Regulatory Challenges May Lower M&A Event Risk for US Corporates

Fitch Ratings-New York/Chicago reports that rising interest rates and heightened antitrust regulatory scrutiny may discourage strategic acquisitions for US non-financial corporates, which could lower M&A event risk through the next cycle.

We have found that large acquisitions by corporate debt issuers often precipitate a rating downgrade of the acquirer, after reviewing selected transactions within our rated portfolio.

However, an M&A slowdown may not hamper leveraging transactions. Companies deterred from pursuing acquisitions may instead prioritize returning capital to shareholders through debt-funded dividends and stock buybacks. Conversely, companies that move forward with acquisitions may embark on a lengthy and costly regulatory process,” Fitch Ratings says.

Recent changes by the US Federal Trade Commission and the Department of Justice are designed to increase the number of acquisitions that face antitrust scrutiny in order to, among other things, protect consumers by reducing the prevalence of anticompetitive practices.

Revenue Synergies for a Successful M&A Strategy

“Companies engage in mergers and acquisitions with the expectation that the merger or acquisition will generate more revenue than the entities would when operating separately. Simply put, they hope the whole will achieve greater results than its parts.”

-Great article on what to expect with revenue synergies for a successful M&A strategy.

This excess revenue generated by the combined company following a merger or acquisition (M&A) is called revenue synergy and it mutually benefits both the target and acquiring companies.

While generating revenue synergies seems simple and viable in theory, synergies depend on many uncertain assumptions. These include cross-selling, market expansion, proper integration, and the introduction of new products. These factors affect how much revenue synergy the combined company can achieve.

Read the full article originally posted on Newswires here:

Global Fintech M&A continues two-year climb to defy broader M&A slowdown

Global Fintech M&A rose sharply in the first half of 2022 with 591 recorded deals, defying the broader M&A slowdown, according to the latest Hampleton Partners’ Fintech M&A Report.

“Fintech is proving to be a very attractive target for financial and strategic dealmakers, defying the broader global M&A slowdown. As for the impact of any potential recession, there is one major difference between now and the previous real recession of 2008. This year, deployable private capital, including buyout, VC, growth and real estate, hit its highest level in history at $3.6 trillion - three times the figure in 2008,”

Says Miro Parizek, founder and principal partner, Hampleton Partners, an international M&A advisory firm for technology companies.

Buy Faster - Creative Business Acquisition Methods to Speed Up The Buying Process

Be Creative and Buy Faster

Things change. Traditional business strategies are now being challenged as the competitive acquisition landscape grows.

If there’s any time to get creative, it is now. Every day, there is an individual or company growing and working their way up the success ladder. Hence, why buying a business today must be approached differently. In order to compete with the masses, a prospective buyer must consider creative strategies. If you’re looking to buy a business, defy traditional methods in order to win. Read on to learn about creative business acquisition methods to speed up your buying process.

Structure The Deal

When you think of structuring a deal, think of decision-makers. Who is the main point of contact? One way to slow down any process is by communicating with the wrong person. Don’t make that mistake. Instead, know the individual who holds the key.

Network Your Business Tail Off

It goes without saying, one of the best ways to know what’s out there is to simply chat about it. If you’re not building your network on a daily basis, you are missing out on hot opportunities. Reaching out to those within your network and asking if they too can reach out to their network, creates a nice funnel of communication and awareness around the interest in buying a business. Besides, any businessman or woman knows that having a conversation can lead to learning opportunities. Sometimes, it’s not always what you know, but who you know.

Use professional platforms to network

Don’t hesitate to use platforms that are built to support networking. Platforms like LinkedIn are great for building professional networking groups. In addition, LinkedIn allows you to choose specific groups tailored to your experience and background.

Use business listing platforms that work

With so many advertisements out there, pay attention and research the most effective business acquisition platforms like BizNexus. Unlike other platforms, BizNexus offers you quick business matching, placing only the businesses that you want buy-in front of you. Using the unique search options, just create a profile and begin searching in seconds. Knowing where to find businesses for sale is half the battle. You can spend countless hours on the wrong opportunities. No more emotional roller coasters, it’s smooth sailing with BizNexus. Search for a business for sale today.

Know Your Finance Options Ahead of Time

Want to slam dunk your acquisition? Yes or yes? Knowing your finance options will help to streamline the buying process. There are traditional methods that exist. However, those options are becoming less popular due to the increase in differing levels of assistance needed from a prospective buyer. Larger lending companies tend to think new business is too risky and smaller lending companies may not have enough options to choose from. As a result, you’re left spending countless hours wondering how you will afford your dreams.

Popular non-traditional lending options to consider

1. P2P - Peer to Peer

2. Crowdfunding

3. Microfinance

4. Seller Financing

Use Straight Up Cash

Now, if you have the cash to purchase a business outright, that will speed up the process a lot. Not having to go through banks and loan companies, doesn’t require as much time and energy. This also allows you to stand out to sellers. The fewer hurdles, the better. Money talks.

To that, make sure you invest time into researching your options and the fine print embedded. If you’re looking to acquire faster and have the cash to prove it, our BizNexus finance partners can get you in front of the right people faster. Skip the lenders, and get approved as a cash buyer today.

Summary

To summarize, the process of acquisition can be timely or efficient depending on how you strategize and plan. To speed up the process, it’s important to know who you are dealing with; the key players in making the final sale decision, and your options to finance. By networking accordingly, you can skip the hassle of speaking to the wrong professionals and buy right away.

Lastly, knowing how much money you are working with and the amount you will need when buying a business is crucial. Don’t get bogged down by lenders if you don’t need to. If you have the cash, skip the lines and let BizNexus place the right cash buyer businesses in front of you.

Bonus Tip! No Numbers. No Deal. Retrieve proper financial data before you buy.

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To the Rescue: Golden Opportunities in Buying a Struggling Business

Buying a business can be very rewarding, but it's not something everyone should do

With your know-how, capital, and a few changes, you could transform a struggling business into a real performer! Here's what you need to know when buying one.

Are you looking to buy a business? You’ve got the know-how, capital, and desire. But do you have what it takes to turn around a struggling business? 

It's essential to understand the process and what steps you need to take before making an offer. Buying a business can be very rewarding, but it's not something everyone should do. 

So before taking on this kind of responsibility, make sure you have the time and money necessary for such an undertaking. 

Keep reading to get the full checklist to help you along your way and provide some insight into the world of small businesses and entrepreneurship in general.

Find the Best Business Opportunities in the Market

Business opportunities are everywhere. While most people do not have the means or expertise to start a business from scratch, many are looking for turn-key opportunities. 

That is why buying a struggling business can appeal to those with ambition and a love for business. It requires less capital and time than starting a business from scratch but can still be very rewarding.

Prepare for the Decision

Forget buying a business; it's time for you to become an entrepreneur. Before you buy any struggling businesses, make sure this is the road you want to take. It's not like most vocations where you start out small and progress with your career. But, if done right, entrepreneurship can lead to great success.

So, are you ready to put your fate into your own hands? If so, then it's time for you to become an entrepreneur. It can be hard work, but the reward is great. Put in the necessary effort, and you might find yourself providing for a family one day with your business.  Remember, buying a troubled business is not easy. Hence, preparation is necessary.

Find the Best Way to Buy a Struggling Business

There are several different ways to buy a struggling business. The main four options are asset sale, stock sale, merger, and management buy-out. 

Each has its own unique advantages and disadvantages that you must understand to make the right decision. To that, consider the following when looking to buy a struggling business:

1. Assets

2. Stock

3. Merger

4. Management Buy-out

5. Auctioning

Assets

There is a complete transfer of ownership of all assets from the old owner to the new owner. The old owner is not liable for any debt or taxes if they get paid off. 

It is the easiest and quickest way to buy a business, but the price may be more than you can afford. This type of deal is usually best suited for buyers who have plenty of capital on hand.

Stock

Selling some, most or all, their stock to a new owner. This is an easy process and provides the seller with personal time to leave the business on good terms. 

The buyer must own at least 51% of the stock for this transaction to be valid. Suppose you buy more than 80% of stakes. In that case, it may affect the tax-exempt status, and the seller will be liable for any debt or liability.

Merger

One company combines with another to create one big business. However, because this business only exists in theory, the old owners are not responsible for any debts or liabilities. 

Also, this type of deal is usually best suited for buyers who have plenty of capital on hand and can manage a larger company with more employees.

Management Buy-out

This type of transaction is when managers or critical employees buy the shares from the current owner. They must have at least 30% of the total shares for this transaction to be valid. 

Because they lack experience, it's also perfect for buyers with plenty of capital and excellent management of large companies with more employees.

Auctioning

You can also auction off your business or sell it to the highest bidder, but keep in mind that this transaction method is often very unpredictable. You never know who will show up at the auction and what they want for your business.

Also, many buyers may take advantage of you if you are not aware of all the necessary procedures involved. The best way to buy a struggling business is from the current owner. 

This way lets you become familiar with all aspects of the company and ensure that there are no debts or liabilities before signing any contracts. But, ensure you know what you're doing if you decide to go this route.

Know Your Competition

Once you decide about purchasing a distressed business, it's time to start looking for the perfect one. But where do you find them? Is it better to go with personal connections or an advertisement in the newspaper?

When it comes to finding promising companies, word of mouth is often the best form of advertising. If you know successful businessmen, or competitors, who have taken the path, ask them about their experiences and if they would recommend it to you.

If you know anything about the business world, then there's a good chance that you have seen an advertisement or two for businesses that are up for sale. Although these ads can help find a failing business, try to find as much information about the company as before getting involved.

Identify Your Resources

Many resources can help you in buying a failed company, but they may cost money to use. Whether it's for sale by the owner or through an ad, be sure to ask them how much commission you need if you buy the business.

If it turns out to be more than you expected, then you should consider using a different resource.

Stay Focused

After deciding on the best struggling business to buy, invest more in its operations, how you can build it, and not only on the profits. As exciting as this may be, many other factors come into play when buying a business, such as location and suitability.

The most important factor in buying a company is whether it's for sale for the right price. If you have enough capital on hand to buy this company from its current owner, then go ahead and make an offer.

Many companies are currently up for sale because the owners do not know how to manage such a large business, and it's up to you to turn this struggling company around.

Summary

If you have the resources and know-how, then go out and find a struggling company needing great improvement. But, remember to stick to a price you can afford.

Also, if you need more advice on how to buy a struggling business, feel free to contact us, Biznexus at any time. Put our team to work for you.

Bonus Tip! Know the benefits of negotiating during an acquisition

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How SaaS Companies Have Been Popular Acquisition Targets Since COVID

Even during the pandemic and all the restrictions, business happened!

Many companies were bought and sold during the pandemic. One of the most popular companies being bought and sold was SaaS companies. SaaS stands for software as a service. These companies provide access to a software system online, and people pay a subscription for it. This gives the company regular income and provides up-to-date software for the user. There are a few key reasons why SaaS companies have been popular acquisition targets and why you may need to think about acquiring one. This could also be a great time to sell your SaaS company if you are ready.

SaaS Business Model

SaaS companies have increased in popularity because so many people are using them. You don't have to buy software and then buy the updated software like in the old days. This trend only increased during the pandemic because many people started working from home. The need for SaaS products has dramatically increased, and the trend isn't going down.
Many people have found out they enjoy remote work, and that segment of the market is increasing. Companies have to rely on SaaS products to keep their remote teams aligned. As the market sees these trends increase, more investors are seeing the benefit of a business acquisition of a SaaS company.

Benefits of an Acquisition Target

Acquiring a SaaS company makes sense for those who want to increase their reach or gain a foothold in a new market. The SaaS has already done the heavy lifting of starting and building an audience. The acquisition meaning in business for the company is shown in their instant growth of market share. They didn't have to build the market share from the ground up; they were able to obtain it through acquisition. This saves the company time and can be a great investment into a market that still sees significant growth.

Further, as the remote workforce increases and internet access becomes more available, SaaS will be even more important. The benefits of acquiring can help the company in two different ways. Defensively, the company can buy potential competitors and gain their creative resources. Offensively, the company can expand into new areas quickly. Acquiring a company with a customer base allows you to focus on retention and monetization of the current base. This focus builds a stronger financial base for the company because it is more effective at revenue growth. Gaining new customers can be expensive, but those expenses can be diminished when you have a base of customers already. You can offer more options to them to increase revenue.

Business Acquisition Financing

Financing an acquisition can be done very creatively today. You can decide if you want to pay with your money or pay with other people's money. There are many options at your disposal when planning to finance an acquisition.
One of the most popular options that many uses when acquiring a company is seller financing. The owners of the company will often accept a financing deal where they are paid a sum upfront, and then the rest is spread out over time.

Moreover, this provides the seller residual income, so many will accept a settlement like this. It is a benefit for the person acquiring the company because the income from the new company can help pay the residual amount.

Another option for investors wanting to buy a SaaS is to build an investment team. If one investor sees the potential in acquiring a company, most likely, they can find other investors to go in with them. You can even build a team of investors who help you find potential companies to purchase. Their expertise can assist you in finding the right SaaS company with the right potential.

The Importance of an Acquisition Team

One of the most important things you can do when planning to acquire any business is build a strong acquisition team. You want people who can help you see the reality of a business. You will want to have a CPA and a business acquisition lawyer who can help you go through every aspect of the deal, so you don't miss anything. They can help you answer the question, "Why is this business for sale?"

A strong acquisition team will help you reach your acquisition targets faster.

Additionally, you want to dig down to make sure you aren't buying a company on its way down. You need to study the market and the potential growth of the company for the future, as well as the costs per customer for the SaaS. Healthy Saas growth only happens when the customer acquisition cost is low, and the customer acquisition rate is high. This, along with a high speed of acquisition, sets up a SaaS company for strong, healthy growth.

You need people who will help you decipher the data to know what type of investment you will be making. There are business acquisition companies and websites that assist you in every aspect of your search.
These companies will also work with the sellers of companies to find the right buyers. The business acquisition doesn't have to be an unknown journey for the seller or the buyer. Whether you are buying or selling, you don't have to figure it all out yourself. These sites will help you find companies for sale and assist with all aspects of the deal, from financing to negotiations.

Your Acquisition Plan

There are many acquisition targets out there. What you want to do is find the right one that fits you or your company. The SaaS market is exploding, and it won't be slowing down. With creative financing and the right help, you could make a great investment for your future. Our passion is simplifying the business acquisition process. We assist sellers and buyers through the complicated world of acquisition. Find a Business For Sale Now and discover how simple the process can be.

Summary

With SaaS (software as a service) companies on the rise, it’s no wonder they are turning quick profits if set up properly. With the right acquisition team and plan, you’ll be well on your way to hitting; even exceeding your acquisition targets. To learn about your options and to buy or sell a software company, check out Biznexus. Put BizNexus to work for you. List your business for sale or find a SaaS business today.

Bonus Tip! Don't be afraid to utilize upsell funnels to increase your SaaS profit

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Business Ownership: What Your Costumers Want More Than Personalization and Ease

What customers wanted a decade ago has changed.

The pandemic presented us with significant data. What we observed was both advantageous and opportunistic for Your business.

So, the pandemic presented us with significant data. What we observed was both advantageous and opportunistic for business. In sum, we saw a mass migration of consumers demanding quality products, personalization, ease, and above all security. The necessity to compartmentalize the consumer experience became the true focal point of a successful business. Read on to learn what consumers want more than personalization and ease.

a business owner needs to be compassionate

If you’re not making every effort to be personal and compassionate with your current customers, you’re missing the point. The most valuable resources are time, energy, and attention. By placing these resources into your customers and your business, you will make more money. The more you connect with the customer, the greater the opportunity to create exactly what they want; better serving them. Whenever possible, focus on data management.

Customer Data is the Foundation of Customer Satisfaction

Where do you house and protect your customer data? Do you know your high-value customers? Lastly, how do you use the data you do have to personalize their experience? More than a first name, last name, and email. This comes down to intelligence. Used narrowly, intelligence uses customer data to identify who your customers are, what their behavior is, and tailoring communications such as email campaigns and marketing to get them to take action. The trick here is getting them to not only take action but stick with you. It’s much easier to grab the attention of a customer than it is to keep it. Hence, why collecting as much customer data and keeping it as safe as possible is crucial.

How do you use your customer data to improve the overall experience?

Moreover, it’s like a science project. Therefore, you can work tirelessly on this project but if you can’t do anything with it, it doesn’t drive anything. Even with the greatest data, if you’re not taking advantage of what the data is showing, you’re not meeting the customer where they are at. To that, being able to understand what the numbers are telling you will assist you in taking the next steps to improve the customer experience and overall satisfaction.

Your Customers want it now and they want it to be easy

Furthermore, customers are smart. As much as we think we know how to approach them and what to offer, we don’t. To this, the best way to know how to approach your customers to offer what it is they truly want, we have to ask. Patience is a virtue in operations. However, customers can be impatient and it’s important to consider your delivery time. When you can, survey your customers to gain valuable insight on how you can improve your business.

Take every security measure possible to protect your business and its customers

Lastly, what customers want more than personalization and ease is security. Anytime your collecting customer’s data, it’s important to keep that information secure. Whether you own a tax preparation business or a wellness spa, whenever a transaction has been made, you’re going to want to make sure that information is heavily guarded. There are many ways you can protect information. However, one of the best ways to protect your business information and customers is through encryption.

Encryption is a process by which information that is stored or transferred is, in laments terms, blocked out. If your point of sales system is backed by a firewall or your wifi isn’t secure, any information being received is vulnerable.

Remember these factors when buying a business

To conclude, personalization is nice and anytime you can make a product or service easy, saving time and money, is great. More than that, however, is how you both use transactional information between your business and its customers. Secure your business information. Make sure you take commercially reasonable steps to encrypt information. Doing so will help your business credibility and customer experience. What customers want more than you calling them by name is their privacy and information managed securely. Trust but verify.

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Why There's No Better Time Than Now to Buy a Business

Buy a Business

There is no better time to acquire a business more than now.

So, if you’re thinking about buying a business, you’ve likely considered the risks and the rewards.

What you might have also questioned, however, is the timing. Before you walk away from closing a deal, let us outline why there’s no better time than now to buy a business. Here’s why:

Valuation

More businesses have sold in 2021 than in previous years. This is because recent market trends have shown the economy rebounding. More buyers are looking to sell, given the increased valuation. As a result, you have more room to negotiate a price you can "deal" with as a buyer. Private and public companies continue to grow in this market, increasing demand for profitable companies.

Business Availability

Additionally, business owners in 2020 took time to rethink their life aspirations. Many, chose to list their business for sale to retire and spend more time with their family. The ease of virtual business deals increased significantly over the past two years. Business listings that solely existed outside of the “www” decided to make their listings available online. Over 440 thousand businesses were started in 2021. There are several businesses for sale, but when it comes to investing in the right one, BizNexus has you covered.

Financial Support

Moreover, from personal banking, VCs, partnerships, angels, crowdfunding, grants, and more, there are many ways to obtain the funds needed to buy a business. Be careful, you want to choose the option that best fits your needs.

BizNexus helps you find a business for sale that’s right for you.

Whether you’re looking to buy a business to diversify your portfolio or a first-time business extraordinaire, BizNexus can help you get started!

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Why Business Acquisition Is Smart Investing

Is Business Acquisition a Smart Investment?

9 reasons why it is smart investing!

Business Acquisition - 9 Reasons Why it is a Smart Investment

1. Positive income opportunity

2. Greater appreciation potential

3. Easier access to cash

4. Established expectations

5. Established brand

6. Promote goodwill in the community

7. Acquire with other’s people money

8. No more foundation work needed

9. Many business owners want to sell

Smart investing is about taking calculated risks with a bigger upside than a downside. Financial advisors will point you toward slow-growth index funds and conservative stocks as the key to getting rich. 

However, business acquisition can be an even smarter investment decision with a far greater upside. In the following article, we'll discuss why it makes sense to buy an existing (successful) business. First, let's look at your options. 

Online Businesses

Business models like online courses or software as a service (SaaS) give entrepreneurs like you a chance to establish ongoing passive income from proven informational products. The info-boom is a huge business with players like Udemy and Clickbank opening doors with existing online infrastructure. 

Brick-and-Mortar

A brick-and-mortar business gives you better access to built-in brand recognition that helps you stand out. Geographical location also opens doors to impulse buyers in a way that you just can't enjoy online. The overhead is usually much larger though, with employees, payroll taxes, utility bills, and real estate to pay for.

Once you establish the type of business to buy, it's time to reap the benefits. Here are nine reasons that business acquisition makes for smart investing. 

Buying a Business Can Be a Passive Income Opportunity

Establishing a business isn't passive. Working in your business isn't either. However, buying a business that's already got a track record of success and the support system to keep it going can offer the buyer total passivity. 

At the very least, it will be a business investment that you don't have to constantly worry about. One that provides you with ongoing access to liquidity and growth potential.

Businesses Have Greater Appreciation Potential

The ROI on buying a business is not guaranteed, but neither is the return on a stock, mutual fund, or cryptocurrency. That said, stocks and mutual funds often are touted as better investments because of their long-term returns of 7-8 percent per year. 

You might save enough money to retire that way, but you're not going to be on the fast track. Successful businesses can produce year-after-year returns that are exponentially higher. 

It Provides Easier Access to Cash

One of the big benefits of buying a business is that there is already some record of liquidity established. The business wouldn't be operational without customers. Customers wouldn't be customers if they weren't spending.

Owning a previously established business gives you quicker and, more importantly, predictable access to cash if you need it. Investing in a retirement account, in contrast, ties your money up for several years. During that time, you can't access it without paying state and federal taxes along with an early withdrawal penalty, which is usually 10 percent.

Business Acquisition Gives You Established Expectations

If you were starting from scratch, everything would be a hunch. Hunches have a harder time finding investors, lenders, or any other source for getting your business off the ground.

Investing in a business that's already established gives you direct access to past sales. It shows you what has worked and what hasn't. Using this data, you can map out what to expect from the current performance and future growth. 

It Removes the Challenge of Brand Building

It's said that it takes 5 to 7 impressions per person before they will remember your brand. Impressions, meaning that your branding is placed before a potential customer. 

That means finding just 1,000 customers requires that you connect with them 5,000-7,000 times. That's a lot of work to be doing on top of everything else that your business requires of you. Acquiring a business allows you to inherit your existing customers and any continuing word-of-mouth marketing they might provide on your behalf. 

It Can Help Promote Goodwill in the Community

Buying the right business gives you some built-in goodwill with your community. This especially is true if you plan to keep the existing jobs in place and any record of charitable activity.

It's a smart business strategy to become an active part of your community. That's why many new businesses will join the chamber of commerce and sponsor events from which they will receive no direct revenue. 

They know that establishing themselves with their neighbors will spread brand awareness and goodwill, and it will set them up for future profits. Buying a business means inheriting that goodwill from the previous owners' efforts and committing to continue it forward.

You Can Buy Using OPM

OPM stands for other people's money. One great thing about buying a business is that you can use it instead of your own if the numbers make sense. 

This is much tougher to accomplish with an unproven idea that has no development or track record. Using OPM is easier in the business acquisition scenario because you can point to a history of past sales and profits to convince lenders to pony up the cash.

You Do None of the Foundational Work

Starting a business requires a lot of groundlaying work. You have to develop the product or service, market it, hire workers, deal with bookkeeping. Buying a business means there is some template for all of this that you can use or adjust to suit your needs.

Many Business Owners Want to Sell

Not every business owner is ready to get out but many would for the right price. One need look no further than the trillions of dollars worth of companies that are currently being represented on the open market. 

The reasons for wanting to sell your business can be many. One common driver of it is that too many owners never make the leap from working in their business to working outside of it.

It consumes too much of their time. Their constant mental and sometimes physical energy is required to keep things on track. Pretty soon, that dream of "being your own boss" feels like you have too many bosses.

Smart Investing Is About Calculating and Minimizing Risks

Smart investing means embracing risk in a sensible way. As you can see, buying an established business allows you to calculate your returns, set realistic forecasts, and skip many of the steps that go into starting your own business. 

Good luck, whatever you decide! For more helpful tips and information on starting a business through acquisition, subscribe to our newsletter today.

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Is Buying a Business a Good Idea?

Buying a Business?

Here are 3 reasons why it is a good idea!

Buying a Business - 3 Reasons Why it is a Good Idea

1. Data and business predictability

2. Existing structure

3. Convenience

Buying a business is a large undertaking. However, it's in fact often easier than creating a startup and can carry much less risk too, done right.

If you're asking yourself "Should I buy a business?" then you have a good deal to consider.

That's why we've put together a guide to help you determine if a given purchase is a good idea (because it very much could be).

Buying a Business vs Starting Your Own

For many entrepreneurs, there are two options: purchase a business or start your own. While there is no one right answer, there are a few factors to consider when making such a choice.

First, the best business strategy for you will depend on your goals. For most business owners, the primary goals are going to be profitable and to avoid unnecessary risk. Whatever your goals, they will guide the rest of the process.

Most startups fail. While that fact can be a bit misleading in isolation (many "fail" but don't cause the owner any major financial loss) it's worth noting. Starting your own business is difficult and can be a serious risk.

While purchasing an existing business has its own risks, those tend to be far more manageable. The simple fact is there are fewer unknowns than with starting a business from scratch.

Starting a business rather than buying one tends to involve a great deal of estimation. While experience and thorough research can get you far, at a certain point, an entrepreneur can only push through, hoping their estimates are enough.

Hard Data and Predictability

Perhaps the biggest advantage of purchasing a business is the substantial pool of records one can look at to determine how risky the purchase is. 

A company that has been around for multiple years has records of its expenses, profits, and more, all helping to illustrate the company's value (or lack thereof).

While this information alone isn't enough to determine whether the company would make a good purchase, it is still an invaluable tool. While past results don't guarantee future performance, they do hint at it.

This also helps illustrate why "Is buying a business a good idea?" is something of the wrong question. It's too broad. The real question an entrepreneur needs to ask is "Is buying this business a good idea?"

Looking at a companies financials combined with good market research can help one understand the future profits a company might offer. From there, one can start to estimate at what price a company becomes a good deal.

Preexisting Structure

While it's rare a company will be identical after purchase (at the very least, the highest leadership has changed) much of the company's core will remain.

This often allows a purchaser to "hit the ground running" when it comes to their purchase. If they don't intend to change much, they may be able to start pulling in a normal profit even just weeks after buying.

This ability to have a pool of employees who are already trained and ready for their duties, a network of suppliers and manufacturers who are willing to work with you can lead to huge savings over starting a new business.

Even if a purchaser instead wants to restructure the business they've bought, this preexisting structure still offers some distinct advantages. It is unlikely a purchaser will want to radically restructure a business that interested them.

The disadvantage of all this is that, should a purchaser decide they do indeed want to radically restructure, it can sometimes be more expensive than having started from scratch.

Quality due diligence will help ensure a purchaser will be happy, for the most part, with a company's preexisting structure. If they want a company but think it needs heavy reworking, that will need to factor into the price.

Convenience

Most entrepreneurs find purchasing a business convenient compared to starting one. The draw of convenience cannot be dismissed as laziness; time saved is money saved.

Briefly touched on in the previous section, starting a business involves a great deal of planning and then enacting that plan. Everything from hiring to marketing to your production line must be fully formed.

It can take months or even years to take a new business from the planning stages to a point where even mild profit can be drawn. While this doesn't mean it is always a bad idea to start a business, it needs to be considered.

When one purchases a business, someone else has already done this work for you. Even if there is a transitionary period where the business is shut down, it is almost always much faster than if one started a new business.

Moreover, if there are things a buyer doesn't like about a business, they can still be changed. Buying an existing business does not prevent you from shaping it the way you want so long as your approach is careful.

Buying a Preexisting Business is Worth Considering

It would be objectively wrong to say buying a business is always better than starting one's own (or pursuing a different investment approach). Every opportunity is different and some businesses aren't worth their price.

At the same time, buying a business already turning a profit or with strong potential can be an excellent entrepreneurial move. It can be easier to predict than starting one's own business and more convenient, all while making you money.

Find a Business For Sale Now!

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Getting an SBA Loan: A Simple Guide

Guide to SBA Loan Submission

The process may take longer than most loan programs, but the benefits of SBA loans are numerous. 

Guide to SBA Loan Submission:

1. Determine your eligibility

2. Choose the best program for you

3. Lower down payments

4. Choose the best lender

5. Gather your paperwork

6. Fill out the application

7. Closing the process

You're thinking about getting an SBA loan. You're struggling to get approved for a loan. Your credit score is decent, but lenders remain hesitant. An SBA loan may be the answer.

The steps for SBA loan approval entail researching eligibility requirements, choosing the best SBA program, choosing the best lender, organizing all your paperwork, completing the application, going through underwriting, and reading over the loan agreement. The process may take longer than most loan programs, but the benefits of SBA loans are numerous. 

This article is your comprehensive guide to SBA loan submission. Let's explore. 

Determine Your Eligibility

Before applying for an SBA loan, determine if you're able to do so. Overall, the SBA imposes the following guidelines: 

• Your business must adhere to the legal definition of a small business (The legal definition is usually a max of 250 employees or a max of 1,500 employees, but the max number depends on your industry)

• You have used all other financing options

• You don't have a history of government loan defaults or delinquencies

• Your business must be registered as a profit-based enterprise

• You have invested time and energy into the business

• The business must be registered in the United States

• The business must operate within the United States

The SBA also has some income requirements, but income guidelines depend on what type of SBA program you're applying for. If you're applying under the 7(a) program, for example, your net operating income must be under $5 million. Overall, your business must have enough cash flow to satisfy debt obligations.

Besides SBA requirements, you must adhere to lending requirements as well. When it comes to credit scores, most lenders prefer a 640 score, but other lenders may prefer higher.

You'll stand a much better chance of approval if you have a score of 680 or higher. The SBA doesn't have minimum credit thresholds, but the lenders do. Further, lenders usually prefer minimum annual revenues of $100,000. Also, lenders usually want companies that have been in business for two years minimum. 

Your personal financial history will fall under scrutiny as well. You could face denial if you have a history of bankruptcies, foreclosures, or tax liens.

Additionally, be prepared to provide a down payment and/or collateral if necessary. The down payment could be 10% of the balance. If you're borrowing over $25,000, you may need to provide collateral. 

Choose the Best Program For You

The SBA has multiple programs, such as the:

• 504/CDC Program: This program is for borrowers who want to purchase assets in the form of large equipment or real estate. You can borrow up to $5.5 million, and the rates are usually around 5 or 6%. The terms last up to 25 years.

• 7(a) Program: This loan program allows you to borrow up to $5 million. The interest rates are from 8 to 13%. This is the most common and popular loan option.

• Microloan Program: This loan option offers a max borrowing amount of $50,000. It can be used to purchase supplies or inventory. This program is more flexible and is a good option for startups.

• Express Program: Choose this option if you need a loan of up to $350,000. The rates are the same as the 7(a) program, and you'll get a faster approval time.

The SBA offers other programs, such as SBA Disaster Loans, Community Advantage Loans, and lines of credit. 

Choose the Best Lender

Since the SBA guarantees a portion of the loan, you must choose a participating lender. When looking for the right lender, look for one within the preferred lending network.

Preferred lenders have positive track records. Plus, they can process your application faster than non-preferred lenders. Additionally, ask yourself the following questions when choosing the best lender:

• How long does the process take?

• What is your pre-approval process?

• What are your minimum credit score requirements?

• Do you require any collateral?

• What are your typical interest rates?

• Will a loan rep guide me from beginning to end?

Gather Your Paperwork

A dedicated service rep is crucial for SBA loan help because they can tell you all the paperwork you need. You'll need basic documents such as:

• A loan request letter specifying how much you intend to borrow and how you intend to use the money

• Financial statements, business statements, and personal tax returns

• Legal documents showing your company registration

• A business plan

You may need to provide other docs, such as a debt schedule, or any other type of documentation unique to your chosen program. 

Fill Out the Application

The programs have different applications. Therefore, ask your loan rep which application is appropriate for you. Some lenders may offer an online application, but others may prefer a paper application.

Closing the Process

After applying, you'll usually hear back from the SBA within one to two weeks. If they proceed with your application, you'll get a letter of intent stating the borrowing amount, lending terms, and interest rate.

If you accept the terms, the process will continue. The underwriting process is the next step and will take between two to four weeks.

The SBA will verify the information in your application and may ask for additional documentation. If all goes well, you'll get a business agreement. Read over the agreement thoroughly before signing. A business attorney can read over the document on your behalf.

Is Getting an SBA Loan Worth It?

Getting an SBA loan will be easier if you have all your documentation in place. During the underwriting phase, make yourself available in case they need additional documents. Before applying, however, ensure that you meet the SBA's core requirements.

Do you want to buy a business? Click here to learn more.  

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Pros and Cons of SBA Loans: 3 Things That Are Great, and 3 That Aren't

Pros & Cons of SBA Loan

We walk you through the benefits and drawbacks of SBA loans.

3 Pros to SBA Loans:

1. No collateral necessary

2. Lower interest rate

3. Lower down payments

3 Cons to SBA Loans:

1. Longer approval times

2. Borrowing restrictions

3. Good credit needed

Are you debating the pros and cons of SBA loans? Ask yourself the following questions:

• Is my credit score decent?

• Can I wait a little longer for my loan?

• Do I have an established business?

If you answered yes to these questions, an SBA loan may be right for you. On the other hand, there are problems with SBA loans. This program may not be the best choice if you're a startup (even though startups can get SBA funding with additional requirements), if you need a faster loan, or if you have a lower credit score. 

This article will highlight the benefits and drawbacks of SBA loans. Read further to learn about SBA loans.

The Pros 

1. No Collateral Necessary

If you apply for a loan through a non-SBA lender, loan reps may require collateral that's equal to or greater than the loan amount. Collateral can be anything of value, such as a house or boat.

If you default on the loan, lenders can seize the asset. With an SBA loan, however, lenders usually don't require upfront collateral. If they do require collateral, the amount is usually small.

Since the government is backing the loan, lenders feel reassured when approving your application. Therefore, they're less likely to ask for collateral. 

Here is a step-by-step guide on how to get an SBA loan.

2. Lower Interest Rates 

SBA loans offer some of the lowest interest rates within the small business lending world. Overall, an SBA loan interest rate is around 5%. However, the rate depends on several factors, such as:

• Your credit history

• The lending institution

• The amount borrowed

Let's say you're getting a 7(a) loan. If you borrow less than $25,000, and you intend to pay it off in seven years, you could have an interest rate of 7.50%. Conversely, if you borrow more than $50,000, and you intend to pay off the loan in over seven years, lenders could offer a 6% rate. 

The SBA mandates lower interest rates to keep costs low for borrowers. Additionally, SBA lenders are content offering lower interest rates because these loans aren't high risk. Since the SBA is guaranteeing a portion of the loan, lenders don't mind offering loans with lower interest rates. 

3. Lower Down Payments

SBA loans offer lower down payment requirements. With a 7(a) loan, the down payment must be 10% of the loan balance. 

• Example: If you're borrowing $400,000, the down payment is $40,000.

That said, the down payment amount could be 15% for startup enterprises. Companies engaging in mergers or acquisitions may have to place a higher down payment as well.

The amount largely depends on the lending requirements. Some lenders may even require some collateral as part of the down payment. 

The Cons

1. Longer Approval Times

If you're looking for fast loan approval from the SBA, you may want to look elsewhere. SBA loan processing can take anywhere from 30 to 60 days. In some cases, the process could take up to 90 days. The time depends on how fast the lender processes the loan.

On the plus side, processing times are faster through the SBA Express Program. This program is a trimmed-down version of the 7(a) program where borrowers can borrow up to $350,000. Since you're borrowing a lower amount, the approval times are typically faster. 

To speed up the processing times, ensure that you have all the necessary paperwork in order. If you're purchasing real estate, make yourself available to appraisers to expedite the process. If real estate isn't involved, you stand a good chance of faster approval.

Above all, the processing times depend largely on the lender's experience with SBA loans. Experienced lenders will generally streamline the process faster than inexperienced lenders. Therefore, do some research on each lender to root out new SBA lenders. 

2. Borrowing Restrictions

Many lenders don't care how you use the funds, so long as you pack back the loan on time. However, the SBA imposes limits on how borrowers can use the funds.  

• Example: The 7(a) program forbids the purchase of investment properties, such as houses or duplexes. If you want to invest in commercial real estate, you must apply through the 504 loan program, and this program has various restrictions.

SBA loans are primarily for small business owners. They're generally not for investors looking to make risky investments. 

3. Good Credit Needed

An SBA loan program offers flexible terms, but it's not for business owners with bad credit. If you want to get a 7(a) loan, you'll need a minimum score of 640.

However, a minimum score doesn't mean you'll get approved. To increase your chances of approval, you'll need a score of at least 680.

The SBA doesn't mandate a minimum credit threshold, but lenders generally prefer scores in the mid 600s or higher. Getting an SBA loan may be an issue if you don't have a credit history, or if you're a startup with a small credit history. 

Additionally, you must be concerned about minimum business scores. Whereas personal credit scores stretch from 300 to 850, business credit scores are on a scale from 0 to 300. In most cases, lenders look for a minimum 140 score. Some lenders even prefer scores of at least 160. 

Pros and Cons of SBA Loans: Are They Worth It?

The pros and cons of SBA loans depend on your situation. An SBA loan offers lower interest rates, minimal down payments, and no collateral. However, SBA loans are only accessible to those with higher credit scores.

Moreover, borrowers must contend with restrictions that determine how they can use the funds. Also, SBA loans take longer to process than most loans. 

Are you thinking of buying a business? Click here to learn how you should proceed. 

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7 Things to Know Before You Buy a Business

Buy a Business

Here are 7 things to know before you buy a business.

Buy a Business? Seven Tips to Follow:

1. Pick the right industry

2. Know what you want

3. Do in-depth research

4. Make sure you buy the assets

5. Prepare to make tough staffing decisions

6. Always get seller indemnity

7. Check all prepaid expenses

Did you know that around half of all businesses will have failed by their fifth year?

With this starting period being the crucial years for a company, it makes sense to buy one that is already running. But do you know how to find a purchase a business successfully?

There are many different facets to consider, from how to check if you are legally covered to managing new staff. Read on as we give our seven essential tips to know when you buy a business. 

1. Pick the Right Industry

It is important that you buy a business in an industry you know, for a number of reasons. Firstly, you need hands-on knowledge of how that business works from the ground up. No one likes a business owner without experience.

Secondly, knowing the industry means knowing the state it is in. Is the market in decline, or is it set for a huge boom period? Without knowing this, you could buy a business that is already doomed to failure. 

Start by making sure you have worked in the industry. Take six months out to go and work on the factory floor or make calls in the office. This will give you a much better understanding of how the whole place operates. 

2. Know What You Want

When you take your first steps into acquisition entrepreneurship, goals are going to be at the center of everything you do. People who take over businesses need to set goals for everything from customer service standards to profit. Without them, it is impossible to measure the success and growth of the business. 

What many people fail to address are their own personal goals. When you buy a company, other than increasing its turnover, what do you actually want from it?

Some people will go into the business with a goal to sell it later down the line for increased profit. Others may be going into it for life and may plan to pass it on to their children. Knowing what you want out of the venture makes it easier when setting the short, medium, and long-term goals of the business. 

3. Do In-Depth Research

Once you have seen a potential business, then you need to do your research. The internet is the first place to begin your business valuation. Delve deep into the company's history, its financial records, and any news articles related to it. 

Once this is done, begin to branch out. Do the same for its main competitors. Look at others in the chosen sector, or a geographical region if it is a brick and mortar business. 

4. Make Sure You Buy the Assets

When a corporation or LLC decides to sell a business, you need to make sure you are not just buying stock. It can work out much better if you offer to buy the assets instead. From here, form a separate company that would act as the buyer. 

The reason for this is twofold. First, if the business owes money, is in debt, or is being sued, then you are no longer liable, as you are not the business owner.

In addition, you will get better tax deductions on the assets. They will be judged by the price you paid for them, not the price the prior owner paid for many years before. 

5. Prepare to Make Tough Staffing Decisions

When you take over a new business, it is natural that you'll want to do some things differently. Even if the previous business model worked, you will have ways of improving and adapting. Inevitably, this means that some people will have to go.

As the business models change, certain people or departments will become redundant. Unless you are willing to spend lots of time and money retraining them for new roles elsewhere, then they are no longer needed. Even if you do this, they may not be as interested in a different role. 

Be honest with people about the reason for the dismissal. Give them fair severance packages and thank them for their service. 

6. Always Get Seller Indemnity

From the business valuation to the period of due diligence, you will have gone through the company with a fine toothcomb.

However, you can always miss something. If that is something that could lead to the company being sued down the line, you'll take the wrap. 

Indemnity can be placed as a clause in the contract. It states that if any lawsuits occur in the future as a result of something that was done before you took over, the previous owner will defend the case, paying all fees and judgments. They may also want an indemnity clause for anything that you may do after the closing takes place.  

7. Check All Prepaid Expenses

Before buying, check how many prepaid expenses are in place.

For example, the company may have annual software leases or in-place advertising that costs thousands of dollars. You don't want to find out about this midway through your first year without having included it in your financial projections. 

In addition, do not forget to check any leases on offices, shops, and warehousing. Make sure this will be carried on when you take over the business. Check if there are any clauses or stipulations, such as whether the rental price is fixed or may soon be facing a raise. 

Want to Buy a Business Near Me? Get Assistance

When you buy a business, it pays to get assistance. There are many sites online that can match you with potential sellers and ensure a smooth handover. 

Your first stop should be BizNexus. Set your targets, get matched with a business then connect with potential sales quickly.

Click here to sign up and let us help find your next opportunity starting today! 

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The Advantages of Buying an Existing Business

Buying a business

We walk you through 7 advantages that will give you some guidance.

Top 7 Reasons to Buy an Existing or Established Business:

1. An established client base

2. Branding

3. Avoid startup costs

4. Internal operations

5. Access to performance history and insights

6. An existing team

7. A proven product or service

Becoming an entrepreneur is well known for how rewarding it can be. In many cases, it can also help you generate a large amount of income.

But, you don’t always need to start your own business in order to become a business owner — many entrepreneurs choose to buy a business that already exists.

Not sure where to start? We’ve put together a guide with everything you need to know. Let’s dive in.

An Established Client Base

As you might expect, one of the primary benefits of purchasing an existing business is being able to leverage its existing client base. More often than not, acquiring new customers is something that requires plenty of research, time, and resources.

In some scenarios, it may prove to be exceedingly difficult to do so.

When you remove this factor entirely, you can place much more emphasis on the growth of your business. A factor to consider, however, is how much the existing customers resonate with the current business owner.

If their loyalty is tied to this individual, you may not see the performance levels that you anticipate.

In most scenarios, however, the transition will be smooth and you will be able to immediately take advantage of this existing client base.

Branding

Without proper branding, your business will struggle — that is simply a fact of life. Fortunately, the business that you are considering purchasing has already laid the groundwork for solid branding.

After all, the branding is likely what got you interested in buying the company in the first place.

The power of branding simply can’t be overstated. For example, let’s assume that you are looking to operate a business within the athletic apparel space.

Now, imagine you were hypothetically able to purchase Nike. You would immediately have access to some of the most powerful branding in the entire world.

You Will Avoid Startup Costs

The largest deterrent that entrepreneurs face when looking to start a business is startup costs. Depending on the industry they operate within, your product/service, etc., these costs could even be hundreds of thousands of dollars.

In some cases, starting your business might require millions of dollars in funding.

Interestingly, purchasing an existing successful business is often cheaper than starting one yourself. This is especially true if you are able to purchase a successful company that has only been around for a few years.

Internal Operations

The internal operations of an organization are essentially the backbone of the entire company. If they are not structured properly, the business will not be able to function optimally.

This could easily result in falling far short of intended metrics. In some cases, suboptimal internal operations could cause your business to struggle to stay afloat.

A successful business more than likely only reaches this point because it properly configured its internal procedures. While there are scenarios where some businesses succeed due to entering the market at the right time, most become profitable because of these decisions.

So, you will be able to take advantage of the framework an experienced business owner has laid out as opposed to creating one for yourself.

Insight Into Its Performance History

It should come as no surprise that having insight into a company’s performance history is a powerful attribute that simply can’t be ignored. Unfortunately, you will not have access to this type of information when you start your own company.

Instead, you will have to lay the foundation for your future success and hope that everything turns out as intended.

When looking to purchase a company, you should look for an upward trend in its performance. Although it might not currently be at the status you desire, if the company has been growing every year, this is a good sign.

So, keep this in mind when searching for a company to buy.

An Existing Team

It can take years and tens of thousands of dollars to assemble a proper team for your business. Additionally, failure to do so can often prevent you from reaching optimal levels of performance.

By leveraging an existing team, you can forego this obligation entirely. In many cases, you won’t even need to make adjustments to the existing team if they have been proven to produce the results you desire.

You would simply let them operate as normal and provide guidance when necessary depending on your intended metrics.

A Proven Product or Service

If you offer a product or service that has not been proven to provide value to your audience, there is no guarantee that your business will ever be successful. In the event that your business fails, you will likely find yourself in an insurmountable amount of debt, develop a poor reputation as an entrepreneur, etc.

Any business that you purchase should have a product or service that has consistently performed well over time. Not only will you be able to pick up where the previous owner left off, but you can also avoid the substantial amount of research involved in developing a product that customers will actually buy.

Deciding Whether or Not to Buy a Business Can Seem Difficult

But, it’s not as complicated as you might anticipate. With the above information in mind, you’ll be able to pursue all the benefits that you can receive when you buy a business that already exists.

Want to learn more about what we have to offer? Feel free to reach out to us today and see how we can help.

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How to Buy a SaaS Company

Buy a SaaS Company

We’ve put together 6 tips to help you out when buying a SaaS Business for sale.

6 Tips to Successfully Buy a SaaS Business:

1. Options: buy vs. build

2. Where to buy a SaaS business

3. Understand the prices model

4. Check out the source code

5. Check acquisition channels

6. Understand the competition

SaaS continues to show its dominance and is expected to generate an astounding $141 billion in 2022. If you're looking to buy a company, buying a SaaS business would be a remarkable idea.

Living in the cloud means that the SaaS model was not affected by the pandemic, making it one of the most attractive business options.

It has proven to be exemplary lucrative with very enticing options in terms of scalability. It also means that SaaS businesses are valued differently compared to most other businesses.

While buying a company is a good idea, you need to do a lot of things before buying a SaaS business. This guide covers how to buy a SaaS company and several steps you should make to ensure a seamless buying process.

Should You Buy a Company or Build One?

Why buy a company when you can just build one?

One of the most significant benefits is that you'll save time. Building a SaaS company involves building software, which takes a specific skill set that most people may not possess. It would take you a considerable amount of time to build your sass products from the ground up.

When you purchase a SaaS company, you'll not only get the software but a few years’ worths of market data as well. It will give you a sufficient baseline to work and allow you to focus on improving and scaling the business.

Consider Where To Buy the SaaS Business

If this is your first time buying a SaaS business, then you may not know where to start. You face two options, which are to buy from a private seller or a broker. You need to conduct a market evaluation.

The main difference you will face between a private seller and a broker is the vetting process.

A broker will vet numerous businesses that are trying to sell. Vetting the account is one of the most important steps you can take when you want to buy a company, so decide whether you want to jump into the numbers or have a broker do it for you.

Having a broker doesn't necessarily mean that you should overlook your due diligence. It means that they will take the weight of the load from you, and all you have to do is verify what they bring to you.

If you choose to vet yourself, you'll find that most businesses offer screenshots of their account to back up the traffic and revenue claims.

This proof should not be enough, though, and they should grant you viewing permission to their analytics accounts. These accounts will show you whether the valuation matches the business performance.

You should also ask to see the profit and loss statement and any other additional expenses you should know about before you buy a company.

Some people purchase SaaS companies with seemingly good revenue figures but later realize that the high expenses involved lower the net profit. You can catch problems that you may be able to fix. For instance, you could eliminate SEM advertising if you're good at organic SEO.

Understand the Pricing Model

Once you identify where the money is coming from and the strengths and weaknesses of the business, you should understand its pricing model. A SaaS business’s pricing model can be the difference between having no subscribers and millions of them.

There are several SaaS pricing models available. The payment option can be Monthly Recurring Revenue or Annual Recurring Revenue.

Monthly Recurring Revenue is usually the preferred method because it requires low payments up-front to new customers, and it's easier to track business performance.

One of the most significant results for you to conduct a thorough review of the market is to look for opportunities. Besides checking the SaaS company’s legitimacy, market opportunities will play a huge role in your business’s future.

Decide whether you would like to change it from a flat fee system to a tiered system instead. Such a move will make it more appealing to your target market and, in turn, speed up your ROI.

Check how many active subscribers the software has, then look at the churn rate and the customer lifetime value. It will give you a better idea of how the company works. Check how many free users are involved and whether you can offer them low-tier payments to generate revenue.

Check Out the Source Code

The source code is arguably the foundation of a business. A robust source code technically means the product will last a long time. If you don't have the technical capacity to assess the source code, it's prudent for you to hire a professional that does.

The source code is usually the owner's property and doesn't belong to the developers who created it. You must ensure the source code is included in the sale and transferred to you after the sale.

Check Acquisition Channels

There are several ways a SaaS company acquires customers, and they include paid advertising, organic search, social, referral, and direct. SEO and paid advertising are the primary sources of traffic, so scrutinize what the current owner is doing and how you can improve it to increase your business opportunities. Check if a domain is included in the sale to use the website to get traffic.

Understand the Competition

Buying a company means buying a share of the market, so get to know the companies you'll be sharing the market with. Check their marketing, pricing, and what they offer their target market. Scrutinize how they differ from what your software offers and look for an angle that offers you marketability.

Ready To Buy a SaaS Company?

There are so many reasons to buy a SaaS company, and this is the process you should follow to get it done. Do your due diligence to verify everything before you make the final decision to buy a company. You should also know when to walk away from a deal that doesn't seem appealing at all.

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What Is a Business Broker? How to Hire the Right One

Hire a Business Broker

Here are 7 tips to best choose and hire the right business broker.

7 Tips for hiring a qualified business broker:

1. Rely on referrals and ads

2. Dedicated practitioner

3. Experience

4. Industry knowledge

5. Public reputation

6. Professional connections

7. Likable

The selling and buying of businesses in the United States are more common than you may have thought, with 10,312 businesses changing hands in 2018 alone. 

The reasons people decide to buy or sell businesses are varied. It could be that changes occurred in your life in the last year or that you simply want to take a new direction this year. Whichever the reason, selling or purchasing a decision is among the biggest decisions you’ll ever make.

Whether the outcome of the transaction is a successful one depends on your business broker. But what is a business broker? More importantly, how can you hire the ideal business broker for you?

If you’re asking yourself these questions, you’ve come to the right place. In this article, we tell you all you need to know on how to hire a business broker.

Read on to learn more.

What Is a Business Broker?

A business broker refers to a trained individual or a professional agency whose role is to aid the sale or purchase of a business. Primarily, business brokers help their clients secure the best price for the business. They’re also responsible for submitting the appropriate paperwork and completing the needed permits or licensing.

As you’re going to find out, the whole process of transferring the ownership of a business can be lengthy and complicated. That’s why it helps to use a business broker, especially if you’re the seller.

A business broker can suggest a realistic price value for your business and properly advertise it for sale. They can also screen and interview potential buyers. A seasoned business broker will also help you in properly preparing your business for sale.

If you’re the one considering buying a business, a business broker can help evaluate the businesses you’re considering. They will also get the cash flow statements and financial statements of those businesses so you can make an informed decision. 

A good business broker will also help you secure financing, besides holding negotiations with the seller on your behalf.

Tips for Hiring the Best Business Broker for You

Now that you know when to get a business broker and have seen what such a professional can do for you, it’s time to look at how you can get the best one for you. Read on for practical tips on finding a great business broker. 

Rely on Referrals and Ads 

One of the best ways to find a business broker is through referrals from trusted contacts. Your friends, relatives, or colleagues may be able to recommend a business broker they’ve worked within the past.

You can seek out brokers in the business sections of major newspapers. Narrow down on two or three suitable candidates and interview them.

Choose for a Dedicated Practitioner 

During your interview, find out whether the business broker practices full-time or part-time. A dedicated practitioner can add a lot more value to the sales transaction as they’re likely to have a larger network of contacts. 

Where you’re selling a company worth millions of dollars, it’s best to work with an acquisition or merger intermediaries. 

Ask About Experience  

Industry experience is a great asset in any profession. Inquire how many years your prospective business broker has been in the industry. Sure, everyone starts somewhere, but when you’re engaged in a transaction as sensitive as the sale or purchase of a business, you don’t want to work with a newbie.

But it’s not enough that the broker has been in the industry for years if they’ve only executed a handful of deals. Work with someone who has successfully helped a considerable number of business buyers and sellers seal deals.

Consider Industry Knowledge  

Top business brokers will usually have worked with a variety of businesses. However, most successful brokers develop a liking for particular types of businesses or industries over time. 

Don’t hesitate to ask what particular types of businesses your prospective business broker handles regularly. If you’re looking to buy a SaaS company, working with a broker with industry knowledge on such businesses can lead to a better outcome for you.

Assess Their Public Reputation

If someone recommended the broker to you, it’s a good indicator that you’re going to have a great experience working with the broker. But if you found the broker through an online search or newspaper search, it’s a smart move to learn more about their reputation. 

So, how do you evaluate a broker’s reputation? The first place to start is online. Read online reviews to find out what people say about the broker.

You could also ask for a list of previous clients from the broker during your interview. Follow up with two or three of those clients to what they say about the broker. If past clients generally seem happy with a business broker’s services, it’s a good sign that you, too, will love working with them. 

Inquire Whether They Have Connections  

Besides the business broker, you’ll need other professionals to help you along this journey. These include accountants, attorneys, bankers, and others. Finding a business broker who has connections with such professionals means that you won’t have to spend time and resources finding them on your own.

Of course, not all great brokers network the same way. However, a broker without a professional network tells you a lot about how they do business.

Consider Likeability

You’re not looking for a spouse in your broker, but you’ll be working together for months. The transaction you’re undertaking together is an intense one and involves highly personal matters. That’s why you want to gauge from your initial meeting whether things are going well between the two of you.

If you and your broker do not seem to be getting along well during your interview, it could signal challenges on the road ahead. It’s best to move on to the next potential broker.

Find the Right Business Broker for You

Hopefully, we’ve aptly answered your question, “What is a business broker?” Given how significant this professional will be when you’re buying or selling a business, it’s critical that you hire the right one for you.

Are you interested in the services of a reliable business broker in your area? Get started today.

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Why Use Seller Financing to Buy a Business

Buying a Business?

Here are 5 questions to consider finding answers to when buying a business through seller financing.

5 Questions to consider when buying a business through seller financing:

1. What is The Meaning of Seller Financing?

2. How Does Seller Financing Work?

3. What are The Benefits for Buyers?

4. What are The Benefits for Sellers?

5. Is Seller Financing Safe?

In 2018, the number of businesses bought and sold passed the 10,000 marks.

If you're looking for a business to buy you have several options. 

One of those options is using seller financing to buy a business. It means that even if you don't have enough money to pay the full price upfront, you can still buy the business you want. 

Read on as we take a look at the ins and outs of using seller financing.

What Is Seller Financing?

Put simply, seller financing is when there seller finances some of the cost of buying the business.

It's a bit like the buyer taking out a loan to fund part of the purchase, but the loan is from the seller rather than a financial institution. In effect, the seller is loaning the buyer some of the money to buy the business and will receive this money back with interest over an agreed period.

How Does It Work? 

First, both parties have to agree to use seller financing for a portion of the sale of the business.

The buyer will usually have to provide financial information to the seller to prove that they can afford the loan repayments. The seller may also ask to see evidence that the buyer has the business experience to keep the business afloat while paying down the loan. This could be in the form of a business plan. 

The seller will probably also look at the buyer's credit history. If any of the information provided gives the seller cause for concern, they are within their rights to refuse the sale. This is similar to the process that you would go through when taking out a loan with a bank, for example.

Once the seller approves the buyer, a contract will be drawn up laying out the amount of the loan, the interest rate, the repayment schedule, and any collateral requirements. It is also very likely that there will be a clause stating that if the buyer does not keep up repayments on the loan, they will forfeit ownership of the business. 

Benefits for the Buyer

The most obvious benefit for the buyer is that it allows them to buy a business without needing to have the full asking price available to pay upfront. 

With less money paid out upfront, and manageable monthly payments, this gives the new business owner more leeway with their cash flow which can then be used to help the business grow. In addition, seller financing usually leads to a quicker sale as there are fewer hoops to jump through than there are with the banks.

It may also be the case that a buyer is more likely to get financing by this method, as sellers may not have such strict financial requirements as financial institutions do. Sellers may offer more favorable rates of interest than the banks can offer, too. 

Also, the seller has a vested interest in seeing the business succeed so that they receive all of the money and interest that they are owed. This means that are more likely to be open to offering advice and guidance to the new owner about how to help the business grow.

Benefits for the Seller

This all sounds great for the buyer, but why would a seller want to lend someone money to buy their own business?

Well, for a start, it opens you up to far more buyers. Buyers who may have the perfect experience to make your business success may not meet the requirements for a bank loan. Offering seller financing gives you a much wider choice of buyers so that you can find the right fit.

Another major benefit is that you're taking an interest in the amount that you lend. That means that your money is going to work for you. You may also be able to sell at a higher price and much more quickly than you could otherwise.

There are also tax benefits. Instead of paying tax on the full sale price of your business, your gains become incremental allowing you to spread your tax burden out over a much longer period. 

Is Seller Financing Safe?

There are risks involved in seller financing, but the vast majority of these are on the side of the seller. 

The biggest risk is that the buyer is unable to keep up repayments on the loan. The seller must then begin the process of taking back ownership of their business or trying to recover any outstanding payments. It may be the case that the business you repossess is no longer worth as much as when you sold it.

The seller also receives less money upfront, so if they are thinking of investing in another business, they have less capital with which to do so.

On the whole, however, the process is a good deal for both sides. Provided that the legal documentation is drawn up correctly, and the seller is diligent in choosing the right buyer, seller financing can benefit everyone.

Are You Thinking of Using Seller Financing to Buy a Business?

If you're thinking of using seller financing to buy a business then we're here to help. 

We can match you with your perfect cash-flow positive acquisition opportunity from our inventory of thousands. Once you've found the perfect match, you'll seamlessly connect with the seller's intermediary, eliminating any wasted effort or time.

Sign up, set your preferences and our algorithms will do the rest.

Find a Business For Sale Now

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Benefits of Starting a Business vs. Buying One

Buying vs. Starting a Business

We put together 7 benefits to share with you on starting vs. buying a business

7 Benefits to Starting vs. Buying a Business:

1. Market Research Benefit when Buying a Business

2. Starting a Business Gives you Meaning and Skin in the Game

3. Faster Track when Buying a Business

4. Starting a business can be built on your personal preference and liking

5. Take Advantage of an Established Brand when Buying a Business

6. Acquiring an Established Business Gives you Access to More Capital

7. Building a Business Allows you to start your own Team

When you are interested in growing your wealth, it means building streams of income. Nothing builds income like becoming a business owner.

There are two tracks for owning a business -- either you build one or buy one. Both are attractive options, depending on what you want and what industry you're in.

Keep reading so that you can learn the benefits of starting a business, compared to buying one.

1. Buying an Existing Business Gives You the Benefit of Market Research

When you're weighing whether to run a new or existing business, consider your risk tolerance. If you want more of a sure bet, buying a business gives you the benefit of market research.

The company that you buy out can hand over documented research and analytics that you can immediately assess and build on. You'll also have built-in successes and failures to learn from, which will let you retool and leave your own mark on the business.

2. Starting a Business Gives You Meaning and Skin in the Game

Starting a business is often a heart-centered decision. For many people, starting their business is tied to finding their "why", which adds to the investment and meaning of the journey.

When you build your company from scratch, it has a large measure of meaning, and you'll feel compelled to fight your way through adversity. People often start businesses when they start thinking about legacy and long-term wealth.

3. Buying a Business Lets You Get Started Quicker

Consider your timetable for getting started. If you are interested in getting in the driver's seat sooner, purchasing an existing business is your best option.

When you're able to start your business quickly, you'll be more likely to make your company productive and profitable. It gives you a swifter return on your investment and lets you begin hitting benchmarks.

4. When You Start Your Own Business, You Build it Perfectly to Your Liking

Starting vs buying is an easy decision if you're big on customization. Building a business to your liking lets you control things down to the last detail.

When you decide to start your own company, you get to see an idea in your mind go from journal entries and vision boards to concrete plans, to a living, breathing reality and source of income. This is a reward in itself, and it gives you the courage and confidence to make other moves in your business life.

5. You Can Take Over an Established Brand

There's no substitute for piggybacking off of the work that someone else already put in. When a brand is trusted and established, you'll be able to quickly build a rapport with their customers.

This is why purchasing a franchise is such a common way that people begin building their wealth.

Being able to use the logo and trademarks of a company that people already trust and identify with gets you, customers, day one. This way, you'll be able to focus more on the work at hand and less on marketing and trying to draw new people in.

6. Purchasing an Existing Business Gives you Access to More Capital

The bank is always more willing to bet on the established brand. If you know that you're going to have to seek lending, you'll have a better chance of getting the funding that you need when you're purchasing an existing business.

When taking over someone else's company, you'll be able to present the bank with financial records for the past several months or years. An existing company also has assets that can be used as collateral.

The risk is lower for the bank, which means that the terms that you receive will also be more reasonable. By taking on a loan that you can easily repay, it frees you up financially to accomplish your goals for both the short-term and the long-term.

Make sure that you explore plenty of options when you're trying to find new lending opportunities.

7. Building Your Own Business Lets You Start Your Own Team

Consider what you are hoping to get out of business ownership. If you're a people-oriented entrepreneur, you will definitely want to put some thought into the team that goes on this journey with you.

When you're building your own company, you'll have more control over who is working for and with you. Taking over an established company is more difficult in this regard since teams are already in place from top to bottom.

By starting your own company, you'll be able to instill a company culture that carries on for years to come. You will know that you left your imprint on the business and that you had a strong influence on its direction and success.

Consider the Benefits of Starting a Business vs. Buying One

When you're thinking about the benefits of starting a business, the tips above will be helpful. Becoming a business owner is a dream that many people have. It's something that you can achieve as long as you have the right information and the willingness to follow through.

These points give you a glimpse of what's possible so that you can then decide which track you want to take. Whether you decide to purchase a business or start your own, make sure that you put together the best team of professionals, and seek help from those who have been in your shoes.

For more advice on buying a business and making entrepreneurial decisions, check out more of our blog posts.

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Becoming a Business Owner: 7 Key Benefits of Buying a Business

When it comes to buying a business, 90% of potential buyers fall through. It's an extraordinarily high number, and there are various possible reasons.

People become obsessed with the idea that the business might fail, or find too many risks. The truth is though, no business is perfect.

However, becoming a business owner of an already established company can be far better than starting your own in many ways. Don't back out because of some trivial reasons — it's time to go for it.

If you're wondering about all of the advantages of buying a business, here they are! 

1. It's Low-Risk Compared to Starting a Business

When buying an existing business, there's generally less risk.

If you're starting your own business rather than investing your time and money in an existing business, the risk factors can be pretty huge. Many businesses fail fast and unfortunately, when starting a business, it's very hard to predict if it will be successful or not. Very promising business can flop.

An established business has already been through the risky first couple of years and made it out the other side. Presumably, they've already met a lot of their business goals and are generating a healthy profit.

By buying an existing business, you're skipping the initial risk period. 

2. There Are Established Relationships Already

Regardless of what the business offers, whether it's a service or a product, there are usually established relationships with clients or customers.

They already know the business works for them, and they're ready to use them.  

Although you'll want to continue to grow the business by going out there and finding more clients and customers to welcome into the fold, starting off with that base can be extremely helpful. There's no need to struggle for a few weeks or months as you try to find people to help — your starting base is already there. 

3. You Might Have a Solid Staff Team

There's probably a staff team already working for the business. Takeovers can be tricky in that not everyone is always happy about them, but if you put your best foot forward, it's likely to go smoothly. 

After all, this staff team is likely already invested in the business. 

The staff team will have been there for a while, which means they already know what they're doing. This can cut training and hiring costs, since if you need to hire anyone new, it'll be far fewer people than if you had started a business on your own.

New business owners developing a good relationship with an existing staff team is vital and will pay off in the long run.

4. Learning Something New

When buying a business, you might know the business and financial world well, but not the industry you're coming into.

For example, you might be entering the pet industry or the gaming world, but have no idea about either of those things.

That doesn't mean you're going to be a bad owner! It just means you're going to learn something new and gain experience in a new industry, which is invaluable.

Let the staff teach you about everything you need to know while you impart business wisdom. 

5. You Still Have Creative Freedom

One thing that scares new business owners is that they'll have no creative freedom. By coming into an established business, they assume it's set up a specific way, and they won't be able to change anything. Understandably, that can be frightening to those who like to make their own mark on things.

This, however, isn't true!

Staff and clients alike will welcome improvements. This isn't to say you should come in and change everything in one shot, but you'll be welcome to put your own stamp on the business if it improves it.

You likely already have ideas if you went ahead with buying the business, so don't be shy to do it — although it's always wise to seek feedback first. 

6. It's Less Work

In general, it's less work at the start. If you own multiple businesses or have another job, this simple fact might be what persuades you to buy an existing business. 

You can skip out on:

• Hiring and training staff

• Working to establish the business

• Finding those initial clients

• Designing the website from scratch

• Experimenting with what works for the business

You can make changes to all of these things, of course, but the solid foundation being there will make a huge difference. 

7. It Likely Has an Established Reputation

Not only will it have a staff team and established clients, but it might also already have a reputation in that industry!

If the website is drawing in a good number of hits a month, or the client base is big, this is likely the case. No need to build the business up to be highly respected when the respect is already there — all you need to do is maintain it by carrying on with what they've been doing and putting your own mark on things. 

Becoming a Business Owner This Way Might Be the Smart Choice

Becoming a business owner can be daunting in any scenario. However, buying a business from scratch involves a risk period and a lot of time and effort investment that buying an existing business doesn't. 

If you've been afraid to buy a business, it might be time to take the leap. Don't look for the perfect business — look for the business that's well on its way to being so, so you can push it for the final few steps!

Looking to buy a business? We can help — let us match you with one today. 

8 Things You Need to Know Before Buying a Franchise

Buying a Franchise?

Here are 8 things you need to know before you dive in.

What are the 8 Things You Need to Know Before Diving in Buying a Franchise?

1. Experience

2. Industry

3. Fees

4. Capital

5. Chance of Success

6. FDD - Franchise Disclosure Document

7. Territory

8. Training

Are you thinking of buying a franchise? Well, we don’t blame you! This is one of the most successful business models of the last century, with 785,000 franchise establishments operating around the US today.

One reason for this massive popularity is the array of incentives on offer for budding entrepreneurs. From leveraging the products and influence of established brands to accessing marketing and operational support, you can sidestep many of the usual problems start-ups face in the search for success.

Owning a franchise isn’t all hunky-dory though! What ordinary start-ups lack in experience, authority, and market share, they make up for in flexibility and control over their business. By contrast, franchisees operate under tight regulations dictated by the brand and pay for the privilege of using their brand name.

For these reasons, it’s important to learn more about the pros and cons of owning a franchise before signing any dotted lines. Do you want some help with that endeavor? Keep reading to discover 8 key things to think about before buying a franchise.

1. The Experience

Our first suggestion is to find out as much as you possibly can about the reality of owning a franchise. You could even go and work for one first! You’d learn what it’s like, how they operate, what challenges they face, and how much support they receive.

At the very least, you should research and talk with current franchise owners about their experience. Having this solid grounding in franchise ownership would help in two ways: first, you’d recognize whether or not it’s something you’d enjoy doing; second, you’d glean vital insights into the processes, pitfalls, and perks involved.</p>

2. The Industry

Think about your personal interests, skillsets, and experience levels too. A particular franchise might seem like an amazing business opportunity. But it could turn into a nightmare venture if you dislike the industry and/or have no experience in it.

Good things happen when passion and skillsets align. You’re onto a winner if you can find a franchise in a field you both like and have prior experience in. Take an honest look at your strengths and weakness to decide if the franchise in question ticks those boxes.

3. The Fees

A full understanding of your financial obligations as a franchisee is crucial as well. After all, the initial franchise fee will only be the beginning. You can expect to pay ongoing royalty fees too; some franchisees even have to pay out for marketing, training, and opening day giveaways.

Don’t be caught unawares! Investigate every single cost involved beforehand so you can decide whether or not it’d be a viable business opportunity.

4. The Capital Requirements

Those fees aren’t the only overheads you’ll have to cover as a franchisee though. Like any business, you’ll be buying inventory and paying utility bills, wages, start-up costs, and so on. That’s why it’s important to a) understand how much capital you’ll need in advance and b) have enough of it in the bank to mitigate the financial risks!

Likewise, regardless of the brand in question, it could take some time for your franchise business to be accepted in the community. Make sure you have a sizable financial buffer to weather this initial slow period until the franchise is fully up and running.

5. The Likelihood of Success

Starting a business on a whim rarely ends well. You need to assess the market, identify the demand (and competition), consider potential future obstacles, and, ultimately, determine the likelihood of running a profitable business. Alas, that last part’s often easier said than done for franchises.

Why? Because what works for one franchisee might not work for another!

Success depends on myriad factors, not least of which is an establishment’s location (and both the culture and demand therein). A franchisee’s personal connections make a difference too. Nevertheless, try to work out how many people have had success with a particular franchise, how they accomplished it, and how many failed to try.

6. The Franchise Disclosure Document (FDD)

The FDD is another pivotal piece of the puzzle. This document will tell you everything you need to know about the franchisor and its system- not to mention your potential requirements as the franchisee. Details about territory (more on this coming up), pricing guidelines, products, and various money matters are all included inside.

You must read the FDD cover to cover, understand the terms, and feel happy with the restrictions you’d have to operate under. Avoid signing up for anything that you either don’t understand or have significant reservations about.

7. The Territory

Start researching franchise ownership and it won’t be long before you come across talk of territory. Outlined in the FDD, your ‘territory’ is the area in which you can legally operate and serve customers. It’s imperative that you

1. define your territory clearly

2. choose properly based on size, population density, and setting and

3. avoid or plan for overlap with a competitor’s territory.

Likewise, how many territories, if any, does the franchisor expect to incorporate in the coming weeks, months, and years? How many are in place already? And what are their rules around competing when multiple franchisees operate in the same area?</p>

8. The Training

The best franchisors understand that their success is tied up with the success of their franchisees. As a result, they’ll invest in their learning and be proactive in their development from day one. It goes without saying that these are the organizations you want to buy into.

That’s why you should try to uncover the franchisor’s reputation (and the support they have on offer) before signing any franchise agreement. Inquire about any training opportunities that provide, hands-on assistance they deliver, and so on.

Remember These Factors When Buying a Franchise

Franchising is a hugely popular business model in the US and around the world. And for good reason! It offers a wide range of advantages to everybody involved, allowing entrepreneurs to ‘piggyback’ on the success of established brands.

But that doesn’t mean you should sign any old franchise agreement without thinking it through first! As we’ve seen, this is a big commitment that demands due diligence and insight to ensure you attain the success you deserve. Would you like professional support acquiring a franchise without the fuss of going it alone?

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