- August 01, 2013
If you are interested in increasing the exposure of business(es) for sale in the IBBA community, consider listing your business in future editions of Mainstreet News. Each listing is limited to 50 words for a total of USD $50. Contact firstname.lastname@example.org or +1 404.477.5823 for more information. For a complete description of the businesses listed below, visit IBBA’s BizBuySell directory.
Seeking a Business
If you access to, or have a listing for a debt collection agency of business receivables, nationally or internationally please contact: Keith McLeod 520-529-1808 or email@example.com. The Client is bonded and will allow owners and staff desiring to avoid the administration burden, to join its company and work from home.
SBA 7(a) Acquisition Loans: Myth or Magic?
You hear about them all the time: “My buyer secured an SBA loan and my seller walked away with all the money.” Does that really still happen in 2013? The answer may be right in front of you. It does and it may happen a lot more often than you think.
So what’s the trick to actually having a buyer apply for, get approved for, and actually close an SBA loan? The short answer is that it is all in the details. Once you have a signed offer, it then begins with correctly structuring the deal up front to fit in a specific lender’s box. With the onset of new lenders entering the market in 2011, 2012 and 2013, they each have specific knowledge of certain industries.
What we have found to be the most important factor in securing any loan is making sure we find and present it to the correct lender. What we typically see in the industry is that every lender promises to be great at every acquisition; what we actually see in the industry is that every lender does not always keep that promise. Depending on the BDO (Business Development Officer), the underwriter and/or his head of credit, each has their own idea of what fits the box and what does not. It goes back to the round peg in the square hole. Knowing exactly what types of businesses each lender likes and doesn’t like is key to saving great amounts of time and frustration. As we are all aware, time kills deals. Spending three to four weeks with a lender only to find out he is not going to approve the loan is devastating to your transaction. Don’t let that happen anymore!
Here is a short list of questions you should ask when discussing any deal with any lender you work with:
How many loans for this industry have you done?
Based on this question you should be able to determine if this is the very first carwash (or whatever) loan this lender has ever written or the 100th. If it is the 100th, then you can feel confident that this lender knows the ins and outs of carwashes. If it’s his first, you may have an uphill battle.
What amount of goodwill do you typically include in your loans?
Goodwill amounts are another moving target in today’s market. For the longest time there have been few lenders willing to extend themselves past $1.2MM in blue sky. That number is changing on a daily basis as the lender competition heats up. We have witnessed many loans with upwards of $2MM in goodwill get approved and closed, and we see that number rising continuously.
Do you have a minimum amount of collateral required for this loan? If yes, what percentage of the loan must be collateralized?
With the goodwill components of loans moving upward, we see the collateral positions moving downward and it is less of a factor in loan approvals in 2013 than it has been in previous years.
How fast can you screen the deal with your credit department for a green light?
Most new aggressive lenders actively writing SBA 7(a) loans should be able to have a good idea of whether or not a deal will fly within a matter of days (if not hours). If it takes longer than that, make sure you understand why.
What are the most important factors in a potential buyer?
Getting an understanding of what type of buyer credentials a specific lender requires should not be difficult (although many times it is). A minimum credit score, collateral and resume issues come up all the time. Each lender knows what he will and will not consider, and you should too if this is a lender you plan on doing presenting deals to.
Do you portfolio these loans or sell them?
It basically doesn’t matter to you if a lender sells the loans if they have a track record of doing aggressive deals. It does matter, however, if it’s a smaller local bank that claims to write SBA loans. If it is a local bank and you are unsure of its actual interest or commitment to the 7(a) product, call your local SBA office and ask for quarterly numbers. They are happy to provide you with the local market SBA volume numbers and that will tell you if that bank is serious about acquisition loans.
Keys to Successful SBA Financing
With the number of lenders growing and many BDO’s calling on your office, keep this list handy and make notes on each one. Try to determine the level of experience that your local BDO has and if you find that you know more about SBA loans than he or she does, don’t allow them to work your deal (or monitor them very closely). If they are well known in the acquisition market as the go-to person, you’re most likely in good hands. Learn how to determine the correct lender for your transaction and be the hero in your deal.
Do some homework, know your lenders and qualify the buyers, and you can be successful in securing the financing needed to put a deal together. Deals are being prepared and getting done by many different lenders all over the country and there has never been a better time to be a broker! Now go make magic happen!
Stephen Mariani contributed this article.
Diamond offers a FREE service of structuring SBA loans and offering SBA answers at AskDiamond@EasySBA.com. This service is 100% confidential and your email address will NOT be shared or solicited in any way.
George Lanza, CBI, M&AMI, CSBA, MEA
How Do You Protect Your Commission?
Several years ago, a few Brokers from the California Association of Business Brokers (CABB) got together with their association attorneys after losing sizeable commissions from some crafty sellers. They discovered the use of a UCC-1 (Uniform Commercial Code-1) to help them protect their commission, a tool that could be used by any California broker. A UCC-1 financing statement is a legal form that a creditor files to give notice that it has or may have an interest in the personal property of a debtor. They developed language to include in the engagement agreement that would authorize the filing. My firm and I have greatly benefited from the work they did.
About eight years ago, I was getting ready to close a good-sized transaction with several hundred thousands of dollars in commission. But the seller decided to play games and tried to get out of paying the full commission. Fortunately, as a result of that one statement within our engagement agreement, I was able to file a UCC-1. And literally the night before closing, I was able to stop that crafty seller in his tracks!
Since escrow performed a UCC search prior to closing (guess who informed escrow to do that?), I collected the commission due to our firm. Many of you old-timers may remember that CABB actually created a life-sized poster of me holding the check which was used as an exhibit at one of the IBBA Conference Trade Shows.
Obviously since then, that one well-crafted statement has remained in our engagement agreement and we have not lost a commission. The UCC-1 is filed, commission is collected, and the UCC-1 is released. It’s a simple process, but not often well received.
We have been called many things by business owners and of course their attorneys. Just three days ago we received a message from a buyer’s attorney that the UCC-1 statement “represents a fly in the ointment.” But guess what? We will get our commission! We will not be persuaded to stop filing a UCC-1, regardless of how well the transaction is going or the good standing we have with the seller. It protects the commission.
While attending the Anaheim conference back in June, I received several requests to disclose the verbiage included in our agreement and how the filing of UCC-1 process works. I have included the statement below:
“To the extent of the Broker’s Fee, Seller hereby irrevocably assigns to Broker any sales proceeds, makes Broker a party to any escrow and grants Broker a perfectible securit interest in the business, all of its assets and any proceeds in the disposition thereof.”
The process works like a mechanics lien —the transaction cannot be conveyed without paying you! Please be sure to check your state regulations and laws regarding filing a UCC-1 and how to include it in your agreement.
If you would like any more particulars on the process, see me at the IBBA Conference in Savannah, Georgia, November 18-23, 2013. I will be there! Will you?
Karl Kirsch, CAE
Ready, Set, Grow!
The 2013 IBBA Fall Conference & Main Street Marketplace will be held in Savannah, GA at the Hyatt Regency Savannah. The main agenda will span from November 21 to November 22, but educational courses will begin on November 18, and the CBI exam will be held the morning of Saturday November 23.
The saying “Tomorrow’s Success Starts Today” couldn’t be truer regarding the fall conference lineup of education, networking, and workshops that will give you the resources you will need to succeed. With new and updated courses, educational workshops, networking events, and the Main Street Marketplace, there is something for everyone at this conference.
The conference will feature seven educational courses, in addition to workshops and networking events. The Main Street Marketplace is where you can meet with the resource partners that can help grow your business.
While in Savannah for the conference, we encourage you to also consider extending your education and networking by attending all or part of the M&A Source Fall Conference for Professional Development and the Dealmakers Expo or to try one of M&A Source’s educational courses.
The M&A Source fall lineup will take place November 18 – 20, with the primary conference agenda taking place November 19 -20. The conference will feature new courses such as the Essentials of the M&A Process for Buy- & Sell-side, in addition to workshops, networking events, and the M&A Source Dealmakers Expo. The Dealmakers Expo is where you can meet with dozens of Private Equity Groups (PEGs) who can help make your deals happen!
Ready to attend the 2013 IBBA Fall Conference? Set your calendars now. And go advance your knowledge of the Broker and Intermediary profession and get the resources you will need to grow your business.
Kevin Dempsey, CBI, CMC, CMEA
A well thought-out seller presentation is crucial in signing up sellers. Here is an outline I am happy to share that we use in our company, Summa Financial Group:
If you take the time necessary to prepare a good presentation you will get more sellers to sign up with you.
Scott Bushkie, CBI, M&AMI
I want to thank the 229 people that completed the Market Pulse Survey.That was a record but still short of our goal of 300+. We should have the results out in the next few weeks, so please look for them. There is some great data in survey that I think will benefit everyone, especially if you have some sellers on the fence.
Now for the video! We want to create two videos to help everyone generate more clients but we need your help. I am looking for your best testimonials. Please email them to firstname.lastname@example.org. I am looking for a testimonial where your client talks about your professionalism and the ultimate success they had with you. Ideally, your client would have approached a non-IBBA member or CBI holder and had no success, but after engaging with you they were able to succeed (like Ray Elwood in Omaha, NE-great job, Ray!). I am trying to show the advantage to using an IBBA member (and possibly CBI) as opposed to someone who just calls themselves a “business broker”. We have the rest of the copy ready to go – I just need your testimonials!
As always, thank you for your cooperation and continued success!
Marketing Committee Chair
Marcie Woolworth, CBI, FIBBA
“So, how’s biz?” a friend asked me the other day over coffee. Well, I reply, things have greatly improved over the past two years! 2013 has given us hope for a brighter tomorrow. And that’s what we’re hearing from other colleagues all across the globe. Being part of something larger than ourselves also gives us the edge that we need in order to compete in the marketplace.
For our newer members, we welcome you and encourage you to attend the Fall Educational Summit to be held in Dallas, TX September 9-12th. For those of you who have been members of IBBA for some time and haven’t gotten your CBI, you might want to consider looking into obtaining it. When you talk with your clients, both sellers and buyers, you are able to tell them about the professional organization you belong to and the credentials that you garner. IBBA has a great influence in our industry, and being part of IBBA we are investing in our future!
As part of any team, we all need to be involved in some way, and for those of you who are not yet involved, please go to the IBBA website (www.ibba.org). Once you have signed in, on the right-hand side you will see a link to the Membership Manual. On page 11, the committees and their descriptions are listed. Please take the time to review these committees and contact the Chair of the committee that interests you. You will be glad you did.
The Membership Committee will be sponsoring a New Members Breakfast at the IBBA Conference in Savannah in November. If you are a new member to IBBA within the past year or so, you will find this time to be very enlightening. Please watch the newsletter for more information as the time draws near. It is also time to plan on attending the Fall Conference in Savannah, GA the week of November 18-23, 2013!
As we continue to search for more valuable benefits, we would appreciate any input that you might like to share! Are there any benefits or services that you would like to see us add? Please email me at email@example.com or call me at 970-663-9400 – I’d love to hear from you!
Wishing you great success and blessings along the way!
Cress V. Diglio, CBI, M&AMI
Invest in Yourself – Become a Certified Business Intermediary!
The Certified Business Intermediary (CBI) credential is the oldest and most prestigious designation in the business brokerage industry. While the designation has been around for nearly two decades, it is the profession’s best kept secret. Both IBBA members and new brokers alike may ask, “Why should I gain a CBI?” Many valid reasons exist for wanting to earn this designation, but education is hands-down the top motive. Completing IBBA courses and attending IBBA workshops at our semiannual conferences gives brokers the skills and knowledge needed to complete even the most difficult of transactions. From a marketability standpoint, the CBI designation will set you apart from other intermediaries and give you a competitive advantage in your marketplace.
Reflect on this example—who do business owners hire to calculate their financial statements, or who do buyers hire to perform due diligence during a transaction? In most cases, they hire a CPA. Sure, they could hire a bookkeeper or someone with an accounting degree, but most choose to spend more money on a CPA. Why? Because people feel more confident hiring a certified professional. Apply this same rationale to the business brokerage industry, and that is why you should become a CBI—it is simply a symbol of proven excellence.
Buyers and sellers may still comment that a CBI isn’t as well recognized as other professional designations. Why should anyone invest in becoming a CBI if people don’t know what it is? The problem isn’t the lack of recognition of the CBI designation, but rather the lack of public knowledge that our industry as a whole even exists. It is fair to say that if the public is unaware of our profession and the role of intermediaries, then they certainly wouldn’t know about our professional designations. One way to ensure buyers and sellers are aware of the CBI credential is simply by explaining it to them. During buyer interviews and listing appointments, it should become standard practice that you explain your background, expertise, qualifications and designations. Once buyers and sellers are made aware of the CBI and the value behind it, their decision will be as easy as choosing between a bookkeeper and a CPA.
Find out more information on becoming a CBI by visiting www.ibba.org/education/cbi. The easiest way to start this process – especially for those who are new to the profession altogether – is to complete our two online courses: #101 Introduction to Business Brokerage and #501 Standards of Care for Business Brokers. Next, attend an Educational Summit to complete the three required recasting and pricing courses. The 2013 Fall Educational Summit will take place September 9 – 12 in Dallas, Texas and cohosted by our regional affiliate Texas Association of Business Brokers (TABB). Finally, attend the 2013 Fall Conference on November 18 – 23 in Savannah, Georgia to wrap up any remaining credits and gain the mandatory conference attendance. The next CBI exam will be given at this event on November 23, 2013. Contact Maggie Nicholson, IBBA Education & Certification Manager, at firstname.lastname@example.org with any questions.
Looking forward to seeing all you CBIs (or soon-to-be CBIs) in Savannah this November!
Barry Berkowitz, Ph.D., CBI, M&AMI
IBBA’s 2013 Affiliates Race to the Grand Prize
With the 2013 Affiliate Rewards Program well underway, we have compiled the results so far and will be looking forward to the Fall IBBA Conference in Savannah to see which Affiliate can take the lead in their quest for the Grand Prize for one of their members. In 2012, Affiliates earned more than 20 free IBBA course registrations and three free IBBA full conference registrations for their members. One member of the New England Business Brokers Association also won the Grand Prize of an all-expenses paid trip to a 2013 IBBA Conference, including fees.
Each year members have the opportunity to earn points for their Affiliate that will be redeemable for future complimentary courses and/or conference registrations. There will also be a grand prize randomly awarded to one of the attending members of the Affiliate with the highest normalized score. This year, the grand prize will be free hotel, registration and course fees at a 2014 IBBA conference.
Points will be awarded to the Affiliates as follows:
The results have been tabulated, and the rankings for 2013 so far are as follows:
Affiliates, there is still time to start collecting points by attending the IBBA Fall Conference!
If you have any questions about this Affiliate Rewards Program, please do not hesitate to contact Maggie Nicholson, IBBA Education & Certification Manager at email@example.com or contact me at Barry@BerkBiz.com.
Matt Slappey, CBI
After 12 years as a manager in the pharmaceutical industry, I was ready for a change in my career path. I had three criteria for my new career: I wanted to leave a huge corporate environment and work for myself or a very small company. I wanted to have a say-so regarding whether or not I wanted to work with certain clients. The final qualification was that I wanted to be paid based on my own abilities and work ethic. I ultimately decided to purchase an Atlanta, GA office of Murphy Business & Financial Corporation. I quickly found that my degrees in Accounting and Business were very helpful in grasping financial statements, financing, and other day-to-day issues.
Now that I am entering my sixth year in the business, the industry and the profession have met my initial requirements and expectations. Don’t get me wrong; there were some things that I did not anticipate having to work through such as the recession, dealing with healthcare plans for my family as a small business owner, and competing with the large number of people trying to represent business owners without much credible training. In Georgia, it seems that there are a lot of commercial real estate agents that want to sell businesses but are not formally trained and ultimately qualified to provide this type of representation. Unfortunately, this has led to many business owners seeing “business broker” in the same light as “used car salesman”. My goal was to be seen as a true resource and provide professional service that my clients could not get from most individuals or firms. I found that in order to separate myself from any “competitors” that I was going to have to more than just have a good website or marketing campaign. I knew that I would have to be extremely knowledgeable and become known as someone who is really good at his profession.
I immediately joined the Georgia Association of Business Brokers (GABB), IBBA and M&A Source and began working on my CBI. The GABB provided me with an opportunity to build relationships with seasoned brokers, accountants and attorneys that all have experience with business transactions. These professional partners have helped me close deals and grow as an intermediary. I learn something on every transaction, but I was learning 100 different things on the first few deals that I closed! Within two to three years, I found myself obtaining the CBI designation and serving on the board at the GABB. I am currently proud to be the president of the state association and believe that one of our greatest missions is to educate business brokers/intermediaries to be the most professional and qualified individuals possible. We have a huge responsibility to our clients to give them credible advice and professional representation and anything short of this is unacceptable.
The three personal accomplishments that I am most proud of are the fact that I am happily married and have three great daughters, my seven years of service on active duty as a pilot in the U.S. Army, and my being ranked as the #1 Murphy business broker in Georgia for years 2008 through 2012 and achieving the Top Producer award for the GABB. I have been recognized as a Top 5 Producer in the state organization every year that I have been a member. I work hard to achieve success and it feels good to be recognized on occasion to validate all of the hard work!
I see myself working with a few more professional firms such as CPAs and attorneys to create a larger referral network for my practice.
I would recommend that brokers and intermediaries embrace every possible educational opportunity that they can afford. Seek the classes that challenge your skills and teach you something you do not know. Always remember that we are entrusted with our client’s entire financial future in many cases. Treat every client relationship as if they were going to write an article about everything you did for them (or did not do) in a leading newspaper. Finally, be candid with potential clients about the real value of a business. If you meet someone with a business that is worth $1MM and they want $2MM, be honest with them and let them know the true value. Listing a company at $2MM only to have the market beat the seller down to a real value over six to 12 months does not do anyone any favors. I have found that business owners appreciate a candid conversation, even when they do not like the answers sometimes!
I would recommend that every member view every interaction with any potential buyer, seller, or professional contact as one more opportunity to market yourself and your practice. Most meetings do not result in a new client, but my desire is that all of the meetings will result in a very favorable opinion of me as a professional that can make the IBBA, M&A Source, and GABB proud to have me as a member. We are members of a great organization that impacts its members and our clients. We should all do our part to ensure that IBBA and state associations remain strong and viable for the future.
Glorianne Campbell, CBI
I became a business broker in 1995. I joined Clyth MacLeod, Ltd at this time and this was after I sold my latest business, a large café in a mall. I had never considered becoming a business broker and it was quite by chance that the sales manager, Richie Lowe at Clyth MacLeod, mentioned to me when I sold that last business ”What are you going to do now?” My response was ”I have no idea. I have a wellearned holiday and then I’ll think about it!” He suggested I become a business broker and here I am still!
I joined Clyth as a business broker selling hospitality businesses and within my first years with the company secured top salesperson of the year for the company on two occasions. At the time I had four children ranging in age from a 2-year-old to a 19-year-old! My household was busy. Business brokering was perfect, as it allowed me freedom to be flexible with family and school commitments. I enjoyed my first years selling businesses. Sadly, in 1999 I was dealt several blows in quick succession, the loss of a dearly loved grandmother, a brother and very sadly the loss of my first born son at age 23. It was very difficult for me to feel hungry to earn after those losses. Clyth took me further under his wing and at this time suggested I might be a good option for him as his exit strategy in the years ahead. He encouraged me to complete all the required real estate papers to become an agent. I worked very hard over the coming year and completed around 40 unit standards, and on completion I was a qualified agent. From here, I felt I needed to have a change and move more into a management role. There was no opening within Clyth MacLeod Ltd for me, so with Clyth’s encouragement and blessing I took on a management role with another real estate company. This company sold houses, not businesses. It was not for me. I stayed there eight months and then returned to Clyth. Clyth created a new position for me and over the years that followed he has taken me from a salaried position to a partner alongside him. I cherish the opportunity Clyth has given me and the trust and confidence he always has in me. He is indeed a special and meaningful person in my life and the life of my family.
Currently, I manage all aspects of our company but my main role is the people.
I am most proud of my relationship in business sales and that of being with Clyth MacLeod. And I am most proud of the family and also the friendships I have gained and continue to have from this business. Further encouragement from Clyth enabled me to join IBBA and also commit to becoming a CBI, I am so very proud of this and the mere passing of the CBI exam. This was a challenge for me, I am not shy to admit.
When I think of what I would do differently in the coming year, that is hard for me to answer, but I do intend to spend more time face-to-face with my team and I also would like to develop our profile more with additional marketing initiatives. I would like to have more focus on the company and less on outside distractions. I would also like to offer more this year to the Membership Committee of the IBBA.
For anyone new entering this industry I say, what a fantastic career move. I always tell new people we are talking to in the recruitment process that they must look upon business brokering as a business, not a job. They must think long term and be prepared to build their business. It won’t happen overnight. You must look at the earnings you make on a yearly basis, not a monthly basis. You should specialize. You should communicate well with buyers and sellers. Remember your buyer is your seller in the future; they will remember how you treated them.
I love business brokering. I love the people I have met and have as friends now within this industry. I love that every day there is something new to learn. I love learning. Business brokering can be hard but it is also a lot of fun.
Clyth turns 80 this year and he is still going strong with no intention of retiring. My exit strategy may come into play before his does!
Thank you Keith McLeod for the opportunity to reflect on this industry we do take for granted and remind me of how great it is. And by the way MacLeod is the correct spelling!
Clyth MacLeod, Lifetime CBI
Every time we list a business, we provide the owner with an honest appraisal of the most probable sale price based on comparables. However, value is one thing and price is another – dependent upon the motivations and the negotiating skills of the parties – and upon the deal structure.
One major variable is the availability of finance. We are seeing more owners leaving in finance when they sell. This can be a win-win for both the seller and buyer.
Vendor finance may enable the buyer to purchase a larger and more profitable business than usually available for his or her cash funds. Also, it shows the seller’s confidence in the business and ensures continued support and assistance for the buyer.
The seller benefits too. Almost certainly he or she gets a higher price, a better return on investment, and solid security.
We have been selling businesses for over 50 years and plan to be here for at least another 50. We have been richly rewarded with numerous marketing awards, many business salesperson of the year awards, fellowships, and other recognitions by our peers.
But we received the nicest reward of them all in July. At a farewell function for a retiring salesperson, he spoke on why he had chosen our firm to join. He said he had asked around accountants, lawyers, and colleagues that he knew and was constantly told that Clyth MacLeod Business Sales was notable for our integrity.
There can be no nicer compliment. For us, integrity is non-negotiable, we have a fiduciary duty to our vendors and an ethical duty to our buyers. We would rather walk away from a deal that we weren’t comfortable with. Thank you!
Keith McLeod, CBI
We are offering a new benefit to IBBA members this month: an opportunity to provide a new outlet for your listings and searches. It is still in the development stage and we welcome your input. Please give it some thought and try it!
Also, I am looking for an Associate Editor to assist me putting together the newsletter. It can be a fun task contacting members to collect information on their background and accomplishments to be featured in our Member Spotlight section, uncovering interesting and beneficial industry stories and pinch hitting for me assembling the issue and passing on to Simone Shahdadi at headquarters when I am unable to. You are also welcome to add your comments in a byline if you choose.
Disaster at home can be a brutal and humbling experience. Early Saturday morning at 4:00 AM I discovered the bathroom floor was covered with water. I called to my wife who discovered water in the hall, another bathroom, living room, dining room, our home offices and kitchen. Not fun. Homeowner’s insurance covers some of the interior damage, but the plumbing portion is not covered. This means paying out of pocket. We are living out of a motel while they tear up the floor coverings and repair walls in our home. The bulk of our home furnishings are stored in a pod in our back yard. Two things I’ve learned from this ordeal are 1) Get a second opinion from vendors before beginning repair, and 2) Once the water is turned off, a vendor selection can be delayed. Standing in water the vendors are predators and are working in their best interests, not yours.
Keith McLeod, Lifetime CBI
Sept. 6 CVBBA Conference (Charlotte, NC)
Sept. 9-12 IBBA Fall Educational Summit (Dallas, TX)
Sept. 11-12 TABB Conference (Dallas, TX)
PBBA Offers 2 Courses (King of Prussia, PA)
Nov. 15-16B NEBBA Conference (North Andover, MA)
Nov. 18-23 IBBA Fall Conference (Savannah, GA)