Buying a Business

Why Use John Diaz and Keller Williams Realty To Sell Your Business?

John Diaz, Licensed Real Estate Broker, Certified Distressed Property Expert, Certified Property Management Executive, and BBF member Business Broker. As a previous General Manager of Ford Motor Credit, John managed a $1.3 Trillion dollar business. Later, as a Sr. Loan Officer for the major banks in the U.S he originated and closed over 500 mortgage loans, many to local business owners.

Preserve confidentiality. You don’t want to lose employees and customers. Vendors may switch your business from credit terms to COD. Lenders may request to pay off loans immediately.

We can create exposure while preserving confidentiality.

Running your business is a full-time job and selling your business is a full-time job. You concentrate on running your business and we will take care of selling it.

Selling a business is a very emotional moment for every business owner. Get unbiased assistance of independent third party.

Determining correct business value is quite challenging. There are many factors that may affect the value: true discretionary earnings, market outlook, unique products or services, distribution channels – just to mention a few. FNRI has professionals who are experienced in valuing various types of businesses.

Why Some Businesses Don’t Sell

Commonly, business owners plan ramp-up and growth activities, however they frequently forget about business exit strategy. This forgetfulness comes at cost – business may deteriorate and lose a part of its value, sometimes all of it. Successfully exiting a business in orderly fashion is just as important as starting and running a business. After all, you have to be able to enjoy fruits of your long days, sleepless nights and years of no-vacation dedication.

Before Selling You Business Know What Your Business is Worth -Business Valuation

Business valuation is an art not a science. The value driver of a business is the ability of the entity to generate future cash flow or earnings..

The valuation of your business and the marketing package used to present it will be crucial to the success of the sale. As a transaction broker, we’ll help you identify the price range and optimal terms for the sale. An accurate valuation will take into account several factors, including tax returns and financial statements:

• The total value of furniture, fixtures and equipment at their current value
• All of the company’s licensed vehicles at their current value
• Average inventory value at cost
• The compensation packages of corporate officers

Asset Approach – values the assets of a business minus the liabilities. Some of the methods in this approach are book value, excess earnings method, asset accumulation method to name a few. However these values usually mean very little to the market value of most operating businesses. For the most part the asset approach does not properly represent the value of an ongoing business that has positive earnings.

Market Approach is much like a real estate comparable method. Like businesses in size and industry sell for similar valuations. Comparable publicly traded company analysis method or the merger and acquired analysis method. There are private databases we research to find multiples of gross sales and earnings to compare to your business. This method can be very reliable in most cases and is a strong indicator of value.

Income Approach- Your business is worth the present value of the income it will bring to an investor. There are several complicated methods including the discounted cash flow of future earnings method as well as several capitalization methods. This approach is also a strong indicator of what a business with positive income is worth. These methods rely on future projections and growth rates to decide what the business may be worth. Your business is worth a multiple of your past earnings if a buyer can project those earnings will be maintained after the purchase.

Fair Market Value

Fair Market Value is of the most interest to business owners. The more knowledge business owners and prospective buyers have about the valuation process, the more likely they will come to an agreement on a purchase price.

FMV is the measure of value most used by business appraisers, as well as the Internal Revenue Service and the courts. FMV is essentially defined as “the value for which a business would sell assuming the buyer is under no compulsion to buy and the seller is under no compulsion to sell, and both parties are aware of all of the relevant facts of the transaction.” IRS Revenue Rule 59-60 lists the following factors to consider in establishing estimates of FMV:

1. The nature and history of the business.
2. The general economic outlook and its relation to the specific industry of the business.
3. The earnings capacity of the business.
4. The financial condition of the business and the book value of the ownership interest.
5. The ability of the business to distribute earnings to owners.
6. Whether or not the business has goodwill and other intangible assets.
7. Previous sales of ownership interests in the business and the size of ownership interests to be valued.
8. The market price of ownership interests in similar businesses that are actively traded in a free and open market,either on an exchange or over-the-counter.