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Fernando Simo's Blog – October 2009 Archive (6)

Selling your Business??--Can you sell something with no value??

As I go on listing appointments, I caution sellers that there are two ways in which one can normally value small businesses (notice the word “normally” and “small”). One way values Tangible Assets, such as inventories, receivables, furniture, fixtures and equipment. The other uses a multiple of Owners Benefit (Operating Profit plus owner’s salaries, depreciation, amortization, interest and personal benefits charged to the business). In other words, if your business generates minimal or no… Continue

Added by Fernando Simo on October 21, 2009 at 11:03pm — No Comments

Learn from those who lost it all—Perform a Due Diligence Prior to Closing on a Business Transaction!!

It’s the same old story. A buyer enters into a Purchase Agreement to buy a business, normally with a provision to conduct a due diligence within a 10-15 day period and, (guess what?) fails to do so. As a result, the buyer goes to closing, signs all of the documents required to transfer ownership only to find out later on that what he bought is not what he expected. As a result, the new business owner losses, in most cases, all of their liquid assets. It is a story which I find repeating all the… Continue

Added by Fernando Simo on October 16, 2009 at 10:01pm — No Comments

Selling your Business??—Why it makes sense to provide Seller Financing in this market.

Let’s face it, many buyers today are hindered by their ability to buy because banks are unwilling to provide business loans to the extent of a few years ago, if any at all. It is, to say the least, difficult to get financing. As a result, sellers have now replaced banks by providing Seller Financing. In this market, if sellers failed to do, they may not be able to sell their business or it may take years in which to do it. Here are some reasons why sellers should provide… Continue

Added by Fernando Simo on October 9, 2009 at 8:59pm — No Comments

Selling your Business??—Focus on your Business, Outsource!!

During one of my listing appointments, I met a seller who wanted to sell his business in order to improve the quality of his life—he wanted to spend more time with his family. According to him, he spent over sixty (60) percent of his time doing things that had nothing to do with the actual operations of the business—the back office stuff.

He complained that the forty (40) percent he spent focusing on his business, although enjoyable, was not enough to provide the kind of bottom line… Continue

Added by Fernando Simo on October 9, 2009 at 8:52pm — No Comments

Selling your Business??— How do you know when to sell your Business??

During the week, I had a discussion with a very talented individual whose job is to help businesses “get well” financially through leadership development. He asked for my opinion regarding valuation and exit strategies. The essence of his question dealt with a topic in the mind of many-a-business: when can I sell my business in order to get the most value?

Now, I know that many of my colleagues may have their own answer to this question. However, I gave him a very simple answer:… Continue

Added by Fernando Simo on October 9, 2009 at 8:49pm — No Comments

Selling your Business??--Cheap isn't always a Bargain!

What is it about most of us who decide that “cheap” is better? We do it when buying clothes, shoes, furniture, car, etc, only to find out, in most instances, that our decision was not a good one. Why?? Because in the very short term, clothes look like hell and soon deteriorate, shoes fall apart and last only a few months, and our furniture rips apart easily, forcing us to go buy the same things within months-- doubling our expense!! We do the same when buying a house. We forgo the best… Continue

Added by Fernando Simo on October 8, 2009 at 7:00pm — No Comments

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