IN THIS ISSUE: “Reflecting on Our Journey and Looking Ahead” Letter from the 2023 IBBA Chair. Plus, Insights on Addressing Emotions in Business Brokerage, Mastering the Art of Risk Management, the New SBA SOPs, and more!
Main Street News December 2013
The Q3 Market Pulse Report is Available!
The Q3 Market Pulse Report is now available, compiling the results of the most recent quarterly survey. The IBBA and M&A Source work to provide timely and accurate data on the current brokerage marketplace. Those who participated in the survey have received the 70+ page full report, as well as a press release draft to submit to local media. The Q4 survey will open in January, so don’t miss your chance for invaluable insight into the current state of business brokerage.
The International Business Broker Association (IBBA) and M&A Source present the Market Pulse Quarterly Survey Report with the support of the Pepperdine Private Capital Markets Project and the Graziadio School of Business and Management at Pepperdine University. The quarterly IBBA and M&A Source Market Pulse survey was created to gain an accurate understanding of the market conditions for businesses being sold in the Main Street market (values $0 to $2 million) and lower middle market (values $2 million to $50 million). The national survey was conducted with the intent of providing a valuable resource to business owners and their advisors.
MARKET SEGMENTS STUDIED
The Market Pulse Third Quarter 2013 survey was completed by 192 respondents from 38 states. The majority of respondents (57%) had at least 10 years of experience as a business broker and/or M&A advisor.
BUYER AND SELLER MARKETS
When it comes to leverage, the market is polarizing. In the third quarter, 72 percent of Main Street brokers representing deals of $500,000 or less said they were operating in a buyer’s market. Meanwhile 79 percent of brokers representing deals of $5 million-$50 million categorized the current climate as a seller’s market. This is the strongest seller’s market sentiment we’ve seen in the lower middle market since the survey started.
RETIREMENT DRIVING SALES
In every segment, retirement was the number one reason sellers put their business on the market. This would indicate that baby boomers are continuing to move into the market in larger numbers.
This finding is consistent with predictions that more business owners will look to sell their companies in the coming year. In every market segment, 50 percent or more of advisors predict deal volume will grow in the next three months, slightly higher than those predicting deal volume will stay the same. Less than 7 percent of advisors expect deals to decrease.
BUYING: A BETTER INVESTMENT
Buyers believe business acquisition is a good way to put their money to use. In the lower middle market, “better ROI than other investments” ranked first or tied for first as the reason buyers are active in the M&A market.
“Buyers in the lower middle market continue to gain confidence in the economy and in their ability to grow a business,” says Dr. Craig Everett, an assistant professor of finance at the Graziadio School of Business and Management and director of the Pepperdine Private Capital Markets Project. “They believe that buying a business is the best way to put their money to work, versus starting an operation from the ground-up or other investment opportunities.”
For Main Street buyers, the number one motivating factor was to buy a job and control their own destiny.
“When we look at the factors driving buyers and sellers into market, we can begin to understand why the market is polarizing,” said IBBA director Scott Bushkie, president of Cornerstone Business Services. “An increase in Boomer retirement should be creating more of a buyer’s market scenario in which supply outpaces demand.”
“But lower middle market buyers believe business acquisition provides the greatest opportunity for investment returns. So despite the higher rate of retirement across every sector, demand remains high and sellers still have the advantage for higher value deals.”
Private equity firms jumped up this quarter to tie existing companies as the number one buyer for businesses over $5 million in value. Private equity acquisitions were divided equally as 50 percent platform deals and 50 percent add-ons. As in second quarter 2013, individual buyers dominated Main Street.
“We didn’t see substantial private equity activity until deals exceeded $5 million in value. One possible explanation is that PE groups have a lot of money they need to put to work and they’re targeting larger deals for efficiency’s sake,” says M&A Source chair Dora Lanza, Principal, Plethora Businesses. “That’s opening opportunities for smaller companies in the $2 million to $5 million sector—companies that might not be as competitive bidding against a PE firm.”
Multiples are markedly stronger in the lower middle market, correlating to a strong seller’s market sentiment and the presence of private equity firms in the buyer pool, as well existing companies poised for growth through acquisition.
SDE = Seller’s Discretionary Earnings EBITDA = Earnings Before Interest, Taxes, Depreciation And Amortization
Transactions in the Main Street market are typically based on multiples of SDE, while those in the lower middle market are most commonly based on EBITDA.
Most advisors think valuations will stay the same or grow in the next three months. In the lower middle market, less than two percent of advisors believe valuations are going to decline. The majority believe they will stay the same, with 20 to 25 percent expecting they will continue to grow from current peak. As the deals get larger there is greater confidence that values will continue to increase.
Multiples were up (or tied) in every market sector over second quarter 2013. In three out of five sectors, median multiples were at a high, or tied for high, over the previous year.
“The M&A market continues to move in the right direction,” says Tom Whipple, Principal, Falcon Advisors. “Even though our study shows more sellers are coming into the market, values are maintaining. Three out of five market sectors have continued to peak. One can assume there are still far more buyers chasing deals than the number of opportunities on the marketplace.”
TIME TO CLOSE
The third quarter 2013 study continues to confirm earlier findings that larger businesses take longer to close. In the smallest Main Street sector (businesses valued at $500,000 or less), the median time to close was four months. In the lower middle market, for businesses valued over $5 million, the median time to close was 10 months.
In the same way that larger deals take more time to close, they are also more likely to draw buyers from farther away. In third quarter 2013, 75 percent of the buyers for deals valued over $5 million came from outside a 100 mile radius of the seller’s location. For Main Street deals, 40 percent or more of buyers came from within a 20 mile radius.
As the deals get larger, seller financing declines but earn outs increase. Once deal size reaches $2 million and higher, seller retained equity and mezzanine debt comes into debt.
MISTAKES AND TERMINATIONS
According to the study, the primary reason for deal termination remains unrealistic expectations, across every market sector. This includes unrealistic valuations or unreasonable non-price demands.
“Unrealistic expectations, non-price, trended higher than past surveys,” said IBBA chair, Steve Wain, Principal, Calder Associates. “With valuations peaking in most categories, one could assume that the gap between buyer and seller price points would be shrinking, but we could be seeing seller expecting all cash at close or abbreviated transition time frames.”
Advisors representing Main Street business owners also reported significant issues with seller misrepresentation and poor seller preparation, ranking second and third for the most common reason deals failed to close. “Which really does highlight the need and value to work with an advisor and truly prepare one’s business for sale, “said Marcie Woolworth, Principal, MRW & Associates.
Lack of buyer preparation, personality conflicts, and minimal corporate structure all rank lower as reasons deals were terminated in the last three months.
A similar question asked advisors to rank the biggest mistakes seller’s make when selling their business. Results are relatively consistent with the reasons for deal termination.
Personal services, restaurants , business services, and consumer goods/retail ranked among the most active industries for the Main Street market. The construction/engineering and healthcare industries were also active. These figures are fairly consistent over second quarter 2103, although restaurant sales saw more activity this quarter.
In the lower middle market, for businesses valued between $2 million to $5 million, healthcare-related businesses led at 25 percent of completed deals over the last three months, followed by manufacturing and wholesale/distribution at 19 percent each. Manufacturing led the $5 million—$50 million sector at 31 percent, followed by wholesale/ distribution at 13 percent.
Interested in contributing to your association? Volunteer positions are open on Credentialing, Conference Planning, Marketing, and Communications committee. If you are interesting in participating on an IBBA committee, please contact [email protected].
George Lanza, CBI, M&AMI, CSBA, MEA
Your Chairman’s Farewell
Fellow IBBA members, colleagues and friends, this will be my last article as your Chairman as my term will come to an end in just a few short weeks. I have had the privilege to work with, assist and lead some of the most talented and dedicated members in our industry across the IBBA organization.
Through the challenges and positive changes made towards our association’s objectives, the experience and the knowledge I have gained will forever be an asset to me and my firm. Not only did I get the opportunity to work alongside a great Board of Directors that accomplished so much this year, but others that contributed much time and effort: from Cress Diglio in education who embraced the challenge to develop many new courses, Scott Bushkie working in conjunction with Pepperdine University to enhance our marketing and putting us on the map, to Marcie Woolworth with membership efforts, Gary Papay our Bylaws Chair, Steve Wain our Technology Chair for the launching of our new website, to our fearless newsletter editor Keith McLeod for taking on the task, and to the M&A Source Board of Directors and leadership team led by Kevin Dempsey for their professionalism and exemplary spirit of cooperation. All of this was possible due to the great staff from Meeting Expectations, under the leadership of Karl Kirsch, who went above and beyond to assist in all areas of our organization, with Kay, Maggie, Darnette, Christine, Brian and Simone taking care of every detail preparing two great conferences.
In addition, I was honored to get to know many of our members who gave of their time to serve on several of the IBBA committees: from Doug Robbins spearheading the 2013 conference, Barry Berkowitz who oversees our Affiliate program, Joe Lindsey for overseeing our CBI credentialing committee. There are so many others that give of their time to our organization: thank you! Without them we wouldn’t be where we are today—profitable and on our way to recovery with great plans for the future.
The IBBA will be in good hands in 2014! For the past year, I’ve had the great pleasure of serving alongside Steve Wain, your 2014 Chairman. With Steve spearheading the IBBA leadership, I know that the knowledge he brings to the association will greatly benefit our members.
As 2013 comes to an end, it is bittersweet for me, but I am thankful for the opportunity to serve you and our association and I look forward to continuing to volunteer.
I wish you and your families a very Merry Christmas and a very Prosperous New Year in 2014!
Steve Wain, CBI, M&AMI
Incoming Chairman’s Message
The End and the Beginning
Impressed because of the great group of members and professionals we have in the association and their unending dedication to just make things better. To the instructors and workshop presenters who work extremely hard to share knowledge and present you with a key to becoming a better business broker and intermediary without anywhere near enough recognition or compensation. To the committee chairs and members who seem to never shut down, working towards improvements that may seem distant yet infinitely achievable. To our management group, Meeting Expectations, and their everyday cast and crew (Karl Kirsch, Kay Ciesla, Maggie Nicholson, Simone Shahdadi, and last but not least, my hockey buddy Darnette Holbert) who provided the backbone to our conference (along with Doug Robbins, our Conference Planning Chair) that many of you have sent in compliments and praises about. And finally to both the IBBA and M&A Source Boards of Directors who work throughout the year, not just to make your time at a conference better but also to make your other times more productive. As someone who works with both associations, I can tell you that it’s not easy to put together such a fine group of dedicated people working towards a common goal of bringing success to each and every member.
If you think the conference went well, you enjoyed it, and there were little to no issues, that’s because, like any sport, we practice constantly to effectively make your experience during “game-time” productive and enjoyable.
Are we perfect? Far from it, but over the past few years we have had to take stock of who we are as an association and the services and education we offer. We’ve had to see which members survived this brutal five year stretch where many of our friends and colleagues left the industry. We’ve had differences in opinion, and challenges that seem to be extremely difficult to overcome. But we are finally moving forward.
Our members are stating that business is picking up. Our attendance at both the Educational Summits and conferences are picking up (Savannah was great). Our IBBA educational curriculum and CBI certification criteria and process is unmatched by any other organization or association in the world.
With the IBBA and the M&A Source, we represent the only solution that a professional entering the industry can subscribe to in order to gain education, networking, mentorship and a pathway to greater deal flow and bigger transactions.
I’m thankful because I learned many years ago that the IBBA and M&A Source even existed. Like many of you, I started on a different path, but learned that what I need to succeed was gained through joining the IBBA and M&A Source and attending conferences.
Why else am I thankful? My education from our courses has been outstanding. Our workshops are both educational and entertaining (where else can you see Len Krick, Jim Afinowich and Monty Walker wearing hospital garb and those ridiculous-looking large head light/mirrors – if you are curious, attend a conference and join in the fun). The professionals I met, many who’ve since turned into my friends, not only provide me with fantastic insights to grow my business, but also a source of business when they refer opportunities.
Like the economy, the associations have had to battle back. Battling to ensure quality continued while peddling upstream. This year’s Chairman, George Lanza, made it his business to ensure that we all concentrated on conferences that provided new education—thank you course creators, subject matter experts, and Janet Nykaza our education content guru—and was able to run at a profit. Profit? You may question what that means to a non-profit organization like the IBBA. Profit is the money we use to help create and present the next course, the next conference, and develop/implement our next member service. It’s the money that allows us to contribute to efforts like SITF that has been instrumental in helping fund our advocacy and lobbying efforts in Washington that has led to our bill in Congress, HR 2274. That bill, which passed a House committee vote 57-0 in a rare showing of bi-partisan support, is now awaiting the next steps towards passage. This is our bill that will hopefully provide us with an exemption from Federal securities registrations and remove the cloud of concern all of us have regarding any professional fees we earn. It is moving forward because of the IBBA and M&A Source.
My year as Treasurer and Incoming-Chair is ending. Next year, I have the privilege of attempting to continue the efforts of many of our past Chairs who’ve succeeded in not only growing your association, but growing the stature of our industry. It is not the work on one person, it’s a collective effort. It extends beyond the Board and beyond the committees. It’s you that makes us great. If you have not contributed, please consider participating. I had a chance to meet a lot of you in Savannah, and asked you to participate in some way. Almost everyone said yes (I will be contacting you, I didn’t forget!) and had a genuine interest in improving our association.
Next year will be a continuation and improvement of where we are. We will be having new initiatives that will directly affect you, and which I will more fully begin to outline in January. We will continue with our traditions, and improve our services and education to you.
2013 was a part of our course correction period. The ship is still gaining speed as we start marching forward, and I’m excited about where are going.
As we complete 2013, I want to wish all of you from the USA & Canada, to our members in far off countries like Portugal, South Africa, UK, Brazil, Australia, Columbia, New Zealand, and others, a very happy holiday, and wishes for a 2014 that keeps you and your families happy and healthy, and for business results that beat expectations!
I know your associations are going to get even better, and look forward to working with all of you in the future.
Welcome to the new IBBA!
Director of Operations’ Message
Thank you to everyone who attended the 2013 IBBA Fall Conference last month in Savannah and gave me such a warm welcome to the IBBA team and conferences! Based on the positive feedback we received throughout the week, it sounds like you enjoyed it as much as I did. The most common comments were relative to the high-quality education as well as the quantity – we had the highest conference attendance since 2011!
If you were unable to attend the Fall Conference, we hope you will plan ahead to join us at the 2014 IBBA Spring Conference in Las Vegas June 2-7. It promises to be the perfect mix of hard work and a fun environment. We are also in the process of finalizing the dates and location of the 2014 IBBA Fall Conference so stay tuned!
As 2013 draws to a close, your staff at Meeting Expectations is reflecting on its first full calendar year of managing the IBBA and all of the wonderful volunteers who support this organization. The team effort between staff and volunteers ensures that the IBBA continues to provide the ongoing support, education and services that you need to be successful in your business. If you are interested in being part of that effort and further enhancing this organization, consider contacting IBBA Headquarters and volunteering on one of the IBBA Committees in 2014. It’s never too late to be part of this fantastic community! And I guarantee that IBBA Committee members would be happy to answer any of your questions about the benefits of volunteerism.
Thank you again for a great year. We hope you have a safe and happy holiday!
Kevin Dempsey, CBI, CMC, CMEA
M&A Source Chairman’s Message
I am very grateful for having served as Chair of the M&A Source. I also want to say we were very fortunate to have some incredibly dedicated volunteer members working with the staff at Meeting Expectations to help us operate our two organizations. As volunteers run non-profit associations, we absolutely require the input from involved members. They deserve our sincere thanks and appreciation for a job well done.
In 2014, be sure to activate your membership by becoming more involved. We have an excellent leadership team in place but there is always room for more committee members. Committees include Education, Credentialing, Governance, Marketing, Membership, Dealmakers Expo, Sponsorship, Conference Planning, Webinars, and Website & Technology. If you would like to be involved in 2014 all you need to do is contact George Lanza at [email protected] or me at [email protected].
My year as Chair of the M&A Source and as a member of the IBBA board was a very rewarding experience. The M&A Source and IBBA continued to work harmoniously together to produce two excellent conferences on both the east and west coasts.
One of the best new benefits added was the IBBA/ M&A Source/Pepperdine Market Pulse Report. If you are not participating you are really missing out. Make a commitment for 2014 to respond to the next Market Pulse survey that we generate in cooperation with the prestigious Pepperdine University. It is important that even if you did not close any deals last quarter you provide your valuable input. We need more participation or we may lose this valuable connection.
Check out the content that was collected by the most recent Market Pulse Report. Giving out information has always been a successful way to engage with potential sellers. There is so much good data here to use to create a newsletter you can send to potential or even existing clients, or to the business editor at your local newspaper; they love this kind of information. You may get interviewed and featured in the newspaper, like member Gary Papay in Pennsylvania.
All you have to do is participate in the survey and you will get a copy filled with data you can use to share with existing clients and prospective clients helping you market yourself as the local business sales expert.
Now that the economy is improving we are beginning to see some new people joining our membership. Membership is the key to a strong IBBA and M&A Source. We need all members to help bring in new members. Simply share with them all the benefits you receive as a member. Click here for a list of IBBA Benefits and click here for MASource Benefits.
Taking advantage of just one benefit may be able to pay for your membership.
As I leave as your M&A Source Chairman I know that you are in the best of hands. New Chairs Dora Lanza and Steve Wain with their new boards are ready for 2014 and the continuation of these two great associations.
I wish you all the best prosperity for 2014!
Cress V. Diglio, CBI, M&AMI
Education Committee’s Update
When Rob Firestone was Chairman of the IBBA in 2011, he initiated my involvement as Education Vice Chair. Understanding the importance of this position, I was hesitant to take on this role. After much deliberation, I accepted the challenge of leading the Education Committee. Over the next several years, I had the distinct pleasure of working with Rob, Pino Bacinello in 2012, and George Lanza in 2013 as they led our association through difficult times. They stood behind the Education Committee and challenged us to provide our members with the very best instruction possible. To them and our membership, I would like to thank you for this leadership opportunity and allow me to reflect on my past years as Vice Chair of Education of our great association.
First and foremost, I would like to express my sincere gratitude to all of the volunteers who donated their time to work on the Education Committee. Without their hard work and dedication, we wouldn’t have been able to accomplish all of our extensive goals. This year alone we have created or updated over 20 courses with the help of our lead subject matter experts, implemented a monthly webinar program that provides informative and educational topics to our members, and established Educational Summits as biannual events. These Summits allow IBBA members the opportunity to complete core CBI courses. Each event has been a huge success and we have received rave reviews from our members. Lastly, we were able to revise the CBI exam. I am very proud of these accomplishments and more of the Education Committee in 2013.
Next, I would be remiss if I didn’t acknowledge those individuals that have given so much to the Education Committee. Warren Burkholder has served on this Committee longer than I have been a member of the IBBA. He is always the first person to volunteer to create or rewrite a course, instruct at one of our events, or suggest improvement projects. Warren never says no and doesn’t expect anything in return. Lou Vescio has been our CBI Exam Chair for the last two and a half years. During this time, Lou has done an extraordinary job reviewing exams and improving the educational components of this credential. Thanks to his efforts, the IBBA has an updated exam and a newly-established preparatory online review program. The Committee also welcomed Russ Bieber last year—a veteran instructor who shares his wealth of business brokerage knowledge in course development projects. The most recent members to join our committee include Ron Johnson, Darrin Davenport, and Bart Basi. Thank you all!
This Committee wouldn’t be able to achieve all that has been mentioned without the assistance of two key people: Janet Nykaza of Learning Solutions Group and Maggie Nicholson of Meeting Expectations. Janet does an exceptional job working with our subject matter experts to develop new courses and revise existing course materials. She keeps us on schedule and makes it possible to introduce new courses to our membership in a timely manner. The Education Committee wouldn’t accomplish our annual goals without the Maggie’s leadership. By organizing regular check-ins with all Education Committee members, Maggie prioritizes our project list and ensures successfully completion of each one of them. Maggie made my job easier and it was a pleasure working with her.
As 2013 comes to a close, the Education Committee welcomes Len Krick as the 2014 Vice Chair of Education. Len has been influential in creating IBBA workshops and courses for many years; he is a dedicated volunteer and a leader in our profession. I have no doubt that Len will accomplish incredible things and become one of our greatest Education Chairs yet! He has a great support team in place and a group of talented committee members to assist with all of his initiatives. Please join me in welcoming
Len to this leadership role within the IBBA.
Although my time as Education Vice Chair is ending, my participation in the IBBA continues as I inherit the Incoming Chair position. I look forward to working closely with our 2014 Chair Steve Wain. Steve is a visionary; his long range innovation and foresight strategy will allow the IBBA to soar to new heights. Together, we look to build upon the successes of our previous Chairs. Await exciting projects and events in the new year!
Finally, as you make your new year’s resolutions, becoming more involved in our association should be one of them. Join a committee, participate at the affiliate level, suggest sponsor or member benefit ideas, or simply spread the word about our upcoming events; help us continue to be the premier business brokerage organization in the world.
Thank you once again for allowing me to serve the IBBA. Best wishes to you and your families for a very merry holiday season and a happy, healthy, and prosperous New Year. May God richly bless you all!
Lisa Riley, CBI
Marketing Committee’s Update
The Q3 Market Pulse Report was released on December 12 to the media. Thank you to everyone who has participated. We would like to say congratulations to Henry Schneps of Better Business Brokers for being chosen in the drawing and winning a $250 American Express Card.
Below is an excerpt of the email participants will be receiving (participants’ email will have live links where bolded):
Click the links to find the Executive Summary of the survey results, in addition to the Full Report of each answer and the breakdown of responses, as well as the Full Comparison Report that compares 2012 Q3 responses to 2013. Please also take a look at the Executive Summary Broker Addendum, as it summarizes the findings of the survey that affect you as a business broker.
Since you took the time to respond to the survey, we wanted to give you a chance to spread the word in your local media. We have drafted a press release for you to submit to your local media, with a place for you to insert your name to quote you on the current marketplace. This will not only spread the word about the survey, but it will also position yourself as an expert in your field in your region. We have also come up with a how-to guide to help you release the press release.
Your participation is the best way to not only ensure a wider pool of responses in the survey, but will also allow you to access valuable insight into the environment of the current marketplace.
Be watching for your opportunity to participate in January for the 2013 Q4 Market Pulse Survey which will be available for 2 weeks.
I would like to thank Scott Bushkie for his dedication and leadership, Berry Berkowitz for his focus on the Affiliate Competition, as well as Simone Shahdadi, Kay Ciesla, and Karl Kirsch for their professionalism, assistance and on-going support. We also welcome Omar Kettani as our newest committee member.
As always, if you have any ideas for the Marketing Committee, please don’t hesitate to send them to us.
Joe Lindsey, CBI, M&AMI
Credentialing Committee’s Update
The Credentialing Committee is a Standing Committee as stipulated by the IBBA bylaws. This Committee is responsible for implementing and administering all policies and procedures of the Certified Business Intermediary (CBI®) designation and other certifications. Other certifications include Lifetime CBI and Lifetime CBI – Retired. This Committee is also charged with the Fellow of the IBBA award. This Committee will approve Fellows and they will be awarded annually at the Fall Conference, if applicable.
I became Chair of this Committee at the beginning of 2010. It has been my great pleasure to serve along with Committee members Gary Papay (Past Chair), Stacy Alario, Paul Klinge, Mike Adhikari, Jeff Snell, and Maggie Nicholson (Meeting Expectation’s Education & Certification Manager). Continuing the practice that was developed by my predecessors, this Committee is dedicated to handling any and all issues on a timely basis.
Although we have long-established policies and procedures for all issues related to the CBI, including how to obtain the CBI and its recertification requirements, we also understand that some CBI members encounter extenuating circumstances beyond their control that may prohibit them from recertifying in accordance with those policies and procedures. While this Committee addresses such exceptions on a case-by-case basis, we must also remember that the majority of CBIs do recertify in a timely manner. To deviate too much from the policies and procedures would result in harming, if not totally undermining the integrity of the CBI. It is a solemn responsibility, and one that is held upper-most by this Committee.
Because much of the CBI requirements revolve around IBBA University courses and the CBI exam, I have also had the pleasure of working with Cress Diglio, Jr. (Education Committee Chair) and Lou Vescio (Education Committee member). I commend these gentlemen for their dedication to the IBBA, our members, and for their counsel to me.
Although I will continue to serve as a member of this Committee, I’m relinquishing my role as Chair because it’s time for me to accept new challenges. As 2014 commences, I will begin a two-year term of service on the IBBA Board of Directors and a three-year term with the M&A Source Board of Directors. As I step down as Chair of this Committee, Jeff Snell has graciously agreed to begin his tenure as Chair of the Credentialing Committee.
With Jeff at the helm of this Committee—and having the support of Gary, Stacy, Paul, Mike, and Maggie—I have complete confidence that this Committee will continue to observe and adhere to its tradition of service to the IBBA.
Best wishes to everyone for a healthy & prosperous 2014!
Marcie Woolworth, CBI, FIBBA
Membership Committee’s Update
Knowledge, Experience, Results!
As we enter into this holiday season, I want to take the time to thank the faithful and dedicated members of the Membership Committee, who have served tirelessly and worked so hard: Sandy Newkham, Melinda Tsang, Jeff Snell, Yiannis Empeoglou, Glorianne Campbell, David Cottingham and to the staff at Meeting Expectations that has been such a wonderful support to this Committee – Simone Shahdadi, Kay Ciesla, and Karl Kirsch. You all have certainly made this position most pleasant with your hard work and support! Thank you from the bottom of my heart!
Your Membership Benefits include the following: world-class education with more new classes being created, the CBI certification, networking, the monthly newsletter (thank you to Keith McLeod), the Market Pulse Report (thank you to Scott Bushkie and the Marketing Committee), webinars, the Member Directory, and Membership dues options which will soon include a Starter Package option.
Your Membership Committee is proud to announce the discounts being offered to our members that include Pratt Stats, ShareFile, Hoovers/First Research, LegalZoom, and BizComps. Our plan for 2014 is to add even more discounts for your enjoyment. As the new benefits come on board, I will let you know.
Our accomplishments include the monthly payment option is available for your membership dues fee. By selecting the option to pay monthly, you are agreeing to pay for a full year of dues at a 20% premium. We also now offer a new Starter Package for new Brokers coming into our industry.
We are excited to see what great things come our way in 2014!
Having had the privilege of attending the IBBA Conference in Savannah, I truly appreciate the hard work and effort of the Conference Planning Committee and its Chair, Doug Robbins. The Conference had such great workshops pertaining to the issues we are experiencing in today’s economy. Please do yourselves a favor and plan on attending the next Conference to be held in Las Vegas June 2-7, 2014 at the Cosmopolitan Hotel. More information will be coming soon.
Wishing you and yours blessings during this holiday season and great prosperity in 2014!
Linda Purcell and John C. Johnson
Strategic Issues Task Force Update
Our Insidious Disease
A disease is a condition impairing an organism’s normal functioning; a harmful development. What distinguishes an insidious disease? It exists “without marked symptoms, but ready to become active upon some slight occasion; a disease not appearing to be as bad as it really is.” A disease that “develops so gradually as to be well established before becoming apparent.”
The 1852 classic “Memoirs of Extraordinary Popular Delusions and the Madness of Crowds” chronicled many follies and schemes, including investment frauds preying on greed to extract money from unsophisticated investors. The stories are testament that this phenomenon has recurred through the ages. Bernie Madoff and offers to get rich by helping wealthy Nigerian widows remind us, frauds have not gone away despite reams of rules and regulations intended to protect unknowing innocents.
Through the mid 1800’s and the early 1900’s, selling unsuspecting investors pieces of the “Bluesky” was observed. This relied on greed, herd behavior, and a “salesman’s mentality” to carry out the frauds. Greedy investors chased hot deals touted by cunning promoters, only to lose their collective shirts. Congress blamed this in part for the stock market collapse leading to the Great Depression and responded by establishing federal securities acts in 1933 and 1934.
Together, the acts:
- Require that investors be given information about securities offered for public sale.
- Prohibits deceit, misrepresentations, and other fraud in the sale of securities.
- Created the Securities and Exchange Commission (SEC)
- Empowered the SEC to register, regulate and oversee securities activities
- Charged the SEC with identifying and prohibiting conducts in the markets
- Authorized the SEC to discipline regulated entities
The 1933 and 1934 laws had noble intentions. An exceedingly complex web of laws, regulations, rules, registrations, court cases and interpretations developed over the next eighty years. One critical practical result of this is that a big player monopoly has been created. If one does not deal in large numbers, he can’t afford to play at the registered broker dealer table.
Thus, our latent disease, accidently introduced in 1934, lay dormant for half a century. It was widely, but not universally, accepted until 1985 that transferring control in an operating business was not transferring a security under the “Sale of Business Doctrine”. In 1985, the disease became active with the Supreme Court Landreth Timber v. Landreth ruling. In essence, the ruling was one of “form trumps substance” so the transfer of stock was a transfer of a security simply by looking at the definition contained within the Securities Acts. The inveterate Sale of Business Doctrine was decommissioned. By extension, it may be argued that transactions involving anything defined as a security might be said to be effecting a securities transaction. Depending on context, included are: any note, stock, bond, debenture, certificate of interest, option, or right to subscribe to or purchase any of the foregoing.
The Landreth decision’s weight languished for our profession for many years. Pressure to sell stock to save on taxes was lower than today. Deals were still being done as before. Court interpretations, rulings, and appeals were slowly percolating through the system. Legal articles started being published. American Bar Association’s committees brought the issue into their deliberations. Lawyers were disseminating advice to clients. Stories began circulating, telling of commission scalpings, “justified” by alleged failures to be properly licensed. A few business brokers dealing with larger transactions began getting licensed to affect “securities transactions”. Today a belief remains widespread, that brokers of small local businesses need not worry about the progression of securities law requirements applying to them. In the parlance of disease progression this would be the denial phase.
Here the prognosis diverts. A cure is promising. On one path, some might interpret that a business sale of any size involving a note, shares of stock, options, earn outs, etc. requires the broker to be securities “licensed.” This path presents an obvious problem set; registration requirements and subsequent regulations were not designed for and are badly misaligned with business brokers’ functions in the market and for their clients. The scheme was designed as one-size-fits-all for one type of market and when imposed on another type, the translation is problematic. The notion of a small business transfer market was not recognized and was not contemplated in the design of today’s regulatory scheme. Additionally, compliance is bureaucratic, highly focused on meticulous record keeping, and very expensive.
On another path, some might interpret that a broker of small businesses offering to sell assets need not worry about securities law. Most deals have no or incidental pieces that might be defined as securities, transactions are small, application of the securities laws would be a mess, and the CBI No Action Letter. This approach, even if it is absolutely correct, presents the risky probability of someone alleging some broker cannot be paid or is financially responsible a buyer’s investment in a failed deal. Right or wrong, the result of having to fight this and winning could be huge, while losing could be devastating. Sadly, which brokers will be sacrificed to the perverted “Russian Roulette” phase of the disease cannot be predicted, but the odds of being hit are increasing over time.
Treating symptoms of our insidious disease includes being registered, great deal care, good bedside manner, following the CBI letter, sticking with very small deals, accepting the risks. Is there no clear cure?
Our milestone CBI No Action Letter came out in 2006. Since 2007, a joint industry coalition has pressed diligently in a “Campaign for Clarity” to substantially improve alignment between what business brokers do and requirements under federal securities law. Improvements could come as an expanded no action letter, an appropriate rule making by the SEC, new legislation providing for simple notice registration with rules to comport with the business broker’s activities, or new legislation clearly exempting activities common to business brokers from federal registration requirements.
Today there is cause for optimism that one or more of improvements may be realized. The best case is H.R. 2274. Following hearings and debate, it passed out of the House Financial Services Committee by a resounding 57-0 bi-partisan vote. People who have looked closely recognize this is a win-win practical solution to an unfair and impractical “form over substance” conundrum.
H.R. 2274, as it goes before the full House, provides an exemption from federal securities registration to business brokers who:
- Do not raise capital, handle the funds or the securities, nor sell stock in public companies,
- Deal with eligible private companies having from zero to $25 million in revenues, or zero to $25 million in EBITDA, and
- Follow clearly specified, non-obtrusive, real-world protocols.
Suffice it to say, this common sense cure eliminates many non-productive requirements, threats, costs and burdens imposed under current law on our profession, business owners and buyers. It may be our profession’s only real opportunity to dramatically uplift our working environment while reducing the risks of allegations a business broker needed to be securities licensed as they serve business buyers and sellers. H.R. 2274 restores the wisdom lost with decommissioning of the Sale of Business Doctrine.
Our entire profession must rise to support this critical priority. Heavy lifting has occurred since 2007 and the final push is upon us. Please respond to help cure our insidious disease. Your profession needs three things of you now!
- Become a grass roots activist. We will give you tools to be effective and keep it simple.
- Call on everyone you know in the profession to join with you to get this done
- Help finish funding the work with a donation or pledge. Members have contributed up to $10,000, with many at $1,000 plus. Pledges have come in many forms! We need everyone to contribute a fair share.
Please contact Linda Purcell or me to find out how you can help.
Strategic Issues Task Force Co-Chairs
Andy Cagnetta, CBI
Business New Year’s Resolutions – Top Ten List
It’s that time of year again where we get to rethink, reload, and reenergize for the New Year. While you make resolutions for your personal life now is the time to do the same for your professional life!
- Dress sharper. Start with accessories like ties, shoes, and jewelry. Nothing says it has to be expensive; you will raise your game and have others take you more seriously.
- Think and plan big! Write down your goals and share them with a mentor. Create your top three goals of the year on a document, email it to five mentors, print it out and hang it nearby.
- Upgrade and leverage your technology. Dump three apps on your phone and research three new ones.
- Get in shape physically & mentally! Make sure it fits you. You might not be marathon ready, but yoga could be a great way to focus on getting in shape and calming your mind.
- Tweet and email less. Use more personal and meaningful communication. Try to get away from the screens in your life and actually meet more, talk more and enjoy looking beyond two feet in front of you.
- Learn something new that makes you a specialist. Education outlets are more available and flexible than ever! Make time to take that computer course, get that certification, or advanced degree! You are never too old or too busy.
- Do more advertising, marketing, networking and branding and be consistent with your messaging. Make a commitment to have frequent and consistent marketing for your brand. Hire a coach or advertising agency. Write a blog. Dive into social media on a professional level.
- Give back to your community. This can improve your professional life significantly. Attend functions, volunteer at your local charity, organize an event, or join a committee. Some of the best fun I’ve had in life has come from my charitable endeavors.
- Make money and feel like you deserve it. Stop giving away your time and expertise. The recession is over and you deserve to get paid. Raise your rates and justify the increase through better service or increased expertise. Profits are good! They make the economic world go round. When people and companies earn it gives them the ability to invest, give back and spend money in our communities.
- Be nicer, and increase customer service. Commit to be a better human and lead by example. Take the extra time to nurture your existing relationships that you may often take for granted.
2014 is shaping up to be a great business year! I wish you all the best in your pursuit of profits and happiness!
Roman A. Basi
Changes to Personal Goodwill Every Broker Should Know
Personal goodwill was given life in court cases over the past 20 years, Martin Ice Cream Co. v. Comr., 110 T.C. 189, (1998) and Norwalk v. Comr., T.C. 1998-279, (1989). It is roughly defined as “the asset that generates cash profits of the enterprise that are attributed to the business generating characteristics of the individual, and may include any profits that would be lost if the individual were not present.” Personal goodwill has been a major tool in the arsenal of business brokers for the last decade as it can significantly reduce a seller’s taxes from the sale of their business. However, several key court decisions have been handed down in recent years that are having a major impact.
The first case is Solomon v. Commissioner, T.C. Memo 2008-102. In the sale of this business, $1.4 million was allocated to a customer list and the remaining $100,000 was allocated to equipment. The taxpayer claimed that a portion of the allocation to the customer list was personal goodwill. In the ruling against the taxpayer, the IRS cited that nothing in the agreement cited personal goodwill and there was no further evidence the seller intended to sell personal goodwill in any document within the transaction. The court went on to further point out that the taxpayer was not hired by the buyer and thus their personal attributes were not available to the buyer after the sale.
The second decision is that of Irwin Muskat v. U.S., No. 08-1513 (1st Cir. 1/29/09). In the sale of his business the taxpayer listed $15 million of goodwill as company goodwill and $1 million for a non-compete. After the sale was completed and after the taxpayer filed his tax return, he decided to re-file his return and consider the $1 million that he had allocated to the non-compete as personal goodwill. The Court did not repudiate the existence of goodwill, but cited no communication, nor document selling personal goodwill anywhere to justify taxpayer claims.
The third impactful decision was Kennedy v. Commissioner, TC Memo 2010-206. The parties in this transaction executed a goodwill agreement, consulting agreement and asset purchase agreement. The taxpayer agreed to work for the buyer under the terms of the consulting agreement for $0, and also not to compete with the buyer for 5 years. The tax court ruled that the payments to the taxpayer were for his services under the consulting agreement and not for his personal goodwill because he worked for no compensation for 18 months and agreed not to compete for 5 years.
Finally, there is Howard v. U.S., 2010 WL 3061626 (E.D. Wash. July 30, 2010). In this case, Dr. Howard had a covenant not to compete within a 50-mile radius for 3 years after he no longer held Howard Corporation stock. The tax court ruled that the taxpayer could not sell his personal goodwill because no one could have used it within the 50-mile radius due to the non-compete and it was not worth anything beyond the geographical boundary.
The concept of personal goodwill is clearly under attack in these cases and based upon these decisions it is imperative that personal goodwill be negotiated, identified, and allocated in a purchase agreement separate from the other assets being sold. Furthermore, a purchaser must have access to the seller’s personal goodwill via an employment agreement or consulting agreement for fair market value that spans the length of time of any corresponding non-compete agreement. It is important that business brokers understand the impact of these cases so that they can better prepare their buyers and sellers and properly inform them of the nuances of transferring personal goodwill.
Roman Basi is the President of The Center for Financial, Legal & Tax Planning, Inc., and can be reached at [email protected], or 618-997-3436.
Jessica Hadler Baines
Outside the Box – Immigration and Main Street Business Sales
For those of you who may not yet know me, I am one of our younger members. I joined the IBBA in 2006 at age 26. And I’m still here. The big question is: why? There are several reasons, but two big ones come to mind: the support of the IBBA and the ability to develop a niche business.
What is that niche? Immigration! A little known federal American law that’s been around since the 1950s says that families from abroad can move to America provided they invest in small business and create work for American citizens. This is called the E-2 Visa. How do I apply this to my brokerage? I help folks outside of the US buy small Main Street businesses so they can move to the United States. This service I offer is all within the scope of a traditional brokerage practice.
Is this a service you can add to yours?
Thousands of families each year buy small American businesses throughout the US and need the help of a professional business broker. That’s where, in your market, you can help—and get paid.
Sound complicated? Not really. You do need to know some criteria that are specific to these deals, but with the support of a good immigration attorney, you may be able to market some of your listings to a much, much larger and global audience. Think about some of your listings, the ones priced between $80-400k, for example. Are the tax returns accurate; are the employees on appropriate W-2 or 1099s? Could a family from England, Canada or South America buy that salon or retail shop you’ve had for sale for months? Could you get an all-cash deal done? See where I’m going here?
Let me give you a recent example from my practice: I was approached by a 30-year-old woman from London who wanted to move to South Florida. She had a budget of about $165,000 which she had ready in the bank. After researching the available businesses for sale that met her budget, skill set and interests, she ended up purchasing a popular pet-sitting business for $150K. Adjusted net earnings were about $90K and employed 65 pet sitters who were all 1099 contractors. The business model was solid, and the paperwork was all there – the seller was responsible with her bookkeeping. Working together with her immigration professional, the buyer earned a five-year E-2 Visa and was able to start her dream as a resident of the USA. The deal only took a coupl of months and the client is over the moon, which usually means future and generous referrals to my practice.
Have you worked with foreign buyers? We’d love to hear stories from other IBBA members who have sold businesses to families from abroad and how they were able to add this niche service to their practice.
To your success in 2014!
Jessica Hadler Baines is the President of American Business Group, LLC.
Sponsor Message: BizBuySell
6 Tips on Using BizBuySell to Capitalize on Q1 Buyer Traffic
We’re seeing positive shifts in the business-for-sale marketplace which are setting the stage for an abundant new year. As 2013 is winding down, activity on BizBuySell is picking up with both a 41% increase in closed transactions (Q3) as well as confidence of buyers and sellers.
For those who weren’t able to attend our workshop at the IBBA conference last month, we shared some tips to help you take advantage of the post-holiday business buying season.
The 2013 Business Brokerage Press survey revealed that most brokers use BizBuySell (thank you!) and in light of that statistic, we want to help you get the most from your membership. A surge of traffic to BizBuySell comes during the first months of the year, so priming your account now will make sure your listings are most effective. Here is what I deem to be the six areas that will help you position your brand to see results on BizBuySell and sell more businesses in Q1.
Tip #1 – Create High Quality, Complete Listings
Differentiate your listings and help turn visits into leads with a complete and thoughtful listing. By filling out key information fields, your listing will be easier to find through search criteria. We’ve identified the five areas that will not only make a great listing, but drive more conversions.
- Maximize Geographic Information – Though confidentiality is important, there are other parts of the listing that can protect it without compromising the search power influence that comes from including geo information. Most buyers search at the county level, so making the county visible will allow your listing to appear in more results.
- Include Key Financials – Financials, especially revenue and cash flow (plus inventory and FF&E if possible), will build buyer confidence and interest.
- Write Great Ad Titles & Descriptions – Descriptive headlines including location, business type, or growth opportunity, and detailed listings that include an asking price, cash flow, and a compelling description of the business help turn searchers into buyers. Remember to also always proofread your ad!
- Use Photos Whenever Possible – On average, listings with photos receive twice as many views. If confidentiality prevents you from posting a photo of the business itself, upload a related stock photo instead. For example, if it’s a local Italian restaurant, search for a free stock photo of pasta or pizza.
- Indicate Seller financing If Available – A recent survey showed that 49% of buyers expect to use seller financing when they purchase a business. Yet among the listings on BizBuySell, just 25% offer seller financing on their listing. Buyers or their representatives can filter listings that offer financing, which is one more way to boost exposure.
Tip #2 – Monitor Listing Performance
See what changes, if any, should be made to your listing by checking its performance on the site. If the “clicked for details”’ to “Ad display” ratio is less than 2%, consider adjusting your listing title, including a photo, or upgrading the listing.
If your ad is being viewed, but you’re not receiving any inquiries (email or clicked to see phone number), ask yourself if it’s priced appropriately, if the opportunity is adequately described, or if there is seller financing/support training available that buyers may find more appealing.
Tip #3 – Complete Your Broker Profile
With 4,000 profiles in the BizBuySell directory it’s the largest on the web and harnesses powerful SEO to help more prospects find you. All of your listings link to your profile, and your directory profile links to all of your listings. The more credentials and expertise you can convey will help buyers and sellers evaluate if you’re the right broker to contact for their job. BrokerWorks Premium members receive additional exposure across the site in positions which include a photo and short description to help you stand out to potential buyers and sellers. Regardless of your membership level, be sure to include:
• Profile Photo
• Company Overview
• Company Logo & Website
• Services Offered
• Sold Businesses
Tip #4 – Link Your BizBuySell & IBBA Accounts
Buyers can search by association and certification, so linking your BizBuySell account to your IBBA account (look under ‘Networking Tools’) will allow savvy business searchers to find your listings. Once linked, your IBBA membership and certification designations will appear on all of your listings and help to increase trust and leads. Another great benefit from linking accounts is that your listings will automatically be published to the IBBA member listing area, saving you time and allowing you to getting more reach from them.
Tip #5 – Use Free Agent Accounts to Increase Exposure
Agent Accounts were introduced earlier this year to help increase exposure and empower your agents to independently market your listings. Agent Accounts are included with your BrokerWorks membership and serve as a limited BrokerWorks account without the ability to edit listings. Each Agent will appear in the Broker Directory with your offices’ contact information, further extending the visibility of your office and increasing the opportunity for potential buyers and sellers to discover your brokerage. Your office gets more exposure for your businesses and deals close faster. Make sure your agents complete their profiles in the same manner that you did in Tip #3.
Tip #6 – Enter Sold Comps and Get Free Report Credits
When you remove a listing from your account, you’re entitled to free Valuation Report credits. These provided data points from over 100,000 sold and for sale businesses will help you price future listings. Submitted comps also drive our quarterly Insights reports, which help to raise the industry profile. Submit comps to receive Valuation Report credits to help you better price businesses in your market.
These six tips scratch the surface, but our goal in the coming year is to make sure our members are using BizBuySell to their full potential and reaping the rewards of the economic and seasonal upswing. For more details and suggestions, please join our exclusive IBBA webinar on Wed, Jan 15, 2014 12:00 PM – 1:00 PM EST, “Tactics for Getting the Most From Your BizBuySell Membership”. We’ll walk through the features available to you on the site and teach you how to get the most from your time on BizBuySell.
Bob House is General Manager for BizBuySell.com – the Internet’s largest and most heavily trafficked business-for-sale marketplace. Currently, approximately 45,000 businesses are listed for sale on BizBuySell and the site receives more than 910,000 monthly visits. BizBuySell also has one of the largest databases of recently sold businesses and a leading franchise directory.
Barry Berkowitz, Ph.D., CBI, M&AMI
2013 Affiliates Rewards Program
As we approach the end of 2013, the Affiliate Rewards Program is nearing the finale to the Grand Prize. The chart below shows the standings amongst the affiliates that include the results of attendance and registration for courses at the 2013 IBBA Fall Conference in Savannah. While the Midwest Business Brokers and Intermediaries (MBBI) are clearly in the lead for the Grand Prize for one of its members, each affiliate can continue to gain additional points by having their members join the IBBA by the end of the year. Each new member will earn five points for the affiliate and just a few new members can put you on top. Whether the affiliate wins the Grand Prize or not, the affiliate will nonetheless be earning additional free conference and course registrations for their members during 2014.
The final standings and the winner of the Grand Prize will be announced early in 2014. Stay tuned for the results.
Doug Robbins, FCBI, M&AMI, CM&A
The Dawn of a New Era
As the end of 2013 draws near, I would like to think it brings to a close not only to this year, but also the conclusion of 5 years of sheer torture to business brokers throughout North America. At the end of 2007, there were more than 2,200 members in the IBBA. Today the number is about one-third of that. I hope that the end of 2013 also brings with it the end of the political shenanigans that has prevented the economy from growing to its fullest potential.
On a positive note, the brokers who are still around are, for the most part, the best of the best and we are poised to experience some serious catch up. Let me explain:
Normally approximately 4 to 5 percent of all businesses transition in some way every year. Some fail, some merge, some are turned over to the next generation, some sell to a friend, some partners buy out other partners, and sometimes business brokers sell them. This 4 to 5 percent comes from the fact that the average successful business owner owns his/her business for 20 to 25 years.
The recession deferred and delayed a large percentage of the businesses that, under normal conditions, would have been sold. Businesses that should have been sold between 2008 and 2012 are now starting to show some profits, which should mean the owners are now thinking about selling or transitioning their businesses.
I estimate that of the businesses that didn’t transition over the past 5 years there are approximately 10% that will probably be transitioned over the next 2 to 3 years, provided there is not another recession (watch out for the last quarter in 2015), coupled with the normal 4 to 5% each year should position for double the usual activity for the next 2 or 3 years. This coupled with the fact that there are fewer business brokers should show record revenues for business brokers over the next 2 to 3 years. Take a quick look around, the competitors you used to face off against should be greatly reduced in numbers in most regions and you ought to have a clearer shot at getting that all important sell assignment.
However, I see a possible concern on the horizon. I am not sure of the impact of the pending HR2274, which in its most recent form provides an exemption to most everyone selling small businesses. Could this exemption result in a huge influx of new competition?
The original concept of the pending legislation initiated by the IBBA, M&A Source and AM&AA was that there was to be a “credibility recognition” of the IBBA’s CBI, M&A Source’s M&AMI, or AM&AA’s CM&A, as a requisition to be registered, licensed or accredited to sell businesses.
It seems to me, that there could suddenly be an invasion of non-qualified competition into our profession. The changing competitive landscape may see that many folks will try to catch some of this action including lawyers, accountants, bankers, real estate brokers, consultants, wealth managers, financial planners, friends, relatives, and neighbors. This means that we must be much more vigilant to distinguish ourselves from the “Also-rans” and “Want- to –bee’s.”
Your membership in a professional organization, specialized training and education, integrity, experience, and carrying a designation of competence is what will set you apart from those other folks.
We will have to work diligently to show business owners and their professionals that there really is a difference. Our associations will have to embark aggressively to tell the world the critical importance of their accreditations, and we will need to reinforce that importance in all our marketing and advertising materials.
Since the legislation is still pending, this issue may not occur, or if it does, it may take some time to sort itself out. In the meantime, let’s get going and sell those businesses that are waiting to be sold.
Make 2014 your record year!
Clyth MacLeod, Lifetime CBI
News and Views
Business sales continued at a steady level throughout November. Noticeable, was the number of larger businesses sold—those in the $500,000 to $10,000,000 price bracket. Hospitality businesses (cafes, restaurants, fast food) continues to dominate but there is strong demand for importer/wholesalers, accountancy practices, service stations, and the health and fitness industry. Business confidence is at record high levels.
A Visit by Bernie
Our team was privileged to have Bernie Siegel visit in November and run a training session. Bernie is a legend in the international business broking world. Headquartered in Philadelphia, he has vast experience and success in selling fast food franchises (particularly Dunkin’ Donuts), has lectured internationally on franchise sales, and is an acknowledged authority on SBA lending in the USA.
Always entertaining and informative, Bernie is an old friend and colleague and always ready to share with fellow brokers. A believer in keeping it simple he points out that our job is to list and sell businesses, that we must really know our buyers and sellers (ask lots of probing questions), drill down to discover motivations, and that we will not sell a business everyday but can make a new friend daily.
Bernie also emphasizes the importance of “reading” our clients and customers and tailoring our presentation whether they are analytic or entrepreneurial. Different people respond to different approaches.
My business partner, Glorianne Campbell, was recognised and honoured last month by being appointed as a Director of the Business Intermediaries Education Foundation (BIEF). A non-profit foundation established in 2005, BIEF’s aim is to advance and promote the business broking profession across the USA, and internationally, based on information, understanding, co-operation, and education.
All the very best for the festive season and the coming year to our clients and customers, our colleagues and competitors. Enjoy!
Keith McLeod, Lifetime CBI
From the Editor’s Desk
Here are some useful questions you may want to ponder by yourself, with interchange from colleagues, or publicly. The year is in its twilight, so ponder these for the dawn of the New Year:
- What were my finest accomplishments, personally and professionally, over the past year? Why was I so successful? What can I replicate for next year?
- What was I unable to accomplish strictly due to my own shortcomings? Was it due to ego, lack of discipline, poor planning, poor execution or other controllable factors? What do I need to do to improve?
- What is the priority development I need to undertake, and how will I obtain it?
- If others seem to be moving at a faster pace than I am, what are the causes? Can I duplicate them?
- Have I been creative enough? Am I producing distinctive ideas and IP or relying on the work of others? How can I improve in this area? Am I looking for the next new thing in my area of expertise?
- Have I grown as an expert, or am I still positioned as a coach or consultant or washing machine repair person?
- Am I receiving the critical candid inputs I need (whether I “want” them or not)? If so, how do I exploit them? If not, how to I acquire them?
- Am I fully capitalizing on my membership in this community?
- Do I feel more confident and worthy and am I able to sustain that sense? If not, what’s missing?
- Have I improved on my financial reserves and reduction of debt? How can I do a better job if needed?
- Am I seeing at least four true buyers a month, and receiving an additional four referrals a month? If not, why not?
New years are symbolic times of new starts. I think it’s a wonderful opportunity, though often unfilled for most. But that doesn’t mean it won’t work for you. My professional suggestions for the New Year are to:
- Find a way to get in front of buyers at least once a week. That’s about 50 a year. If half show interest and you submit proposals to half of them and half of those accept them at an average of just $50,000, that’s $300,000 right there.
- The best ways to get in front of buyers are to:
- Find people who know them and get introductions
- Network at events that they attend
- Speak at events they attend
- Write for publications they read
- Host an event that attracts them
- Get serious about your value proposition (how clients improve after working with you). Keep it to a single sentence that describes a dramatic outcome (“I help you reduce new client acquisition time and expense.”)
- Get serious about your expertise. Learn to easily say, “I am an expert in XXX” until it is natural.
- Drop subscriptions, memberships, and even acquaintances which aren’t helping you to improve but which have simply become force of habit and time wasters.
- Every morning and evening repeat a very brief description of what you’re excellent at doing. (“I coach people so that they can perform better and achieve their career goals.”)
- “Tithe” (ten percent) of everything you earn into a separate account which you don’t touch in order to provide some financial freedom and reserves.
- Resolve to increase your fees and decrease your labor on every new piece of business.
These simple eight steps should propel you to more and better business and enhance your life.
Some additional thoughts:
- When you reinvent yourself the younger you become.
- You are in charge of your profession. Change is constant; to survive you and your practice must modify and change.
- Support systems are vital: family, strong colleagues, talk to others and get feedback.
- To grow you have to change your friends. Change people you hang out with. To grow differently you have to change your beliefs, and change your habits. It is the way you grow. You need change more than you think.
- Learning is excitement. You need to stretch yourself, get to know new leaders, new books. Don’t be so sure. Ask questions, teach, coach, and participate. It provides a tremendous pay back. Insights will come from others. It takes self-confidence to say I need some help here.
- Great ideas come from diverse reading.
- Use examples, analogies and metaphors.
- Use humor and smiles when seeking challenging situations.
- Find the cause of your success by reflecting on your talents, strengths, wins and experience.
- If you are optimistic you will turn bad news into opportunities and become more effective.
On a personal note: Take a page from what I do every year during these festive times. Write a love letter to your spouse or significant other. It will become a treasured gift for all kinds of weather now and in the future.
Happy holidays and happy New Year to all IBBA and M&A Source members – and a deep and profound bow to all of you who have crafted articles for our newsletter.
The world has changed around us. Yesterday’s strategies and tactics will not work. You must have the courage to ask and answer this question, “What am I going to do differently?” (Larry Sternberg)
Apr. 6-9 IBBA Spring Educational Summit (Orlando, FL)
Jun. 2-7 IBBA Spring Conference (Las Vegas, NV)
New IBBA Members for December
Independence, OH – October 2, 2022 – The International Business Brokers Association® (IBBA) is pleased to announce the three individuals elected by membership to serve on its board of governors for the January 1, 2024 through December 31, 2026 term: The Board also unanimously approved Erin Crawford, CBI of Calder Associates as the 2025 Chair […]
IN THIS ISSUE: “Embracing Resilience and Refinement in Challenging Times” Letter from the 2023 IBBA Chair. Plus, Insights on the Power of AI, Deciding Whether or Not to Grow, Do’s and Don’ts for Buyers, and More!