 Tired
of the volatility in the stock market? Diversify
your assets through business ownership.
Acquisitions of existing businesses are at an all time
high due to the immediate high returns and established
business operations. Individuals, corporations and
financial buyer groups are all actively scouring the
countryside for existing businesses. It is usually
much safer and more profitable to buy an existing
business than starting a new venture. According to
the Small Business Administration, over fifty percent of
startup businesses fail due to unproven concepts, lack
of working capital, and poor management.
Click here for Businesses
For Sale Notification
Advantages To
Acquiring Existing Businesses
Some of the advantages in
acquiring existing businesses include:
1) Being able to review a
company's existing track record as reflected in
P&Ls,
Tax Returns and other financial records can be very
helpful in
determining expansion plans. Growth
potentials can be measured based
on actual experience
rather than conjecture associated with startup
ventures.
2) The need for additional
working capital is reduced due to the immediate
cash
flow being generated by the acquired company.
3)
Obtaining an established supplier and credit network
along with training
from the seller (s).
4) Obtaining skilled
employees who are familiar with the business operation
and market. Gaining established customers significantly
reduces the time
it would otherwise take to attract an
adequate number of customers to
support the overhead of
a new operation.
5) Obtaining existing
licenses and permits can often reduce the time and cost
of making application, gathering information and
conforming to required
regulations.
6) Sources of capital to
purchase existing businesses are more readily
available
than startup ventures. It is very common for the owner
of an
acquired business to finance part of the purchase
price. Banks and other
financial institutions prefer to
loan money for existing operations that have a
proven
track record.
Self Assessment
When you meet with a
Business Broker, be prepared to discuss your background,
work experience and financial ability to purchase a
business so that we can help you find a business that
meets your needs. You will need to prepare a personal
resume and financial statement which will be required by
lenders, landlords, and others who will be a party to
the business acquisition. The following are examples of
the questions a Business Broker will be asking you:
- Why do you want to
buy a business?
- What are your
special skills and educational background?
- What is your work
and/or business ownership experience?
- What are your
hobbies and areas of special interests?
- What is the maximum
amount of your personal funds you can invest as a
down payment?
Buy-Side Process
Acquiring companies to
improve market share, extend product and service
offerings, capture new technology, or just to provide
you with the desired lifestyle is a dramatic undertaking
for companies of all sizes. Defining the type of
company to acquire, locating it, meeting management,
pitching the strategic advantages, valuing the target,
and negotiating the deal are just a few of the steps
companies or individuals must take before any
acquisition can be completed.
RealNova Brokers &
Associates helps
clients improve the opportunity for acquisition success
by utilizing a formalized process:
- Define the
Purpose:
Prior to entering the market as a potential
buyer, it is very important that a company define
the purpose for the proposed acquisition. For
example, reasons could include growth, defense,
product or service extension, geography, technology
or desired cash flow (income). RealNova
Brokers & Associates
helps each client define its acquisition objectives.
- Describe the
Ideal Prospect:
RealNova Brokers & Associates leads its clients through a
formal brainstorming session to determine the
characteristics of the ideal acquisition candidates.
- Analyze the
Market and Select Initial Targets:
RealNova Brokers & Associates researches and studies the
appropriate markets for acquisition opportunities
and selects the ideal candidates from a pool of
potential targets.
- Narrow the Target
Selection:
RealNova Brokers & Associates contacts management of the
agreed upon targets to discuss the opportunity and
asses interest. Once completed, the target list is
narrowed to the best strategic opportunities with
the highest interest and potential for closing.
- Meet Target
Management:
RealNova Brokers & Associates arranges an introduction for
its client to meet with management of interested
potential targets to discuss the proposed
acquisition.
- Select Best
Target:
Following the management meetings, RealNova
Brokers & Associates assists the client in selecting the best
target(s) to pursue.
- Value the Target:
RealNova Brokers & Associates prepares an initial valuation
of each selected target to assist in preparation of
a letter of intent.
-
Issue Letter of
Intent:
RealNova Brokers & Associates and the client
identify the defining terms of potential deal and
prepare a letter of intent to the target company....more
info on Letter of Intent
- Definitive
Agreement:
RealNova Brokers & Associates supports the client's legal
counsel and accounting advisors in the collection of
pertinent due diligence information from the target
company.
- Close the Deal:
RealNova Brokers & Associates helps the client bring closure
to any outstanding issues so that the deal can be
closed properly.
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