how to buy
Types of Acquisitions - Merger
March 05, 2019 by Alex Estrin
There are three principal ways to acquire a business: a purchase of the Target's assets or stock, or a merger. Alex Estrin business broker with BizEx, and Alex Prasad, business attorney with AEGIS Law, present a high-level summary of mergers. Merger Fundamentally, a merger is a more complicated stock purchase. “The result is that two legal entities are merged into one, which assumes all of the assets and liabilities of the extinguished entity,” says Alex Estrin. In some forms of merger, when the Target's corporate existence continues, the Buyer can avoid many third party consent issues. The tax treatment, relation to third parties and ability to force stockholders into a transaction vary based on the type of merger.
Types of Acquisitions - Stock Purchase
February 26, 2019 by Alex Estrin
There are three principal ways to acquire a business: a purchase of the target's assets or stock, or a merger. Alex Estrin business broker with BizEx, and Alex Prasad, business attorney with AEGIS Law, present a high-level summary of stock purchases. Stock Purchase In a stock purchase, an acquiror buys the target company directly from its shareholders; the result, if the Buyer is an existing business entity, is that the target becomes a wholly-owned subsidiary of the acquiror. Since the acquiror in a stock purchase takes complete control of the legal entity of the target, it takes on all of the assets – and all of the liabilities – of the target as of the closing date. If the deal is structured as a "cash-free, debt-free" deal, as most US domestic deals are, the Buyer will often require the Seller satisfy certain liabilities with the closing proceeds simultaneous with the closing.
Types of Acquisitions - Asset Purchase
February 19, 2019 by Alex Estrin
There are three principal ways to acquire a business: a purchase of the target's assets or stock, or a merger. Alex Prasad, business attorney with AEGIS Law, and Alex Estrin business broker with BizEx, present a high-level summary of asset purchases. Asset Purchase In an asset purchase, a Buyer acquires only those assets and liabilities specifically delineated in the purchase agreement. This surgical approach ensures that a Buyer gets only what it wants – and nothing more. As compared to a stock purchase, the process of picking and choosing usually leads to a longer deal timeline. In other ways, an asset purchase can be simpler; for instance working capital adjustments are not always included in an asset purchase as the Buyer may not be acquiring the bank accounts of the Seller.
Acquiring a Business – An Overview of the Process
February 12, 2019 by Alex Estrin
Whether you're a business looking to grow through acquisition or an individual looking to acquire your first business, the acquisition process generally contains the same high-level steps. In the paragraphs below, Alex Prasad with AEGIS Law, and Alex Estrin with BizEx lay out a high-level summary of the process of acquiring a business. Form an advisory group If you are an existing business you may already have an in-house acquisition team. If you do not, at a minimum, a team will likely include a transactional attorney to draft the deal documents and either a broker or an investment banker. The broker/investment banker can help you identify targets and provide useful context re: price and other deal terms they see in the same industry as your target. Conduct public due diligence
Selling a Small Business as a Short Sale
December 05, 2011 by Shelli Margolin
Drowning in business debt!?! Even when a companys sales start increasing, debt can eat away at the profits More and more small business owners are finding that profits are going to servicing their debt and keeping their business operational. In such cases, an option is to sell the business through a short sale. Especially if a business owner is burnt-out, looking at shuttering the business and declaring bankruptcy. Declaring bankruptcy is different as a small business owner. Its not just an anonymous bank or bureaucratic phone company that is owed money; its often suppliers and vendors with whom there are long-term personal relationships. And often, friends and family have invested in the business or lent large sums of money to help keep the business afloat.
How to Value a Restaurant or Bar that is not Showing Profit
November 03, 2011 by Mina Singson-Brightman
How much money is a restaurant worth? Does it have any value if the restaurant is not turning a profit or barely breaking even? Restaurants, coffee shops or bars are valuable even if they are not showing a profit. These kinds of businesses are valued through the replacement value technique which assumes a buyer pays the seller a price that is not dependent on the income value to benefit from the existing investment in the restaurant facility, the lease and the location. In other words, the buyer is starting a restaurant business at a discount and will pay for the right to avoid spending hundreds of thousands or even millions and avoid all the delays and city regulations in building a new restaurant Here is what a restaurant seller has to say when he received an offer on his business.
How to Sell a Restaurant in 90 Days
October 31, 2011 by Shelli Margolin
How to Sell a Restaurant in 90 Days A True Story Restaurants are not necessarily an easy sell. However, if they are priced at their proper value and positioned to sell in the right forums, they can be sold in a timely manner to the satisfaction of both the buyer and seller. Preparing the restaurants books and records for sale is as important as bringing in the right buyer. The following is a true story of a restaurant that recently sold through an experienced restaurant business broker. When the Johnstons[1] bought their pizza deli in Los Angeles five years ago, the plan was to build a business for their children to takeover. Both Mr. & Mrs. Johnston had fulltime careers that they wanted to keep. With the help of their son, the restaurant was able to sustain a positive cash-flow for several years.
Buying a Restaurant or Bar and the Transfer of Liquor License
September 08, 2011 by Mina Singson-Brightman
When we list a restaurant or bar for sale with Alcoholic Beverage Control (ABC) license, we generally get significant buyer activities on them. For buyers of such businesses who do not understand how a liquor license is transferred, here is an overview. The number of retail liquor licenses, especially Type 47 (full liquor license for restaurants) and Type 48 (full liquor license for bars and nightclubs) that can be issued in a county is restricted. The limited supply of liquor licenses and the lengthy process to get an ABC license approved make businesses with permit to sell alcohol highly desirable and valuable. When buying a business with beer and wine or full liquor license, the transfer of ABC license from one person or entity to another person or entity is called a person-to-person transfer. Generally, this is how it works:
HOW TO SELL YOUR BUSINESS WHEN YOU ARE THE KEY TO YOUR BUSINESS
August 11, 2011 by Dan Munter
In a perfect world, when owners decide to sell their business, a buyer will come forward and write a check for the full asking price. In the real world, this rarely happens. There are so many reasons why this rarely occurs. In this blog, I want to focus on one of the most important issues. One of the biggest risks for a buyer is whether the business will survive without the sellers presence, knowledge and relationships. I want to give you some actual examples of businesses I have both recently sold and am in the process of selling.
What Is a Typical Restaurant Business Worth?
July 12, 2011 by Shelli Margolin
As written for ehow.com... What Is a Typical Restaurant Business Worth? The worth of a restaurant is predicated on what someone will pay to buy that restaurant. As restaurants come in as many shapes and sizes as do their owners, determining worth is complex. In the most general terms, value can be established through either a multiple of annual sales or by its assets. Restaurant Categories Restaurants fall into two major categories: full-service and limited-service (or quick service). Then there are many subcategories such as, fine dining, casual dining, dinner house, bar & grill, delis, fast food, pizza take-out and the list goes on. Within those categories are independently owned, franchises, corporate owned, single location to international multi-location. Thus, typical restaurant cannot be rationally defined. Profit vs. Assets
How to Appraise a Restaurant Business
July 11, 2011 by Shelli Margolin
As written for ehow.com... There are several reasons for appraising a restaurant, along with many nuances to the appraisal itself. Let's review how a prospective buyer can appraise a restaurant for purchase. There are three general ways that restaurants' sale prices are established: based on profits, assets, or "key costs," referring to its location value. The buyer should be aware of whether the restaurant is making a profit and what furniture, fixtures and equipment (FF&E) are included in the sale. If a restaurant is profitable, a buyer can take a financial approach to the appraisal. If the restaurant is not turning a profit, it still has value in its equipment. In some cases, a restaurant is sold for key costs: its location, property/lease value and entitlements. Instructions: Profitable Restaurants
Inc's 10 Questions to ask before Buying a Business
May 26, 2011 by Michael Davidson
I just read an interesting Article from Inc., entitled 10 Questions to ask before Buying a Business. Many experts are predicting that a huge wave of businesses will become available over the next decade or so as baby boomers look to sell. As the economy continues its climb into a full-blown recovery (we hope), it just might be the perfect time for you to fulfill that lifelong dream of buying a business. If you can find the right business that is the right fit for you, I think this is a great time to buy! Overall, I think it's a pretty good list. When we create a Confidential Business Review (CBR), we try to address these questions up front before you even meet with the owner. Some of the questions not asked by Inc., which we think are important include: Can you as a new owner successfully run and operate this business? If not, the other questions don't really matter.
What Is a Typical Restaurant Business Worth?
May 06, 2011 by Shelli Margolin
http://www.ehow.com/info_8360777_typical-restaurant-business-worth.html
April 23, 2010 by Kendric Foultz
To help a small business seller understand how buyers value businesses, I like to use this analogy. If you bought a nice car fifteen years ago and took very good care of it, chances are that it looks pretty much how it did when you bought it. It still runs great and does the job that you got it for in the first place. If you take care, it could keep going for decades. Now lets say you bought that car for thirty thousand dollars. What do you think you could get for that car today?
BUYING A BUSINESS WITHOUT THE EMOTION
March 30, 2010 by Dan Munter
Buying a business has many similarities to buying a stock. They both require appraising the value of a company to make sure that you buy at a price which will give you the ability to grow your investment and earn an income (dividend). A careful analysis will use many of the same tools for appraisal. Both buyers will look at the multiple of earnings (P/E ratio), the multiple of revenues (p/s ratio). They will also look at macro trends within the industry of the business/stock and within the general economy. They will both look at what is the barrier of entry into the business.
BOSS Theory- What small business buyer should look for
March 23, 2010 by Dan Munter
I recently participated in a Webinar on How to Buy a Business by industry expert Richard Parker (Diomo.com) and one of the topics discussed really hit home for me... There are 4 qualities of a business that will help a new small business succeed with his new purchase. The 4 components can be remembered with the anagram called the BOSS Theory: B-Bland. A business that is today's 'hot new business" will become the 'out of style business' of tomorrow. A bland business is less vulnerable to fads and innovation. O- Operational sound. Buying a turn-around business is very risky. There are people who specialize in turning around companies. It really takes a different skill set then simply running a business. There are enough challenges in taking over a business without having to engineer a turn around.
Why now is a great time to buy a business
March 15, 2010 by Kendric Foultz
If the number one rule in business is to buy low and sell high then now is a terrific time to buy a business! 2009 was a rough year for the overall economy. Businesses across the board showed revenue declines that haven't been seen in decades. Many business owners who were planning on selling their businesses and retiring found themselves in a position where financially they had to either reduce their retirement expectations or continue to work. Until recently, most were opting to continue to work, but now we are seeing more owners adjusting to the new reality and selling their businesses at today's valuations.
Free Online Business Evaluation Tool
March 09, 2010 by Michael Davidson
Want to know what your business is worth? BizEx Business Brokers has a fun and interesting tool available for small business owners. Just answer some basic questions and our site will show you the estimated value of your company. The valuation process is based on the Multiple of Earnings Method, which is the most common process used for small business valuation. Its a fairly simplistic tool, but its online and its free. Free Online Business Evaluation Tool I would appreciate any feedback you might have as we'd like to create a version 2 down the road. Thanks!
To Blog or not to Blog, that is the question
January 28, 2010 by Michael Davidson
Like most small business owners in Los Angeles and throughout Southern California, weve heard about the benefits of hosting our own blog. After exploring this further, we found out about the time commitment and it made us cringe. Two or three blog posts a week? We dont have time for that. We are so busy; we have a hard time getting out of the office most days! So we delay and explore other ways to promote our business and wait for someone else to figure out the magic recipe on how to blog time and cost effectively.
