Sunbelt Seminars Presents:

The Secrets of Buying, and

Valuing a Business

352 Dorval Ave, suite 207

Les Jardins Dorval,

Dorval , Quebec

H9S1C5

Thank you for attending

WELCOME!Thank you for attending our seminar “Buying , Selling and Valuing Your Privately Held

Business”. We will share some ideas and experiences that we hope will be beneficial in your understanding of the “Real World” of privately owned businesses and the factors that affect their value.

That Sunbelt is the largest business brokerage network in the world with over 300 offices in 14 countries is not particularly important to this presentation. However the source of this presentation comes from the experience pool of a large network of professional business brokers.

In this seminar Ronald Greeley will convey awareness of areas that drive the value of a business, confidentiality in the sale or transfer of the business, finance issues , how we help protect all parties throughout the process with a goal to arriving at a win-win scenario for everyone involved.

Ronald Greeley CMSBB Business Intermediary CLU EPC

Sunbelt West Island 514-694-0554 poste 9

www.Sunbeltwestisland.com

Seminar Presenter

Ronald Greeley CMSBB CLU EPC is a retired financial planner with

Over 25 years experience in the financial services sector.

• Born in Toronto and living in Montreal for many years Ron has extensive

experience in management within small, medium and large privately held

companies in addition to having successfully operated and sold his own

business before joining the Sunbelt office on the West Island of Montreal.

• He is trained in the intricacies of pricing businesses, bringing buyers and

sellers together and negotiating long term solutions.

Is buying a business the right decision.

What are your alternatives.

• Finding a job?

• If you find another job will they let you sell it when you

leave?

Options

Keeping the job you have?

• How confident are you that your job is secure?

• Do you like your job?

• Can you build wealth based directly on your efforts?

Buy an existing Business or a Franchise!

More Options

Retiring?

• Trends are against retirement - evidence is mounting

that people who retire are not as happy as they thought

they would be.

• Many people who want to “Retire” realize they simply

want a change and a new challenge.

The Fact

We sell many businesses to people who leave the

corporate world…..

We rarely sell a business for someone who wants

to go back into the corporate world.

The Decision

A well known saying among business

owners:

“The worst day of owning your own business is

better than the best day working

for someone else .”

First Basic Rule

“Never confuse a business that

doesn’t show a profit for tax

purposes, with a business that isn’t

Profitable”

Understanding Why?

• Public Companies do their accounting to

Maximize reported profits profits.

• Private Businesses prepare their tax returns to

Minimize taxable income.

The Reality

• Minimizing Taxable income is part of the normal

activities of private business.

• Private businesses rarely have audited financial

statements.

• Private business owners are very concerned with

Confidentiality.

You can see, only what is there.

• Small businesses don’t have (or want) the level of

detailed record keeping usually seen in larger

companies.

• Small businesses all have a system although often it is

an inadequate system.

• There are no perfect businesses.

Will you thrive?

Must be a business that you will enjoy.

• Dealing with clients, staff , suppliers.

• Hours, location , product or service.

• Image

• Your role.

• Will you have a vision.

Suggestions on how to approach your investigation

• Be persistant, don’t be easily discouraged.

• Recognize the limitations of the available information

and analyze what is available.

Strengths and Weaknesses

• Have a clear understanding of your own strengths and

weaknesses.

• View weaknesses in a business as an opportunity.

Remember the profits of the business are being

generated with those weaknesses present. Fixing the

weaknesses should improve the profits for the buyer.

Most Important

Determine how much is the minimum you need to

make from the business and determine what is the

investment level you are willing to make.

Typically the higher your investment the higher the

business profitability

Financing the Purchase

• 90% of businesses sold have Vendor financing

(10 to 50% is typical)

• Other sources – BDC, SBL, etc.

Good News is:

You get to make all the decisions.

Bad News is:

You get to make all the decisions.

The News

• Salary, vehicle costs, personal insurance, entertainment not directly related to the business, some charitable contributions, travel, maintenance costs for non-business items, rent costs in excess of normal market rent or rent paid to an entity that the seller controls, etc.

Owner compensation/benefits that are often identified:

• The taxable income reported on a small business tax

return is rarely an indicator of the true earnings

realized by the business owner.

Conclusion

• ConfidentialityThis is critically important

• Customers• Employees• Vendors

A confidentiality agreement usually grants you the opportunity to share the confidential information with your financial advisors.

Dealing with sellers

Buyer seller meetings

• Keep a good relationship, you want the seller to help

you after buying the business.

• Focus on determining the skills you will need to replace.

• Try to ascertain the weaknesses of the current owner

and determine if your skills can add value to the business.

Negotiations

• Don’t confuse the desire to win with what is a fair price.

• Understand how you arrived at the business value before

you start negotiations.

• All negotiations through the broker, it will give both

parties a chance to test the reasonableness of their

requests

Due Diligence

• Get everything you need (limited to what is available), move quickly

and be persistent.

• Never lose sight of the characteristics of small business record

keeping. When you own the business you can keep the books any way

you like.

Key Points

• Be willing to spend some money in the process to do it

right.

• Always respect the need for confidentiality

• Don’t worry if you’re nervous, it’s natural

Steps taken by successful buyers of an operating business or

a new franchise:

• Take time to decide if buying a business is best

• If yes, commit the time necessary to accomplish the many

tasks

• Minimize risk

Headed in the Right Direction

Minimize Risk

• VTB with right of offset

• Training and transition program

• Due diligence – Contracts, financials, operations, staff, systems, equipment, exposure,

customer relationships, supplier relationships, inventory, reputation

• Legal Counsel– Structure– Tax planning – Protection from misrepresentation or failure to disclose– Title

Goal Line

• Keep moving toward the goal, not every deal works out. You may need

to find more than one business to pursue.

• No matter how thoroughly you try to prepare when the day comes to

sign you will still have some unanswered questions.

• There is no such thing as a risk free transaction for a buyer or a seller.

Things to Do

• Use a Good Broker

• Be responsive to your broker

• Keep an open mind

• Be forceful and determined…but be reasonable

• Get appropriate legal and accounting advice

Thank you!

• Thank you for attending our seminar

• If you feel you have any questions please call!

• I will be pleased to set up a confidential meeting.

Ronald Greeley CMSBB CLU EPC

Business Intermediary-Sunbelt West Island

514-694-0554 x9

ronald.greeley@sunbeltnetwork.com

www.Sunbeltwestisland.com