IN THIS ISSUE: Remembering Tom West, “What a Flight It’s Been” Letter from the 2022 IBBA Chair. Plus, Marketing Opportunities for Business Intermediaries, Best Practices in Specialization, Establishing Realistic Asking Prices, Working with Brokers, Legislative Updates, and more!
Main Street News July 2015
Registration for the Fall Summit Now Open!
The Fall Summit, held September 13-16, 2015 in Santa Ana, California is a great opportunity to earn 32 credit hours from courses that are required to attain your CBI designation. The Fall Summit pass, which includes all course materials, 4 days of top notch instruction, and lunch each day is just $1,500. Click here to get all the details and register.
This may be the last chance to take these courses before the next CBI exam, which will take place at the IBBA Fall Conference, November 9-14, 2015 in Albuquerque, New Mexico. The exam will be held in the morning on Saturday, November 14, 2015.
Cress V. Diglio, CBI, M&AMI 2015 Chair of the IBBA
Building Long Lasting Referral Sources
Referrals are the lifeline of our industry. We all love receiving a phone call or email where the person makes the statement “_________ referred you to me….” Referrals and recommendations of our services are powerful when coming from a source that a person trusts. It is much easier to gain the trust and ultimately the business of people when we are referred rather than sending a blind letter or making a cold call. The million dollar question is, how do you build long lasting referral sources?
There isn’t one easy answer to the question. Building a strong referral source takes time, energy and effort. It doesn’t happen overnight and far too often people quit when they don’t see immediate results. There is an old adage, “people do business with people they like and people they trust.” Let’s break this down into two parts.
Part 1: People Do Business with People They Like
Many have said that you can’t teach a person to be likable. People either have a likable personality orthey don’t. I have never subscribed to that philosophy. I do agree that there are some people that can enter a room and immediately become the center of attention utilizing their charm and wit. I also agree that the majority of individuals aren’t blessed with those characteristics. If you aren’t blessed with the innate ability to immediately win over a crowd and have everyone in the room desirous of your attention, then try these 8 simple things:
- 1. Be kind and courteous. It’s as simple as saying please and thank you. Opening a door or picking up something that someone dropped gets noticed. These things show that you are a kind, caring person and make you more likable.
- 2. Laugh and smile. It is a known fact that people gravitate towards happiness and avoid sadness. A smile is inviting and elevates the spirit of those around you. Laughter, at the appropriate time, makes people feel relaxed and happy. When people laugh they typically let their guards down and open up. Laughter is contagious and will show you to be a likable person.
- 3. Be honest. Honesty is always the best policy. People respect those who are honest and are willing to admit to
their mistakes. Honesty is a reflection of one’s integrity. We are all human and make mistakes. If you want to be
likable, then own up to your mistakes instead of covering them up with a lie.
- 4. Learn to listen. A wise man once told me that God gave us two ears and one mouth for a reason. He wants us to
listen twice as much as we talk. Listening allows you to learn about an individual which will help in conversation.
Listening also shows that you are genuinely interested in them and what they have to say. People love to talk
about themselves. Give them an opportunity to do so, and you will become likable in their eyes.
- 5. Be attentive. When you are in someone’s company, make them feel as if everything they are saying is of the
utmost importance to you. Looking at texts and emails while someone is talking to you comes across as rude. Rude people aren’t likable.
- 6. Be complimentary. Well meant compliments make people feel good about themselves and the person delivering the compliment. Be sincere because people can spot insincerity a mile away, and always be appropriate with your compliments. It is hard not to like someone who pays you a meaningful compliment.
- 7. Follow the Golden Rule. It is as simple as treating others as you would like to be treated. Unless you are a person
that likes to be lied to, ignored, disparaged, belittled, undervalued, ridiculed and any other negative thing you
can think of, then following the Golden Rule will make you likable to MOST people.
- 8. Be a giver NOT a taker. People like those who give of themselves. If you are a member of a club, organization,
group, etc. you should get involved. Start at the bottom and work your way to the top. Give of your time and energy. Givers are likable people.
These might sound simple, but it’s sad to note that in today’s society, many of these things have been forgotten. I guarantee that if you apply these 8 things into your everyday life you will be a more likable person. Remember, people do business with people they like!
At A Glance
are KIND AND COURTEOUS.
LAUGH AND SMILE.
follow the GOLDEN RULE.
Building a strong referral source takes time, energy and effort. It doesn’t happen overnight and far too often people quit when they don’t see immediate results.
Fall Summit Sept. 13-16
Santa Ana, California
Part 2: People Do Business with People They Trust
You conquered the first obstacle by becoming likeable. However, someone can like you instantly, but trust is built over time. Here are some practical steps to becoming trustworthy:
- 1. Reliability. When you are given a task to complete or arecalled upon to perform a specific duty, GET IT DONE! If you are supposed to be somewhere at a certain time, SHOW UP! If you give your word, LIVE UP TO IT! If you are deemed to be unreliable then you will never gain the trust of others.
- 2. Honesty. Honesty is always the best policy. If you are caught in lies you will lose the trust and respect of others. People can accuse you of being dishonest but the truth will set you free. Caution: being honest doesn’t always make you popular. The truth can hurt but if done in a proper manner, people appreciate the truth. Honesty is a characteristic of a trustworthy person.
- 3. Integrity. In business as in life, a person’s integrity is more valuable than anything. If you give your word,
KEEP IT! If you’re told something in confidence, KEEP IT CONFIDENTIAL! When asked a question, ANSWER IT
HONESTLY! Simply stated, if you are going to talk the talk then walk the walk. People of high integrity are trustworthy.
- 4. Loyalty. Loyalty refers to your ability to protect others and be on their side both in their presence and, most
importantly, in their absence. Don’t bite the hand that feeds you. If an attorney sends you a referral don’t
recommend that client to another attorney. When a person has the confidence you are loyal to them, then they will also trust you.
- 5. Keep your emotions in check. It is hard to trust someone that lets their emotions dictate their actions. Levelheaded individuals who listen to all the facts prior to making a determination typically garner the respect and trust of all involved. It is unlikely for someone to refer you to a respected client if they fear you might lose your temper and make them look bad. In today’s society this is extremely important. With the click of a button we can send a message to the world that will NEVER disappear.
At A Glance
Remember, people can like you instantly but it can take years for them to trust you. You can take a lifetime to gain trust and lose it in a minute. If you are human you will make mistakes. Own up to those mistakes and don’t make excuses. The road to rebuilding trust begins with your reaction to adversity.
If you desire to build a pipeline of long lasting referral sources, you must learn to be more likable and trustworthy. If you are able to do all of the things listed in this article you will build a referral pipeline second to none. It won’t happen overnight and requires a commitment of your time, energy and resources. It will require a conscious effort to be more detail oriented, and possibly involve improving your personal characteristics and philosophies.
Remember, people can like you instantly but it can take years for them to trust you. You can take a lifetime to gain trust and lose it in a minute. If you are human you will make mistakes. Own up to those mistakes and don’t make excuses. The road to rebuilding trust begins with your reaction to adversity. I have been a business broker for 17 years and I can honestly say that over 75% of my deals are from a strong referral source that took a career to build. Every year that percentage rises – as does my deal flow. When I began in business brokerage I hated networking and had a difficult time making new acquaintances. I learned a few tricks on how to be likable and build trust. I hope these help you as much
as they have helped me.
Don Emmett, CBI Olga Kennedy Entrust Associates
Reasons Why Business Sellers Hire Brokers
Business sellers often wonder the value of retaining a business broker to help sell their businesses and frequently ask, “Why should I hire a business broker?” There are many reasons we can think of but our simple response to the question is, because helping people sell their businesses is what we do.
We recognize that you are the expert in your industry, whether you own a machine shop, e-commerce business, or a distribution/warehouse company. You know the ins and outs of your business and its industry because this is what you do, every day. Likewise, selling businesses is what business brokers do every day.
Business brokers know the steps needed to prepare and market a business carrying it through to closing. Brokers have strategic alliances with other professionals necessary in the transaction, such as attorneys and accountants, to whom they can refer sellers to utilize their services. Most business brokers have spent years working with hundreds or thousands of buyers developing a keen knowledge of the buyers’ perspective. Understanding the buyer’s perspective helps brokers effectively market their client’s business ultimately increasing the seller’s chances at closing the deal.
Again, helping business owners sell their businesses is what business brokers are here to do. When selling a business, owners have certain responsibilities and time constraints. Retaining a business broker takes the pressure off a seller to manage all the steps of the selling process. Determining a fair market asking price, gathering the necessary information and documents needed, marketing, finding and screening qualified buyers, answering buyers’ questions, collecting and dispersing appropriate information to the right people at the right time, managing negotiations…the list goes on. It’s important as a business broker to have a complete understanding of our role and the selling process so in turn, the seller will have the confidence to hire a broker and trust you with their business.
Kent Hoover Washington Bureau Chief
Congress ends SBA loan shutdown by raising annual lending cap
The Small Business Administration can resume lending to small businesses through its flagship 7(a) loan program now that Congress has raised the program’s authorization level.
The SBA was forced to suspend 7(a) lending on Thursday after the program hit its $18.75 billion annual loan ceiling with more than two months left in the government’s fiscal year. The Senate passed legislation Friday raising that limit to $23.5 billion, and the House followed suit Monday afternoon.
Vasilis Georgiou, M&AMI, CBI, MBA, CRIM
Franchise Resales and How to Best Handle Them
Like any business, there comes a time when franchise Owners decide to sell their franchise. The reasons for selling it are no different than any other owner: It could be because of a new venture or change in direction, health, divorce, retirement, or simply wanting to capitalize on the many years of hard work spent building an asset with exit value.
In my many years as a Business Broker and Franchise Consultant, having worked with many hundreds of potential Sellers and Buyers of franchises and businesses, I have often found that selling a franchise has its own complexities, as well as its own inherent advantages for the Intermediary. Intermediaries should bear in mind that when Buyer Prospects are considering an investment in a franchise resale, they are typically not only evaluating the demand for its products or services, industry trends, complexity of the model, and people requirements, but they also evaluating the reputation and staying power of the Franchisor. In other words, Intermediaries need to be prepared to position and leverage any positives the Franchisor can add to the selling proposition. At the same time, the Franchisor can be very useful in providing valuable insights into the industry, but more importantly, would often have a pretty good idea of what the Seller’s Discretionary Earnings (SDE) multiples look like, based on previous re-sales in the system.
Owners of franchises often have a bit of an advantage when it is time to sell, a fact that is helpful to Intermediaries. The advantage stems from the fact that a franchise, by nature, is monitored and audited by the Franchisor. That fact results in less uncertainty when it comes to revenues and expenses. The overall financial model can also be validated by reviewing Item 19 of the Franchise Disclosure Document, which outlines financial data for the whole system.
There are also more opportunities for Buyer Prospects to validate the financial model directly by working through a parallel investigation with the Franchisor, and also reaching out to other franchisees in the system.
Another inherent advantage for the Intermediary is that the franchise is part of a network of franchisees who often act as a de-facto marketplace for re-sales when they want to expand and add on to their own operations. World class Franchisors understand the importance of helping their franchisees exit gracefully and with the highest valuations the market will bear. They understand that the exit event is part of their value proposition, a way to ensure that top quality candidates will continue to be attracted to their model.
Overall, when Owners of franchises are preparing and planning for an exit event, they need to consider some of the following questions, very similar to any other Owner:
- Does my franchise have the appropriate level of staffing that allows the new owner to just replace the current owner? Or does the new owner need to hire additional personnel to supplement.
- If the new owner needs to hire additional personnel, what does that do to the SDE and the business valuation? Can current employee roles be expanded or modified to cover shortcomings?
- Can I reasonably explain and justify all the Add-backs I am claiming?
- Can my accounting books withstand scrutiny?
- Especially in the case of a franchise, do I know enough about my Buyer and his/her financial viability so that I am confident that he/she will get approved by the Franchisor?
- Have I taken into consideration the impact of transfer fees and commissions in my asking price?
- Have I taken into consideration the timing and sequence for the transaction, and have I budgeted enough time to accommodate the process?
A typical task sequence for a franchise transaction after a Buyer has been located, looks as follows:
- Offer acceptance (Letter of Intent)
- Purchase Agreement signed
- Due Diligence completed
- Franchisor notified, Buyer introductions (for Franchises)
- Buyer Franchise Disclosure Document (FDD) review (for Franchises)
- Buyer investigation/approval process (for Franchises)
- Escrow process
- Transfer Fee paid (for Franchises)
- New Buyer Franchise Agreement signed (for Franchises)
- Escrow Closes
- New owner training by current owner and Franchisor (Franchisor involved if franchise)
- Transition period begins
About the Author:
Mr. Georgiou is currently the President of CrossRoads Business Brokers, Inc. & www.TheFranchiseCrossRoads.com, and has been involved in a great number of business transactions over the last 12 years. He is also a national Franchise Consultant with FranChoice advising hundreds of franchise Candidates in their search for a franchise. Since 2008, he has been a successful multi-unit owner/operator of a Home Care Franchise in California. Previously, Mr. Georgiou was a former Senior Manager with KPMG Consulting (BearingPoint) where headvised and assisted various mid-market companies with operations, strategy, and systems.
Jeff Snell, M&AMI, CBI, ABI ENLIGN Business Brokers
From the Editor’s Desk
While CBI certification and networking opportunities at conferences are appreciated by all, one of the other benefits that shouldn’t be overlooked is the Market Pulse Report. You may have received emails recently asking you to participate in the survey – and I hope you did because this easily overlooked benefit provides market data that is actionable in your practice that can help you make better decisions about how you operate your business.
The Market Pulse Survey and subsequent report provide quality information on a quarterly basis in order to become the go-to source for Main Street and Lower Middle Market transactions. Created by the IBBA and M&A Source, along with Pepperdine Private Capital Markets Project, the Market Pulse Report gives timely and accurate information to help you build a successful and sustainable business.
For more information on the Market Pulse Report and to access previous reports, click here.
IBBA Webinar Series: Turn an SBA Loan Decline Into an Approval
Date: Wednesday, August 12 12:00 p.m. EDT
A loan decline does not mean the end of your deal and YOU can be the difference. On this webinar we’ll talk about addressing a loan request right after a lender decline and things you can do to have the application be reconsidered. Making some small changes could make big differences in a lender’s approval process….and your ability to close the deal!
About the Presenter:
Steve Mariani is the President & Founder of Diamond Financial Services and has personally been involved in small business since 1978. His IBBA Conference Workshops on SBA financing are always packed, as his practical insights are geared specifically to helping business intermediaries get more deals done. Steve can be reached at [email protected].
CBI Brochure Now is Available
You already know the value earning your CBI brings – you are a proven, experienced, and educated broker. But your clients don’t always understand why they should choose a broker with a CBI. The IBBA is here to help! The Marketing Committee has been hard at work updating IBBA’s former CBI brochure to include more up-to-date information and compelling quotes. Updates will be made each year as needed and redistributed to CBIs.
Additionally, the brochure is in a convenient, low-maintenance format so all CBIs can print on-demand as. If you are current CBI, email [email protected] to request a copy of the brochure be sent to you.
New IBBA Members
Hal Blackwell, Jr.
Richard Della Penna
James D. Linfield
Ronald J. Welebny
Independence, OH – December 7, 2022 – The International Business Brokers Association (IBBA), the world’s largest trade association for the business brokerage industry, is pleased to announce the individuals selected to receive this year’s Certified Business Intermediary® (CBI) Scholarships for 2023. “The IBBA scholarships are a great way for us to help support newer intermediaries […]
Independence, OH – October 4, 2022 –The International Business Brokers Association® (IBBA) is pleased to announce the four individuals elected by membership to serve on its board of governors for the January 1, 2023 through December 31, 2025 term: The Board also unanimously approved current board member, Pino Bacinello, CBI of Pacific Mergers and Acquisitions, […]