Every Business Is A Risky Business!

business riskEvery business faces risks, but some companies are riskier than others. Assessing  a company’s risk is an important part of estimating its value. Risk and value are inversely related. That is, the higher a company’s risk, the lower its value. Risk is a function of a company’s external threats and internal weaknesses, but these forces only tell part of the story. On the flip side, a business’s strengths and opportunities minimize risk and, therefore, build value. A Business Intermediary can help you further understand the relationship between risk and value, but remember when valuators focus exclusively on one side of the story, their conclusions are likely to be skewed. For example, to minimize an estate’s tax burden, an appraiser might unduly emphasize a company’s weaknesses and threats to justify excessive valuation discounts. Conversely, the IRS’s expert might downplay these negative elements and, instead, call attention to the business’s strengths and opportunities.

Framework for evaluating risk

Providing a complete, accurate depiction of a company’s future performance requires the valuator to consider both positive and negative aspects of its operations.A strengths, weaknesses, opportunities and threats (SWOT) analysis provides a four-pronged framework for analyzing risk that links a business’s internal strengths and weaknesses to the opportunities and threats in its external environment. This popular tool helps valuators organize their thoughts and provides a holistic risk assessment.

1.      External forces: opportunities and threats.

Before jumping head first into a company’s financial performance and operations, the valuator assesses the external environment in which a company operates.

Opportunities are favorable conditions that — if exploited — may enhance shareholder value. Alternatively, threats are barriers that jeopardize future performance. In many cases, management has little control over these external factors.

2.      Internal forces: strengths and weaknesses.

After the valuator understands the company’s external forces, he or she is ready to identify its internal strengths and weaknesses relative to its competitors’. Strengths are competitive advantages or core competencies that enhance value. In contrast, To complicate matters, strengths and weaknesses sometimes overlap. Consider former Disney CEO Michael Eisner. Although he fueled the company’s financial revival in the late 1980s and 1990s, Eisner’s inability to train a suitable successor has depressed the entertainment giant’s stock in recent years.

3.      Strategic management.

During the valuation process, the valuator also addresses whether a company recognizes and manages its strengths, weaknesses, opportunities and threats. Are the company’s short- and long-term goals congruent with these factors? Does management plan to mitigate threats and correct weaknesses? Is the company taking advantage of potential opportunities and exploiting its strengths? A company’s value can be adversely affected if management is unaware of these internal and external factors or if management fails to incorporate them into its strategic plans.

4.      Impact of information on value estimate.

Finally, valuators use the information obtained from their analyses to help them:

_ Select the appropriate valuation technique,

_ Forecast future income streams,

_ Decide on relevant selection criteria and other subjective adjustments under the market approach,

_ Build discount and capitalization rates when using the income approach, and

_ Quantify valuation discounts, such as discounts for lack of marketability and control.

Review and investigate

In adversarial situations, a valuator’s subjective decisions may come under attack. Attorneys and clients need to review valuators’ written reports to ensure that all risk factors have received adequate attention. They also should investigate exactly how these risk factors affect the appraiser’s computations and assess whether any factors have been double-counted. Above all else, a valuator’s subjective decisions should be well supported and reasonable. Contact a Business Intermediary to find out more about business value vs risk, buying a business or selling your existing business.


What Buyers Look For In A Business Opportunity

You have built a great business with love and care. It has grown larger than you’d
ever imagined, and generates a nice profit that has allowed you and your family to live
comfortably. Now you’re ready to sell. You assume there’s a buyer out there who will
pay you a fair price and then nurture the company with the same attention you have. What’s more, selling the business is a major part of your retirement plan.

Needless to say, buyers look at businesses differently than sellers. So to achieve the
outcome you want, it’s important to think like buyers and understand how they evaluate a business.

What buyers look for

There are many types of buyers: strategic and financial, individuals, companies, and
private equity funds. Despite differences, all buyers consider how much they’ll invest
to acquire a business, the amount of risk they’ll bear and the potential return on their
investment. To evaluate an opportunity, buyers focus on three major areas:

1. Cost and terms.

What will it take to acquire the business? How much cash and how much debt?
What are the deal’s terms and conditions?

2. Continuity

Will the business continue to operate similarly after the sale? Much of the risk of
buying a company relates to continuity. For example:

_ The current owner has personal relationships with customers, distributors or vendors that the new owners may have to struggle to maintain,

_ The owner has special expertise that is undocumented and difficult to learn,

_ Key personnel aren’t committed to staying, or

_ Offshore competition looms.

Sellers armed with solid responses to these types of continuity concerns are more likely to get their desired price. Even if you don’t want to sell your business for a few years, take steps now to ensure it can run smoothly without your personal involvement.

That independence could be worth millions when you sell.

3. Growth

Are there unexploited opportunities? You may have focused your sales efforts in
one geographic region, but there may be many opportunities to take the
product national or international. A buyer that believes it can increase revenues
substantially will pay more for the business than one that believes the current
owners have already maximized opportunities.

What sellers should do?

It may seem counterintuitive, but the things you may be most proud of can work against getting the best price for your company. Not many entrepreneurs like to boast that their company could run just fine without them or that there are plenty of opportunities they’ve failed to exploit. Yet these may be the very factors buyers seek, along with lower cash requirements. Please call us for help in understanding how to best present your company for sale.

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…



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!

Understanding How To Find and Buy The Right Business

Understanding Your Strengths and Weaknesses before Buying a Business

by Peter King, CEO of VR Business Sales

When you’re coming close to buying a business, you will want to investigate and research every objective you have. You will want to see what the alternatives to achieve these goals are……Click here to read full article

Finding the Right Business for You

by JoAnn Lombardi, Pres. of VR Business Sales

Before delving too deeply into the technicalities of due diligence when buying a business, remember the following point: Always focus on finding the right business before concerning yourself with the right price. Don’t base your search solely on finding a good deal or a steal….. Click here to read full article

About VR Business Sales

VR Business Sales is the world’s premier business intermediary firm. With a combination of global strength and local experience, VR’s 30 years of successful business sales through Valued Representation, is the reason more and more business buyers and sellers demand our proven skills and resources to help them succeed in an increasingly complex market.

VR offers the best opportunity for owning a successful Business Sales Brokerage.

Contact our Director of Franchise Development at 800-377-8722 for more details about owning your own VR Business Sales Franchise Office.

How To Become a VR Business Broker – Brokerage Franchise Opportunity

VR offers the best training and support toward opening and succeeding with your own business brokerage office.

Upon joining VR you will be trained on how to…

  • Build an inventory of best quality businesses to sell
  • How to  establish the correct value and price for a business
  • How to structure business transactions to best maximize value
  • How to prepare  a VR Business Profile
  • Best methods to launch a marketing campaign for your new VR office
  • Learn to educate buyers and sellers on how the transaction process works
  • Work and structure financial statements for privately-held companies
  • How to help with negotiations to achieve a successful transaction
  • How to prepare all the necessary documentation
  • Provide a successful due diligence process

And of course… how to successfully close business sales transactions!

To find out specific answers about how you can best fit into the VR Team you can speak with our Franchise Development Team to learn more about VR and how we can help you succeed in the business brokerage industry.

You can also complete the Confidential Personal Profile (online franchise application) to speed up the process.

Contact our Director of Franchise Development for a personal interview to answer all your questions:

Toll-Free: 800-377-8722  or 954-565-1555

VR Business Franchise Opportunity Details

Get more details about the VR Franchise Opportunity from the following links:

Please visit the section on the main VR website about the VR Business Franchise Opportunity

VR Business Franchise Opportunity, which includes more information toward taking the next step in becoming more familiar with VR.

VR Franchise Industry Overview provides information about statistics and demographics about the franchise industry.

The VR Franchise Purchase Timeline describes the steps from initial information gathering, to site selection, to training, to succesfully opening your own VR franchise office.

Initial Training for the new VR Franchise Owner shows you the detailed part of the extensive training for new VR Franchise Owners.

MBI Academy and Recruiting provides the most extensive training program in the world for our full-time professional intermediaries.

The VR Difference find out what sets VR apart from all other business brokerage companies..

VR Franchise Information Request to receive our VR Introductory Information.

Confidential Request for Consideration in the VR Franchise once you’re ready to take the next step toward owning a VR Franchise.

Notice Regarding Franchise Offers Or Sales Disclosure Statement

For more information on how you can become part of the successful VR Business Sales Franchise group call our Director of Franchise Development at Toll-Free: 800-377-8722  or 954-565-1555

VR Business Franchise Opportunity on Facebook

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For more information about the VR Business Franchise Opportunity please contact:

Director of Franchise Development
VR Business Brokers | Mergers & Acquisitions
VR Global Headquarters
One East Broward Blvd. Suite 1500
Fort Lauderdale, FL 33301
Toll-Free: 800-377-8722
Phone: 954-565-1555
Fax: 954-565-6855