1.
How you can determine the asset value or enterprise value; a typical buyers
offering price.
BTF We Bring Buyers and Sellers Together
Ken Roys 866 385-1900
or Ken.Roys@BTFmanagement.com
A
business is ONLY worth whatever a buyer is willing to pay for it. The big
question is how is that price determined. There is a reason why each year more
than 4 million profitable businesses are closed and not sold. Some owners will
simply rather close their doors and sell the assets than turn over their life’s
work to what they may term a thief and a rapist pretending to be a buyer. Why
do some people have a pleasant experience and for others it seems to be an
excursion through Dante’s multi leveled Hell? Why are most businesses that are
sold merely sold for the assets? The main reason is when a buyer is usually
found locally it is either a bargain hunter looking for a deal or a competitor
looking for the same thing. Either way the results are disatrous for the
selling owner.
Of
the business that are sold why are so many sold to foreigners? I know of
Solicitors (Lawyers) in
When
over 80% of all businesses sold are sold to buyers that are more than 500 miles
from the location of the business. Granted this includes 30% of that number who
are foreiners that emigrate into the
How
does a buyer and seller find each other. With much difficulty normally…That is
why BTF was created over fifteen years ago. The BTF model has been very
successful for both the seller and buyer for more than fifteen years. Assuming
you want us to find the right buyers from whom you will choose your buyer, how
do you know at what price you should sell your business?
So
now how do YOU price your business? The price of all business fall into three
main categories:
You
have the two basic formulas for Asset Value and Enterprise Value. Your business
is just that…YOURS! We do not dictate
any
price for you to sell your business. Some owners are desparate, such as those
with medical emergencies like terminal illness for example and will sell at a
low Asset Value, others will sell for the top of the Enterprise Value range.
Still others wish to sell for full Fair Market Value. We do not require any
documentation other than a tax reurn or if and only if you so choose to sell at
a higher value justified with some sort of third party documentation. The
business must be a viable business as determined by me, Ken Roys, the BTF
Certified Field Representative. Which is why I must visit your place of
business before you can become a client!
|
SIC Code |
Common
Multiples Chart |
Low |
Medium |
High |
|
15 |
Building Construction, General Contractors, Builders |
2.00 |
3.50 |
4.50 |
|
17 |
Construction Special Trade Contractors |
2.50 |
4.50 |
5.50 |
|
20 |
Food, Kindred Food Products - Meat, Dairy Food
Processing & Packaging |
3.75 |
7.00 |
9.00 |
|
21 |
Tobacco Products |
3.75 |
7.00 |
9.00 |
|
22 |
Textile Mills |
3.50 |
6.00 |
7.00 |
|
23 |
Apparel & Other Finished Fabric & Similar
Materials Products |
3.50 |
6.00 |
7.00 |
|
24 |
Lumber & Fixtures |
3.00 |
5.00 |
6.50 |
|
25 |
Furniture & Fixtures |
2.50 |
4.50 |
5.00 |
|
26 |
Paper and Allied Products |
4.50 |
6.00 |
8.00 |
|
27 |
Printing, Publishing & Allied Industries Manufacturing |
4.75 |
7.00 |
8.75 |
|
28 |
Chemicals & Allied Products Manufacturing |
3.25 |
6.00 |
7.50 |
|
29 |
Petroleum, Refining & Related Industries |
8.50 |
9.50 |
10.25 |
|
30 |
Rubber & Miscellaneous Plastics Products |
4.25 |
6.75 |
9.25 |
|
31 |
Leather & Leather Products |
5.00 |
6.00 |
7.00 |
|
32 |
Stone, Clay Glass & Concrete Products |
3.25 |
5.50 |
6.00 |
|
33 |
Primary Metal Industries |
3.50 |
5.75 |
8.00 |
|
34 |
Fabricated Metal Products |
4.00 |
6.50 |
8.25 |
|
35 |
Industrial & Commercial Machinery & Computer
Equipment |
4.50 |
8.25 |
10.50 |
|
50 |
Wholesale Trade - Durable Goods |
2.00 |
4.00 |
5.25 |
|
52 |
Building Material, Hardware, Garden Supply &
Mobile Home Dealers |
1.75 |
3.25 |
4.25 |
|
53 |
General Merchandise - Retail |
1.00 |
2.00 |
3.00 |
|
54 |
Food Stores - Retail |
2.00 |
3.50 |
4.50 |
|
55 |
Automotive Dealers & Gas Service Stations |
1.00 |
2.00 |
2.50 |
|
56 |
Apparel & Accessory Stores - Specialties |
2.00 |
3.50 |
4.50 |
|
57 |
Home Furniture, Furnishings & Equipment Store |
2.00 |
3.50 |
4.00 |
|
58 |
Eating & Drinking Places |
3.00 |
5.00 |
5.50 |
|
72 |
Personal Services |
4.50 |
7.00 |
9.00 |
|
73 |
Business Services |
3.50 |
6.00 |
7.50 |
|
75 |
Automotive Repairs, Services & Parking |
3.50 |
5.50 |
6.50 |
|
76 |
Miscellaneous Repair Services |
5.00 |
6.00 |
7.00 |
2.
Meeting Agenda if and when we meet. Duration: one or two hours.
BTF We Bring Buyers and Sellers Together
Ken Roys 866 385-1900 or Ken.Roys@BTFmanagement.com
I will gladly
schedule an appointment with the business owners that meet these three simple
parameters:
1.
VIABLE BUSINESS: It
doesn't matter if you are losing money, will a buyer believe
he/she can make it profitable. The business is only a portion of the sale. The
Buyer is also buying a business defined by who you are and
what you had done. If you do not like the buyer
or visa-versa then no deal will be effected.
2.
DECISIVE: Are
you really ready to sell in your mind! A buyer / investor will not make a
serious offer if they believe you may change your mind and back out of the sale
during the process. If you are not capable or able to decide and commit to
sell, then wait until you are capable and able to make that decision.
3.
NOW: The
buyer has money and will buy / invest in a business now, if not yours then some
other business. Buyers / Investors have choices. The process will take some
time but YOU must be committed to the process now knowing it could take
a few weeks to a few years before you decide on the right buyer.
Introduction
Brief
introduction of all decision makers of the two parties:
1. The Owners or Directors of
the Shareholders and all germane decision makers and / or mentors representing
your business.
2. Ken Roys, a Certified Field
Consultant who has an extensive background of experiences in the M&A
Industry
Paperwork Signed
We
will quickly review the questionnaire that you received in the e-mail/fax and
filled out prior to our meeting. I will sign the Confidentiality Agreement and
any Non-Disclosure Agreements that you may have.
Facilities Tour & Photos
Another
thing on the agenda is a tour of your business. If I am to be introduced any
employees it is simply as a consultant. I will take photos of your business with
my camera. I am also interested in any copies of brochures or company
advertising that you might have for your portfolio.
Private Meeting, Options &
Alternatives
From
this point on, the meeting must be conducted and discussed in total privacy. If
your place of business is not private enough then you are best served to
continue at your home. All options and alternatives that are available to you
will be discussed.
Review Your Collection of Data for a
Business Valuation Analysis
Next,
we review what your Business is worth to a buyer / investor using several
different methods for a realistic but general ball park figure. The basics are
done by you prior to our meeting. We review the options by you to the basic
methods that a buyer may use. A Credentialed Valuation and Pro-Forma Future
Business Analysis would require more data, time and a credentialed professional
analyst and Appraiser.
BTF
What
BTF does and how they do it and have done so for fifteen plus years. BTF
Advertising costs for 36 months versus your other options. BTF Valuation
options versus competition versus not going that route
Decision Commitment
A
decision will be made as to what you wish to do about the disposition of your
business. If you cannot make a decision then it is made for you as buyers will
only deal with a decisive seller. Since I only meet with owners who are
committed to effect a sale of their business either completely or partially, if
what BTF does makes sense then we sign an agreement. If it doesn’t make sense
today it will not make sense tomorrow. We either have a match to do business or
we do not.
3.
Basic info on: BTF exactly what we do for our clients and how we do it
BTF We Bring Buyers and Sellers Together
Ken Roys 866 385-1900
or Ken.Roys@BTFmanagement.com
Business owners
know how to negotiate or they would not survive in their business. There are
only three major components for a business owner to sell their business once
they have committed themselves to.actually sell
BTF Management
Consultants Inc. represents a large group of qualified buyers and investors. In
addition to our base of of qualified
buyers / investors currently looking to invest in a business, we qualify
hundreds of new buyers / investors. This is done through an aggressive,
confidential, Internet advertising campaign. My role is to meet with serious
minded and motivated business owners such as yourself and to physically inspect
their business on behalf of our buyers / investors.
We advertise
globally in the internet for 36 months. In the past we have averaged over 80% success
ratio at matching buyers and sellers During just a three month period our database of businesses that
are for sale, we:
The results of any
of those searches we will typically show up on page one in the first
five paid advertising results in anywhere from 50 to over 200 million possible
results for "buy a business".
If you require we
will help you with an American Society of Appraisers Professional Valuation,
and/or a professional pro-forma enhancement on your business' potential growth
for a potentially higher sales price justification.
Basic Statistics on Businesses for
Please note: BTF does not tell
the seller at what price their business sould be sold.. Notwithstanding,
whatever price you do come up with will have to be justified in the eyes and
mind of a buyer or they will not pay your price. Price can easily be justified
by a tax return.. However if the business is to be sold a a greater price than
what a tax return justifies i.e. start-up businesses have no tax returns
normally. They are justified in other ways that show and verify future cash
flow potential. Example: In
1997 Star Furniture was bought by billionaire Warren Buffett's Berkshire
Hathaway. Founded in 1912, furniture retailer Star Furniture NOW
operates 10 stores in the state of
BTF’s buyers are
pre-qualified to meet the above listed characteristics prior to ANY
introductions to any of our sellers.
Therefore, you as the seller of your business would only be negotiating
with qualified buyers who are looking for the type of business you have, in the
location you have your business, who are willing to purchase a business under
the terms and conditions you want to sell, and these buyers have the money with
which to purchase your business.
Guarantee
We guarantee in
our agreement:
1. To advertise for buyers in Electronic / Digital Non-Print Media i.e.
Internet Search Engine Priority Placement Advertising.
2. Forward your professionally designed portfolios to interested parties and
provide follow-up with qualified buyers
3. Notify you of every buyer receiving your portfolio
And,
we will do so until……your business is SOLD!... Or for up to 3 years, whichever
comes first!... Or if you withdraw your business from the market… Or if you
sell your business to anyone... your buyer or ours…
Contact: Ken
Roys , Office &
4. Business For
A 2001 study found that the more successful
the company, the more likely its owner wants a valuation. While only 39% of
firms with 1 - 4 employees planned to get an appraisal, 70% of firms with 50 -
99 employees planned to. Does this statistic prove why 3 out of 4 small
businesses sell at a liquidated value?
If you
were to sell your business today, how much would it bring? Understandably,
that’s not a simple question in today’s dynamic market. Every business is
unique. Which means it’s not enough to rely on comparisons with other
businesses in your area. And clearly pricing your business is a tricky matter.
For example, according to a well-known source for business transaction data, Pratt’s Stats, recent revenue
multiples for firms in the auto parts industry ranged from a low of .98 to a
high of 83 with a median of 2.9. If you were valuing your firm for sale and
your annual revenue were $100,000, then the value of your business could be as
low as $98,000, as high as $830,000, or somewhere in between. Where your firm
lies along this continuum is obviously of the utmost importance and can only be
determined by a valuation approach that incorporates academically validated
methods with industry-specific valuation factors. The first step for any seller
is to have a third party business valuation completed on the business. Make
sure you are dealing with a credible individual or firm that is accredited
through The American Society of Appraisers.
THIRD PARTY VALUATIONS -
Preparing the business for financial negotiations
Many
small to medium size business owners don’t know where to begin. There may be
too many assets to value, too many changes within their industry during years
of operation, or their emotional attachment may bring a distorted view. That’s
where an independent business appraiser is a necessity. There are numerous
certified public accountants, valuation firms, and investment banking companies
that specialize in this area. The cost: Between $3,500 - $45,000 depending on your business. Time to
complete: one to two months. The American Society of Appraisers, based
in
CHALLENGES
Confidentiality -
Confidentiality should be considered when preparing your business for the
market. If the general public knows you are for sale you can lose value
overnight. Do you think your local competitors will take advantage of the
situation? Of course they will. Clients might start looking at taking their
business elsewhere. Employees might not feel secure and start exploring other
employment opportunities. If you have operating lines of credit, a banker’s
mentality can change very quickly if they know you are for sale. The list goes
on and on. Confidentiality should be very important through this process.
Exposure to Qualified Buyers - How
do you get exposure to qualified buyers while maintaining confidentiality? Is
there a qualified buyer in your local market? Don’t limit your search for a
buyer to your local market. There may be a buyer(s) several states away that
are willing to pay you more. If you called your local competitor, do you think
they would pay you a fair price? They are very likely to not put any goodwill
value on your business. Define how and where to confidentially advertise to
find that right synergistic buyer. Is your buyer an individual, corporation or
investor?
FINDING BUYERS &
SELLERS - What are the industry options?
DO NOTHING -This can be one of the most expensive ways to go. How many times has a potential buyer just walked in to your business with checkbook in hand? It is very unlikely for this to happen...