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M&A POLL

Will Business Values Increase Over Next 12 Months?

Substantially - 10%
Moderate - 31.4%
Stable - 30%
Decrease - 24.3%
Plummet - 4.3%
The voting for this poll has ended on: 06 Mar 2012 - 21:24

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M&A Home -> BUYING A BUSINESS

Buying a Business

Princeton Capital can help you buy a business that will help you with your goals.

  • Princeton will work to understand your particular needs
  • Princeton will utilize this information to give you as many, or as little, opportunities as you would like.
  • Princeton will customize a list of opportunities for you that match your criteria.
    Whether International or Domestic, we have a unique database of buyers you will not find elsewhere.


FINANCING A BUSINESS FOR SALE WITH 504 SBA LOANS

To obtain the maximum value when selling your business, there is a chance you will need to provide assistance to the buyer as they obtain funding.  This might mean an introduction to your banker who is familiar with your company, or possibly structuring the transaction in such a way that the business looks more attractive to a lender.  Either way, in the end you are helping yourself get the best price.

On interesting fianancing mechanism that is typically overlooked by buyers is the 504 loans.  It is only only available for smaller businesses, with  than tangible net worth less than $7.5 million and  not have an average net income less than $2.5 million after taxes for the preceding two years.

These loans are attractive to business owners becasue they are typically easier to get, and have lower interest.  Unlike the traditional SBA loan, they do not have to be used by startups.  Another advantage is that the downpayment is 10% instead of the traditional 20%.

There are requirements such as proving that you are creating or keeping jobs, or providing community development.  The loan amounts can be for up to $1.5 million for most companies, or $4 million for small manufacturing companies.

Proceeds from 504 loans must be used for fixed asset projects such as: purchasing land and improvements, including existing buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or modernizing, renovating or converting existing facilities; or purchasing long-term machinery and equipment.

These loans are an excellent alternative to the long and restrictive 7(a) loans offered by the SBA, and should help you get more value for your company.  Your M & A Advisor, or Business Broker should have more information with regard to these loans.

Princeton Capital Strategies, llc.
www.PrincetonCapitalllc.com

 

 
INCREASING EARNINGS THROUGH ACQUISITIONS

The business brokers and business intermediaries we speak to explain to us that they have two groups of companies - 1)  businesses that are seeing a downturn in their earnings, and are seeking ways to increase revenue, and 2) businesses that are stable, but seeking to get out and having problems finding buyers.

If you are seeking to increase revenue and earnings, there are obvious ways.  Increasing your geographic reach, diversifying your product line, new sales/marketing initiatives, etc.  Beyond these "organic" methods, there is another option that may prove to be more successful, acquisitions.  The decision is historically called a grow vs. buy decision.

The solution to the companies who are seeking an exit in the marketplace is the first type of company mentioned above, or the companies seeking to increase earnings.  There are not many ways to quickly increase earnings for most companies.  If you are a company, and experiencing a decline in your earnings, one way to try and increase your earnings is through an acquisition of another company.  Even if your business is not flush with resources right now, there are many deals getting done in creative ways that do not need a lot of cash down.

from "The Balanced Scorecard"

"Organic growth and growth by acquisition should be complementary strategies. The successful execution of both depends on aligning everyone and everything around a single set of corporate goals, and so achieving these goals faster, better, and cheaper. "

In other words, if your company is seeking growth, no matter what the market, you should be looking at organic and acquisition growth strategies.

If you are a business for sale, or a business owner seeking an exit strategy, you should be marketing yourself to companies seeking growth by giving them positive growth to their revenue.

Princeton Capital Strategies

www.PrincetonCaptialllc.com

Value Beyond a typical Business Broker

 
WHY DO 3 OF 5 M & A DEALS HAVE PROBLEMS AFTER THE SALE?

Ready to buy a business, are you? Do not make the mistake of blindly sealing the deal without looking into the intricacies of the both the paper work and daily logistics of the venture. It is a known fact that three out of every five M&A deals end up in a problem due to lack of proper planning and investigation, before the business was bought.

Below is a list of five such essentials, which must be looked into when you set out to buy a business, so as to ensure that the post purchase period goes along smoothly.

1) Identify and explore – Each and every business is not a lucrative buying proposition for you. Keeping your strengths and weaknesses in mind, it is best to undertake a comprehensive and professional approach to identifying the type of business that will suit you the most. Just because it is a good business, it does not mean it is good for you. So, before you do buy a business, work with an agency that understands your needs and can provide extensive options in accordance with it. Explore not only ventures in your area but seek a wider approach of businesses that can be relocated in your search.

2) Business valuation – When you set out to buy a business, you need to hire experienced professionals to undertake an evaluation of the business being considered. You need to know exactly what the financial return on your investment will be, and where all the hidden costs might lie. Of course the seller will also have the venture evaluated before coming up with an asking price, but as a buyer you need to undertake this process on your front too. While there are many M&A brokers to do the job, hire one, which offers a combination of credibility, confidentiality and experience.

3) Test run- Just like when you buy a car; take the business being considered for a rest run. Most sellers are happy to assist in this task. Going through the various processes of the business personally, helps comprehend the problem areas, which you can tackle with preparation when the real task does start.

4) Legal issues – There are several agreements and deeds that will need to be looked into before you buy a business. The legality of the venture is of primary concern, as is the authenticity of the transfer documents. It will benefit immensely to keep a business broker or M&A intermediary along your side right through the entire process of buying a business.

5) Check and recheck – Irrespective of whether you are a strategic buyer, financial buyer, industry consolidator or even an individual buyer, always authenticate the facts that are provided to you, twice over. It is not everyday that you buy a business and depending wholly on agencies, lawyers or financial experts is not highly advisable. While it does help to work with professionals, also keep your own knowledge of the game at optimum level.

The tips listed above may seem like a tall order to follow, but do not fall into a trap when you set out to buy a business by ignoring them. Hiring the right team around you is crucial to sealing the deal.

Princeton Capital is a M&A intermediary business broker that has proven its metal in the business world. Not only is it recognized for its international database of buyers and sellers but is also highly valued for its immense credibility. Understanding the client’s needs for confidentiality, the firm places great value on ensuring that deals are never leaked out. The company does emerge as a perfect solution for those seeking professional as well as ethical M&A advice.

 
NEW SBA GUIDELINES

The Small Business Administration is considering new guidelines for loans. With thanks to Bernie Siegel for his work to move this forward, and for summarizing the details here.  If these new SBA guidelines are implemented, it will go a long way toward helping business owners exit, and buyers to begin new businesses.

SBA Update

Small Business Administration Loans

By: Bernard Siegel, Founder and Chairman, SFG Business Services

Highlights of the legislation include:

  • Increase the loan limit on 7(a) loans from $2 million to $5 million.
  • Increase the loan limit on 504 loans from $1.5 million to $5.5 million.
  • Increase the loan limit on microloans from $35,000 to $50,000.
  • Allow the 504 loan program to refinance short-term commercial real estate debt into, long-term, fixed rate loans.
  • Extend the authorization to provide 90 percent guarantees on 7(a) loans and fee elimination for borrowers on 7(a) and 504 loans through December 31, 2010.
  • Direct the SBA to create a website where small businesses can identify lenders in their communities.
  • Increases the maximum guarantee on 7-A loans to $4.5 million
  • Changes the eligibility criteria to  (a) a tangible net worth not to exceed $15 million and (b) the average net income after Federal Taxes over the past two full fiscal years is not more than $5,000,000.
 
BUYING A BUSINESS

Buying a Business

Princeton works with business acquisitions of all types, from high net worth individuals who are looking to acquire a business for income growth, to companies seeking business growth through strategic acquisition.

 

The most important consideration is your needs. You must define your goals.

 

  • Princeton will utilize this information to give you as many, or as little, opportunities as you would like.
  • Princeton will customize a list of opportunities for you that match your criteria.
  • Whether International or Domestic, we have a unique database of buyers you will not find elsewhere.

 

If you are an individual seeking a business to replace or supplement your income, please visit our page on Increasing or replacing income through a business

For companies seeking to purchase a business for growth, please visit our site Business Growth Through Acquisitions

 



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