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					How much is my company worth?
Many healthcare service providers sell within a range between 3-5 x normalized EBITDA. That
is to say a multiplier of EBITDA. This most commonly used formula is a pretax earnings
multiplier that assumes an asset purchase where the seller keeps the cash and accounts receivable
and is responsible for any liabilities associated with the company. Larger, more profitable
companies can sell for a premium above the range while smaller, marginally profitable
companies can sell for a discount below the range. Actual financial and operational data is
required to do a genuine valuation. At American HealthCare Capital, we offer a FREE “no
strings attached” preliminary valuation to any healthcare provider who wishes to investigate a
divestiture.

How long will it take?
The seller has a lot to gain by following a carefully measured process. In order to allow time for:
a) the collection and analysis of data for valuation, b) the qualification of prospective buyers and
the execution of confidentiality agreements, c) the negotiation of the letter of intent, d) the
completion of due diligence and finally, e) the negotiation of the definitive purchase agreement
and the transfer of all applicable licenses, most sellers can expect a 90 – 120 day process from
the decision to sell to the close of the transaction. In a hot market the timetable can be
accelerated, but in cooler times the pace can be glacial.

Do we know a buyer?
Yes! American HealthCare Capital has ongoing relationships with active buyers of homecare,
DME/IV/02, medical staffing, acute care, long term care, diagnostic imaging and all other
healthcare service providers. However, the M&A marketplace is subject to constant change as
market conditions cause buyers to become sellers and sellers to become buyers. Because we are
always in the market, AHC knows who’s buying at a premium, who’s selling for a discount and
what deals can get financing. If we don’t already know enough good candidates, we will
conduct a dedicated search to identify and qualify new prospects.

What is the difference between an ASSET PURCHASE purchase and a STOCK SALE?
In a stock sale, the seller sells the actual corporation including all assets and liabilities, usually
including cash, accounts receivable, bank debt, and all IRS/CMS liabilities. In an asset purchase,
the buyer only buys certain core assets of the company, usually leaving the seller with the cash,
accounts receivable and all liabilities associated with the company. Whether a transaction is a
asset purchase or a stock sale, who actually gets what assets and liabilities at closing is entirely
negotiable. Because of the risk associated with contingent liabilities, many (but not all)
transactions in the healthcare industry are asset deals. In all cases, it is extremely important to
consult with a qualified tax advisor and an experienced transactional attorney before entering
into any binding agreements.

What about personal expenses that the seller runs through the business?
The most commonly used metric for valuation analysis is EBITDA. In the case of a private
company with significant personal (e.g. country club dues, fancy cars, etc.) or non-recurring
expenses (e.g. fire, lawsuit, etc.), it is appropriate to calculate an adjusted EBITDA and to
present a recast or restated financial statement that reflects the normalized financial
characteristics of the company along with the actual numbers. However, it is absolutely
imperative to disclose, explain, and defend each assumption used to adjust the actual EBITDA in
a clear, honest and forthright manner.

What is required during due diligence?
Due diligence is the verification of all representations made by the seller upon which an offer has
been based. Due diligence is not initiated until after an offer has been accepted and a letter of
intent has been executed. Sellers can expect buyers to exhaustively review all clinical,
operational, and financial records. For most sellers this process should require a few
representatives of the buyer to spend a week or so at the corporate headquarters of the seller.
The buyer should then immediately conduct a final analysis of all pertinent information and
proceed to the negotiation of the definitive purchase agreement with the seller. If due diligence
verifies the representations of the seller, the definitive purchase agreement should reflect the
price and terms agreed upon in the letter of intent. The price and terms may be renegotiated up
or down after due diligence if new concerns are discovered or if the process takes so long that the
performance of the company warrants a change to the originally agreed upon price and terms.

How do we protect confidentiality?
At American HealthCare Capital we understand that the sensitive nature of each transaction
requires total confidentiality. Employees, patients, suppliers, and the competition need not know
your intentions until you are ready to announce that a deal has closed. We guard your proprietary
information: executing confidentiality agreements with every qualified prospective buyer, seller,
or third party financing source. Furthermore, we don’t provide comprehensive information about
our listings just because someone has signed a confidentiality or nondisclosure agreement. We
start with preliminary summary information and provide more detail on an “as needed” basis
only when appropriate.

What is the difference between a Finder and a Broker?
“Business Broker” is a legal term of art with a specific meaning: a licensed agent of a principal
that is registered with the state department of real estate. As agents of principals, brokers have
certain fiduciary responsibilities that entitle them to prepare data, negotiate and conduct due
diligence on behalf of the principals they represent. Because of licensing requirements, business
brokers typically limit their business to a particular state rather than focusing on a specific
industry. A “Finder” is not required to be licensed and is not an agent of the principal: Finders
are primarily responsible for making introductions and acting as intermediaries between
principals. Finders are usually professionals from a particular industry who are knowledgeable
about the national M&A marketplace of that industry. Although finders may offer their
opinions, they do not dispense formal advice, prepare documentation, or negotiate on behalf of
the sellers or buyers. Principals use finders to identify opportunities but must rely on advice
from attorneys, CPA’s, and possibly other advisors to analyze and act on the opportunities
introduced by the finder. AHC is proud to be one of the leading finders in the healthcare service
industry.

What is a Merger?
A merger occurs when one corporation is combined with and disappears (or merged) into another
corporation. All mergers are statutory mergers, since all mergers occur as specific formal
transactions in accordance with the laws, or statutes, of the states where the companies are
incorporated. The post-transaction operations or control of a company has no relevance on
whether a merger has occurred or not.

What is an Acquisition?
An Acquisition is the process wherein the stock or assets of a corporation are acquired by a
purchaser. The transaction may take the form of a stock purchase or an asset purchase.

What's the difference between a Merger and an Acquisition?
An Acquisition is the generic term used to describe a transfer of ownership. Merger is a
distinctive, technical term of a particular legal procedure occurring after an acquisition.

What is a Leveraged Buyout?
A Leveraged Buyout (LBO) is a transaction whereby a company's stock or assets are purchased
largely with borrowed money, resulting in a new capital structure consisting of a high percentage
of debt secured by the assets of the acquired entity.

What is an Earnout?
An Earnout is a method of compensating a seller based on the future earnings of a company. It is
the contingent portion of the purchase price. A common type of earnout provides for additional
payments to a seller if the earnings exceed agreed-upon levels. Another type of earnout may
provide that certain debt given to the seller as part of the acquisition price be paid out early if
earnings exceed agreed-upon levels.

What are the different forms of transactions?
There a three general types of transactions in the acquisition of a business; Asset Purchase, Stock
Purchase and Merger.

What is an Asset Transaction?
The acquired company transfers the assets of the business to the purchaser. These could include
equipment, inventory and real estate, as well as intangible assets such as contract rights, leases,
copyrights, patents, trademarks, etc. The acquired company executes the specific types of
documents necessary to transfer the assets, such as deeds, bills of sale, and assignments. This
type of transaction generally contains tax attributes favorable to the buyer.

What is a Stock Transaction?
The seller transfers the shares in the acquired corporation to the purchaser in exchange for an
agreed-upon payment. A Stock Transaction is appropriate when tax costs, risk considerations or
other issues surrounding an asset transaction make a Stock Sale more appealing to the parties.

Why VR M&A Atlanta?
VR M&A Atlanta fills the void that exists between general business brokerage and the
investment banking community. Specializing in transactions valued between 2 and 15 million
dollars, VR Mergers & Acquisitions Atlanta provides it clients with access to a network of
highly trained professionals that, by virtue of being part of the VR network, have the resources
required in this specialized market. VR Mergers & Acquisitions has forged strategic alliances
with the world's top investment banking firm, enabling us to provide our clients access to a
lucrative network of qualified, professional buyers worldwide.

As you prepare to put your house on the market, you get the word out to as many people as possible. The ―For Sale‖
sign is placed in the front yard, you invite people into your home during an open house and you put ads in the
newspaper and online. You want everyone to know your house is for sale.

However, that’s not the case when selling a business. Place an ad that your business is on the market and people
start to wonder. It creates an air of uncertainty that can be detrimental to your bottom line and put the company in
jeopardy.

To increase the likelihood of a successful sale of a business at an optimum price, keep it confidential!

What’s likely to happen if people find out the business is up for sale?

Employees get nervous. They begin to worry if their jobs will disappear or if they’ll get along with a new owner.
Some may even quit before you have a chance to reassure them and it will probably be the good employees that
leave. They’ll start looking for jobs that make them feel more secure. Losing key people is serious, particularly during
the sale process. Key staff members provide valuable continuity and business knowledge that buyers are looking for.
Lose them and potential buyers may be lost too.

Customers begin to wonder. They may become concerned whether the business has problems that could threaten
their supply chain. They may start questioning if they’ll get the same quality from the new owner.

Competitors will spread the word. Once the competition finds out, rest assured they’ll let your customers know and
use it as ammunition to bring that business to their company. It opens the door for them to steal business from you.

Vendors and creditors may tighten terms. You may be working with terms of net 45 or more to benefit your own
cash flow. But once creditors learn that the business is for sale, you may find those terms tightening or notes
unexpectedly called due.

On average, a business sale takes nine months to one year. If even some of these changes occur early on, the
impact can be dramatic. You’ll find that you’re not only running a business, but you’re busy putting out fires.

A buyer wants a successful operation with few changes until he or she can make those changes. Too many question
marks translates to greater risk and lower purchase offers.

Confidentiality is crucial no matter the size of the company or the type of business. To maintain confidentiality, use a
professional who understands the process – use an intermediary. An intermediary will market the business in a
confidential manner, while providing just enough information to attract the buyers you are looking for.

The intermediary should be diligent in screening inquiries to be sure competitors aren’t out there fishing for details.
The intermediary should only be sharing your identity after determining that a potential buyer is seriously interested
and is qualified. Those serious and qualified buyers should also be required to sign a binding confidentiality
agreement that holds them accountable for leaking information.

You want to maintain your business as usual for as long as possible. Keeping the sale confidential until the time is
right will help you to minimize uncertainty and maximize the sale.

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Selling Your Business? Why You Should Use a Broker
Any business owner who has sold a business on his of her own will tell you it’s a long, tedious and stressful process.
It consumes time and distracts you from the day to day operation of the business. When your focus should be on
maintaining or increasing the value of your business, all of your time and energy is directed to the sale process.

That’s where an experienced business broker can pay huge dividends. There are many areas where the business
broker expertise pays off:

         Confidentiality. If you as an owner attempts to sell your own business, that process alone reveals that the
          business is up for sale. Employees, customers, suppliers and bankers all get nervous and competitors look
          to make a kill. A business broker will protect the identity of the company and contact only owner approved
          buyers through a blind profile – a document describing the company without revealing its identity.

         Business Continuity. Selling a business is time-consuming for an owner who already is probably wearing
          many hats for the company. By taking on the additional load of selling the business, essential functions will
          get less attention and possibly damage to the business. The owner can maintain a focus on running the
          business when a broker is working on the sale.

         Reaching Potential Buyers. Business brokers have the tools and resources to reach the largest possible
          base of buyers. They then screen these potential buyers for revenue that would support the potential
          acquisition.

         Marketing. A business broker can help present your company in the best light to maximize the sale price.
          He or she has an understanding of the key values that buyers are looking for and can assist in identifying
          changes that can lead to a better selling price.

         Valuing your Business. Putting a value on a business is far more difficult and complex than valuing a
          house. Every business is different, with hundreds of variables that have an impact on the value. Business
          brokers have access to business transaction databases that can be used as guidelines or reference points.
          But the best way for a business owner to truly feel comfortable that he got the best deal is to have several
          financially viable parties bidding for his business, which is much more likely using the resources of a
          professional business broker.

         Balance of Experience. Most corporate buyers have acquired multiple businesses while sellers usually
          have only one sale. An experience business broker can level the playing field for a business owner making
          his one and only business sale.
          Closing a Deal. Since the business broker’s sole function is to sell the business, there’s a much better
          chance that a deal will be closed in less time. The faster the sale, the lower the risk of employee problems,
          customer defection and predatory competition.

Utilizing the services of an experienced, professional business broker allows the owner to focus on running the
business reducing the risk of business erosion during the sale process. A sale facilitated by a business broker helps
maximize sales proceeds by involving a large universe of buyers in a confidential, competitive bidding process.

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Adding Value to Your Business

If you’re looking to sell a business, it’s critical to look at the value of the business. But a typical business really has
two values. The ―academic‖ value is the one determined by a professional business valuation. The other is the ―true
market‖ value. The academic value is arrived at with a formula based on the firms’ hard assets, cash flow, industry
averages and multiples. The fair market value also takes those items into consideration, but then considers what
buyers are really willing to pay.
For many small and mid-sized businesses hard assets like equipment, vehicles, land, buildings, and inventory may
be limited. For some small businesses there may be no hard assets at all. Instead, their value is based on intangibles
like employees, business processes, customer lists, location and business relationships.

To maximize the fair market value of your business, it’s vital that you capitalize on those intangible assets.

         Develop Key Employees. Buyers generally aren’t interested in paying a premium if the business relies on
          you for its success. Remember to delegate responsibility to key employees and involve your key staff
          members in the decision making process. Demonstrating that your company’s success is reliant on your
          capable, well-trained employees – not just you – will pay off at the time of sale.

         Document What You Do. Be sure that job descriptions, operation processes, and strategic plans are
          documented. Documented records and plans give a buyer greater comfort that he or she will be able to
          emulate your successful growth and will help your buyer obtain financing. Also, be sure to keep business
          records like sales and expense reports, internal profit and loss statements/balance sheet, and tax returns
          clean and well-organized.

         Build Relationships. Name recognition, customer awareness and your reputation are all part of your
          business value. Even if your company doesn’t have many hard assets, your relationships are key. Consider
          diversifying both supplier and customer accounts.

         Improve Cash Flows. A potential buyer wants to see the ―true cash flow.‖ And, of course, in the business
          world cash is king. Be sure you are driving all income to the bottom line.

         Review Your Assets. Sell off or dispose of unproductive assets or unsalable inventory. Remove or buy off
          any assets that are primarily for your personal use.

         Find and Build Your Niche. You don’t have to be everything to everyone. Buyers will pay a premium for a
          niche that has barriers to competitive entry.

         Remodel, Clean and Organize. What’s the first thing anyone does when they put their home on the
          market? They spruce things up and make sure everything is in its right place. Yet, in business, that’s rarely
          considered. A well-maintained facility will get the best price. Even businesses that lease space can benefit
          from a thorough cleaning and organization to convey a feeling of quality and efficiency.

Keep these important intangible assets in mind if you’re looking to sell your business. They convey a value that
financial statements alone do not. If you are looking to sell, make a plan. Start working on the intangibles well in
advance of putting your business on the market. For many business owners, they reach a point where they burn out
and psychologically retire early, before a sale is made. It’s important to work to keep your focus right until the sale is
complete.

Finally, when the time to put your business on the market arrives, consider lining up key specialists who will help you
make the most of the sale – an attorney, an accountant, and a business intermediary to name a few. Remember, you
only have one chance to sell your business, so you want to do it right.

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How Do You Prepare Your Business for Sale?

Sure you are properly prepared when selling your business. Taking the proper steps to get your business ready for
sale can significantly improve the likelihood of a successful sale. For many business owners, the prospect of selling
the business after years of pouring every effort into growing the company can be emotional and difficult. That’s a
major reason why it pays to structure a plan to prepare for the sale. Remember, it’s crucial to use the same care and
patience that is used to grow and sustain a business. What important steps are needed to prepare your company for
sale?

Determine the company’s actual worth. There are a lot of formulas for valuing a business. Buyers may base a
purchase offer at least in part on the value of the assets in a business, the cash flow, gross revenues, annual growth
and other factors. The sale price generally depends on profits and, in most cases, the sale price is some multiple of
the businesses profit. Valuations can be obtained from a number of sources including a certified business
intermediary.

Be sure your records are up to date. You want all of your hard work to pay off in the sale, so be sure you have
current, detailed records that provide an audited assessment of the company’s financial position and future
projections.

Remember your staff is an important asset. The loss of key employees during a sale can kill the deal. Key
employees may be crucial to the ongoing success of the company. Assess which employees are prepared to stay
with the company through the transition

Assemble a team of experts. No matter how independent you are, the sale of a business isn’t something to handle
on your own. A business intermediary will take some of the load off your shoulders so you can spend time running the
business when it’s needed most. Keep in mind that the sales performance of the company during the time it’s on the
market is crucial, so working with a qualified business intermediary to sell your business will allow you to focus on the
ongoing operation of the company. Business intermediaries know the ins and outs of mergers and acquisitions and
take pride in what they do.

Always remember that selling a business is a one-time event. Preparation is a key to a successful sale. Be sure you
understand the process involved.

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Succession Planning: It’s Never Too Early

There are more than 15 million family businesses in the United States, ranging from giants like Wrigley and Marriott
to the local corner grocery store. Yet, history tells us that less than one-third of family owned companies will make it
to a second generation. One reason for the disheartening statistic may be that business owners tend to forget about
succession planning. It’s often not a priority and it definitely can be an emotional issue. Many owners just can’t
imagine the business succeeding if they aren’t involved or they may be too busy with day-to-day operations to take
the time to adequately plan for someone else to take the reigns when it’s time to step aside.

But as more and more baby boomers approach retirement age, the time for succession planning is today. Tomorrow
may bring a serious illness, disability or even death. Having a well thought out plan is critical to the continuation of a
business, particularly for a small, family-run operation.

Plan early. Developing a succession plan early will help to smooth the transition. You may think the plan won’t be
implemented for years, but unexpected factors may move up the timeline.

Bring in outside experts. As you’ve grown the business, you no doubt have had some help along the way. Hiring
the right professionals – attorneys, accountants, financial advisors and business intermediaries – will help you ensure
you have the best possible succession plan when it is needed. Their expertise will be invaluable as you develop and
plan while continuing your every day tasks in running the company. They will look more objectively at the business
and the goals you’ve set and help you ensure that everything is in place.
Involve family members in the planning process. Developing a succession plan and simply announcing it to the
family will only bring discontent when you unveil the plan. You may come up with the same plan, but bringing the
family into the process will certainly create goodwill and support.

Train your successors and work with them. Take the time to work with the person you’ve selected to take over so
he or she knows and understands what it takes to run the business and keep it successful. Help your successor
understand the big picture in running the entire operation, not just the duties he or she is currently handling.

Look at all options. Pay particular attention to three areas when putting your financial plan together; management,
ownership and taxes. As you work on your succession plan, consider that management and ownership aren’t
necessarily one and the same. You may look to one family member for the management of the company, but transfer
ownership of the firm equally to several members of the family.

Look carefully at the financial impact. Be sure to develop a financial plan as part of the overall succession plan.
You don’t want your heirs hit by heavy gift taxes that they cannot bear. And no matter who takes over the business,
be sure the valuation of the firm is accurate.

Be realistic. Of course you want to turn the business over to your eldest son or daughter so they can follow in your
footsteps. But it’s important to carefully consider whether he or she is really the right person to take over the
operations of the company. Consider another family member, or someone else within the company, if that person is
the best qualified and has the business skills and desire to run the firm. Ultimately, selling to an outside party may be
the best option. A business intermediary can guide you through that process, identifying potential buyers and advising
you on options for structuring a transaction. The time for succession planning is now. Don’t delay starting the
planning process. It is one important way for you to ensure that you have the funds you will need in retirement, while
helping to ensure that your company will continue on after you leave.

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Creative Financing for Buyers with Limited Capital

A recent survey of members of the International Business Brokers Association (IBBA) found that business
intermediaries expect 2007 to be a busy year for buying and selling businesses. Some of those transactions may
need creative financing. With a busy year ahead for small business transactions, there are a number of creative
financing options to consider.

      1.   Seller Financing. Increasingly, buyers and lenders are looking to the seller for financing as they try to put a
           transaction together. In such a scenario, the seller will hold a note at an agreed upon interest rate for a
           specific term or amortization – generally ranging from five to years. The terms of the sale may include a
           balloon payment three to five years after the purchase date. It’s a way of giving the buyer time to get up and
           running and to establish a successful track record with the business. Seller financing makes the bank more
           comfortable with the transaction. Lenders know they have a seller who has a vested interest in the success
           of the business rather than one who will take their money and run.

      2.   SBA Loans. In sales of a business, conventional loans usually aren’t available, so a buyer may want to
           consider going to a Small Business Administration (SBA) lender, which has a number of loan options. The
           SBA guarantees a portion of the loan. The buyer pays an SBA loan fee that allows them to get funding for a
           loan the bank couldn’t do conventionally. If an SBA guaranteed loan goes into default, the SBA will pay the
           lending institution up to 75% of any deficit left after liquidating the collateral.

      3.   Earnouts. Earnout financing involves a certain dollar amount agreed on by the buyer and seller to be paid to
           the seller based on the performance of the company after the transaction is completed. Earnouts can be
           structured in a variety of ways and can be based on different financial benchmarks such as a company’s
           revenues, gross profits or net income. Earnout financing is often used for companies that are in a turn
           around situation or when buyers are purchasing on potential, rather than on historical cash flow.

      4.   Mezzanine Financing. In mergers and acquisitions, mezzanine financing is another alternative for a buyer
           looking for capital where the financing package may include interest rates of 20 to 30 percent. The lenders in
           this situation are typically high net worth individuals who are expecting a larger return on their investment.
           They are lending in a junior lien or a position behind the bank and seller financing. The loans are typically
           made with limited sources of collateral, thus the request for higher interest rates. Again, this financing is
           often used in funding goodwill or reputation in an acquisition.

      5.   Funding Scenario. In a million-dollar transaction, the buyer would be expected to have a 20% down
           payment. The seller may hold an additional 10% to 20% in seller financing, and the lending institution would
           offer a combination of conventional or SBA financing to cover the difference, depending on collateral
           available. A buyer and the lending institution must evaluate a company’s cash flow and determine if it is
           adequate to cover their debt service and provide a reasonable return on their investment. Lending
           institutions will also be examining whether a buyer’s coverage ratio, or excess cash flow after all debt is
           paid, is adequate to cover their needs. Even if you’ve been affected by a downtown in the economy in some
           parts of the country, don’t let that stop you from considering your acquisition options.

Creative financing tactics are becoming more common. Talk with a business intermediary representing the company
you are considering purchasing. They’ll know if the owner is willing to consider seller financing, earnouts or other
creative financing ideas. Based on your available capital, the business broker should be able to tell you whether you’ll
be considered for the purchase and may also provide you references to various lenders that are familiar with
financing the purchase of a business.

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M&A Due Diligence

Merriam-Webster Dictionary defines due diligence as ―research and analysis of a company or organization done in
preparation for a business transaction.‖ Some even look at it as a pre-marital background check and counseling. But
it should be noted that dissolving a merger is much more difficult than ending a marriage if things aren’t as they
appear. Ultimately, due diligence is the process of being sure that things are as they appear before a deal is sealed.
For someone considering a merger or the purchase of an existing business, the review of documentation and the
answers to your due diligence questions are critical. There’s no doubt it is a complex process that can be time-
consuming. But with so much on the line with any merger or acquisition, you don’t want to make a decision without all
of the information. You want to be sure everything is reviewed and all questions are answered to your satisfaction.

During the due diligence process, an often lengthy list of documents should be provided. The list of documents
should cover a range of areas, including:

          Legal structure and incorporation of the company

          IRS records

          Insurance policy information

          Organizational structure

          Personnel policies

          Operations
         Capital and real estate

         Contracts, licenses, agreements and affiliations

         Technology and intellectual property

         Current or potential legal liabilities

         Marketing materials
Today more than ever, buyers are putting more emphasis on the due diligence process. And while the financial
aspect is a key component, the due diligence process should also consider organizational items. Be sure to seek
documentation and ask important questions about the company’s culture, strategy, leadership and competencies. To
properly address and evaluate all of the areas of the due diligence process, you want to assemble the best possible
team of people. Work with that team, including your business intermediary, throughout the process to review and
evaluate the documents and information you receive. It’s also important to keep an open mind. Be sure that you get
all of the information you need, but don’t assume that you will find something wrong.

Although the due diligence process may take considerable time, it’s a critical part of any transaction and should be
considered the foundation of the entire deal.

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Seller Can Stay Around Following the Sale

Selling a business and walking away can be very difficult. But in many cases there’s a transition (―training‖ and/or
―consulting‖) period dependent on the size of the company and the role of the owner. Transitions may be as short as
a month or two or as long as a year. In most situations, the buyer wants the seller to remain on board to shorten the
learning curve and help with the smooth transfer of key relationships.

In the typical business sale, a transition period of four to eight weeks is included, and sometimes a ―telephone
consulting period‖ is added (e.g., 6 months of telephone consulting not to exceed 5 hours per month). Also, the seller
may additionally be retained as a consultant at a negotiated rate. In some instances, a long-term employment
contract is negotiated and the seller maintains daily involvement for a much longer period of time.

For the owner who wants to sell the company and leave quickly, the focus should be on the development of a strong
management team. Be sure to introduce key employees/managers to your major customers and vendors and look at
ways to delegate responsibilities. The more the customers think they are interacting with ―the company‖ versus the
―owner‖ the easier the transition.

If you’ve established a good management team, less time will be required for the transition to the new owner. In
addition, a well developed team usually adds value to the sale.

Occasionally there are owners who want to sell but just aren’t ready to quit working. They may be looking to sell early
to get a premium price while the market is in their favor or to get away from unwanted or overwhelming administrative
and management duties.

Either way, long-term employment contracts can be included in the sale agreement. The seller can stay on board and
work with the business a few more years while still drawing an income and benefits.

If you’re selling your business, in most cases you won’t be able to walk away the day after the sale and in most cases
you probably don’t want to. Talk to your business intermediary about the true timeline of the sale and transition. If you
want to sell while the price is right, but you’re not quite ready to leave immediately, consider the options available to
sell now and maintain a role with the company.

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You Want to be Your Own Boss? Buy an Existing Business

The Baby Boom generation spans many years, creating a unique situation in the business world. Aging boomers are
looking toward retirement, while many younger boomers find they’re ready to be their own boss. For those younger
boomers, and others looking to be a business owner, buying an existing business is a great option. But be aware that
buying a business is a timely process. Some buyers never find the right opportunity, while others spend too much
time exploring too many options. Consider a step-by-step approach to get you where you want to be: owning your
own business.

Ask yourself some important questions. Why do I want to be an owner? What types of activities do I like? What
lifestyle is important for me? You’ll also want to be sure to include your family as part of the assessment.

Line up a team of professional advisors. Alert your attorney, accountant and financial advisors that you are looking
for a business. Be sure to contact business intermediaries who represent businesses within your targeted market.
They’ll work with you to let you know about available companies that meet your criteria and qualifications.

Consider your financial situation. Be sure to carefully consider how much money you need and how much you
want to earn. Your expectations need to be realistic and something that can be achieved by the type of business you
are searching for.

Develop a personal financial statement. The personal financial statement should show your assets and liabilities
and possibly include a supporting statement from your banker or accountant. Be prepared to share this document
with the business intermediary who is working with the seller. If you are planning to work with other investors, identify
them and create a group financial statement.

Create a profile. Sellers want to be sure their business will continue to be successful. They want to find a buyer who
has experience and will take care of the company’s employees. Really, you are selling yourself to the current
business owner(s) and the professional team that represents the seller.

Establish your criteria for acquisition. It’s important to define the parameters of your search. Include geographic
requirements and criteria on the transaction size. Having set criteria will help you demonstrate your commitment to
finding the right business for you. If you are interested in buying an existing business, you want the business
intermediary to be selling you to the seller. It’s important that you demonstrate that you’re a qualified, motivated
buyer. Being prepared and serious about your search is an important initial step.

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The Benefits of Buying a Business versus Starting a New Business

So you want to be your own boss. Consider the options: work as an independent contractor … start your own
business … buy an existing company.

Certainly there are pros and cons to each option. If you do a careful analysis, you’ll learn what many seasoned
entrepreneurs have discovered…the risk-to-reward ratio is tipped in your favor when you purchase an existing
business.
Admittedly, as an independent contractor, your risk is minimal. The up front investment and overhead costs are
limited. However, without the ability to leverage the work of an employee base, the returns are limited by your own
personal capacity.

Starting a business of your own can pay great dividends, but it’s important to understand that the risks are significant.
Most start-up businesses will falter and eventually die. According to Michael Gerber, author of The E-Myth Revisited,
40 percent of new businesses fail in the first year and 80 percent fail within five years. On the other hand, purchasing
an existing business reduces an entrepreneur’s risk while creating opportunities for tremendous profit.

There are a number of reasons to consider the purchase of an existing business rather that starting one:

        Proven Concept. Buying an established business is less risky – as a buyer you already know the process
         or concept works. Financing a purchase is often easier than securing funding for a start-up business for that
         very reason—the business has a track record. A bank will be able to look at the historical results for the
         business, not just rely on projections.

        Brand. You’re buying a brand name. The on-going benefits of any marketing or networking the prior owner
         has done will transfer to you. When you have an established name in the business community, it’s easier to
         place cold calls and attract new business than with an unproven start up. That’s an intangible benefit that’s
         difficult to put a price on.

        Relationships. With the purchase of an existing business, you will also be buying an existing customer
         base and vendor base that took years to build. It’s very common for the seller to stay on and transition with
         the business for a short time to transfer those relationships to the buyer.

        Focus. When you buy a business, you can start working immediately and focus on improving and growing
         the business immediately. The seller has already laid the foundation and taken care of the time-consuming,
         tedious start up work. Starting a new business means spending a lot of time and money on basic items like
         computers, telephones, furniture and policies that don’t directly generate cash flow.

        People. In an acquisition, one of the most valuable and important assets you’re buying is the people. It took
         the seller time to find those employees, develop them and assimilate them into the company culture. With
         the right team in place, just about anything is possible and you will have an easier time implementing growth
         strategies. Plus, with trained people in place you will have more liberty to take vacation, spend time with
         family, or work on other business ventures. When start-up owners and independent contractors go on
         vacation, the business goes, too.

        Cash flow. Typically, a sale is structured so you can cover the debt service, take a reasonable salary, and
         have some left over to take the business to the next level. Start up owners, on the other hand, often ―starve‖
         at first. Some experts say start-ups aren’t expected to make money for the first three years.

        Risk. Even with all these advantages, some entrepreneurs believe it is cheaper, and therefore less risky, to
         start a business than to buy one. But risk is relative. A buyer may pay $1 million, for example, for an
         established business with strong cash flows of approximately $200,000 to $300,000. A lending institution
         funds the transaction because historical revenues show the cash flow can support the purchase price. For
         many people, however, that is far less risky than taking out a $300,000 loan with an unproven concept and
         projections that may or may not be realized.
Becoming your own boss always involves a risk. When you buy a business, you take a calculated risk that eliminates
a lot of the pitfalls and potential for failure that come with a start up.

Seller FAQ's - Why use a Business Broker or M&A Intermediary?
Partnering with a Business Broker or merger and Acquisition Intermediary provides you with a significant advantage
that can literally make the difference between a successful outcome and a failed deal.
Your Business Broker will work with you through all aspects of the search, offer, due diligence and closing of a
transaction.


Your Coldwell Banker M&A team provides:

                                          Experienced analysts and dealmakers to help you refine your
                                           search criteria and find a business that fits your requirements
                                          A selection of businesses that you would not be able to find on
                                           your own
                                          Dozens of pre-qualified acquisition candidates that may meet
                                           your criteria
                                          Market information and industry trends
                                          Negotiating and problem solving
                                          Financing advisement

What are my costs for using a Business Broker or M&A Intermediary?
In most cases, the Business Broker is paid a “success fee” by the seller based on a successful
transaction at the close of a sale. If a buyer pursues a company that is not currently listed with
Coldwell Banker, that buyer might pay for the Broker’s services.

What is important to look for in a Business Broker or M&A Intermediary firm?
It is important to consider many factors when deciding which Business Broker or M&A Intermediary to
use when selling your business. Be sure you select a firm you feel confident can sell your business.
Your relationship with a firm is critical as you work together to successfully sell your business.

At Coldwell Banker M&A we pride ourselves on taking a client-centered approach to the sale of a
business. Our partnerships are based on integrity, confidentiality, professionalism and experience. This
type of partnership allows us to understand your goals and create a plan to successfully sell your
business.

In addition, you will need a firm with a large pool of buyer contacts to market your business. With
Coldwell’s local presence and national reach, experienced professionals and access to qualified buyers,
we can provide a significant advantage for the sellers we represent.

Is there an advantage to using a national firm versus a local broker?
With a national firm, sellers often have access to a large pool of qualified buyers, greater resources for
selling, national reach and more experienced team members. Local brokers provide a better
understanding of the local market, buyer contacts and local business trends. With Coldwell Banker
M&A, sellers get the benefits of both a national firm and local brokers.

Our business brokerage team has expertise in selling smaller companies, including local franchises,
family owned businesses and one location operations. The Coldwell Banker M&A team has expertise in
all aspects of transactions involving larger, mid-market companies which require an increased level of
knowledge and practice. They offer services including growth equity capital strategies, industry
consolidation plans, recapitalizations and ownership transfers.

How can the sale of a business be kept confidential when using a firm or broker?
It is critical that during the course of selling a business, all aspects are kept confidential. At Coldwell
Banker M&A we understand the importance of confidentiality. We protect your sensitive information
throughout the course of a transaction and discreetly market to qualified buyers. Coldwell Banker M&A
can ensure the strictest of confidentiality as no illuminating information or characteristics of a
company is ever revealed during a business deal

How long is the sales process when using a broker or firm?
Many factors influence the length of time it takes for a Business Broker or M&A firm to sell a business.
The market, industry, financing, number of buyers interested are just of few of the key influencers.

At Coldwell Banker M&A, we prepare our sellers to expect, on average, between five and eight months
to sell a business. However, if the process is moving more quickly or taking a bit longer than
expected, our team is diligent in keeping our sellers apprised of any changes so everyone can react
accordingly.

Would my accountant be able to sell my business?
Although accountants can provide information pertaining to the financial aspects of your business,
their expertise does not include selling businesses. Accountants do not have access to buyers nor the
knowledge specific to selling a business.

At Coldwell Banker M&A, our team will work closely with your accountant to determine key factors
when valuing your business. Your accountant will be an important contributor throughout the
transaction of selling your business.

				
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