Posted on Wed, Jul 07, 2010
This long established Heating and Cooling (HVAC) business located in Tucson, Arizona, has an excellent reputation and good customer base.
In 2009 the revenues were down due to the economic downturn. This year the seller has decided to wind down the construction side of the business and concentrate on Service and Retrofit
It is the Service/Retrofit division that is for sale! Management is layered for optimal performance. Real estate is available for $600,000. Good location, well built structure, and large yard space for storage and vehicles. This business can be relocated, combined into a larger operation, or the seller is willing to work with a buyer on a property lease or lease with purchase option. Seller works less than 20 hours per week in the business.
Asking Price: $450,000
Annual Revenue: $825,000
Years in Business: 33
Business Structure: Corporation
Reason For Selling: Retirement
Inventory: $26,500 (incl)
Equipment: $28,000 (incl)
Acct. Rec. @$68,000 (incl)
Vehicles: $78,000 (incl)
Facility Size: 6450 sq ft
Real Estate: $600,000 (additional)
Business Hours: M-F 7:30 am to 5:30 pm
Employees: 11 FT
Down Payment Terms: Sellers Prefers Cash
Business Structure: Corporation
Covenant Not to Compete: Yes
Training: 3 mos. (longer w/ salary)
Licenses Required: C39R, L39, L45, and L37
Assumed Debt: None
For more information, contact us at 520-327-4454. To download a printable copy of this listing, visit the listing page by clicking here.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Thu, Jun 03, 2010
A respected colleague in the business brokerage industry in Prescott, Arizona, Brian Harron, is the original author of this helpful article about selling a restaurant or bar. Much of what Brian writes is applicable to the sale of any business. We hope you find this valuable.
When is the best time to sell a restaurant or bar? Another question that I get asked is when is the best time to list a restaurant or bar for sale? So here are ten answers to the questions.
#1 Before you absolutely have to. The best time to sell is when there is no sense of desperation due to economic circumstances, divorce, health or whatever. Whenever desperation is present, it seems to infect the process everywhere and creates an unbelievable buyer advantage or a situation where buyers just stay away.
#2 After you have sought professional advice. Smart Sellers confer with their attorney, their tax adviser and a professional business broker and perhaps a business appraiser before putting their business on the market. Tie up loose ends first, not last, get your legal and tax house in order and know the consequences of the sale first so that when the sale is done there are no unpleasant surprises and you get a deal that you can live with.
#3 Before a deadline. You do not want to be trying to sell when the lease is running out or when you thought you were going to retire. When you want to sell, you need to know that the average time length for a business sale can be six months or longer. Allow for it and let the process unfold normally.
#4 After you spruce the business up. This is all about fixing up your business both physically and fiscally. Paint, clean, replace. This is no different than selling a house. Then get to work on the money side of your business. Clean up your financial reports, report all sales. remove unnecessary expenses and maximize your Seller's Discretionary Earnings, the thing that most likely will have the greatest impact on the price that you can get for your business.
#5 When cash flow is strong. Don't know what Seller's Discretionary Cash Flow is? SDE has a formula but in short it is the amount of cash taht an owner has access to directly or indirectly. Profit counts but not as much as SDE because most small business owners do not like paying taxes. SDE gets at the ways owners can have cash and it is generally the number that gets capitalized to create the estimate of listing price. Better read the Blog on SDE to be sure that you realize it importance to brokers, bankers and appraisers and yes, seller's too.
#6 When general economic trends are rising. Right now, April of 2010, is an excellent time to list a business. The economy is improving as is the general level of optimism. When the economy is hot is also a great time to have a business on the market as buyers are willing to pay higher prices and there are more buyers to deal with.
#7 When it is a Seller's market. A wonderful time to sell is when there are more buyers than sellers and buyers get anxious to buy, sometimes becoming a little less demanding than what they might ordinarily be. Supply and demand is always in the favor of the seller when there is a small supply and a great demand.
#8 When you have ample time left on your lease. The length of time on your lease can be critical to your ability to sell your business. Your buyer needs time to get his investment back and then time to get a return on the investment. Anything less than three or four years will cause a very deep discount in your price. With an average life span for restaurant ownership of approximately five years, a five year lease with one or more renewal options can be very important to your sale strategy.
#9 When sales are steady or increasing. Strong sales are a very good indicator of a healthy business. Generally only bottom feeders are going to be interested in a business with significant reductions in sales. Start your sales plan two to three years ahead of the time that you list your business for sale and make increasing sales one of your biggest goals.
#10 When the business is no longer fun. Most entrepreneurs get into the restaurant business because it is fun and they love it. it is for many, a physically and emotionally demanding business. When it is no longer fun or when you can feel the burnout arriving, it is most likely time to sell - before your performance,. your attitude and the business deteriorates, making it harder to get the best price at the time you want it.
To read Brian Harron's original article on his blog, click here.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Thu, Mar 11, 2010
Have you considered that in today's economy buying a business is essentially buying a job that you can never be laid off or fired from?
If you have the requisite skills and access to capital and / or financing, there could not be a more favorable time to buy a business. Most buyers today have less than $100,000 to invest, and much of this may be pulled from a 401k or home equity. A buyer's motivation is generally to gain more control over their own life and achieve pride of ownership.
What would your dream job look like? How many hours a day would you work? How long would your commute to work be? Where would you live? What would the weather be like? What would your average day be like, what kind of activities would you be performing?
It is important to ask yourself these questions, because buying a business is really the same thing as buying a lifestyle. In addition to the choice of what kind of business to buy, whether that be a manufacturing business, service business, restaurant, franchise or any other kind, there is the choice of where to buy that business.
Buying a business in Arizona offers many different lifestyle options, for example:
- Buying a business in Phoenix offers access to the nation's 5th largest city and year round warm temperatures. Proximity to Sedona, Flagstaff and the White Mountains offer weekend escapes.
- Buying a business in the White Mountains area, including Pinetop and Show-Low, affords buyers with 4 seasons and mountain and lake sports.
- Businesses for sale in Tucson or Southern Arizona offer buyers less extreme weather than Phoenix, access to Mexico, and plenty of great hiking and outdoor activities.
There are many different lifestyles available to investors considering in buying a business in Arizona. We would be happy to answer any questions or point out of state buyers in the right direction to discover more facts about life and business ownership in in Arizona.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Sat, Mar 06, 2010
In the previous post, we began a conversation about how even experienced buyers who have great familiarity with the process of buying a business need to perform rigorous analysis in support of every transaction. Regardless of how much experience they have with buying a business, there are areas where a business broker can assist a buyer in performing due diligence in order to uncover the areas where intentionally or unintentionally, a seller may have obscured the reality of the value of their business.
CASH FLOW STATEMENTS are another such area that must be carefully scrutinized, because for a buyer they are more important than either balance sheet or income statement. The buyer needs to certify that the cash flow will continue to remain positive even after having taken into account the debt service that will be necessary after the acquisition and once the non-recurring or extraordinary items have been removed.
The ability to continue producing positive cash flow is dependent upon the condition and reasonable future lifespan of the machinery and equipment of the business. Should CAPITAL EXPENDITURES become necessary to replace equipment that is dilipidated or will become obsolete in the near term, a buyer needs to know that in order to assess its impact on the acquistion price and the ongoing operation. Rapidly growing companies may also continue to need capital investments in productive capacity that exceed the normal rate of depreciation, which would have an impact on both future projections and acquisition price.
We invite you to visit the experienced buyer page in the resources section of our Web site for more information on all aspects of buying and selling a business in Tucson or Southern Arizona.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Fri, Mar 05, 2010
As Tucson business brokers dealing with Arizona businesses for sale, we frequently deal with experienced buyers, or even professional acquirers, whose level of experience and familiarity with the acquisition process may give them an advantage over an owner who plans to sell a business for the first time. That said, regardless of a buyer's level of experience, the facts about a transaction need to be uncovered by thorough and rigorous analysis in each and every case. For there are many areas where a seller, whether intentionally or unintentionally, may have obscured the reality of the value of the business for sale in question. We plan to comment on these over the course of this and several subsequent posts to this blog.
The first of these areas is INVENTORY. It is paramount for a buyer, or representing business broker, to ask the right questions about inventory, such as:
- how often and how it is counted?
- how it is valued, by cost or fair market value?
- what percent of it is obsolete
- how many years of worth of obsolete inventory there is?
- what kind of reserve policy is in place to cover for the inevitable need to write down a portion of inventory?
Another area that business buyers ought to delve into carefully is DISCRETIONARY COSTS. Often, when preparing to sell a busines, the owner will scale back on discretionary spending in order to maximize profit in support of an inflated asking price. Areas that frequently get the axe are:
- marketing: advertising, promotion, public relations, etc
- maintenance: equipment and facility
- research and development
- technology upgrades
A buyer and his or her representing business broker must ask probing and persistent questions in order to understand the correlation of each these categories of expenditure to the company's long-term competitiveness.
While we are Tucson business brokers working with Arizona businesses for sale, we want to serve as a resource for business buyers and sellers anywhere, regardless of location. Check out the resources section on our Web site for more information. And leave us a comment below if you want to discuss this post.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Wed, Dec 02, 2009
Whether you are selling or buying a business, allowing a business broker to assist you with the due diligence process is a good idea. Most business brokers would use a simple definition of “due diligence” to mean the process through which a potential buyer evaluates a target company or business for the purpose of acquisition.
According to the U.S. Securities Act of 1933, business brokers must conduct a due diligence investigation for the businesses they are selling and disclose their discoveries in order to not be held liable for non-disclosure.
In Arizona, business brokers are governed by the Arizona Department of Real Estate, which requires them to disclose material information that could affect a buyer’s interpretation of the sale price as well.
The due diligence process is similar to a forensic analysis. According to many business brokers, relevant areas of concern can include financial reports, the business’s place in the market, real and personal property, insurance and liability coverage, review of debt, employee benefits, immigration, and international transactions.
Business brokers say that due diligence should be performed before a company goes to market. This helps to uncover any hidden or unexpected costs that may be associated with the sale of the business, ensuring that the seller is receiving a fair sum from the buyer. The best advice is to employ the help of a qualified business broker.
Protecting the seller is a business broker’s job, and properly performing due diligence is one of the most important steps to take when selling your company. Broker’s may also be retained to protect the interests of buyers.
Portions of this post originally appeared on Web site of the International Business Brokers Association, Inc.
http://www.ibba.org”>http://www.ibba.org
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Tue, Dec 01, 2009
How long have you been looking at businesses for sale for the the right opportunity to buy a business in Tucson, or make a Tucson Business Investment.
Several months ago, Bizquest.com (a national business for sale listings site) conducted a survey and learned that nearly 70% of the would-be business buyers who responded had been looking for a business for over 7 months. The same group of buyers also reported that they had also met with fewer than 3 sellers during that period of time.:
If you are looking at Tucson businesses for sale, with an eye to making a Tucson business investment, then what this means for you is that if your strategy has been similar to those prospective buyers in this survey, it is time to make a major change to your approach. Otherwise, you might still be sitting in front of your computer in a year, no closer to buying a business in Tucson than you are now.
You can look at businesses, at a superficial level, from your computer. But you can’t buy one that way.
And you won’t ever buy a business if you’re just a “looker,” someone who never gets beyond the executive summary
to really dig in and get to know a business, meet the seller, understand the numbers, etc.
If you want to buy a business, you have to get off the porch and play with the Big Dogs, as they say. You need to get out and meet with people who have businesses for sale if you plan to make a Tucson Business Investment. You should meet them, ask them questions, and arrange to visit their businesses. And you should do this with quite a lot of businesses, because there is no other, and therefore no better, way to to expand your understanding of what different businesses have to offer you in terms of lifestyle, operating model, and return on investment. We believe that your decision to purchase in the end will be based on these factors, and that the lifestyle a business offers you will turn out to be perhaps the most important consideration. If you don’t go meet sellers, and get a feel for what their life is actually like while running the business they intend to sell, how else are you going to get a reality check on what your life would be like if you were running their business? You need to answer the question “what are the fundamentals that I am looking for in a business?”
The more sellers you meet with, the better you will get at rapidly and accurately analyzing a business, getting your questions answered, and working with your broker to determine what you think it is worth. If you don’t go through these steps, you will never actually get to the point of being ready to make an offer. And it goes with saying that you miss 100% of the shots you don’t take. If you don’t go through these precursor steps, you will never be in the position to buy a business. Preparation and practice are essential to buying a business. If you are not working with your broker to better prepare yourself, and you are not practicing by researching and interviewing, then quite frankly you are spinning your wheels and wasting your time.
Businesses for sale come and go on the market continuously. Will you be ready to seize upon the right opportunity when it presents itself? Buying a business can be intimidating, and time consuming, until you take the time to get into the process and understand all the steps involved and develop your own judgment at each stage. Once you’ve made that investment of time, you’ll take the mystery, and any hesitation, out of the process. But unless you take off your gloves and roll up your sleeves and get in there and meet real live sellers and get your hands dirty by digging into the numbers, you will never buy a business, and instead will remain part of the 90% of lookers who never become buyers.
So, unless you’re willing to get out in the market, don’t tell people that you are trying to buy a business. Because the only thing you’re really doing is wasting time.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Tue, Nov 03, 2009
Do you plan on selling a business in Tucson or Southern Arizona? Think for a moment about what someone who wants to buy a business in Tucson would love to see. Wouldn’t they be simply delighted to find all of your accounting and customer records completely accurate, computerized, and ready to be used without the need for any confusion or translation
If you’re already running Quickbooks or a similar small business accounting package, you can increase the value of your business by taking the next step and organizing your customer records using one of the many affordable small business Customer Relationship Management (CRM) systems that are available today. These systems will allow you track all manner of customer information, take notes, make appointments, broadcast email campaigns, etc. They build on the customer record in your accounting package, and let you do much more.
CRM systems are available as both “on-premise” solutions (meaning that you buy and install the software on your computers) or as Software As A Service (SaaS), or internet hosted solutions that you pay for monthly on an a per-user basis. The latter have the advantage of continual upgrades to the software itself, and do not require any expenditure on hardware.
By exporting your customer records from your accounting software into a CRM system, you will gain the ability to cost-effectively communicate with your customers and to track their activity in a more detailed fashion than the accounting software generally allows.
Why will this increase the value of your business? Well let this business broker tell you!
In terms of marketing expenditures, it is nearly always more cost effective and profitable to gain additional share of business from current customers than it is to prospect for new customers. Existing customers are also typically less price sensitive and therefore higher margin, whereas you will generally need to offer new customers some form of an incentive to switch to your product or service, which lowers your margin.
Using a CRM systems can also transform the way sales and marketing work within your organization when combined with analysis of past sales, and the visibility they offer for managing the pipeline of future sales. If you fully understand the products, services, channels or customers that make the largest contribution to your bottom line, a CRM system will allow you to redirect your marketing resources and sales efforts in a highly targeted fashion to focus on the areas of your business that matter most.
From the perspective of a prospective buyer of your business, imagine how much more confidence they would have in their investment if you could clearly demonstrate who your customers are, what their sales patterns have been, what orders or repeat business is in the pipeline, and by deduction, what the future value of those customers are.
A buyer will generally not pay for future value, preferring instead to base their evaluation of your business’ value on its historical financial performance. However, if you can show them this level of detail about your business, and give them the greatest possible level of confidence that they could hit the ground running after buying it and expect the same or better results, then they are likely to be willing to pay you a higher price.
Don’t wait until you want or need to sell your business in Tucson to take advantage of the power and insight that your customer records can provide when you use a CRM system to manage them.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Fri, Oct 02, 2009
If you are like most small business owners who have ever thought about selling your business in Tucson or Southern Arizona, you have probably asked yourself on many occasions “I wonder how much my business is worth.”
A small business is typically the owner’s principal asset, aside from a home. And yet, surprisingly few business owners in Tucson or Southern Arizona thinking of selling a business put themselves in the shoes of a potential buyer when asking that question.
The value of your business will be determined by the market. In other words, the asking price is what the seller wants, and the sale price is what the seller gets from a buyer. The amount that a buyer may be willing to pay for your business is a direct consequence of the money they believe your business will put in their pocket. Buyer’s have a number in mind, a desired rate of return. And they have many investment options available to them when making a Tucson or Southern Arizona business investment. How will you demonstrate to them the potential cash flow that your business offers a buyer in exchange for their investment?
The answer: by showing the buyer accurate and verified financial and accounting records.
Don’t wait until you think you want or need to sell your business in Tucson or Southern Arizona to begin organizing and standardizing your accounting records. There is nothing that will discourage a buyer wanting to make a Tucson or Southern Arizona business investment more from further evaluating the purchase of your business than incomplete, inaccurate, or unprofessional accounting practices and records. If you put yourself in the buyer’s shoes, you would expect the same.
Seek the advice of a professional CPA in order to review and standardize your accounting practices, and, if you have not already, invest in a small business accounting software such as Quickbooks that most buyers will be familiar with. Make sure that any personal expenses that were charged to the business are clearly disclosed or annotated as such, to make the process of explaining to a prospective buyer the true Discretionary Income generated by your business clear and direct. Keep a file containing those receipts for future cross-reference and spot check by a potential buyer during due diligence. If a buyer wanting to make a Tucson or Southern Arizona Business Investment can quickly understand the financials of your business and find them trustworthy, they are much more likely to move to the next stage of evaluation.
Don’t wait until you need or want to sell a business in Tucson or Southern Arizona to invest the time in developing accurate, standardized and systematized accounting records. Having them will allow you better visibility into your business, and lead to better decision making that will increase it’s value. It will also allow you to immediately show a buyer that your business is worthy of their consideration.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Thu, Oct 01, 2009
If you are considering buying a business in Tucson or Southern Arizona, you will no doubt be interested in learning more about SBA Loan Programs and what it takes to quality for an SBA Loan
The SBA has a basic loan guaranty program called the 7(a) loan guaranty. This program may be available to help people seeking to buy a businesses in Tucson or Southern Arizona obtain loans that they normally would not obtain. The SBA guarantees that the lender will receive most of their money back if the business defaults on the loan.
Lenders can become Certified Lenders by showing that they have the ability to process, close, service, and liquidate loans. They must also have a satisfactory history with the SBA, an acceptable SBA rate, and have shown the ability to work well with the SBA. In return the SBA promises a fast loan decision. The proceeds of the loan can be used for any business purpose. If the loan is for working capital then the maturity is 10 years and if it is for fixed assets then the maturity is 25 years.
Another loan program is the Certified Development Company program which is also called the 504 loan program. This program allows people seeking to buy a business in Tucson or Southern Arizona, or anyone wishing to make a Tucson Business Investment to purchase real estate, machinery, or equipment for the purpose of expansion or modernizing the business.
The Micro loan is a very popular loan program for those who need up to $35,000. This loan can not be used to purchase real estate or to pay existing debt and they are not guaranteed by the SBA. The Low Doc program is a loan program in which the lender doesn’t require as much paperwork as with other traditional loans.
SBA lenders will generally require the following from anyone seeking to buy a business in Tucson or Southern Arizona, or make a Tucson Business Investment:
Confidential Business Profile – this is our prospectus we have prepared for our business opportunities that will detail the specifics of the business and financial statements and projections that a bank will be interested in.
Business financial statements- Tax returns and/or P&L statements for the prior three years in most cases.
Personal financial statements- Detailed personal financial statements will be required for any owners, partners, or any stockholder holding more than 20% interest in the business will be required to provide this information.
SBA Loan Request – A standard form showing description of how the funds will be used, etc.
Collateral- Describes the collateral used to secure the loan.
For more information about how the SBA program could work for you if you are planning to buy a business in Tucson or Southern Arizona or make Tucson business investment, please give me a call at 520-327-4454.,
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com