Improve Your Turnaround’s Forecast

Today’s business climate poses many challenges – from increased global competition to a tight capital environment – that can hinder or even destroy a business. Companies struggling with poor cash flow, inadequate capital and weak leadership are especially vulnerable. Such companies can provide significant upside potential to the right buyers. But to turn an unprofitable company around, new owners must have an implementation plan and be ready to execute it.

Getting to the Core

If you’re a potential buyer of a troubled company, you must examine it closely for hidden values, such as untried territories or poor leadership. Then decide if these opportunities mitigate acquisition risks and potentially provide enough financial benefits.

It’s essential to understand the company’s core business – specifically, its profit drivers and roadblocks. Without a clear understanding of this, you may misread the company’s financial statements, misjudge its financial condition and, ultimately, devise an ineffective course of rehabilitative action.

Due Diligence Matters

While due diligence is an important part of any acquisition, it’s probably the most critical stage in a turnaround deal.

Buyers should use a professional business intermediary who will take the time necessary to perform due diligence, request the supporting documentation needed and perform personal audits that cross-check reported and actual data. At this stage, it is important that the source of the company’s distress (such as maturing products or overwhelming debt) is pinpointed to determine what, if any, corrective measures can be taken. You also need to determine if the business harbors significant liabilities, such as pending legal judgments, product claims or dissatisfied customers.

This is the time to find hidden flaws. But due diligence may also unearth potential sources of value, such as tax breaks or proprietary technologies. Benchmarking the company’s performance with its industry peers’ can help reveal where opportunity lies.

Hit the Ground Running

hit the ground runningGenerally, the first post-transaction step is for new owners to determine what products drive revenue growth and which costs hinder profitability. This may be the time to divest the business of unprofitable products, services, subsidiaries, divisions or real estate. Staff cuts may further be in order. Make sure you keep key players. They may be expensive, but as long as they are pulling their weight and have good relationships, they have value when retooling.

Implementing a longer-term cash-management plan and forecast based on receipts and disbursements are also critical. Owners can manage each line item of the company’s weekly or daily receipts and disbursements in accordance with:

• Profit and loss projections,
• Changes in working capital, and
• Major debt and capital expenditures.

With a strong cash-management plan and a thorough evaluation of accounting controls and procedures, buyers should be able to identify lost revenue opportunities, such as unbilled services. This plan can also help buyers determine where they might be able to cut costs.

Mapping the Future

Buyers should ensure that accounting and reporting systems are producing the data necessary to run effective management reports. If these systems don’t accurately capture all company transactions and list all assets and liabilities, company leaders will be unable to fully pursue opportunities or respond to potential problems.

One troubled manufacturing company, for example, wasn’t tracking future purchase commitments. When the new owner took charge, it prepared and circulated among managers a comprehensive commitment and contingency report that helped senior management renegotiate the terms of the customer agreements.

Because the task may seem overwhelming, it’s easy for new owners to focus only on the business’s day-to-day operations. But a strategic plan that maps the path toward revenue growth and improved cash flow is necessary. Buyers may find, for example, that the company’s best revenue-producing assets aren’t reaching customers and that their potential could be realized with a more sophisticated marketing campaign or bigger sales staff. Macro- and micro-level planning is equally important.

Return to Profitability

Only a small window of opportunity is available to realize a turnaround’s potential. To take full advantage of it, buyers must get up to speed on the acquisition’s products, departments, delivery systems, staff and overall operating systems as soon as feasible.

Insurance specialists can also be used in a risk-management role, evaluating company insurance coverage and claims. Auditors may be useful for interviewing accounting personnel and financial statements to verify their accuracy. Finally, private investigators can research the backgrounds of key executives for possible fraudulent activity and misrepresentations.

Interested in joining VR? Learn more now.

Interested in owning your own VR office? Learn more now.

Dream Team

Join the VR team as a franchisee and serve the lower mid-market
as an M&A specialist

VR Business Broker Teamknowledgeable and experienced M&A deal team can help facilitate and streamline the business sale process-from due diligence to negotiations to the execution of agreements and other post deal transactions. Becoming a VR Franchisee affords you the opportunity to assist sellers of privately held lower mid-market companies to successfully navigate the selling process and put together a winning dream team that can produce a win-win outcome for all parties.

 

Choose members wisely

Some of the most important decisions you’ll make in the process concern selecting professionals to help with your M&A deal.  A deal team may consist of financial and
legal experts or you may need to expand the team to include – depending on the
size and scope of the deal and your industry-specialists from fields such as
government and environmental regulation, human resources, risk management,
information technology, and operations. As a VR Intermediary, you will lead the
team, helping to organize and package information from all certifiable sources and
further negotiate the deal.

Your seller’s current legal and accounting advisors may be able to serve on
your deal team and recommend M&A experts to work with you. When evaluating
potential advisors, you will want to consider such factors as their:

  • Experience with transactions similar to yours in terms of size and industry,
  • Success rate with previous clients,
  • Number of engagements handled per year, and
  • Professional affiliations.

Guide your team

Because of increased concerns about fraud, financial misrepresentations
and the profitability of consolidation, many buyers have intensified their due
diligence and are demanding a more qualitative analysis of an acquisition
target. They will be ready to devote time to the information-gathering and
negotiation process.

As your seller comes under intense scrutiny, your team needs to be in place as
early in the process as possible to enhance the value of your seller’s assets
and prepare to support the company’s credibility. Any significant surprises
uncovered by a buyer during the due diligence phase will almost certainly lead
to a reduced offer.

Ensuring that team members understand the goals of a deal is critical. Buyers
need to articulate their consolidation objectives-for example, whether theirs
is a financial or strategic acquisition-and which of the target’s assets are of
greatest interest. Sellers need to communicate their selling price goals and
unique value drivers and outline other issues, such as the protection of
intellectual property and financial information.

Without clear guidance, conflicting views and opinions from the buyer and
seller will affect the outcome of the deal. You, as a trained VR professional
can avoid this by assigning tasks to specific individuals, based on their areas
of expertise. You may end of leading both sellers and buyers into forming
separate  due diligence committees. Comprising company executives and select deal team advisors, you will lead the committee to meet regularly to review the status and progress of the due diligence process.

Know your purchase agreement

Buyer and seller deal teams also will be instrumental during the negotiation process. The teams can help outline the structure of the deal, purchase price, financial terms, integration and any potential “deal killers.”

Once the parties have come to an agreement, your VR deal team will review the
purchase agreement’s terms and conditions along with the seller’s professional
advisors. For example, the team may work through actual conditions that may
arise and run model purchase price adjustments using anticipated inputs, such
as how current assets and current liabilities are defined.

As the team anchor, you  must be prepared to suggest additional stipulations into the purchase agreement to solve issues that will affect the final purchase price, such as a valuation of a piece of intellectual property. Once the purchase agreement is signed, your job as a professional VR Intermediary will continue to work together through any regulatory consent processes and assist, as necessary, with the process of merging finances, operations and other systems. Your VR team will also be
instrumental in ensuring that the terms of the transaction are carried out and
a “time is of the essence” closing event occurs.

Start building yours

The process of buying or selling can create tremendous pressure on buyers and sellers of privately held businesses. As a VR Franchisee, your job is to help ease and manage those pressures to a successful closing event.  Helping buyers and sellers achieve their goal and transition to the next phase of their life is a high calling.  Becoming a VR Franchise is not for everyone.  But for the few who select to go down that road, there are few professions that are as rewarding as assisting buyers and sellers in fulfilling their dreams and ambitions.

Interested in joining VR? Learn more now.

Interested in owning your own VR office? Learn more now.

The VR Transaction Process: 20 Steps To A Successful Sale – Part 1

With over 30 years of experience in selling small to medium enterprises (SME), VR has developed a dynamic and effective Transaction Process to promote a win/win outcome for both Buyer and Seller.  Over the next two blog entries, we shall be sharing with you the 20 Step VR Process to Selling your business.  Here are the first 10 Steps to a successful sale:

1.     Initial Meeting:

The initial meeting serves as an introduction to VR and explanation on how VR can help maximize the value of your business and answer any questions. During this meeting your VR Intermediary will ask to review your business tax returns, company financials, brochures and sales materials, and any other pertinent information to understand your company.

Read the full article here.

Do Your Homework Before Applying for SBA Loans

Preparing Yourself  To Apply For An SBA Business Loan

In today’s economic environment, there’s a smart way to obtain a small-business loan according to a recent article in the Los Angeles Times.

Preparation is one thing that is essential in obtaining loan approval. You need to be able to explain and justify every area of the business you are buying. You can’t simply present projections for the next five years and talk about construction and renovation. In many cases, you will need additional data and may have to revise your application.

SBA lenders will actively look for small businesses that are aggressive in obtain a strong profit margin while keeping overhead low. They will also look at character, where you will not only be able but willing to write a check to cover a loan if it goes bad.

SBA Financing To Purchase A Business

SBA financing offers buyers attractive loan terms and interest rates while eliminating, or reducing, the need for the seller to carry a note. This means a lower down payment and lower debt service for the buyer, which translates into more net income for the buyer. Both of these factors make SBA financing attractive.

Financing the Purchase of a Business: The deal has to make dollars and sense

The most important factor a buyer must consider in the purchase of a business is cash flow. Financing substantially increases a buyer’s cash flow while lowering their up front investment. Thus, financing is a critical factor in a successful transaction.
Read more about Financing The Business Acquisition here…

 

OWN A VR BUSINESS FRANCHISE TODAY!

VR Has a Tremendous Opportunity, with over 100 locations worldwide and over 70,000 transactions closed.

VR is a leading international intermediary franchise. We specialize in the sale of small and medium privately-held businesses.

The VR Business Sales division, which opened in 1979, handles the sale of small businesses up to $2 million in value.

The VR Mergers and Acquisitions division serves a diverse client base, including individuals, corporations and institutions seeking assistance in the acquisition, divestiture or valuation of mid-market companies up to $200 million in size. Financing available.

Call today to learn more about owning a VR franchise at 1-800-377-8722!

Business Franchise Opportunities | Using SBA Loans to Finance Your Business

Using SBA Loans to Finance a Business or a Franchise

Finding the Right Path to Capital

Right Path to CapitalThe biggest obstacle people have when trying to buy a business stems from lack of down payment and little start-up capital. However, any VR Business Sales intermediary will explain that SBA-guaranteed loans are a great option that will become easier to obtain given the latest SBA bill that was signed into law. They are very attractive to small business buyers due to long-term financing and a low down payment.

Click Here to Read the Full Article

Looking for Assistance In Purchasing A Business?

If you would like more information and assistance with the options available to finance the purchase of a business, one of the highly trained VR Business Intermediaries can offer some valuable guidance.
Click here for more information of how VR can help with Planning Your Financial Needs.

Assistance in Financing the purchase of a VR Business Sales Franchise

If you are interested in exploring the options of owning a VR Business Franchise and how you may be able to finance it, please contact us online or Call  Director of Franchise Development, Toll-Free: 800-377-8722  or 954-565-1555

Business Franchises For Sale – Featured U.S. locations

Featured VR Business Franchises For Sale in various US locations:

Business Sales Franchise, Chicago

Buy a VR Business Sales franchise in Chicago, where the area has been rated as having the most balanced economy in the United States, due to its high level of diversification. The Chicago metropolitan area has the third largest science and engineering work force of any metropolitan area in the nation. 
Read more about this Business Franchise For Sale…

Business Sales Franchise, Ft. Lauderdale

Are you done spending countless hours going through available business opportunities that are nothing but scams and dead ends? Are you sick of the mindless drudgery pitched to you by one broker after another who cares nothing about your interests and needs? Are you fed up with filling out one NDA after another to the point of nausea? 
More information about this Business Franchise For Sale…

Business Sales Franchise, El Paso

Are you tired of filling out endless NDA forms for businesses for sale that do not meet your interests and needs professionally or financially? Then take this opportunity to contact VR Business Sales on how to buy your very own franchise, helping facilitate the ownership of a business from the established seller to the aspiring buyer!
Read more about this Franchise Business For Sale…

Business Sales Franchise, Washington, DC

As a VR Business Sales franchise owner, you will have the ability to work closely with every office owner as both an advocate and mentor with the right tools and training necessary to compete successfully in the business intermediary industry.
Read more about this VR Business Franchise location…

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To find out more about a VR Business Sales or a VR Mergers & Acquisitions franchise, contact us online

or Call  Director of Franchise Development, Toll-Free: 800-377-8722  or 954-565-1555


VR Has Sold More Businesses in the World Than Anyone. ®

News Release: Newt Gingrich Appoints Peter King To Jobs And Prosperity Task Force Advisory Board

News Release from VR Business Franchise for VR Business Sales / Mergers & Acquisitions

Former Speaker of the House and General Chairman of American Solutions Newt Gingrich, announced today the appointment of Peter King  C.E.O. of VR Business Sales / Mergers & Acquisitions to the Advisory Board of his Jobs and Prosperity Task Force.

The Jobs and Prosperity Task Force is comprised of the most successful and accomplished business leaders and entrepreneurs in America. The Task Force will focus on Jobs Here, Jobs Now, Jobs First.

“We’ve given Washington a chance. It has failed miserably and proven to be so inept at job creation that our unemployment, as President Obama himself said, ‘blew past’ his own administration’s projection of 8%. Now it’s time for people who know how to create jobs and prosperity, know what it means to stick to a budget and make payroll – the business leaders of this country – to come together and clean up this mess,” Gingrich said.

“We’re thrilled to have Mr. King on board as we begin the work to get this economy back on track.”

As VR Business Sales / Mergers & Acquisitions’ dynamic and intuitive business leader, Peter King began his career on Bay Street in Toronto with one of Canada’s oldest Merger’s and Acquisitions firms. Upon relocating in 1989 to the United States, King was an instrumental part of Canada’s largest real estate company’s American development plans. His responsibilities included all legal and franchise arena’s through which his franchising intrigue arose. From 1994 until his acquisition of VR in 1999, King returned to his roots, joining one of America’s largest investment banks on Wall St. servicing large institutional clients.

In 1999,  Mr. King saw an opportunity that would bring the professionalism and service of investment banking to the small and mid-size business owner: acquiring VR Business Sales / Mergers & Acquisitions. Today Peter King and his partner and President, JoAnn Lombardi, lead VR Business Sales / Mergers & Acquisitions as the only full-time global network of Professional Business Intermediaries.

As an Advisory Board Member, Mr. King will be invited to Washington for strategy sessions and events where he will discuss ways of turning American economic problems around with tried, true and battle-tested solutions that have been used in successful businesses.

Mr. King’s company, VR Business Sales / Mergers & Acquisitions, is the innovative leader in the sale of privately held companies.
Celebrating 30 years as the world’s only network of full time professional business intermediaries, VR Business Sales addresses the needs of small and midsize businesses.  VR Business Sales is a company committed to a diversified menu of business advocate services, with more than 125 locations, and consequently has proven its value to business clients across the country and around the globe.  VR’s global headquarters are located at One East Broward Blvd., Suite 1500, Fort Lauderdale Florida.

For more information, please call 1-800-377-8722 or visit  www.vrbb.com.