TYPES OF BUYERS

As a Seller of a business it is important to know the types of buyers you will encounter in the sales process.  Selling a business successfully requires the help of a M&A advisor who “knows the ropes” and has dealt with each type of buyer.

Financial – Financial buyers like to base their buying decisions on the numbers. It is all about the numbers, multiples, and financials (both historical and projected).  They tend to be industry agnostic because it doesn’t matter what type of business it is; it matters what numbers the business can produce.  I would call them the “bean counter” guys.  Bankers and business appraisers usually are enlisted to provide comfort and figures for the transaction.  It’s all about how the numbers look, particularly the EBITDA numbers.  They buy based on a multiple of EBITDA with the idea of growing the business.  Financials buyers tend to like businesses that have had a strong, steady growth over the past 3 years versus a jump in sales the past year because they like to average the numbers over a 3 year period.  Financials buyers like stability and reliability.

Strategic – Strategic buyers tend to be less about the numbers and more about the opportunity provided by the acquisition. They care about numbers, don’t get me wrong, but in the back or their mind they care more about how this business will help their existing business plans.  As an example, if you had a piece of real estate that was only 5 acres, but was surrounded by real estate owned by a developer who wanted to develop the whole piece including yours, your 5 acres would most likely be worth much more because it was the final cog in his plans. He would pay a premium for your 5 acres. Strategic buyers tend to pay more because the business is worth more to them as it fits into their overall strategic plans.

Partner – A partner could be either strategic or financial.  Partners generally want the Seller to hold equity post-close.   Partners generally acquire 20-90% of a business and work with the Seller to grow the business post-closing.  Partners can provide financial support, management oversight and guidance that the Seller of a business lacks.

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Rick Krebs – Mergers and Acquisitions, Professional Business Broker

Rick brings a unique blend of sales, entrepreneurial, and financial experience to Business Sales Group.  He began his career as a CPA, working in Nevada and Utah where valuable financial experience was gained. He uses those skills every day. He graduated with a Master’s of Science Degree and Bachelor’s Degree from Utah State University.  As a business owner he started Liberty Mortgage, a mortgage bank licensed in 23 states nationwide. He eventually sold the successful company to an investor from California.  He has been in the M&A space helping people sell their businesses since July, 2010.  During his first year as a business broker with BRC, he listed and sold more businesses than the entire office combined.

As a sale-side advisor for Mergers and Acquisitions transactions Rick’s advisory, accounting, and management skills are invaluable when advising sellers as they maneuver the intricate details of the deal through closing. Rick is also a CNA (Certified Negotiation Expert) which helps him negotiate the most favorable terms for clients in a transaction.

Multi-state operation with headquarters in Wyoming and Texas. They opened in 2006. They are the industry leader in their areas for oil spill cleanup and remediation services. As a seller of cleanup detergent, they have protected sales areas in Texas and Wyoming.

The Company operates in the production side of the Oil and Gas Industry. Because of this, the recent drop in oil prices hasn’t affected their business. The financials will show a steady revenue stream over the past years. They have 3 main sources of revenue:

Production Equipment Maintenance & Roustabout
On-site Oil Spill Cleanup & Remediation
Product Sales of Remediation Agents & Screens

Offering includes over 5 acres of Real Estate and over 6,300 square feet of buildings in two locations.

See for details: http://www.bsalesgroup.com/our-listings/

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Rick brings a unique blend of sales, entrepreneurial, and financial experience to Business Sales Group.  He began his career as a CPA, working in Nevada and Utah where valuable financial experience was gained. He uses those skills every day. He graduated with a Master’s of Science Degree and Bachelor’s Degree from Utah State University.  As a business owner he started Liberty Mortgage, a mortgage bank licensed in 23 states nationwide. He eventually sold the successful company to an investor from California.  He has been in the M&A space helping people sell their businesses since July, 2010.  During his first year as a business broker with BRC, he listed and sold more businesses than the entire office combined.

As a sale-side advisor for Mergers and Acquisitions transactions he brings a unique blend of financial, advisory, accounting, and management skills to the table helping sellers maneuver the intricate details of the deal through closing. Rick is a CNA (Certified Negotiation Expert) which helps him negotiate favorable terms for clients in a transaction.

We are pleased to announce that our M&A Team has just successfully completed the sale of the Electrical Services Company we had listed for sale.  Business Sales Group provided sale-side advisory services for the transaction. The Company sold for full Asking Price. It was a debt-structured buyout with favorable terms for the Sellers and Purchasers.  Congratulations to the New Owners.  Sincere appreciation to Brian Lloyd of Parr Brown Gee & Loveless, Mark Hendry of Mountain View Title, Boyce Coombs of Caldwell, Coombs, and Foley, and Chris Adams of US Bank, and Jed Labrum for all of their hard work on this project.

We just listed 2 new businesses for sale.

HOME HEALTH AND REHABILITATION COMPANY. They do physical therapy services and have valuable contracts with the insurance carriers. Have been open 11 years.
Asking: $1.2 Million
Adjusted Income: $290,000
EBITDA: $396,000

COURIER SERVICE BUSINESS
Established customers and long-time employees.
Leading provider of same-day courier services in Utah.
Asking $2.3 Million
Adjusted Income: $506,674

Call Heather at 801-201-6866 or email at Heather@Bsalesgroup.com for details

The following is a list of 8 items to consider when performing Due Diligence while considering a business purchase.  This list is not a comprehensive list as each transaction lends itself to a unique set of circumstances and considerations, but it provides good things to consider when purchasing a business.

1.  Business Name, Owners, and Licenses.

Verify the business name, address, and contact numbers of the business through the State the business is operating in. Contact the regulatory agencies that govern the business and get a rating of the business and ask questions about transferring licenses.   The Better Business Bureau and Angie’s List are good resources to review customer complaints as it the internet.  You can check with the Securities & Exchange Commission if the company is publicly listed. Find out who the business owners are. Search for published articles about the company and its owners or principals on the Internet and in local newspapers. If the principals or key employees are required to have professional licenses, you can check the status of their licenses with the State.  Corporations, partnerships and sole proprietorships have public information available from State.  A corporation is assigned a FEIN or Federal Employer Identification Number that can easily be traced. You can find out if the company is active and current in filing its yearly documents as required by law. Check with the issuing licensing agency if the licenses and permits are valid and up to date.

2.  Assets.

Get a complete of assets that will be purchased. This includes FF&E (furniture, fixtures, and equipment), inventory and real estate. Make sure the assets have clear titles, and the equipment has been recently inspected and are in working order. If a fleet of vehicles is being purchased, vehicle maintenance records are necessary to review how the vehicles have been maintained. Ownership of real estate assets can be verified in the county’s assessor’s office and motor vehicles with the Department of Motor Vehicles. Ownership will need to be transferred at closing.

3. Liabilities and leases.  

Have the Seller provide a list of the liabilities that will be assumed (if any) and the leases that will be transferred to your name. Get a copy of the lease obtained from the landlord(s) and any other lease that may be pertinent to the transaction.  Review the leases. If necessary have an attorney review the leases. You will need to know what these leases are, how much the monthly obligations are, the rules and restrictions of the leases, expiration dates, delinquent payments, and past due amounts owed for these leases.

4.  Financial Documents.

It is recommended that you review 3 to 5 years of financial history to have an idea of the overall performance of the company. Study the profit and loss statements, balance sheets, accounts receivable, accounts payable, tax returns, vendor invoices, bank statements, payroll and sales files, employee files, equipment maintenance documents and other important data. Hiring a CPA to review the documents is a good idea as well. Remember that CPA’s are good at auditing records and preparing tax returns, so use them for that. Have them check for accuracy and inconsistency. I wouldn’t recommend using them for business advice though.  I have had CPA’s try to talk their clients out of buying a good business when the client went on to make millions because he/she chose to ignore their business advice.

5. Reputation of the Company and Business Relationships.

Talk to the landlord, vendors, neighbors and customers to find out if the company has positive dealings with them. Find out if they have complaints, particularly if the business pays its obligations. What is the reputation of the business in the community and industry? The local Chamber of Commerce and industry or trade associations are great sources of information.

6. Location of Premises

Examine potential threats to the business from competitors, especially those in the vicinity. Go to the city’s planning department to find out if there will be future road or building construction that may decrease foot and vehicle traffic, or if a large competitor is planning to build near the area. Check also with the environment office if there are existing or new regulations that may affect the business.

7.  Legal Issues

County courts have records pertaining to judgments, liens against the business owners and tax liens. State records have the UCC (Uniform Commercial Code) filings that contain financial information. It is important to check if the principals have criminal records. You can find out from court records and from the Department of Corrections.

There are many records that can be accessed for free online, or through agencies and information providers for a fee. Engaging the services of a business appraiser, lawyer, broker and accountant is necessary when investigating a business. They will help in sourcing and interpreting the information you need in making the decision to buy a business.

8.  Insurance.

Talk to the owner about his insurance coverage. You will also need to talk to your insurance agent about coverage you will need for the business. Insurance experts can give you guidance about the types of liability coverage needed, but also have ideas about things like malpractice, umbrella coverage, errors and omissions, general business insurance, property and casualty coverage and limits, etc.   You will need to make sure you have insurance in place the day of closing as well.

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Rick brings a unique blend of sales, entrepreneurial, and financial experience to Business Sales Group.  He began his career as a CPA, working in Nevada and Utah where valuable financial experience was gained. He uses those skills every day. He graduated with a Master’s of Science Degree and Bachelor’s Degree from Utah State University.  As a business owner he started Liberty Mortgage, a mortgage bank licensed in 23 states nationwide. He eventually sold the successful company to an investor from California.  He has been in the M&A space helping people sell their businesses since July, 2010.  During his first year as a business broker with BRC, he listed and sold more businesses than the entire office combined.

As a sale-side advisor for Mergers and Acquisitions transactions he brings a unique blend of financial, advisory, accounting, and management skills to the table helping sellers maneuver the intricate details of the deal through closing.