Eric Gall

Just curious as to how many Lee and Collier County realtors would be interested in receiving commissions in advance? Please answer the following questions:

1. Would you be interested in receiving your commission in advance for a 15% fee (yes/no)?

2. How often would you use the service per month on average?

3. Would you be interested in investing in such a service for reasonable returns, e.g., 25% (yes/no)?

If yes, to question #3, please give me a call at 239-405-8818.

Thanks,

Eric J. Gall

More and more frequently, I am running across business owners coming off of listings produced by a residential or commercial realtor with no business brokerage experience. The vast majority of these owners are very reluctant to list with me due to the inappropriate marketing of their business. Here are two (of many) common, critical mistakes made by residential and commercial realtors in listing a business for sale:

1. Breach of confidentiality. A business is not a residential or commercial property. A visible listing makes customers, employees and suppliers nervous at best and "former" customers, employees and suppliers at worst. While reviewing the financial information, I have seen a lot of damage done to businesses and business owners through listings stating the business name and/or photos of the business.

2. Improper valuation of the business. I have seldom met a business owner who thought their business was worth less than it really is. Just as in valuing a residential or commercial property you need data, it is the same for businesses. If you do not know the business market, including historical multiples, comparables, the local listings and most importantly, if you do not have the knowledge and skills to recast financials, you cannot value a business. I have seen so many businesses listed by residential and commercial realtors at two or three times their market value. Buyers today are far too sophisticated. They won't waste their time looking at businesses priced too far out of reason.

Now my plea: If you are a residential or commercial realtor with a business owner as a client and you have little experience valuing and marketing businesses, get me involved. The benefits should be obvious;

1. The means to confidentially market the business will result in continuity in business performance.

2. The proper valuation will result in more prospective buyers and realistic expectations from the business owner.

3. You won't waste your time or your client's time with an improper listing.

4. Your probability of selling increases dramatically; hence, the probability of earning a commission does as well.

5. Your client will be much happier with you and will enhance your reputation because you provided the best advice.

So, if you have a client with a business for sale, contact someone with business sales experience. I can be contacted at 800-599-0503 and would be glad to write a sell side commission agreement to help you and your client.

Business sales are effected by the same supply and demand curves impacting every free-market commodity. Presently, the supply of businesses for sale is roughly the same as any time in recent history. However, demand for businesses is still relatively low. Uncertainty in the credit markets, the economy and in business in general, have limited the number of qualified buyers. So what does this mean in terms of your business value?

1. Buyers are looking for “cheaper” deals. Smaller deals under $250,000 and $100,000 down in order to limit risk are what is selling at the moment. Businesses priced from $250,000 to $5,000,000 are moving more slowly due to the credit crunch and increased risk.

2. Buyers are looking for “better” businesses. For most buyers, they are looking for a 25% or greater ROI — after you factor in a reasonable salary for their involvement in the business. For example, if a tobacco store sells for $200,000 and the buyer expects to earn $50,000 per year for working the store themselves, a buyer would expect to earn 25% of their investment (or $50,000) in addition to their $50,000 salary. Hence, this $200,000 investment must provide $100,000 of owner benefit to sell.

3. Buyers are moving “slower” than in the past. They are taking longer to put offers in, to execute due diligence, to obtain financing, etc.. A typical business sale used to take 4 to 9 months. Today, it will likely take much longer as buyers are much more cautious and unless seller financed, financing is much more difficult to find.

If you would like a market analysis of your business, please do not hesitate to call me at 800-599-0503. Tags: acqusitions, business consulting, business sales, business valuations, mergers

Interesting Facts:

1. One out of five businesses change hands each year.

2. Most sellers are selling a business for the first time and do not understand the sales process.

3. Getting financing is significantly more difficult on business transactions than a real estate transactions and almost always require a formal business plan.

4. Sales by business owners often receive far less than market value due to lack of understanding of business valuation techniques.

5. Only a handful of accountants and lawyers fully understand the basics of business valuation, risk analysis, exit strategies, business plans, competitive analysis, trend analysis and cash flow forecasting, yet sellers and buyers still count on them.

6. Over 50% of all deals not completed with professional assistance from a business broker result in transactional problems, dissatisfaction or default.

7. Most buyers have little appreciation for the amount of effort it takes to secure a SBA or conventional loan and are not skilled in completing a formal business plan.

8. Businesses highly favored by the the SBA and banks for loans: Assisted Living Facilities, Expansions, Child Care Centers, Dentists, Doctors, Funeral Homes, Hardware Stores, Medical/Dental/Vet Facilities, Nursing Homes, Pet Centers and Recycling Facilities.

9. Businesses not favored by the SBA and banks and almost always require some form of seller financing: Beauty Salons, Breweries, Dry Cleaners, Fishing Vessels, Poor Performing Franchises, Gas Stations without Convenience Stores, Gift Shops, Gyms, Non-Flagship Hotels/Motels and Restaurants.

10. I am here to help residential and commercial realtors who do not have experience selling a business. Everything you have learned on how to market a property is does not work in selling a business. In fact, it often makes selling a business far more difficult, if not impossible.

Call me at 239-471-2210 for assistance.

I am looking for financial institutions and developers/owners interested in selling senior notes and commercial real estate. Focus is on Florida properties only. Transactions should be in the range of $3M to portfolios of $100M or more with emphasis on retail, office, hotels, multi-family and marinas. Cap rate must be over 9-1/2%. Will co-broker, but seller's broker must be direct to financial institution or developer/owner.

Contact:

Eric J. Gall

Blue Chip Business Solutions

239-471-2210

eric@bluechipbizsolutions.net