IN THIS ISSUE: Letter From the 2020 Chair A Pandemic Recession? How Virtual Data Rooms Enhance Communication Between Deal Participants The Impact of a PPP Loan on Recasting Differences Between Business Ownership and A Job New CBIs in 2020! LETTER FROM THE CHAIR: We Found a Way Barry J. Berkowitz, PhD, CBI, M&AMI Year […]
Main Street News February 2012
Save the Date! – More Information Will Be Out Soon!
We are very excited about our Spring 2012 event in San Antonio. Since we will have 1 major event this year we’re planning on pulling out all the stops and making this conference a Blowout!
The conference will be held June 4 – 9 at the Hyatt Regency Riverwalk.
We are currently working on the schedule of events and details for the event, more information will be available soon.
The 2012 Conference format will be different from previous years. There will be one primary conference with the IBBA & M&A Source in 2012. That will be the San Antonio Event. It will be structured like previous IBBA Conferences where we have educational courses, workshops, networking events and a trade fair. There will also be the typical M&A Source events: Expo, panel discussions & educational courses.
There will not be an IBBA event in November of 2012. The M&A Source is planning on having an event November 7 – 11.
We will have more information about the conference available soon! Keep an eye out on your email inbox and check into the IBBA website for more information. We look forward to seeing you in San Antonio!
– IBBA Headquarters
Dear IBBA Members and Friends:
As you are aware IBBA has launched a monthly newsletter Mainstreet News. By now you have received two issues. The third issue will appear mid-March. In our initial issue I indicated there will be a number of changes and improvements throughout 2012. A significant difference will occur in your March newsletter’s format and content. We are excited about this enhancement providing more value for your membership. The following is a preview which you can expect to see. For more details about the features & upgrades to the newsletter please reference the Executive Director’s message below.
Communication Chair and Editor
Executive Director’s Message
IBBA Announces Upgrades to Mainstreet News
Welcome to the improved edition of IBBA Mainstreet News, a customized online newsletter and valuable information resource for business brokers and dealmakers. We hope you have enjoyed the first couple of issues and want to take the opportunity to introduce some new things in this issue. You’ll notice a new top navigation bar above that will take you directly to important sections of the IBBA website. Secondly, there is an enhanced industry news section below featuring digested executive summaries of articles that pertain to business brokerage, finance and privately held businesses. I would also like to point out a new feature that allows you to share each article with your own Facebook, Twitter & LinkedIn pages. We encourage you to share pertinent articles with your social media network.
Designed with the input of IBBA members, IBBA Mainstreet News has enhanced capabilities to maximize our communication with you and improve our dialogue. It’s much more than a newsletter! IBBA is pleased to offer this information service providing carefully selected articles, research, white papers, announcements, executive profiles and headline news coverage to the business brokerage community.
With its updated look, Mainstreet News will arrive in your in-box every month providing you with essential, need-to-know information, insights and perspectives to help you follow key developments and to give you convenient access to a wide array of high value content on business issues and trends that impact our industry and your success.
To produce IBBA Mainstreet News, we have partnered with a wide range of editorial contributors to provide industry thought leadership, research and insights. In addition, our own editorial staff will monitor thousands of newspapers, business publications, Web sites, national and international wire services, and other periodicals to provide you digested industry news coverage in easy-to-read executive summaries. We’ll also feature broker interviews, white papers, press releases and research from many of the leading companies in the business brokerage industry.
We cut through the information clutter for you – and help you focus on the most critical information you need in today’s complex and changing business environment. IBBA Mainstreet News is your connection to all things in the business brokerage industry—and it provides a one-stop resource for you and your colleagues.
We truly hope that IBBA Mainstreet becomes a favorite on your desktop, iPad or smart phone
Steve Bova, CAE
Small Business Lending on the Uptick in January 2012
New Jersey Newsroom (02/14/2012) Arora, Rohit
According to the Biz2Credit Small Business Lending Index, lending in all categories of lenders was up for small business owners seeking capital in January. Small business lending at large banks rose 2 percent over December 2011’s rate of 11.7 percent, and lending among small banks and non-bank lenders increased to their highest levels in the last year. Small business lending continues to rise among alternative lenders, such as Community Development Financial Institutions, Accounts Receivable financiers, merchant cash advance, and micro lenders, rising to 62.4 percent in loan approvals in January from 62.2 percent in December. Additionally, credit unions are active in the small business lending market, approving 57.6 percent of all small business loan requests, up from 57.4 percent in December. Experts say that there has been a 35 percent increase in month-to-month volumes of new loan applications, as economic indicators improve, such as the declining unemployment rate and strong holiday sales. As larger alternative financing firms enter the market, the cost of funding small businesses has fallen from an average of 27 to 28 percent to 16 to 18 percent. Competition in the alternative financing market is heating up, lowering barriers to credit access and reducing interest rates.
SBA Opens Doors to More Firms by Increasing Size Limits
Washington Technology (02/10/12) Sideman, Alysha
A final rule from the Small Business Administration, published on Feb. 10 in the Federal Register, raises 37 of the revenue-based size standards in 34 industries and three sub-industries in the Professional, Scientific and Technical Services Sector and one size standard in the “Other Services” sector, making 8,350 more small businesses eligible to compete for federal contracts. Revenue limits for technology firms providing computer programming, maintenance, and design services will jump from $25 million to $25.5 million, and the limit for the Management, Scientific, and Technical Consulting Services sector will rise from $7 million to $14 million. Eligibility for federal small-business assistance programs is based on these size standards. The new revenue limits will be implemented on March 12.
Obama Proposes Way for Congress to Help Entrepreneurs
Phoenix Business Journal (02/03/12) Hoover, Kent
A legislative package sent to Congress by President Barack Obama on Jan. 31 seeks to increase entrepreneurship by providing incentives to small businesses. Among other things, Obama wants to get rid of capital gains on investments in certain small businesses, let companies write off 100 percent of the cost of new equipment bought this year, provide small businesses that increase payroll by hiring new workers or giving raises to existing employees a 10 percent income tax credit, and allow businesses to deduct $10,000 in startup expenses, up from $5,000. He also wants the Senate to approve legislation already passed by the House that would not require small companies to register with the U.S. Securities and Exchange Commission when offering as much as $50 million in stock to the public. The president also believes venture capital firms licensed by the Small Business Administration could increase investment in small businesses through an expansion of the Small Business Investment Company loan program.
More Small Employers Are Seeking Credit – and More Are Being Turned Away
Washington Post (02/16/12) Harrison, J.D.
The latest small business credit report from the National Federation of Independent Business, released on Feb. 16, shows an increase in small businesses looking to obtain credit to 57 percent last year from 48 percent in 2010. The report also indicates a 33 percent jump in demand for credit lines and cards. However, only 50 percent of small businesses obtained all or most of the credit they sought in 2011, down from 60 percent the prior year. With the number of small business owners securing credit holding steady around 1.6 billion, the report shows that more small employers were turned away by banks. However, the survey found that just 15 percent of small businesses considered credit problems a top concern, while 33 percent cited political and economic uncertainty and 23 percent cited weak sales. Moreover, the survey reveals a significant decline over the past three years in the number of small businesses working with local or community banks, falling to just 20 percent in the latest report.
Making M&A Safer
CFO (02/12) Ryan, Vincent
The heightened awareness of M&A risk is partially related to current economic challenges, which leave little margin for error. When determining when to merge or acquire another firm, businesses need to conduct forecasts based on optimistic, neutral, and pessimistic assumptions through scenario planning and stress-testing discounted cash-flow models. Assessing acquisitions should include examining the data available to focus on three to four key areas that will create value post-acquisition, including how to retain customers and gain new ones. Acquisitions should not be based on potential revenue gains that may not materialize; instead, experts suggest focusing on strategic improvements the acquisition can provide and what value from cash flow can be obtained. Another tip is to ensure risk mitigation is part of the deal, either through the assessment of hurdle rates, defining actions associated with cost-savings synergies, and greater structure in the deal through promissory notes attached to liability and performance conditions. Some buyers even spend time on post-acquisition contracts to keep sellers engaged in the business. Cash flow and accounting risks also must be accounted for, especially as they relate to tangible and intangible assets.
How a Valuation Can Benefit Your Company and Help Focus Your Business
Smart Business (02/12)
Business owners should not view valuations as something to do only when they plan to sell. Kevin Strain, audit partner at Sensiba San Filippo LLP in the San Francisco Bay area, says that valuations should be considered in the early stages of the business lifecycle, as having a valuation can help businesses assess their strengths and weaknesses and create a road map for boosting value. With a valuation, business owners are better able to gauge whether human capital or products or something else provides the most value to the business. Business owners should have an adviser to help them navigate the valuation process, which can be very detailed and technical. When choosing a valuation firm, business owners should ensure the firm is familiar with their industry and how the economy is impacting the industry. They also should examine the firm’s credentials and experience to ensure that it will provide an accurate valuation and can suggest ways to improve business value.
Sales of Small Businesses Rose in 2011
Inc (01/12) Rubin, Courtney
According to the latest report from BizBuySell.com culled from information listed by local business brokers and “for sale by owner” listings, for the second consecutive year, the number of small business sales rose, with the total rising 3.3 percent to 6,703 in 2011. In 2010, sales of small businesses rose 2.9 percent, following a 28 percent decline in 2009. BizBuySell.com General Manager Mike Handelsman says, “While 2011 continued to be a tough year for the nation’s small business owners, we were pleased to see that business performance is improving and more people are buying small businesses. Helping this is the fact that business sellers are adjusting their value expectations, something that should continue to spur deals in 2012.” In addition to an increase in transactions, the report indicates a 3.3 percent increase in the median selling price from $150,000 in 2010 to $155,000 in 2011. Median revenue also rose, increasing 6.7 percent, which suggests improvements in business performance. Handelsman says, “We are seeing improved small business transaction activity driven, at least in part, by the fact that small business owners are lowering prices to attract buyers. It’s slowly becoming a better time to be a seller, but it’s already a good time to be a buyer.”
Connecting With Customers Is Easier Than Ever
destinationCRM.com (02/01/12) Leary, Brent
Despite improvements in the economy, small and midsize businesses (SMBs) continue to face challenges to increase revenue, maintain profits, and locate customers. More SMBs are turning to CRM and social media to find customers, as social and mobile technology have made it easier for businesses to connect with customers and potential clients. However, while connecting is easier, it is harder to maintain customers’ attention as they are bombarded by Twitter and Facebook feeds, online games, and other applications. SMBs need a pervasive mobile engagement strategy for the entire business that helps acquire and retain customers through marketing and sales interactions and through product development and internal functions, such as measuring customer retention and satisfaction.
SEC Advisory Group Recommends Doubling 500-Shareholder Limit
Bloomberg (02/01/12) Hamilton, Jesse
The Securities and Exchange Commission’s (SEC’s) small-business advisory group is calling on the agency to change a number of its regulations. For instance, the committee voted Feb. 1 to recommend that companies be required to register with the SEC once they have 1,000 shareholders, which is double the current threshold. In addition, the small-business advisory group urged the SEC to require Regulation A public offerings to be registered once they reach $50 million a year, up from the current $5 million a year. A third vote that would have called on the SEC to consider allowing a practice known as crowdfunding, in which small investments are solicited and pooled together, usually online, was postponed due to concerns about limiting the potential for fraud. The votes come after SEC Chair Mary Schapiro asked her staff to perform reviews of agency rules to ensure they were not overly burdensome for small companies. That review followed a request from President Barack Obama that federal agencies ensure their rules help spur economic growth and not impose too much of a burden on companies. The House already has approved parallel legislation, while similar measures have been introduced as amendments to other bills in the Senate.
The Three Deadly Mistakes of Succession Planning
Registered Rep (01/20/12) Gleeson, Jerry
Succession planning is an integral part of running a business, particularly for small businesses, given that not having a plan in place can reduce the value of a business and its prospects for a sale. For those crafting a succession plan, they will want to avoid three pitfalls: building the wrong bench, turning succession into a competition, and acting out of fear. Business owners will not want to groom successors that have the same vision as they do because the market is always changing, and the new leader must be able to adapt to changing circumstances. Second, business owners will not want to tell potential successors that they have an equal shot at running the business because the potential candidates could enter into a destructive competition that eventually renders the business asunder. Instead, business owners should tell candidates that the firm is investing in their potential and offer a list of strengths they need to develop to create a team atmosphere. Finally, acting out of fear can skew the succession plan; experts suggest that business owners pay closer attention to how the plan can improve the business and generate benefits for clients, investors, and workers.
DIY Apps Save Small Businesses Time, Money
BusinessWeek (02/06/12) King, Rachel
Many small-business owners are looking to create mobile apps for their business, and there are a growing number of self-service solutions that do not require the hiring of professional programmers. Using a service like Appsbar, which builds apps for free and places ads inside the apps, can save companies anywhere from $10,000 to $100,000 and up to twelve weeks of work, according to Appsbar founder Scott Hirsch. The firm’s clients are mostly small and midsize companies, and it has attracted 60,000 users since its start in April 2011. There are several other options beside Appsbar as well, including MyAppBuilder, AppBreeder, AppsGeyser, Mobile Roadie, and Socialize, which makes the AppMakr tool. About 70 percent of small businesses used mobile apps in 2011, and 40 percent said their business could not survive without them, according to an AT&T survey. Another survey from the Small Business & Entrepreneurship Council found that small businesses that use apps save about 5.6 hours per week.
Free Advice About Leaving Business
Windsor Star (Ontario, Canada) (01/19/12) Hall, Dave
Canadian-based VR Windsor Inc. business broker Bill Sivell says that winding down a business or selling it can be difficult, especially when dealing with family owned businesses in which the children have not been active in their operation. Additionally, selling a business can be hard when owners are seeking an appropriate amount of value from the open market. Sivell advises clients to determine a finish line in terms of time spent or value sought for their business and work toward achieving that goal. However, once the goal is met, it can take up to 18 months to sell a business, which is why having a business broker is important. Sivell says he helps clients establish a legitimate market value for the business and markets it to a wider audience of serious buyers.
National Report: Advisors Divided on When Business Sales Will Return to “Normal” – NOW or 2021 or 2022 November 9, 2020 – LOS ANGELES – The latest data from the Market Pulse survey of business brokers and M&A advisors suggests that pandemic-resistant businesses are in demand. Responding advisors report they completed 301 transactions in the […]
Independence, OH – October 2, 2020 – The International Business Brokers Association (IBBA), the world’s largest not for profit association for the business brokerage industry, is pleased to announce the formation of its first domestic Chapter, IBBA Mid-America, with a primary service region of Missouri, Arkansas, Kansas, Kentucky, Oklahoma and Iowa. Going forward, IBBA members […]