Main Street News January 2014

Save the Date for the Spring Conference!

Mark your calendars today for the 2014 IBBA Spring Conference, to be held at the Cosmopolitan of Las Vegas, June 2 – 7, 2014. More information is forthcoming, and registration is set to open in a few short weeks. Be sure to visit our website for updates on the schedule and registration information.


Steve Wain, CBI, M&AMI

Chair’s Message

Hi. Now Buckle Up!

wainWelcome to 2014! To start, I am both excited and honored to lead one of the best professional associations I’ve ever been affiliated with. A little less than 10 years ago I was a business broker that had been doing deals for a few years when I checked out the IBBA. It seemed too good to be true in many ways, especially compared to alternatives I had been exposed to. It was a great decision to join.

In the last few years, the IBBA has gone through some significant changes. But the best is just starting. Throughout the year I plan on keeping you up to date on the areas we are dedicating to improve on and the efforts of the many volunteers and staff that are helping us grow. Remember that could be you if you are not already engaged in IBBA activities.

There will be other articles each month that will offer more detailed views of our initiatives, as well as educational articles to help you with your month-to-month practice improvement. Contact Keith McLeod, our newsletter editor, with suggestions and contributions.

Our first order of business is governance. Since the beginning of the organization, the IBBA has operated in a way that allowed for shared, sometimes disjointed, responsibilities between the Board, volunteers, and for the last 15 years or so, our management company. At the end of 2012, the IBBA Board decided that we need to govern and manage our association better to allow us to grow, and to allow the Board members and volunteers to moderate their time devoted to association matters and still manage to be, well, business brokers and intermediaries!

The Board voted to adopt the Carver Model of Governance. This is a widely practiced method that, in a nutshell, allows the Board of Directors to evaluate and establish key future objectives, or ends. Our management company, Meeting Expectations, headed by Karl Kirsch as Executive Director and Kay Ciesla as Director of Operations, have the full responsibility and authority to achieve those ends. As required, they will request assistance and guidance from the Board (and potentially you) to help reach those goals.

It sounds pretty straightforward and simple, but it is a change, and you know what they say about change.

So, here is a bit of sneak peak (just a peak, you’ll learn more later) of planned and upcoming initiatives for 2014:

  • With Scott Bushkie at the helm of our Conference Planning Committee, our conferences this year will be very different and very exciting. News about the content and format will be coming very soon. I promise you it will be worth your while to attend, and more importantly to sign up early. The Spring Conference will be in Las Vegas starting June 2 at the Cosmopolitan—one of the newest and nicest hotels on the strip! For planning purposes, our Fall Conference will be held, starting November 17 in beautiful Austin, Texas!
  • A special member benefit/initiative regarding franchising will be announced. If you want to be more successful, reach more franchisors and close more deals, then get ready for this fantastic new initiative.
  • By the Spring Conference we hope to announce new additions of benefits that will not only make it easier for you to operate your practice, but provide a way to earn more income. Staff and volunteers are working on that now, and one of our objectives is to get that to you quickly.
  • We are working on new courses that will address the needs of new as well as experienced brokers. We hear you and know that the association needs to ensure that our experienced and certified professionals stay at the top of their game! Join me in welcoming Len Krick not only to the Board, but also as Vice Chair of Education (no, he does not wear the lab coat for all education! If you don’t know what I am referring to, come to a conference and find out).
  • We are investigating new initiatives in expanding the IBBA’s influence, education, networking and deal opportunities across more borders. Special initiatives for international growth are being progressed. Interested in participating and learning more? Contact Board Member Pino Bacinello, who heads this initiative. It’s in the early stages so if you want to contribute let us know!
  • We are beginning to investigate and develop special initiatives with our key strategic vendors on ways to bring enhanced value to your practice. As things develop we will keep you informed.
  • The Association began a Past President’s Council in 2012, which is comprised of ex-IBBA Chairman. Their collective knowledge and experience is second to none. They participate and contribute to the IBBA by having a representative on your Board, and are working on projects to advance our industry and member recognition. The Council’s chair is Jeff Jones. He and the team will be heading up an investigation on some new areas of interest, including local speaking engagements to spread the word of business brokerage, the IBBA and the professionalism of its members and certification process, as well as other areas to contribute to member benefits.

We will be doing what we can to make your experience in the IBBA better, and by extension the enhancement of your practice and earnings. The list of to do’s can be endless, but we are working to achieve growth so that our members can stand alone as the best practitioners in the industry and garner the earnings associated with that. We will continue to enhance our CBI program and never stop improving what is known as the largest inventory and best education worldwide.

Our objectives are not just for 2014, but beyond. Cress V. Diglio is our incoming Chair for 2015 and 2014 Treasurer. I will be working closely with Cress so that our initiatives continue to completed, and so that we transition these initiatives in a positive way from year-to-year. Cress has been with the IBBA for a long time and is as passionate and devoted to the growth of the association as anyone I’ve had the privilege to know and work with. Please feel free to reach out to Cress to discuss any future initiatives you feel we should consider.

With all the initiatives in place, I do have two special requests for each member.

First, as you may or not be aware of, we are making great strides in Congress. On January 14, the full House of Representatives voted on H.R. 2274, our initiative to limit or remove the need for federal licensing requirements for business brokers and intermediaries on any business transfer. The house voted 422-0 to approve! That alone is incredible (a unanimous and bipartisan decision – how often does that happen?) and now we are on to the Senate. A new bill, S.1923, was introduced on the same day as passage through the House. We need you to contact your Senators and push hard for their cosponsorship and approval. This is an uphill battle and we are moving that ball quickly—we need your help to get it over the goal line.

Additionally, this effort is a very costly one and we need you to contribute to offset the costs. The IBBA and M&A Source as well as our affiliate associations have contributed a significant amount. Along with the dedication and assistance of the AM&AA, we have contributed over $300,000 to pay for our attorneys and lobbyists. But as we near the goal line, the costs not only continue but accelerate. We still owe over $330,000 as of today, and ask that you either pledge now or pledge a small portion of each of your next closings. This is a benefit for you. Consider what the removal of federal sanctions will do when you go to a closing and someone asks you, “are you licensed?” It’s your future earnings that are at stake–help us to help you keep them. Click here to find out how to contribute.

Finally, please make it your business each quarter to contribute to our IBBA and M&A Source Market Pulse Survey – it takes less than 10 minutes. This survey, managed and published by the Graziadio Business School of Pepperdine University (a recognized leader in business data and intelligence) gives exposure and credibility to our industry and to you, as an IBBA member. We need to keep increasing the number of participants so that the survey has full bearing on the market. Minimally, we need 300+ members to contribute. If you missed this quarter, please make it your business to contribute next quarter. Even if you did not have a closing, just having listings and a pulse on your business environment is key to completing the information we need to gather.

Our 2014 Marketing Committee Chair, Lisa Riley, is available to answer any questions you may have, as well as listen to any suggestions for future Market Pulse Surveys. The results of the survey are published nationally and garner interest in the associations and members through awareness of what business brokers do, why certified and educated brokers and intermediaries offer the best chance for a successful business sale and finally, exposing our industry and name to those who never even considered either selling or working with a business broker or intermediary. Be a part of your future growth and contribute!

So as you can see, our plate is full. We will keep you up to date. A State of the Association message will be published soon, much like we did in prior years. If you have questions about the association, contact me at [email protected] or anyone in our management office. We are here for you!

Have a great month. Welcome to the new IBBA!


Kay Ciesla
IBBA Director of Operations

Director of Operations’ Message

kay-cieslaThe IBBA has some exciting new developments and benefits lined up for 2014, so it’s great to see that so many of you have renewed your membership on time in order to maintain uninterrupted access! If you haven’t already, I would encourage you to do so online or by contacting IBBA Headquarters as soon as possible so you don’t miss out on what sets IBBA members apart from other brokers: immediate and ongoing access to a community of highly successful brokers who willingly share their tried-and-true tactics for success. In addition to your fellow members’ “street smarts”, you have deeply discounted education at your fingertips to keep you on the cutting edge of your field.

On a related note, the IBBA added two new CBI Certification Packages this month, which are membership packages available to anyone who is considering becoming a CBI. The purpose of these bundled memberships is to provide brokers with an opportunity to meet all of the requirements of the CBI certification at a discount within a compressed period of time. The Starter and Fast Track Packages are outlined below. If you are interested in signing up, please contact IBBA Headquarters at [email protected] or 888.686.IBBA (4222). If you would like more information about the benefits of obtaining your CBI, please visit the IBBA website.

Next month we plan to launch the 2014 IBBA Spring Conference registration. There is no greater opportunity to be immersed in the IBBA community! And if you sign up for one of the new CBI Certification membership packages before you register, you will be able to take advantage of the Member registration rate as well as a new IBBA membership. If you have any questions about IBBA membership, conferences or specific benefits, feel free to contact us at any time.

CBI Certification Packages

CBI Certification Starter pack chart


Linda Purcell and John C. Johnson

Strategic Issues Task Force Update

The current “one size fits all” regulatory environment puts owners at risk if their transaction morphs from an asset sale into a stock sale. This can occur due to advice of other transaction professionals, e.g. attorney recommendations regarding transferring contracts or accountants restructuring the deal to minimize the tax ramifications of the sale to the owner.

Owners of small to medium sized companies should enjoy quality representation when they are ready to bring the businesses that often comprise the majority of their net worth to market!

Right now, we have a unique opportunity to impact the shape and the scope of that landscape.

The House of Representatives voted and unanimously approved H.R. 2274, January 14, 2014 by a vote of 422 – 0! This legislation has real potential to create an environment that encourages rather than discourages successful transitioning of ownership for small to mid-market companies, the majority of business providing jobs and growth in the U.S.A.

We need your support to turn this potential into reality. You can reach out to your state’s or your neighboring state’s Senators to let them know in your own words:

Our current and future clients want and need to realize the value of the companies they have built as they move on to another stage of their lives. Owners encounter and deal with numerous difficulties in the ordinary course of running their businesses. If they try to bring their company to market without the aid of professionals, e.g. intermediaries, business brokers, attorneys, accountants, tax specialists, their support team, in what we know is an inefficient market, the negative results too often include:

  • Losing focus on their business
  • Failing to follow up on customer needs while talking to prospects so revenues decline
  • Missing advantageous connections with the quality candidates
  • Presenting inadequate information for potential acquirers to base a decision on
  • Resulting far too often in the owner closing down operations
  • Eliminating needed employment, goods and services to customers and communities

The vast majority of companies in this country do not generate earnings that will justify the fees necessitated by compliance by Broker Dealer regulations. Small through mid-size companies do constitute the “backbone of our economy.”

Can your efforts truly make a difference?

As we celebrate and are encouraged by the House vote passing H.R. 2274, here is one of many examples of how IBBA and M&A Source members have reached out and can continue to do so to change our world.

On January 7, 2014, Leon Parker, CBI sent the following in an e-mail to John and Linda:

I was sending emails to the legislative aides of our congressional delegation this afternoon passing on John Johnson’s excellent article from the IBBA newsletter about H.R. 2274. My main objective was to plead again for bill co-sponsors.

I also sent notes to our senators’ aides just to keep them up to date and to prepare to work harder on them when the bill gets to the Senate.

Before I did that I called Kevin Edgar, Senior Counsel, House Committee on Financial Services, to see if the House bill had been filed yet or if there was still time to get our Congresswomen to be co-sponsors. He said the bill would probably be filed the first of next month so there is still all of January for House members to sign on as co-sponsors.

So there is still time for others to challenge, dare, or plead with as the case may be, their House delegation members to sign on.

Leon M. Parker, CBI

Leon told us to feel free to share his activities with you, hoping they would encourage IBBA and M&A source members to do even more. Leon chose to reach out to the legislative aides of his state Representatives first, understanding they were more accessible, and that legislative aides usually screen the facts and make recommendations on what their Congressman or Congresswoman support. Leon contacted each of the aides at least three times via e-mail, with relevant updates and requests for support in addition to his initial phone contacts. Leon commented that if any of you have direct access to your Congressional Representatives and Senators, contacting them directly would be even better.

Leon also said, “People have to understand that the squeaky wheels get greased, and that is particularly true when dealing with members of Congress, so the more we squeak the better chance of getting through. Also, I have been asked “How many of you are there?” and of course our own numbers are not as impressive as they could be, so the impact of our activities sooner or later on most small businesses has to be emphasized to get their attention. A vote for H.R. 2274 is a vote not just for us but for all small businesses in general.”

Statistics from the Small Business Administration website affirms the accuracy of Leon’s perception… small businesses are essential to the health and well-being of our economy.

Small Business is Big!

  • The 23 million small businesses in America account for 54% of all U.S. sales.
  • Small businesses provide 55% of all jobs and 66% of all net new jobs since the 1970s.
  • The 600,000 plus franchised small businesses in the U.S. account for 40% of all retail sales and provide jobs for some 8 million people.
  • The small business sector in America occupies 30-50% of all commercial space, an estimated 20-34 billion square feet.
  • Furthermore, the small business sector is growing rapidly. While corporate America has been “downsizing”, the rate of small business “start-ups” has grown, and the rate for small business failures has declined.
  • The number of small businesses in the United States has increased 49% since 1982.Since 1990, as big business eliminated 4 million jobs, small businesses added 8 million new jobs.

John Johnson wrote in the December IBBA Newsletter, “Today there is cause for optimism that one or more of improvements may be realized…People who have looked closely recognize this is a win, win, win, win, win…practical solution to an unfair and impractical “form over substance” conundrum.”

As we embark on a new year in January 2014, John’s optimism has an even sounder foundation.

H.R. 2274 has gone before the full House for a vote and passed by a unanimously 422 -0.

Senator Joe Manchin, III, (D, WV) and Senator David Vitter (R, LA) introduced a bipartisan companion bill January 14, 2014 in the Senate. It is S.1923, a bill to amend the Securities Exchange Act of 1934 to exempt from registration brokers performing services in connection with the transfer of ownership of smaller privately held companies. If S.1923 is supported, and passed in the Senate, affording the same protections found in, H.R. 2274, and signed into law, it will provide 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 $250 million in revenues, or zero to $25 million in EBITDA
  • Follow clearly specified, non-obtrusive, real-world protocols

As John eloquently summed up, “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. “

How Can You Impact Your Future, Your Clients’ Divestitures, and Our Country’s Economy?

  • Reach out to your Senators and their Legislative Aides or Directors, explaining the regulatory dilemma that exists today, and the viable resolution now at hand.
  • Who do you know, who may be willing to sponsor or support a similar bill in the Senate?
  • Support the effort with contributions and or pledges to defray the ongoing legal expenses incurred to move this effort forward.
  • Stayed tuned for the latest, breaking news on the legislative front.

We have moved the ball forward, past the 50 yard line. Your help is essential in order to reach and cross the goal line!

Please contact John Johnson or me to find out how you can help.

Linda J. Purcell
[email protected]
(847) 358-9404

John C. Johnson
[email protected]
(918) 749-6016

Co-Chairs, Strategic Issues Task Force

Marcie Woolworth, CBI, FIBBA
Vice Chair, Membership Committee

Membership Committee’s Update

woolworthIt’s that time of year again when our membership dues become payable. If you have renewed your membership: thank you! If you’re getting ready to pay your membership dues: thank you! If you need some help in making your payment instead of paying for your membership all at once, don’t forget about the monthly payment option that is available for paying your membership dues. By selecting this option, you are agreeing to pay for a full year of dues on a monthly basis (plus a 20% administrative fee). We also now offer a new Starter Package for new brokers coming into our industry. Please see more information from ME in this newsletter.

Being a member of IBBA is so integral to our industry and we’re striving to make being a part of this organization more convenient during these trying times.

As we enter into a new year we need to remember the advantages of belonging to IBBA. Your membership benefits include: world-class education (more new classes are being written), certification (CBI), networking, newsletter (thank you to Keith McLeod!), the Market Pulse Report (thank you Marketing Committee), webinars (with more to come in 2014!); and the lead-generating member directory.

Your Membership Committee is proud to announce the discounts being offered to our Members which include: Pratt Stats, ShareFile, Hoovers/First Research, LegalZoom and BizComps. Our plan for 2014 is to add even more discounts to enhance your business. As the new benefits come on board, we will get word out to everyone.

It’s not too early to plan on attending the June Conference! 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. Registration will be open soon!

Wishing you and yours blessings and great prosperity in 2014!


Barry Berkowitz, Ph.D., CBI, M&AMI

IBBA and its Affiliates are Exploring New Ways to Help Each Other

Barry-BerkowitzAt the IBBA Conference in Savannah last November, the leaders of the IBBA Affiliates met with IBBA Board members and staff to identify ways for the IBBA and its Affiliates to help each other. At this meeting we focused primarily on ways that the IBBA can help the Affiliates provide better services and benefits to their members. In doing so, the Affiliates and the IBBA will each become stronger, grow in membership and become more effective at fulfilling their respective missions.

In attendance were representatives from 12 of the 15 Affiliates, including AZBBA, BBF, CABB, CABI, GABB, MBBA, MBBI, MABIA, NBBA, NEBBA, NYABB and TABB. If you want to know the full names, they are all listed on the IBBA website Affiliates page. From that page, one can link directly to most of the Affiliates’ websites (one of the benefits that the IBBA has already implemented). Also in attendance were Board Members Steve Wain, Cress Diglio and Scott Bushkie, in addition to Kay Ciesla, IBBA’s new Director of Operations, and Maggie Nicholson, IBBA’s Education & Certification Manager.

Many of the new benefits to the IBBA Affiliates and their members have already been implemented:

  • The new Affiliates Directory is now on the IBBA website.
  • The first co-hosted Educational Summit with TABB took place in September 2013.
  • Special membership and conference registration discounts were extended to all Affiliate members in October 2013.
  • IBBA courses at Affiliate events are now advertised on the IBBA website.
  • The new “Affiliate of …” logo has been developed for Affiliate websites and will be distributed to all Affiliates in February.
  • IBBA is trading state/regional membership lists with Affiliates. This occurs twice a year, creating opportunities for cross marketing.
  • The Affiliate Rewards Program is progressing nicely with many cost-free benefits to the Affiliates and their members.

In addition to the above, we discussed proposed changes to the IBBA education policies and benefits. The policies and many of the details are still being developed, but it was certainly helpful to receive the feedback and advice of the Affiliate leadership.

There was also a lively discussion of innovative suggestions regarding additional ways that the IBBA could further help the Affiliates and suggestions for improved IBBA/Affiliate interactions. Some of the Affiliates’ suggestions included:

  • Helping Affiliates create or improve their websites.
  • Creation of a “CBI Candidate” status as a precursor to achieving the CBI credential.
  • Helping Affiliates with their association administrative tasks.
  • A D&O insurance option for Affiliates.
  • Providing members a wide range of broker services through group purchasing by the IBBA.
  • Creating reduced course and conference pricing by offering a CBI package rate.

As Kay Ciesla references in her article, we are pursuing one of these ideas immediately: the discounted CBI Starter and Fast Track package rates.

We will have another Affiliate Leadership meeting at the spring IBBA conference in Las Vegas, which runs June 2 – 7, and hope to announce new Affiliate benefits and innovations at this time. Stay tuned!


Roman A. Basi

The Series Limited Liability Company


Most of us are familiar with the legal entity known as the Limited Liability Company (LLC). Now, there is a new LLC entitled the Series LLC. This new structure is created by state statutes and from the treatment given by the IRS and state regulations we are now getting a clearer picture of what is and will become of the Series LLC.

What is a Series LLC?

Series LLC’s were first introduced in Delaware in 1996 and in other states in the 2000’s. The Series LLC statutes allow for an LLC to be created and then allow for numerous “Series” to be created within the structure of the LLC. The purpose of the different Series is to separate assets and title them in different Series. The most important element of their existence is that any liabilities associated with a particular asset are only enforceable against the Series in which that asset resides and that liability cannot be enforced against assets of other series within the LLC.


Currently, there are thirteen states and one territory (Puerto Rico) that have Series LLC legislation; and,while these states have Series LLCs, it is important to point out that 37 states do not have Series LLC legislation on the books. The reason this is important is because in the states not recognizing the SeriesLLC, liability protection may not be allowed in the same form that the granting state allows. This means your assets may be encumbered by creditors in different states depending upon their interpretation andenforcement of foreign states laws.

Protection Based On Separation

The most important theme with regards to a Series LLC is separation—you must account for the assets separately. Liabilities and assets must be reported separately for accounting and legal purposes. Fortunately, accounting programs via computer make this easier than before. It is recommended and in some states required that the Series LLC have separate books, separate records, even separate checks that indicate which series the check is for (ex. ABC, LLC Series 1, ABC, LLC Series 2….).

States Departure from the Mold

Some states have significantly departed from the original Series LLC legislation from the State of Delaware. The reason for the departure was the legal element of “notice.” Delaware and many of the other states do not have much of a demand for notice in their statute. Other states require the LLC to notify others as to whom it is doing business with and that it is in fact a Series LLC. In some states the Series LLC must use the complete name of each series. This extends to all of the Series LLC’s obligations including documents such as its contracts, lease agreements, A/R, A/P, etc. Therefore it is recommended that you know the state law in which your Series LLC is organized in order to remain legally compliant and to assure your entity of the benefits of the law.


The Series LLC is quickly becoming the premiere legal entity for this decade as far as new companies are concerned. The Series LLC gives unsurpassed liability protection along with retaining the advantages of the traditional LLC. They can be an extremely beneficial tool to both your brokerage business as well as your client’s business. It is important for business brokers to be well versed in the benefits/costs and advantages/disadvantages of the Series LLC in today’s business climate.

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, President, American Business Group

Thinking Outside the Box: Why I Killed My Own Deal

jessica-hadlerHappy New Year, all! My last column in December talked about niche industries. Mine is immigration via business investment. What is yours?

For the new year, rather than talk about a specific sales demographic, I want to talk about when it is sometimes good to kill your own deal and make more money because of it.

Recent case: in December, I had a long distance buyer from the UK that wanted to buy a business in Florida in order to relocate here and start their little one in our school system. Both husband and wife have great educations and the work experience tasked to take on a number of different businesses. We found a great business on the coast—pool maintenance and chemical retail sales with full-fledged store.

The deal was progressing quite well, and the buyer had a great independent CPA conducting a thorough due diligence, and the seller, to be honest, was a champ at answering questions. It was a good business model and the numbers were adding up. The buyers flew in to meet the seller and see the premises. They loved the guy.

But after meeting the seller, they returned to their hotel and went to bed. They didn’t sleep. They talked. They talked about this major life decision. They talked that it could be the biggest mistake they may ever make, or that this one wasn’t the right one.

They called me the next day. They weren’t aware that they were still in the due diligence window to cancel; they just called me to say they couldn’t buy this one. The wife was terribly upset, and felt like she had let me down. I told her it was not a problem, and that their deposit was still secure. That’s why I include the cancellation clause during due diligence and it’s there for a reason. The bottom line is that no broker is going to receive future referrals from a seller or buyer who felt forced into a bad transaction. That is not what we do.

Buyers trust us to invest what is often their life savings in a main street deal, and if they make the wrong decision, their course in life will be drastically changed. As a business owner, I want to know if a deal isn’t going to happen sooner rather than later – I want to know as soon as possible so I can help the customer with another opportunity that will close successfully and pay. I don’t want litigation to command a fee; I’d much rather have a happy customer and just get paid for doing my job.

As intermediaries, we’re here to earn a living. Our customers are human and sometimes we forget that and focus on the fee. We can’t forget that – not if we want to get paid and keep up positive reviews and good future referrals. We are not in the business of selling the wrong businesses.

The buyers valued that in me and my practice, and that the best sale has to be the best match between both parties. While we looked for a new opportunity, by treating the customer as a family and not just a sale, I have created a very significant referral source. They’re not even in the USA yet and they are singing my praises and my phone is ringing with good leads.

Wishing you all a happy, healthy and profitable 2014!


Bob House, General Manager, BizBuySell

BizBuySell’s Message

All Signs Point to a Strong Market for Business Transactions in 2014

bob-houseWe saw positive shifts in the business-for-sale market last year, and 2013 saw the strongest gains in the industry since the Great Recession. Towards the end of the year, our team conducted several surveys that revealed some strong upward trends and sentiments, setting the stage for an abundant 2014.

This research touched all our key audiences (buyers, sellers and brokers) and revealed three positive developments: an increase in small business transaction volume, increased buyer and seller confidence, and widespread broker optimism.

Strong Transaction Growth in all Four Quarters of 2013

There was a dramatic increase in small business sales last year, showing a 49% growth compared to 2012. The strong uptick was driven by a number of factors; an improving economy, latent supply and demand, better access to capital and continued improvement of small business financial performance.

Our Insight Report revealed improved business performance as the median revenue of small businesses sold rose 13% to $405,905 and median cash flow grew 9% to $97,000 when compared to 2012. In turn, strong financial performance helped push the median sale price up 13% to $180,000 which is great news for sellers. However, it is still a buyer’s market with the average revenue and cash flow multiples falling 1.7 % and 3.0 %, respectively, in 2013.

The strong growth in all four quarters suggests we may be returning to more favorable conditions like we saw prior to 2008. 2013 was a great leap towards a healthy business transaction market. With the recession-induced latent supply and demand for businesses finally reaching the market, we’re in the midst of what should be a strong buying and selling environment.

Read the full Insights Report and view transactions in your region here.

Buyer & Seller Confidence is Up

We conducted a nationwide survey in Q3 to measure the sentiments of buyers and sellers. Over 1,500 buyers and sellers participated and three clear trends emerged which highlight opportunity in the market.

The first is that pricing expectations are converging as 80% of buyers felt confident they could purchase at an acceptable price and 65% of sellers felt confident they could sell at a price that met expectations.

We also saw a shorter timeframe in which buyers and sellers were looking to make their move. Sellers have been waiting for the right conditions in order to receive an acceptable sale price, including a large number of Baby Boomers looking to retire. Buyers are now getting better access to capital and hoping to take advantage of the buyers’ market. Of the prospective buyers surveyed, 88% consider themselves in the market to purchase a small business within the next 1-2 years. Similarly, 70% of sellers expect to be able to sell their businesses within a year. Both sides of the table are ready.

Finally, almost half of buyers (49%) expect seller financing to be a part of the offer when purchasing a business. On BizBuySell, only 25% of listings indicate that seller financing is available, leading to a significant gap in participants’ views on how business transactions will be paid for and shows the importance of both sides discussing financing options early in the sales process.

To sell the full results of this survey, visit our release here.

Brokers Expect Small Business Sales to Grow Again in 2014

We asked our broker members to report on what they were seeing in the market during 2013 and to share their predictions for 2014. Sixty-eight percent of respondents saw an increase in the number of transactions in 2013 and 83% felt that there will be even more sales in 2014.

Why the spike in sales? Thirty percent attributed it to a rise in the number of interested business buyers in the market in 2013. Eighteen percent attributed the sales boom to an increase in the number of sellers listing their companies.

According to brokers, the economy had a lot to do with buyers and sellers deciding to enter the business-for-sale marketplace in 2013. An overwhelming 70% of brokers felt that more sellers were in the market because they were finally confident that they would get their asking price.

Read more on BizJournals here.

The overall theme looking into 2014 is optimism in the economy which is helping to drive improved small business financial performance, strong demand from buyers and increased transaction volumes. While we still have a way to go, things are finally headed in the right direction.


Zac Cartwright

Pratt’s Stats Announces 2013 Hall of Fame Members

pratt-s-statsBusiness Valuation Resources, the author of the Pratt’s Stats® database is excited to announce that IBBA members submitted over 427 deals in 2013. These contributions helped Business Valuation Resources add over 1,573 transactions this past year, for a total Pratt’s Stats transaction count of over 21,100 deals.

In an effort to recognize these submitters and IBBA members who have continued to contribute to the Pratt’s Stats® database over the years, we are pleased to announce the Pratt’s Stats® 2013 Hall of Fame Members – we thank them for all of their efforts:

Pratt’s Stats® 2013 Hall of Fame members

Broker Name Firm Name Firm Location
Brad Bottoset The Liberty Group of Nevada Reno, NV
Robert Howells* Business Brokers of San Antonio San Antonio, TX
Stanley L. Pollock Professional Practice Planners, Inc. McKeesport, PA
Frank Stabler* Certified Business Brokers Houston, TX
*IBBA Members

Contributing members of the IBBA receive free access to Pratt’s Stats when their transactions are included in the Pratt’s Stats database – three months of complimentary access for every deal that’s included in Pratt’s Stats. IBBA members may submit their closed deals to Pratt’s Stats electronically by registering at BVMarketData and submitting their transactions online. IBBA members may also submit transactions by printing a contributor registration form and a Pratt’s Stats submittal form at BVMarketData, completing the forms and faxing them to Business Valuation Resources. A quick and easy way to gain access to the Pratt’s Stats database is to have an employee from Business Valuation Resources visit your office and collect the transactions for you.

If you have any questions about the submittal process or would like to schedule a visit to your office by a BVR employee, please contact Zac Cartwright at 971-200-4840 or at [email protected]


Doug Robbins, FCBI, M&AMI, CM&A

Dealing with Unsolicited Offers: Six Simple Questions

doug-robbinsOften we are called by a business owner who says “a competitor, supplier or customer has called sayingthey wanted to buy my business. What should I do?” Or “why do I need an intermediary/broker if I already have a Buyer?”

A question easy to ask—but difficult to easily answer!

If the inquiry is handled professionally, you will create deficits in the client’s mind of his own ability to successfully handle the project himself and you should find yourself in a position to provide consulting advice (paid for) coupled with a success fee (generally about 30 to 50 % of a normal commission).

Six Simple Questions
First, a few questions that the business owner needs to answer:

  • Is he really ready to sell?
  • Does he have a life plan outlining what he will do when he sells?
  • Does one of his children have an interest in operating it?
  • Does he know what the business is worth?
  • Has he structured the ownership to minimize taxes?
  • Will the sale of the business provide him with the financial wherewithal to retire comfortably?

Most often, business owners have not thought seriously about the above questions, and why should they? After all they have been busy operating their business and after putting in a 60 or 70-hour week (studies have shown that the average business owner works about 68 hours per week) they do not have the energy or desire to pontificate over hypothetical situations.

Let us presume that they have thought through all of the above and think that now may be the time and this inquiry may be the answer.

The next order(s) of business for a seller would be:

  • The seller needs to put together a divestiture team, comprising of a transaction lawyer, an accountant, a tax specialist, a business intermediary and a wealth manager to ensure that he does things properly. Oftentimes other specialists, such as bankers, an industrial psychologist, technical support, insurance, actuaries, pension experts, real estate appraisers, equipment appraisers, etc. augment that team.
  • He should have an intermediary to qualify the prospective purchaser according to the 3 M’s:
    • Has the buyer the financial wherewithal (Money) to complete the transaction?
    • Does the buyer possess the Management skills to continue operating the business?
    • Are they properly Motivated to complete the transaction or are they just kicking tires, or worse, is this a guise for industrial espionage?
  • He requires a confidentiality agreement along with a non-interference agreement to be executed by the prospective purchaser.
  • He should have an intermediary coordinate research on the buyer and his company, including reference checks, credit reports, bank-to-bank report, etc.
  • His intermediary needs to determine how the buyer proposes to value his business and will that formula deliver fair value for the company prior to providing any information.

Once he is satisfied that the inquiry is bona-fide, he will need to provide information on his business to the buyer. Be careful not to provide too much too early. Do not provide customer lists, employee lists, supplier lists, sales information by product line, gross margins, pending transactions or any other information that could be used to the detriment of the business if the transaction does not close. If the buyer does not have the really personal and confidential information on the business, then harm is minimized. Always mitigate the seller’s position. This is where his accountant can be of great assistance—have him prepare a “summarized set of statements” that are accurate but short on details now. You can offer to provide this information as part of your service.

The summarized set of statements is then used to build a profile on the company to provide limited information to the prospective purchaser. The profile should contain sufficient information to allow the buyer to prepare a Letter Of Intent (LOI). If the buyer is at all serious, his LOI should be of sufficient detail to allow the client to determine whether or not he wants to sell on the terms offered. Be aware of a “skimpy LOI” or one that is “vague” because the buyer needs to complete due diligence before they can make their final offer. This is often a ploy to gain access to information to perform the due diligence. If the buyer is serious then he knows what he wants and how much he is prepared to pay for it.

Also remember when a NAP (No Asking Price) program is used, that the first offer is usually lower than the buyer is ultimately prepared to pay, so the owner should be prepared to have his intermediary negotiate hard. I just signed an LOI where the opening offer was $7.5M and the final LOI is $12.9M.

His divestiture team needs to be up to speed and kept in the loop on all aspects of the negotiations, and be prepared to bring other experts on as required.

The next step would be to take as much time as needed to thoroughly understand all aspects of the letter of intent. Do not hesitate to have the buyer clarify anything. We recently reviewed an LOI that had 19 items that needed qualification, including the price and whether it was for shares or assets. Take nothing for granted and don’t assume anything. Always qualify and quantify. Do not allow access to any customers, suppliers, or employees until every T & I is crossed and dotted on the formal agreement of purchase and sale. Be cautious of swapping shares in the seller’s business for shares in the buyer’s business. If the buyer cannot pay with cash and notes then he may not be the best buyer for the deal.

The legal terminology in a formal agreement of purchase and sale can easily be in excess of 100 pages plus schedules. It is quite complex and technical and not for the layperson to understand. Be sure the Seller has retained a transaction lawyer, as compared to generalist. (Would you go to a gynecologist if you had brain cancer?).

It is extremely important that the seller deal with the issues surrounding the sale of the business in a rational, logical, common-sense manner. If he allows his emotions to get involved, this will become a tormenting, extremely dramatic and stressful situation. By taking the time to pull together the divestiture team and listening carefully to their advice and recommendations, most of the emotion will be removed from the transaction and decisions will come much easier.

Being prepared for a sale is something that, in my opinion, every business owner needs to do, while in reality most have not done so.

By taking the time in your role as an intermediary, to discuss the six steps thoroughly with the client, you will at the very least confirm in the client’s mind of your competence. If there are deficits in the client’s mind of his own ability to complete all aspects of those six steps, you will ingratiate yourself to most sellers and ensure yourself of a loyal client.

Tales from Doug’s book: “You Can Always Sell Your Business”


Clyth MacLeod, Lifetime CBI

News and Views

clyth-macleodHappy New Year! We hope 2014 brings you all your heart desires. Most of the signs for the year are positive with surveys and economists being very optimistic. The Christchurch re-build, increased house building in Auckland, rising infrastructure spending, positive immigration, a booming dairy industry and employment growth all underpin this optimism.

The business sales market is already reflecting this. 2013 finished strong with more buyers looking for opportunities and bigger businesses coming on the market and selling quickly.

What’s your business worth?

It is worth what someone will pay for it! But the price may be significantly affected by the way it is marketed and who it is marketed by.

Experienced specialist business brokers can provide an owner with a solid indication of the most probable selling price. In fact, the Real Estate Agents Act mandates that all licensed brokers must provide an appraisal based on market comparables—and you would not want to risk your business sale to an unlicensed broker.

To assist and advise us professionally, we are members of BizStats, a nationwide database of transaction data from actual business sales around the country as well as records form the 8,000 sales of our company has been involved in over the years.

These statistics provide invaluable benchmarks, but they need to be considered alongside the value drivers of the industry and of the specific business being appraised. Accurate valuations require the data to be used with care and experience and all opinions of value will contain assumptions and subjective judgments.

Importantly, the price achieved can be impacted by the motivations and negotiating skills of the parties and the marketing of the opportunities by the agent.


Keith McLeod, Lifetime CBI

From the Editor’s Desk

keith-mcleodMy mentor friend Alan Weiss provided some year-end thoughts that I’d like to share with you. Each year I send out an Annual Report. It is a summary of personal observations and reports on my family, business and activities I participated in. I began this year’s report by suggesting questions to ask with clients, friends, standing in line, at parties or dealing with prospects. Try them:

Over the years I’ve enriched my conversations by asking, “What are you most proud of you’ve accomplished in your life time?” The responding comments have always provided great insight and value.

I’ve used other questions as well:

  • What book, event, or person has had a great influence on you changing your mind or changing your life?
  • What is your competitive advantage?
  • If you could have a meal with one person living or dead who would that be, why, and what would you talk about?
  • What was the best advice you were ever given?

While these may not be easy questions to answer, the answers give them a chance to talk about themselves. The best approach to launch this discussion is by asking for their permission: “May I ask you a question?”


Upcoming Events

Jan. 17 Course #211 and #212 (Westboro, MA)
Apr. 6-9 IBBA Spring Educational Summit (Orlando, FL)
May 19-20 Course #301 and #345 (Clearwater, FL)
Jun. 2-7 IBBA Spring Conference (Las Vegas, NV)
Sep. 8-12 Fall Educational Summit (Dallas, TX)
Nov. 17-22 IBBA Fall Conference (Austin, TX)

View upcoming events!

New IBBA Members for January

Brian Bond
Gary Brooks
Washington Bryan
Candice Caruso
Maria Cifuentes
Paul Clark
Michel Dandurand
Donald Fruge
Diane Horton
Karen Johnson
Julie Kilienskold
Mlison Mank
Dean Martin
Patrick Mattingly
Thomas Millana
Joe Mota
Roland Oletu Oroh
Anthony Petrosino
Aldrin Raphael Fernandes
Angela Roswell
Katrina Stone
Duane Tucker
Jaime Velez
Warren West
Sonja Wood
David Xie

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