanup and “throw it out” campaign. If it is not going to be used, sell it or throw it away. Then give the physical location a thorough scrubbing: walls, windows, floors, cabinets, etc. Where practical paint, clean or replace carpet and upgrade landscaping. In particular, upgrade the office suite of the owner. Remember this will be the “home” away from home for the new owner or his executive.

9) Fringe Benefits

Reduce employee fringe benefits that are out of the “norm” with your industry. You can bet that a new owner will. If it is a corporate buyer, the existing and retained employees will be added to the corporate buyers existing fringe benefit plan. So make the cuts and reap the benefits.

Sellers - How a Potential Buyer Will Value Your Business

2011-10-24T12:53:00.000-07:00

Dominantly, most Buyers are buying a business based on the net cash flow of the business. The common industry term is E B I T D A.

E Earnings

B Before

I Interest

T Taxes

D Depreciation

A Amortization

In addition to E B I T D A, most buyers will include in net cash flow owners prerequisites such as Owner / Family Compensation, owner benefits such as extraordinarily rich life insurance, pensions plans, and other fringe benefits. Also, any personal use assets paid for by the business such as vehicles, apartments/condos, boats, airplanes, etc.

Once a net cash flow number is derived, most buyers will pay in a range of three (3) to five (5) times that number.

The Main Goal

The main goal of every business owner trying to sell their business is to increase E B I T D A. Every dollar ($1) increase will increase the value of the business by three (3) to five (5) dollars.

What about the Value

of the Business Assets?

Assets of a business such as land, buildings, equipment, furniture, fixtures and inventory all support the value of the purchase price and may slightly increase the multiple offered on E B I T D A. However, buyers are buying Cash Flow !!! If the assets are not producing sufficient cash flow, then they only represent value in a liquidation or near liquidation scenario.

The Main Goal for the

Assets of the Business

For every business owner planning to sell their business, the main goal pertaining to the assets should be to sell unproductive assets such as:

- Machinery

- Land, Buildings

- “Dead” Inventory / Excess Inventory

- “Dead” Raw Materials / Excess Raw Materials

- Fleet Vehicles

- Company Cars (All)

- Recreational Vehicles, Boats, Airplanes, 4 x 4’s

These assets add no value to the business, so any money received from their sale are a direct benefit to the business owner.

Welcome to Sunbelt of Louisiana's Blog

2011-10-21T12:14:00.000-07:00

Headquartered in Baton Rouge, Louisiana, we have offices and broker representatives serving the cities of Baton Rouge, Alexandria, Lake Charles, and Monroe. These offices combine to serve all of the outlying areas of Central Louisiana. Sunbelt of Baton Rouge and Central Louisiana is a part of the International Network of Sunbelt Business Brokers with 300 plus offices on 6 continents. Sunbelt is the largest organization of its type in the world. We maintain over 200+ high quality Louisiana businesses listed for sale and through the Sunbelt system we can offer over 12,000 businesses listed for sale nationally and internationally. Sunbelt of Baton Rouge and Central Louisiana assists buyers of a business by helping them find a quality business that they can financially afford and that they will get great psychological comfort and enjoyment from owning and operating. Where financing for the buyer is required, we can assist the buyer in finding financing. We have a large base of lenders that will provide financing even when the local banking community won't. Whether you are looking to buy or sell a business, Sunbelt of Baton Rouge and Central Louisiana can guide you through the business sale process.