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Table of Contents
Introduction Chapter 1 You can’t be fired but you can’t quit either Expectations regarding business continuation What really happens Expectations vs reality Why most business do not transfer Most businesses can be sold Obtain necessary information Common reasons for sale One minute quiz for business owners only Chapter 2 Don’t let anyone know it’s for sale but sell it quickly! Sell it but don’t let anyone know it’s for sale
Don’t know what the business is worth, but
Ask twelve people and you will get twelve Future of business is dependent upon who buys it Light manufacturing or distribution
Third parties refuse to ratify the wisdom of
Selling is a personal decision and not purely
What business person complains they have A business is to its owner as a child is to its parents Chapter 3 All the right things are wrong! Highest and best use Motivation
Alternatives to buying a business that Combining highest and best use with motivation View your business from the outside in Chapter 4 Value, as with beauty, is in the eyes of the beholder The saga of the rusty dusty Ford What is your business worth? Chapter 5 Types of buyers and what they will pay Opportunity vs potential Strategic acquiror Sophisticated or corporate acquiror Financial buyer Industry buyer Chapter 6 Types of businesses and what they may be worth Size of company Product or service Importance of the owner Profitability and perception of future profits The four major business classifications Wall Street Main Street Upper Main Street Middle-market or Limbo Types of business or market served Chapter 7 How to identify the “right buyer” How to find “Mr. right” Profile your business Profile ideal acquiror Buyer profile and value Chapter 8 What do you do after you decide to sell? Help, where to find it No one understands my business the way I do When business owners attempt to sell on their own Chapter 9 Is it an offer you can’t refuse? Type of buyer The fit Resources Chapter 10 Dealing with the financial buyer The envisioned method Why conventional methods do not work The safe and effective selling process The buying process Summary Chapter 11 Main Street business, sophisticated buyer
Why many sophisticated buyers avoid
Attracting sophisticated buyers to a
Positioning your business for the Chapter 12 Bottom line or between the lines? Balance sheet adjustments Adjustable balance sheet elements Sample adjusted balance sheet It’s not what you see, but how you see it Adjusting historic “bottom line” results Recasting or normalizing financial statements Non cash adjustments Non reoccurring expenses Discretionary expenses Negative adjustments Example of Income Statement adjustments Non financial elements that affect value Outlook for the industry Outlook for the business Outlook for the market served Regional or local outlook The opportunity Reason for sale Summary Chapter 13 How to increase value without increasing profits Transferability of skills Bankability and records Information beyond the financial statements Industry concentrations Margin maintenance
Identification of buyer fitting Prepare credible projections Stability of tenancy Professional assistance Perception of risk Chapter 14 Assessing risk What is a capitalization rate?
Alternative method of determining a Summary Chapter 15 Earnings computations, varying views Industry buyer Financial buyer Sophisticated or corporate acquirer Projections ? Chapter 16 Valuation example The company Buyer identification Summary of values Exhibits Comparative balance sheet Comparative income statements Comparative analysis of selected ratios Interim income statement Sales history by month Chapter 17 Industry buyer valuation methods Book value method Adjusted book value method Liquidation value method Summary of values Chapter 18 Financial buyer methods Discretionary earnings computations Weighted income computations Basic method Discretionary earnings method Debt capacity method Comparable method Cost to replace Multiple or weighted value method Chapter 19 Methods used by corporate and sophisticated buyers Summary of classifications Favorite methods Business risk worksheet Projections Income computations Excess earnings Present value computations Discounted present earnings Discounted projected earnings Capitalization of income EBIT methods Summary of sophisticated buyer methods Chapter 20 Strategic acquiror methods Comparison with public companies Computation of earnings
Converting earnings for public company Comparison methods Summary of values Chapter 21 Fair market value
and fair cash value... Valuation results may mislead Case study Calculate the cash value The facts as supported by comparable sales data Chapter 22 Financing and value attainment Amount of financing available
How much might a bank lend for the purchase Will the business qualify for a loan? Bankability worksheet Do you want a bank to participate? Chapter 23 Transaction structuring and value justification What’s the cash price? Terms or cash -- which do you prefer? Summary of all cash value computation Buyer expectation Value justification Buyer’s view of fairness Chapter 24 How a savvy businessman sells his business The winning strategy Summary Appendix Ratio analysis and value Ratio analysis and comparison with industry Comparative ratio review Comparative operating ratios
Comparison of profitability with
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