Selling a Business - What Buyers Are Looking For

Selling your business must not be complicated, but it is a process that is unique and one that most entrepreneurs do not have much experience with.

What buyers want in a business
Business buyers are a fickle bunch. Most of them (some even say 90%) will never actually buy a business. The role of the Business Broker is to qualify the serious buyers from those who are "window shopping". This is a crucial roleBrokerage firms that play. The focus of this article is to provide some key elements that seek the most "serious" buyers in a business review for sale.

Historical cash flow
It is an expression that says "Cash is King". This is a very true statement, if you intend to sell a business are. Buyers are very interested in companies that have a successful track record of historical earnings and cash flow. If you are an owner thinking of an exit plan for your company,Take a look at the past two to three years of your finances. Determine what is the cash flow. If you need help, talk to your accountant or business broker for assistance. It is very difficult to develop a plan to lose the money or who sell only marginally profitable. All too often hear that a real estate owner wants to "sell my business - but it has potential." Potential is great, but it also needs to cash flow.

If the cash flow sustainable?
A buyer is not onlyInterest in historical, how much profit is generated in the company, but is interested more so if the results are sustainable. A buyer is a company to be interested in an excellent outcome history, only if he or she believes that they buy the company and the profits do not evaporate when they are made the sale. If you have a business where the whole operation depends on you being there - then it is a difficult kind of business sale. If you own, where yousuccessfully train and transition countries, a new owner with little interference by the customer or the results - these are the types of companies that have sold more quickly.

Is the business priced right?
If a venture has a strong historical earnings, sustainable income and easy for the transition - is yours but not exact prices - the company will be difficult, too. First steps of the evaluation (or price) right for a company to sell is crucial. Example - if youown a small business that generates $ 75,000 in earnings each year, an owner / operator and you expect that a price of $ 1,000,000 to ask, it is extremely difficult if not impossible to sell, too. Remember that most small businesses are being evaluated 2-3x "seller's discretionary cash" if you think about a sale price. If you need help, talk to a broker or a firm rating available. If you on the sale of your business please be realistic about the seriousness of the issuePrice.

Potential
Do not go with an intermediary "I think of the sale. My business earns me at 50,000 U.S. dollars per year, but it has potential, I would ask to half a million dollars for them." Must have a certain potential for a sale. Potential buyers expect. If there are none, then it will be very difficult to sell your business. If this is all what you do offer, you must re-examine your sales strategy very closely. Buyers will naturally ask whether there isa lot of potential in the business, why else have you done with him. This is a very important point.

Intellectual Property Strategies - 7 Tips to Grow Your Business With an IP Strategy

Intellectual Property (IP) assets are important for many companies. Proper leveraging of IP assets can enhance a competitive advantage, revenue, expand product lines and create an "innovation culture" in the company.

Many people mistakenly believe that innovation is limited to "high tech" companies or those with a large research and development. Most businesses have IP assets such as business processes) (internal and external proceduresCustomer lists, a company, brand / identity innovations of company personnel and more developed.

Regardless of the industry or increase the size of your company's intellectual property strategy to your business. It's never too early to think about this strategy - Early planning can accelerate growth and reduce the risk of future problems.

1. Understand the different types of IP assets. An important first step in developing an IP --Strategy is to understand the different types of IP assets and how to strengthen it business. Copyrights, trademarks, patents and trade secrets are some of the most common types of IP assets. These plants have different levels of protection and different approach is needed to protect the asset.

2. Identify types of IP suitable for your business. A successful strategy for intellectual property consider the various types of intellectualProperty, which are a logical "to achieve fit for the company and the company's goals.

3. Define IP goals. Define goals (both short and long term), support your business objectives. An IP strategy to support business goals by increasing revenue, the creation of competitive advantage in attracting investment and positioning the company as an "Innovator". The IP strategy also supports the expansion of existing products / services, promotea "team environment" and raise the valuation of the company.

4. Protection of confidential information. Every company has confidential and proprietary information, the proper management requires. Diligent use of a written Confidentiality / Proprietary Information Agreement is an important method to protect the confidential and proprietary information. This agreement will be signed by everyone who has access to confidential / proprietary information, such asEmployees, contractors, suppliers, consultants, investors, board members and potential clients.

5. Educate and encourage innovation. Many companies assume that innovative activities of research and development group, or for staff are limited with modern scientific degrees. Although these groups and individuals to an IP strategy, each person in a company are important, is a potential innovator. Innovations are often created to solve problems or improve an existingProduct or service. Everyone is capable of finding solutions, even if the development is not the solution to give part of their function.

6. Manage all innovations. Identify innovation is a crucial step in the creation of intellectual property and leveraging assets. Implementing an innovative program disclosed that all the employees to easily create and submit descriptions of their innovations can. Be submitted once, a tracking system monitors the status of each innovationDisclosure. This tracking system should identify deadlines upcoming public announcements and other activities that enhance innovation.

7. Take Action. Be active in implementing an IP strategy and the identification of new innovations. Restrict activities to current products and services - look for unmet needs in related markets and to create intellectual property in these areas.

Identifying, developing and leveraging IP assets will take time. Review your businessGoals and start today to develop an IP strategy that strengthens and supports these goals.

The Business Architecture of Conglomerates - Acciona (Spain)

Conglomerates) are companies with a diversified business model (. They were popular in the sixties, when the investment was less specialized approach. During this time, the company could improve the risk / return profile by diversifying the economy, with businesses from other areas. In this way the risk was reduced through a harmonization of the revenue from the various sectors.

The other idea was that an independent entity could be organized on a larger scale, within the same companyand following a management approach.

Today, many of these companies are divided, but there are many examples on the left: General Electric, is a famous example, and ITT Corporation is an example that is often quoted.

When conglomerates are difficult to categorize, financial information brokers such as Thompson Financial setup a separate area for conglomerates. Also search in Google Finance, you get an overview of conglomerates, with companies such as: Philips,Siemens, ABB, etc.

Not present in the index of conglomerates is the Spanish company Acciona, but the company has the same properties. For example, in 1999, was the business of the company from the following categories:
Construction and real estate law (with 44% of total profits)
Urban and Environmental Services (7.7%)
Concessions and Infrastructure (0%)
Energy (4%)
Logistics and airport services (13.6%)
Others (29.2%)

In 2006, the business model issummarized similar except for a few changes: The infrastructure is now the most important sector, is an independent real estate business and water (management was added). This shows that the company is eager to grow, with growing demand for water (management).

The 2005 annual report states: "More than 200 km of roads, highways and railroads built (infrastructure)." We avoid 1.78 million tons of CO2 emissions per year. We produce 1.8 million KV of clean energy per year(energy). "We have purified more than 28 million m3 of water with our
purifiers.We have the capacity to m a ke 4 million m3 of water drinkable every day. (Urban and environmental services). Our sea routes have removed 120,000 cars and 20,000 semi-trailers from the roads, which also means that 4.4 million litres of fuels are saved each year. (Logistics and transport).

Then comes the organization. I have looked at the corporate values. And these seem to match with a company of such Size and diversity. Here is the list of values:
Honesty ... Leadership ... Excellence ... Concern for the environment ... Social responsibility ... The focus on the long-term ... Ability to pay ... Customer focus ... Innovation ... Caring for people.

Ten core values. A first impression is that these values is a summary of the values of the individual divisions of the company. For an employee mention a number of ten values just too much and take themconsidered. For managing this task must also so difficult.

Then the evaluation of the company. This is the hardest part. Looking back over the year this company has achieved continuous growth in performance with a double-digit growth in profits. But now the question is, will this growth rate continues, then? This is the most difficult question. There are so many areas and indicators to consider.

At the company's homepage, it gives an overview of the opinions ofFinancial analysts about the expectations. These statements give display a well-diversified. The analysis of opinions greatly differ: Buy (4 times), hold (1), increase (1), neutral (2) reduce to (3), Sale (4). (What needs to be added is that the final recommendation by June 2006).

Conglomerates are complex undertakings. They compete in the era of real investments with highly focused companies. The inherent complexity of the company has one disadvantage: it is difficult to benchmark for others. Onthe other hand, the company is unique and, it may generate split-off's in the near future.

Hans Bool

A Strong Management Team is the Key to Success

A key element to entrepreneurial success is choosing the right people as part of your management team. In fact, angel investors and venture capitalists both view strength of the management team as the most important factor in determining whether they are prepared to make an investment in the company. But it is also important that an entrepreneur has an external consultant he or she can trust and on, an accountant than one of these companies. Even a start-up companies with little or no revenue musthave a good accountant is available, and a lawyer who has experience with small businesses.

Accountants are important members of the team of a company. If you are a start-up or small business, you can not have the necessary resources to run a full-time bookkeeper. There are programs that can do most of the data entry, but it's still a good idea to rent control and auditing firm on a consulting basis to do your accounting systems, processing, and tax returns.

Lawyers are onlyequally important, perhaps more than accountants. A lawyer can help, the most appropriate way to choose your business. The best time, a lawyer would be involved before you need such a plan. It is worth the money knowing that if something happens to a lawyer who is familiar with your company. Lawyers have valuable contacts with venture capital firms and private investors. They know what is reasonable in a private offering, which is not, and what needs toincluded.

An attorney can also help you protect your intellectual property, trademarks, trade names and trade secrets. Although expensive, it has an experienced attorney on your management team will avoid later problems.

Business Committee of experts you can, how much is your business worth, and say why. When you refinance your assessment of this activity can help you determine, how much debt can take the company are given.

If you plan to sellYour company's business-verifier to a ball park valuation. Of course, the buyer will want to conduct their own due diligence and you can even hire their own independent business appraiser, that is to be expected. The assessment you have completed you get a bench mark to begin negotiations.

A business plan consultants may speed up the planning process. If you are a sophisticated investor concise businessPlan is of crucial importance. If you are planning to start a business, a business plan will help you improve your chances of avoiding the success and that serious mistakes. Be the only one who reads this plan, although you should be input from a number of other people with business experience have. A business plan is an important element for the success of a start-up companies.

With consultants to provide services you need on an outsourced basis is much lessexpensive in the long run than hiring someone as an employee. The consultant will probably cost more on an hourly basis, but you only need their services on a project basis. Consultants can programming, technical support, and communications know-how, to name but a few areas.

When hiring a consultant or consulting firm, ask for references and check those references. A good place to start looking for a consultant is that you ask your attorney and tax advisor toRecommendations.

Net Income, EBIT, EBITDA And SDCF - What Is The Right Metric To Use For Business Valuation?

The most commonly used "earnings figures" used for small to mid-market business valuation are Net income (NI), Earnings Before Interest and Taxes (EBIT), Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) and Seller's Discretionary Cash Flow (SDCF). With a variety of metrics to choose from it is natural for a business owner to ask "which is the right one to use for my business". To answer the question, first we need a quick background on what are these earnings metrics.

Ø NI: NI is net income of the company after deducting all expenses of the company, including all operating costs, owners and officers, salaries, interest, taxes, etc. Some people regard this as the "true earnings", but for many small to medium enterprises market, based on a constant quest to minimize taxes, this figure may be grossly underestimated and is not a true picture of the company's earnings stream.

ØEBIT: EBIT is the net profit of the company before the funding and payroll taxes. The reason for using this metric is that high tax accounting and owner dependent and a pretax profit of EUR look at the profits would be a better indicator of the income stream are. Also, the interest payments are a function of financing the company's strategy and varies depending on preference of the debt-equity ratio of property. The resulting leverage can artificially inflateor the air from the NI. EBIT result shows a figure that is adjusted for these variables to reflect a more accurate picture of the outcome.

Ø EBITDA: The accounting treatment of depreciation for many companies is significantly different from the actual cash flow impact of these elements have on the business. EBITDA allows a consideration of the profitability of the business before factoring in these two positions. One must be aware that this may be a highly misleadingIndicator based on the characteristics of the business write-downs and adjustments to EBITDA are almost always necessary to obtain a true picture of the revenue.

Ø SDCF: For smaller companies, where the owner, the business can be seen as a "job", can the true measure of profitability, the sum of all funds of the owners from the business, including salaries, benefits and other perks.

Actual

Ø EBIT = Net income + interest + Taxes

Ø EBITDA = EBIT + Depreciation + Amortization

Ø SDCF = EBITDA + Owner / Officer 's Salary + Benefits + Perks

So, to answer the question: "What outcome is right for my company?" Depends on the type and size of a business and an understanding of the metric may be closer to the actual result. For many mid-market companies is the appropriate metric is likely to EBIT or EBITDA.

Once the correct metric is identified, the> Entrepreneur has the range of multiples that may mean for the chosen metrics. For example, tend to-earnings ratio for most small businesses vary from 1 to 3 times SDCF and the earnings ratio for mid-sized firms are more likely to be 3 to 5 times EBIT or 3 to 7 times EBITDA.

However, companies tend to be more unique than typical and multiples, which is good for a company may be too low or too high for another. The more unusualThe company is, the more likely it is that the multiplier is the typical outdoor range.