Empire Business Solutions Celebrated Its 10th Anniversary

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Empire Business Solutions, a leading Business Broker and M&A Company based in Huntington Beach is pleased to announce that 2015 marks the 10th Anniversary for this Southern California intermediary.   Started in 2005, Realestate Opportunities & Investments, Inc, dba Empire Business Solutions, opened its doors with the mission of helping business owners realize their dreams of financial security by selling their business.

As experienced M&A professionals, Empire completely understands the life span of a business.  From start up through acquisition, merger or to presenting your business for sale, Empire has established our principles for success;

*Strict confidentiality with free consultation

*Strong client representation

*Solid evaluation

*Energetic Marketing

As President of Empire with over 35 years experience in all aspects of the business and sales process, Roy Moss has  personally involved himself in every transaction.  Through continued education and experience, Roy Moss and Empire manage the complex M&A transactions along with its team of professional experts which range from environmental to legal.  The goal is to arrive at a successful transaction for buyers and sellers.

Over the last ten years of service to the Southern California and Orange County business community representing buyer and sellers, Empire Business Solutions has participated in

over sixty different successful transactions.  Here is a partial list of successful transactions:

Done Deals

(Partial List)

Beco Mfg

Eastman-Bell Mfg

EML Laboratories

D&A Coatings

Pastorello Construction

USECC

Virtuoso Video Productions

Business Opportunity Journal

Islander BBQ

Avant Garde Salon

Origins Massage & Bodyworks

Skin Rx

Pet Pantry

Lisa Belle Salon

Tommy Bahama Retailer

Spa World Mfg

Gauthier Spa and Salon

Pasadena Med Spa

Carpolicy.net

California Greetings

Bershea

Colton Radiator

Midas

Reliable Auto Care

Focus Medical

Hairfree

Studio Exchange

Shah Legal

Lincoln Institute of Massage

It’s A Grind

Bamboo & Beyond

Pura Vida

KG Spa

Photomakers

OC Spa

Lil Angels Photography

Advanced Laser Clinic

Spa  Del Mar Location

Midas-Barstow

Wright’s Automotive

The deals over the last ten years have ranged from main street businesses to lower middle market M&A transactions.   The experience and personally attention to our clients have made Empire Business Solutions a leading Business Broker and M&A Specialist since 2005 in the Orange County and Los Angeles County area.  Empire specializes in representing sellers in Southern California who want to maximize the value of their business.

Contact Roy Moss, President of  Empire Business Solutions at 714-374-6430 to discuss the process in selling or buying a business in Southern California.

Who Is the Buyer?

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Buyers buy a business for many of the same reasons that sellers sell businesses. It is important that the buyer is as serious as the seller when it comes time to purchase a business. If the buyer is not serious, the sale will never close. Here are just a few of the reasons that buyers buy businesses:

  • Laid-off, fired, being transferred (or about to be any of them)
  • Early retirement (forced or not)
  • Job dissatisfaction
  • Desire for more control over their lives
  • Desire to do their own thing

A Buyer Profile

Here is a look at the make-up of the average individual buyer looking to replace a lost job or wanting to get out of an uncomfortable job situation. The chances are he is a male (however, more and more women are going into business for themselves, so this is rapidly changing). Almost 50 percent will have less than $100,000 in which to invest in the purchase of a business. In many cases the funds, or part of them, will come from personal savings followed by financial assistance from family members. The buyer will never have owned a business before, and most likely will buy a business he or she had never considered until being introduced to it.

Their primary reason for going into business is to get out of their present situation, be it unemployment or job disagreement (or discouragement). Prospective buyers want to do their own thing, be in charge of their own destiny, and they don’t want to work for anyone. Money is important, but it’s not at the top of the list, in fact, it probably is in fourth or fifth place in the overall list. In order to pursue the dream of owning one’s own business, buyers must be able to make that “leap of faith” necessary to take the risk of purchasing and operating their own business.

Buyers who want to go into business strictly for the money usually are not realistic buyers for small businesses. Keep in mind the following traits of a willing buyer:

  • The desire to buy a business
  • The need and urgency to buy a business
  • The financial resources
  • The ability to make his or her own decisions
  • Reasonable expectations of what business ownership can do for him or her

What Do Buyers Want to Know?

This may be a bit premature since you may not have decided to sell, but it may help in your decision-making process to understand not only who the buyer is, but also what he or she will want to know in order to buy your business. Here are some questions that you might be asked and should be prepared to answer:

  • How much money is required to buy the business?
  • What is the annual increase in sales?
  • How much is the inventory?
  • What is the debt?
  • Will the seller train and stay on for awhile?
  • What makes the business different/special/unique?
  • What further defines the product or service? Bid work? Repeat business?
  • What can be done to grow the business?
  • What can the buyer do to add value?
  • What is the profit picture in bad times as well as good?

Buying (or Selling) a Business

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The following is some basic information for anyone considering purchasing a business. Is may also be of interest to anyone thinking of selling their business. The more information and knowledge both sides have about buying and selling a business, the easier the process will become.

A Buyer Profile

Here is a look at the make-up of the average individual buyer looking to replace a lost job or wanting to get out of an uncomfortable job situation. The chances are he is a male (however, more women are going into business for themselves, so this is rapidly changing). Almost 50 percent will have less than $100,000 in which to invest in the purchase of a business. More than 70 percent will have less than $250,000 to invest. In many cases the funds, or part of them, will come from personal savings followed by financial assistance from family members. He, or she, will never have owned a business before. Despite what he thinks he wants in the way of a business, he will most likely buy a business that he never considered until it was introduced, perhaps by a business broker.

His, or her primary reason for going into business is to get out of his or her present situation, be it unemployment, job disagreement, or dissatisfaction. The potential buyers now want to do their own thing, be in charge of their own destiny, and they don’t want to work for anyone. Money is important, but it’s not at the top of the list, in fact, it is probably fourth or fifth on their priority list. In order to pursue the dream of owning one’s own business, the buyer must be able to make that “leap of faith” necessary to take the plunge. Once that has been made, the buyer should review the following tips.

Importance of Information

Understand that in looking at small businesses, you will have to dig up a lot of information. Small business owners are not known for their record-keeping. You want to make sure you don’t overlook a “gem” of a business because you don’t or won’t take the time it takes to find the information you need to make an informed decision. Try to get an understanding of the real earning power of the business. Once you have found a business that interests you, learn as much as you can about that particular industry.

Negotiating the Deal

Understand, going into the deal, that your friendly banker will tell you his bank is interested in making small business loans; however, his “story” may change when it comes time to put his words into action. The seller finances the vast majority of small business transactions. If your credit is good, supply a copy of your credit report with the offer. The seller may be impressed enough to accept a lower-than-desired down payment.

Since you can’t expect the seller to cut both the down payment and the full price, decide which is more important to you. If you are attempting to buy the business with as little cash as possible, don’t try to substantially lower the full price. On the other hand, if cash is not a problem (this is very seldom the case), you can attempt to reduce the full price significantly. Make sure you can afford the debt structure–don’t obligate yourself to making payments to the seller that will not allow you to build the business and still provide a living for you and your family.

Furthermore, don’t try to push the seller to the wall. You want to have a good relationship with him or her. The seller will be teaching you the business and acting as a consultant, at least for a while. It’s all right to negotiate on areas that are important to you, but don’t negotiate over a detail that really isn’t key. Many sales fall apart because either the buyer or the seller becomes stubborn, usually over some minor detail, and refuses to bend.

Due Diligence

The responsibility of investigating the business belongs to the buyer. Don’t depend on anyone else to do the work for you. You are the one who will be working in the business and must ultimately take responsibility for the decision to buy it. There is not much point in undertaking due diligence until and unless you and the seller have reached at least a tentative agreement on price and terms. Also, there usually isn’t reason to bring in your outside advisors, if you are using them, until you reach the due diligence stage. This is another part of the “leap of faith” necessary to achieve business ownership. Outside professionals normally won’t tell you that you should buy the business, nor should you expect them to. They aren’t going to go out on a limb and tell you that you should buy a particular business. In fact, if pressed for an answer, they will give you what they consider to be the safest one: “no.” You will want to get your own answers–an important step for anyone serious about entering the world of independent business ownership.

Orange County Business for Sale Market

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LOOK AT THESE FACTS…

The Baby Boomers (about 70,000,000 of them) are poised to make a great impact on the American economy.

  • Retiring Boomer business owners will sell or bequeath $10 trillion worth of assets over the next two decades.
  • These assets are held in more than 12 million privately owned businesses.
  • More than 70 percent of these companies are expected to change hands.
  • The sale of almost 12 million businesses over the next 10 to 15 years represents a significant increase in the annual number of businesses that will be sold.
  • These owners of businesses should have a valuation performed by a business broker, to map out a strategy for selling and structuring the sale of the business.
  • Planning ahead will enable business owners to achieve the best transaction possible during this Boomer-induced wave of business sales.
  • The 12,000,000 businesses likely to change hands over the next 10-15 years might involve a large number of boomer-to-boomer sales.
  • Baby Boomers ages 45 to 64 form businesses at a higher rate than other age groups.
  • 55 to 64 year olds form businesses at the highest rate of any age group.
  • Many of the Baby Boomers are too young to retire; they typically have ample capital through savings, investments or other assets; they have job-related skills accumulated through a lifetime of work; and many have lost faith (and money) as a result of large company layoffs and restructurings; and many will buy their own business in coming years.
  • Many Boomers find themselves unhinged from their traditional employment safety nets. This dislocation has fueled an intense desire and need to have control of their destinies.
  • Ironically, now small business ownership is seen as much more safe and secure than working for a large company.
  • So, in the coming decades, not only are we likely to see millions of Baby Boomers selling businesses they now own, we will also see additional millions of Boomers (who’ve spent their lives working for someone else), buying businesses.
  • The next two decades will see a significant increase in the number of small and mid-sized businesses being bought and sold by Baby Boomers, in addition to the other generations of Americans.

What Companies are Buyers Looking For In Orange County

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Top Ten Businesses for October 2014:

  1. Restaurants
  2. Convenience Stores
  3. E-Commerce
  4. Bars
  5. Fast Food – Non Franchises
  6. CaféBars
  7. Sandwich Shops & Delivery
  8. Auto Repair, Service & Parts
  9. Liquor Stores/Off Licences/Wine Merchants
  10. Gas/Petrol Service Stations

Top Ten M&A Businesses for October 2014:

  1. Distribution Businesses
  2. Car Wash & Valet
  3. Gas/Petrol Service Stations
  4. Mining Businesses
  5. Fabrication Businesses
  6. Main Contractors
  7. Construction Businesses
  8. Manufacturing Businesses
  9. Wholesale Businesses
  10. Road Haulage & Freight Services

Free Broker Opinion of Value For Qualified Sellers In Orange County

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M&A and Business Broker activity is very high due to a number of reasons.  The revenues and profits for most business have increased and therefore the valuation for these businesses has moved upward.  Business owners who put off selling their business due to the “great recession” are now contemplating a sale.  Another, even more significant trend, is the Baby Boomer generation who want to retire.  It is estimated of the approximately 700,000 Baby Boomers, about 12 million own privately held businesses.  These 12 million businesses are likely to change hands over the next 10-15 years.

Before a business owner, whether a Baby Boomer or not, sells the business, he or she needs to get an estimate of what the business will bring on the open market.  A formal Valuation can cost between $5,000 and $10,000 depending on the size and complexity of the business.  If a seller wants to know if his perception of the value of his business, he should either do a formal Valuation or ask a Broker to do a Broker Opinion of Value.

Before putting a business on the market, a seller (or a buyer) should get an idea of the worth of the business.  There are several ways to value a business but most are based upon the re-cast cash flow of the business.  One way is to value by “rule of thumb”  which is a shortcut analysis of a business’s value, usually expressed as a multiple of the annual re-cast earnings of the business or Seller’s Discretionary Earnings (SDE).  In general,  a small business with a full-time working owner is worth from 1 to 3 times its annual SDE, with businesses producing SDE under $50,000 falling closer to the “1x” and businesses producing SDE of $100,000 or more valued closer to the “3x.”  The value must be tempered by the risk assessment which can either increase or decrease the valuation.  Another way to value a business is to compare the cash flow of the business to the sales price of other businesses that have sold.  This market comparison approach will reveal the multiples of SDE on past business that have been sold which can then be applied to the business being sold. A good Broker will have sources to access to these “comps”.  The market comparison approach is more likely to yield a more accurate valuation.

Empire Business Solutions is offering a Free Broker Opinion of Value to all qualified business owners.  Empire believes you should have an estimate of the value of your business BEFORE you make the decision to sell.  Call us at 714-374-6430 to discuss the details.

Empire Business Solutions has been a leading Business Broker and M&A Specialist since 2005 in the Orange County and Los Angeles County area.  Empire specializes in representing sellers in Southern California who want to maximize the value of their business.

Which Businesses Get the Most Inquiries?

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Hot Business List ~ September 2014

 

Below you will find the current “hot” business list courtesy of data from a leading Business For Sale website.  A  monthly ranking of business types based on the number of “hits” on their site. This ranking is not based on the actual sale of businesses.

TOP CATEGORIES BY IMPRESSIONS

Top Ten Businesses for September 2014:

  1. Marketing Businesses
  2. Convenience Stores
  3. Printing & Typesetting Services
  4. Restaurants
  5. E-Commerce Businesses
  6. Fast Food – Non Franchises
  7. Auto Repair, Service & Parts
  8. Liquor Stores/Off Licences/Wine Merchants
  9. Bars
  10. Gas/Petrol Service Stations

The Deal Is Almost Done — Or Is It?

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The Letter of Intent has been signed by both buyer and seller and everything seems to be moving along just fine. It would seem that the deal is almost done. However, the due diligence process must now be completed. Due diligence is the process in which the buyer really decides to go forward with the deal, or, depending on what is discovered, to renegotiate the price – or even to withdraw from the deal. So, the deal may seem to be almost done, but it really isn’t – yet!

It is important that both sides to the transaction understand just what is going to take place in the due diligence process. The importance of the due diligence process cannot be underestimated. Stanley Foster Reed in his book, The Art of M&A, wrote, “The basic function of due diligence is to assess the benefits and liabilities of a proposed acquisition by inquiring into all relevant aspects of the past, present, and predictable future of the business to be purchased.”

Prior to the due diligence process, buyers should assemble their experts to assist in this phase. These might include appraisers, accountants, lawyers, environmental experts, marketing personnel, etc. Many buyers fail to add an operational person familiar with the type of business under consideration. The legal and accounting side may be fine, but a good fix on the operations themselves is very important as a part of the due diligence process. After all, this is what the buyer is really buying.

Since the due diligence phase does involve both buyer and seller, here is a brief checklist of some of the main items for both parties to consider.

Industry Structure

Figure the percentage of sales by product line, review pricing policies, consider discount structure and product warranties; and if possible check against industry guidelines.

Human Resources

Review names, positions and responsibilities of the key management staff. Also, check the relationships, if appropriate, with labor, employee turnover, and incentive and bonus arrangements.

Marketing

Get a list of the major customers and arrive at a sales breakdown by region, and country, if exporting. Compare the company’s market share to the competition, if possible.

Operations

Review the current financial statements and compare to the budget. Check the incoming sales, analyze the backlog and the prospects for future sales.

Balance Sheet

Accounts receivables should be checked for aging, who’s paying and who isn’t, bad debt and the reserves. Inventory should be checked for work-in-process, finished goods along with turnover, non-usable inventory and the policy for returns and/or write-offs.

Environmental Issues

This is a new but quite complicated process. Ground contamination, ground water, lead paint and asbestos issues are all reasons for deals not closing, or at best not closing in a timely manner.

Manufacturing

This is where an operational expert can be invaluable. Does the facility work efficiently? How old and serviceable is the machinery and equipment? Is the technology still current? What is it really worth? Other areas, such as the manufacturing time by product, outsourcing in place, key suppliers – all of these should be checked.

Trademarks, Patents & Copyrights

Are these intangible assets transferable, and whose name are they in. If they are in an individual name – can they be transferred to the buyer? In today’s business world where intangible assets may be the backbone of the company, the deal is generally based on the satisfactory transfer of these assets.

Due diligence can determine whether the buyer goes through with the deal or begins a new round of negotiations. By completing the due diligence process, the buyer process insures, as far as possible, that the buyer is getting what he or she bargained for. The executed Letter of Intent is, in many ways, just the beginning.

Buying a Business – Some Key Consideration

  • What’s for sale? What’s not for sale? Is real estate included? Is some of the machinery and/or equipment leased?
  • Is there anything proprietary such as patents, copyrights or trademarks?
  • Are there any barriers of entry? Is it capital, labor, intellectual property, personal relationships, location – or what?
  • What is the company’s competitive advantage – special niche, great marketing, state-of-the-art manufacturing capability, well-known brands, etc.?
  • Are there any assets not generating income and can they be sold?
  • Are agreements in place with key employees and if not – why not?
  • How can the business grow? Or, can it grow?
  • Is the business dependent on the owner? Is there any depth to the management team?
  • How is the financial reporting handled? Is it sufficient for the business? How does management utilize it?

Selling Your Business? Expect the Unexpected!

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According to the experts, a business owner should lay the groundwork for selling at about the same time as he or she first opens the door for business. Great advice, but it rarely happens. Most sales of businesses are event-driven; i.e., an event or circumstance such as partnership problems, divorce, health, or just plain burn-out pushes the business owner into selling. The business owner now becomes a seller without considering the unexpected issues that almost always occur. Here are some questions that need answering before selling:

How much is your time worth?
Business owners have a business to run, and they are generally the mainstay of the operation. If they are too busy trying to meet with prospective buyers, answering their questions and getting necessary data to them, the business may play second fiddle. Buyers can be very demanding and ignoring them may not only kill a possible sale, but will also reduce the purchase price. Using the services of a business broker is a great time saver. In addition to all of the other duties they will handle, they will make sure that the owners meet only with qualified prospects and at a time convenient for the owner.

How involved do you need to be?
Some business owners feel that they need to know every detail of a buyer’s visit to the business. They want to be involved in this, and in every other detail of the process. This takes away from running the business. Owners must realize that prospective buyers assume that the business will continue to run successfully during the sales process and through the closing. Micromanaging the sales process takes time from the business. This is another reason to use the services of a business broker. They can handle the details of the selling process, and they will keep sellers informed every step of the way – leaving the owner with the time necessary to run the business. However, they are well aware that it is the seller’s business and that the seller makes the decisions.

Are there any other decision makers?
Sellers sometimes forget that they have a silent partner, or that they put their spouse’s name on the liquor license, or that they sold some stock to their brother-in-law in exchange for some operating capital. These part-owners might very well come out of the woodwork and create issues that can thwart a sale. A silent partner ceases to be silent and expects a much bigger slice of the pie than the seller is willing to give. The answer is for the seller to gather approvals of all the parties in writing prior to going to market.

How important is confidentiality?

This is always an important issue. Leaks can occur. The more active the selling process (which benefits the seller and greatly increases the chance of a higher price), the more likely the word will get out. Sellers should have a back-up plan in case confidentiality is breached. Business brokers are experienced in maintaining confidentiality and can be a big help in this area.

Do You Know Your Customers?

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It’s always nice, when eating at a nice restaurant, for the owner to come up and ask how everything was. That personal contact goes a long way in keeping customers happy – and returning. It seems that customer service is now handled by making a potential customer or client wait on a telephone for what seems like forever, often forcing them to repeatedly listen to a recording saying that the call will be handled in 10 minutes. Small businesses are usually built around personal customer service. If you are a business owner, when is the last time you “worked the floor” or handled the phone, or had lunch with a good customer? Customers and clients like to do business with the owner. Even a friendly “hello” or “nice to see you again” goes a long way in customer relations and service.

The importance of knowing your customers and/or clients could actually be extended to suppliers, vendors, and others connected with your business. When is the last time you visited with your banker, accountant, or legal advisor? A friendly call to your biggest supplier(s) can go a long way in building relationships. A call to one of these people thanking them for prompt delivery can pay big dividends if and when a problem really develops. With most communication now done online, a handwritten thank you to a long-standing customer, someone whose recommendation resulted in a new customer, or a vendor you appreciate stands out among the bills and junk mail.

Owning and operating your own business is not a “backroom” or “hide behind the business plan” business. It is a “front-room” business. Go out and meet the customers – and anyone else who has an interest in your business.