|
|
 |
48 Manzanita Road
Atherton, California 94027
phone: 650-327-9710
fax: 650-327-4117
e-mail us
|
|
|
|
|
|
|
|
|
| |
Taking A Company to Market |
| |
Selling one’s business can be both an exciting and challenging project. It is a process but one that requires focus, commitment, patience and perseverance. Each of these can place strong demands on your time and resources. What is most important is how to maximize your return and help you capitalize on your years of hard work. As such, your business deserves the best possible exposure to qualified buyers and the focused efforts of an experienced business intermediary.
The Results Group, Inc. (TRG) is comprised of individuals with extensive real world operating experience and they work with a network of professionals that have the requisite skills and resources to help find the right buyer and consummate the right deal.
The general process we follow to sell a Client company is designed to provide the Client with the widest possible exposure to target Buyers while maintaining rigidly enforced confidentiality agreements to help insure that only the ‘right’ people know that the Client company is for sale.
We'd be happy to share our entire process with you so that you can see first-hand why our approach is designed to find the best opportunity for you.
|
| |
|
| |
Important Points for Every Seller |
| |
1. Depending upon the size of the business and the situation, a specific “selling” price may or may not be mentioned in the initial mailing and Offering Memorandum. Generally the objective is let the buyer make the first move toward a valuation of the company. This is especially true for larger firms. The buyer will have specific ideas about the value a company might bring to its operation that may not have been considered by the seller. In situations like this a strategic buyer may be willing to offer a higher valuation than a financial buyer.
2. It may be in the best interests of the seller to obtain an independent third party valuation of the business. An independent valuation should help provide prospective buyers with an understanding of the value of the business when considered against other similar companies in the market.
3. TRG is very focused on maintaining confidentiality during the process. The Client company is never revealed without prior permission from the Client. It is also important that the confidentiality extend to the personnel of the Client company. Since employees are usually not aware of a potential sale, TRG only uses a “reference” number to identify the Client company. This minimizes any potential “leak” to staff and operating personnel.
4. While TRG is the conduit by which prospective buyers find out about the opportunity, the Client is in control of the entire process in terms of who is contacted and who is invited to see the operation. The Client must approve each phase of the transaction before we proceed.
5. TRG cannot provide accounting and legal advice. We have established relationship with outstanding professionals in each of these fields in the event the Client wishes to engage them for their professional opinion.
|
| |
|
| |
Building Through Acquistion |
| |
Making a strategic investment by acquiring a business to add to the corporate portfolio can be both an exciting and challenging project. It is a process that requires focus, commitment, patience and perseverance. Each of these can place significant demands on your time and resources. The most important factor is how to maximize your return by utilizing outside resources for discovery as well as managing the process. The exploration of potential acquisition candidates, to be both successful and financially prudent, requires the focused efforts of an experienced business intermediary.
The Results Group, Inc. (TRG) is comprised of individuals with extensive real world operating experience and who work with a network of professionals that have the requisite skills and resources to help find the right acquisition candidate(s) and consummate the right deal.
The general process we follow to assist a Client company in its acquisition search is designed to provide the Client with the widest possible exposure to target Sellers, while maintaining rigidly enforced confidentiality agreements. This helps the target company to know that only the ‘right’ people in the Client Company will be involved during the initial exploration period. The same confidentiality holds for the Client Company. In many cases, the Client Company wishes to remain anonymous during the initial stages of the process in order to protect strategy, market awareness, competitive threats, etc.
If you would like to find out more about our approach and how The Results Group can make a difference please contact us directly.
|
| |
|
| |
Buyer's Primer |
| |
Owning one’s own business can create opportunities that rarely exist to those working for someone else. Besides controlling your own destiny, the independent business owner has the greatest chance for accumulating wealth since over 80% of the millionaires in the United States are individuals that own their own business. However, it is not easy. Owning one’s own business usually means greater risk, longer hours, wearing many hats and relying on your own skills and energy to make the business a success. Whatever your motivation is for owning your own business, it’s important to understand if you have the skills necessary to make yourself successful.
The purpose of this document is to provide you with answers to some of the most common questions that are asked as well as share with you those key ingredients necessary to successfully make the transition from working for someone else to working for yourself.
How Are Businesses Valued?
There are many ways that businesses are valuated. For our purposes here, we’ll explain three formal methods used when an independent valuation by an outside service is conducted as well as some general methods used in main street businesses that are variants of the formal approach.
When companies engage a firm to do an independent valuation, there are three primary forms of valuation:
· Asset Approach to Value
· Market Approach to Value
· Income Approach to Value
The Asset Approach is based on a business using its assets in the highest and best use of the assembled assets for continued use in a similar business. This form of valuation is designed to determine the adjusted book value of the company. This is accomplished by:
1. Adjusting all tangible assets to their fair market value in continued use;
2. Adjusting all tangible liabilities to their fair market value in continued use;
3. Adding a control premium or minority interest discount (if applicable);
4. Deducting a discount for lack of marketability (if applicable).
The Market Approach utilizes a comparison of the interest being valued with actual trades of other similar interests. This form of valuation is appropriate to use only in situations where there have been actual trades of similar business interests. The approach can include public companies and private company transactions. The industry rule of thumb approach is the most common. These “rules of thumb” are market-derived, which means they are taken from actual market transactions. Many market-derived formulas value the entire business, exclusive of real estate; some value just the goodwill; and some provide a combined value for trade fixtures, leaseholds, goodwill, licenses and other intangible assets.
Market derived formulas can incorporate a growth multiplier based on cash flow or sales. Most commonly it is based on cash flow. There also can be a gross unit multiplier, such as number of seats in a restaurant, enrolled children in a day care center or number of beds in a health care facility. In essence, market formulas provide a form of market comparison.
The Income Approach is a method of valuation that is often used when there exists a record of historical earnings from which a cash flow or earnings capacity can be derived. It is usually given some weight when there are no reliable comparables or they have questionable comparability. The steps of the capitalization of earnings method is to:
1. Estimate the anticipated benefits (income to be capitalized);
2. Develop the capitalization rate;
3. Capitalize the income estimate.
In main street businesses, there are many factors that go into what a company’s value is in the market. These factors include replacement value of assets, inventory, franchise value (if applicable), good will, location, type of business, condition of the books and records, length of time in business and adjusted annual profit. All of these factors put together help determine the “market value” of a business. The market value of a business is actually determined by applying a series of multiples based on the real operating profit of the business taking into consideration the factors mentioned above.
Ultimately, the market will determine what a company is really worth. If the price is too high, no one will buy it. Rarely is a company priced too low. The most important thing is to price a company so that it is competitive in the market and creates interest among the universe of buyers looking for a business.
Is It Better to Buy a Business or to Start a New One?
This is really an individual decision. Generally there are many more advantages to buying an existing business than starting one from scratch. First, and probably most compelling is that the risk of failure of an already existing business is less than if one were to start a business from scratch.
However, there are other factors that also make buying an existing business a preferred choice by many people. When one starts a business there is usually a ramp up period where there is negative cash flow until such time as the business begins to generate cash so that the owner can take a salary. This period typically ranges from six to twelve months. During that time, an individual must have sufficient cash flow to meet his/her monthly obligations as well as the capital necessary to fund the growth of the business to positive cash flow. During this time vendor relationships must be established, a customer base must be created, employees might need to be hired along with all the other tasks needed to create a successful company. Once the owner achieves positive cash flow, the owner can either keep re-investing in his/her new enterprise and/or begin to draw compensation from the business that has been developed through their hard work.
When one buys an existing business, there is a premium to be paid for immediate cash flow, established vendor relationships, on-going customers, proven employees, a history of experience, an established name and a position in the business community. However, this premium is small in comparison to what it costs to establish each of these when one starts a new business.
Probably the most important component is the immediate cash flow associated with purchasing an on-going business. This provides a new owner with an immediate return on his/her investment, an income as well as having an on-going concern to take to the next level of success.
What’s the Advantage of Using a Business Broker to Help Find a Business?
First and foremost a good broker usually has access to businesses or information about a specific opportunity that may not be available to the general public. In selling a business, the seller usually wants to keep confidential the fact that the business is for sale. Vendor relationships, customers and employees can all be affected by public knowledge that a company is for sale. A good broker acts as the confidential intermediary and can provide valuable information to the potential buyer about a specific opportunity.
Secondly, when working with a broker, the time one spends looking at a business is time well spent. The broker does a great deal of analysis on companies that he/she represents, has access to information that a seller will not normally provide a potential buyer and the broker should have an ability to provide greater insight into the market in general.
What Should I Look For in a Business Broker?
Most importantly you should work with a broker with whom you feel comfortable and who you believe can best represent your interests in finding the right business to buy.
It’s important that a buyer has a good understanding of the capabilities of the broker. There are multiple factors to consider. These include, but aren’t limited to, general business experience, industry experience, market knowledge and fit with the personality and style of the buyer.
Each of these areas is important and contribute to the capabilities of the broker. Some, however, are more important than others. A buyer might find a broker with twenty years of experience and choose them over someone with only one year of experience only to find out that the twenty years of experience is the same year repeated over and over again. Good business knowledge, experience in operating businesses, demonstrated integrity and a good personal fit are essential and these should weigh heavily in any decision to work with a specific broker.
Why Do Most Brokers Prefer to Work with Sellers?
Generally speaking, most brokers prefer to represent sellers since they have a vested financial interest in any transaction that involves their client. Also, buyers often contact multiple brokers on potential opportunities they find interesting. This is perfectly acceptable if the buyer wants to do all the work, but it removes the likelihood that a broker will represent the buyer on the transaction. The reason is that the procuring cause for the buyer finding out about the deal is the buyer him/herself. Therefore, the selling broker won’t split their commission with another broker. Thus, there is no financial incentive for a broker to represent a buyer unless the buyer is willing to pay a separate commission to the broker for his/her services. That commission is generally 50% of the commission paid to the broker representing the seller. Most buyers don’t want to do that.
If a buyer wants to have a broker assist them in finding a business that might be on the market, then the buyer should have the broker make all of the contacts directly with the seller’s broker on any and all opportunities that are of interest. Generally, this solves the issue of how the buyer’s broker will be compensated for a specific transaction.
There are situations where a buyer might want to work directly with a broker to assist them in finding a business that is not on the market. The broker is now pro-actively working for a buyer, or group of buyers, to find a specific opportunity. In this scenario, the buyers will most likely be paying the commission of the broker as he/she is representing them in the transaction. This is more common in larger transactions involving private equity groups.
What Other Outside Counsel Should a Buyer Seek?
Purchasing a business is both an emotional and financial decision. The transaction is usually somewhat complex and one might want to consider an opinion by an accountant and/or CPA. A broker cannot give either legal or accounting advice and it is important that the buyer have a solid understanding of the financials. What is important is that a buyer has an accountant that understands the what re-cast financial statements are and the things business owners do that don’t always show up on their tax returns.
It is also important to get good legal advice regarding any contractual agreements. If one is using a standard business transaction contract that is approved by a state’s association of business brokers, the lawyer should not waste his/her client’s time and money by drafting a new agreement unless it is absolutely necessary. This should save the buyer and seller both time and money.
A good standard agreement, such as the one used by the California Association of Business Brokers, is designed to protect both parties. If, on the other hand, a purpose specific agreement is drafted for the transaction, a thorough legal review is both wise and prudent for both the buyer and the seller.
Finally, most business transactions go through an escrow (just like buying a house in the western United States) so that many of the things that are done with attorneys in other areas of the country, are taken care of in the escrow. This helps to reduce the costs to both parties.
|
| |
|
| |
TRG's Consulting Services |
| |
What we can do for you
TRG can help you successfully launch products and services, build strategic relationships and effectively compete in the marketplace. From major multi-national organizations to “just getting off the ground” start-ups our extensive sales, marketing and general management experience can make a difference. We’re accelerators. Our job is to get you to your goal faster, better and in time to make a difference.
Our experience includes:
· Management Coaching
Work with senior management to lead, motivate and build teams.
Clarify the company’s core mission and strategic focus.
Train management in giving road show and investor presentations.
· General Management
Create and communicate company vision and strategy.
Build effective and cohesive teams to implement corporate strategy.
Build operating infrastructure to successfully launch company/product/service.
Conduct selective executive search to find specific “high quality” operating
personnel.
· Sales and Sales Management
Identify the key steps in the sales cycle and how to reduce “time to close”.
Identify and quickly build a productive sales team and management team.
Create and implement a strong quick-start sales training program.
Build and implement an effective sales compensation program.
Evaluate current sales operations to identify opportunities for improvement and
work with management to make it happen.
· Product/Service-Customer Match
Identify not just who will buy, but who will buy most, first.
Validate that you have the right product/service for the market.
· Positioning and Key Messages
Identify your key competitive advantages-from the customer’s perspective.
Design road show and investor presentations.
· Pricing and Channel Strategy
Build a pricing strategy that makes channel partners want to sell your
products/services.
Create a compelling message to “win” channel mind share.
· Launch Plan Development
Prioritize the marketing mix based on what’s most important in your business.
Define a focused, winning plan and implementation team-even with minimal
resources.
· Demand Creation Programs
Create promotions that make target customers take decisive action to buy.
Know which promotion makes sense given your unique market situation.
Select agencies for PR, advertising, promotions, and program fulfillment.
Our value to you:
· Hands-on, up-to-date experience with all stages of the product life cycle coupled with extensive sales and sales management experience. We know what it takes to “make it happen” because we’ve been in your shoes, many times.
· Strategic thinking balanced with the pragmatics of “It’s got to happen NOW!”
· Solid Internet, hardware and software experience built on both a channel and direct sales & marketing foundation.
|
| |
|
| |
Buying a Business |
| |
For anyone considering the purchase of a business, we offer no charge consultations and access to an excellent inventory of businesses for sale. You might want to visit the Buying a Business section of our site for more articles on buying a business. There is also a Questionnaire that helps us to help you in your search for the best business for you. In addition to a question and answer section that might be helpful we have a "Buyer's Assessment Tool" designed to help you value a business based on 20 different criteria. We are happy to answer any questions you might have that are not covered in our Buying a Business section. If there is a question you need answered please call us and we'll try to help.
|
| |
|
| |
Selling a Business |
| |
Selling businesses is our business and we offer complete advisory and brokerage services performed in a strictly confidential manner. There is no charge for consultation and they are strictly confidential. For additional information, visit the Selling a Business section here on our site. There is also a short questionnaire there that will help us in our initial consultation.
|
| |
|
| |
Valuation Services |
| |
You may be considering selling your business or you may just be curious about what your business is worth. However, there are also other reasons why a business owner might require a business valuation. Personal matters such as family or partnership issues, estate planning or other reasons may require an actual valuation of the business that can be place an actual value on a business based upon a professional opinion. We have access to a wide range of available services and can provide you with the information you need to get access to these professionals.
|
| |
|
| |
Pricing a Business |
| |
Getting the highest price that the market will bring is important to anyone selling their business. We can’t tell you what that price is, but we can give you some guidelines on how to set a price. We can also advise you on how to prepare your business for sale to maximize its value to a potential buyer.
|
| |
|
| |
Other Services |
| |
We have affiliations with many different services that offer financing, SBA funding and accounting. We can provide the names of attorneys that are very familiar with small business and business transfer services. We have access to and work with several websites that provide us with businesses all over the country. We are also affiliated with several associations/organizations that provide us with extensive networking capabilities. Most importantly, we have direct access to business intermediaries around the country that specialize in very specific type business whose services we can call on if required. If it’s about the privately-held business we can help!
|
| |
|
|
|
|