Some day you might what to sell your business. We have agents in other places that Florida but this is from one of the seminars we put on here in Tampa.

1. What is involved in selling my business?

2. There are 10 key phases There are over 130 steps That’s not counting dealing with all the many people who will inquire but either don’t qualify or who are really not serious but have time (of yours) to waste Note: We may not always completely qualify a buyer before investing time but we can often weed out the ones that are not even close to being ready to buy

3. 1. VALUING YOUR BUSINESS: Understand the current marketplace Determine your business’s full Owner Benefit in dollars Identify key factors attributing to your business’s value Calculate realistic multiples to apply toward gross sales and net profit Consider other valuation methods.

4. 2. COLLECTION OF RECORDS & DATA: Furniture, Fixtures and Equipment Federal Tax Returns (3 years) Profit and Loss Statements (3 years) Balance Sheets Monthly Revenue Reports Lease Summary Franchise Agreement Summary Other

5. 3. PACKAGING THE BUSINESS: Create a detailed report Create blind summary Identify key items to be shared early on in the Buyer Review Process Prepare other documents needed for Due Diligence

6. 4. MARKETING THE BUSINESS: Create and implement a Specific Marketing Plan for selling your business Ad composition Reach synergistic prospective buyers Review existing Buyer databases Create appropriate internet postings Other media advertising

7. 5. DEALING WITH BUYER PROSPECTS: Requires utmost confidentiality Buyer education Use of an effective Non Disclosure Agreement (NDA) Effectivebuyer interviews Appropriate buyer qualification

8. 6. SHOWING & NEGOTIATING: Maintain Confidentiality Further buyer education Showing your business Negotiating a deal

9. 7. PREPARING THE PURCHASE AGREEMENT: Use of a legal and effective contract, which protects the integrity of the business transition and all parties involved, that has the approval of the Florida Bar Association; complies with local and state laws and statutes; establishes a transaction timeline, establishes an escrow fund. Handle counter offers as appropriate

10. 8. DUE DILIGENCE: Checklist development Deal flow management Contingency signoff Documents for closing

11. 9. ASSISTING IN FINANCING: Including Buyer qualification Connect to banks when possible Educate on other resource such as IRA/401K programs Data for promissory notes SBA loans where applicable.

12. 10. BUSINESS CLOSING: Qualified attorney to manage the closing process Manage process up to closing Follow up with buyer Post-closing record management

13. Can I sell my business on my own? Absolutely. Keep in mind the procedures that you will need (covered in the WHAT IS INVOLVED IN SELLING MY BUSINESS section above).

14. Make sure you maintain confidentiality and have the time, energy and money to spend without compromising your existing business. Get a good valuation for determining the price of your business. This is especially sensible if you plan to sell your business to a family member, partner, or long term employee as if you do sell it to some one close; it is worth getting an independent valuation to make sure you are getting all that you should for your business.

15. Always use a Confidentiality Agreement (CA) Be extremely cautious of sharing detailed records, operations manuals, trade secrets, or other vital information.

16. can my real estate agent sell it? Don’t they sell everything? Business Sales fall under the Division of Real Estate in the state of Florida. Make sure the person you deal with is qualified from a legal standpoint (www.MyFlorida.com).

17. Don’t they sell everything? Carefully interview the broker you plan to select. Residential real estate agents may sometimes offer a lower price but not have the contacts, expertise, or a suitably full array of business selling tools. Selling a business is nothing like selling a house. There are levels of training, support, expertise and certification in business brokering – which are very different from commercial real estate.

18. Are all Business Brokerages Alike? Many great brokers have strong backgrounds and the requirements from the state to sell businesses. In addition, the International Business Brokers Association (IBBA) has the nation’s credible certification known as Certified Business Intermediary (CBI). Look online to see if the brokerage you are considering is registered with IBBA or ask how they got their designation. Check www.IBBA.org for details. Legacy Venture Group has its own trained and experienced team of Legacy Business Intermediaries or LBIs.

19. what qualifications does a broker need to sell a business? Look for a firm that treats you professionally and respectfully. Accept a team that intelligently approaches valuation, marketing plan development and that will establish and maintain a professional, committed relationship with you – not just tell you a high listing price to get your contract. Look for a relationship as well as expertise and ability. Consider experience, training, certification, existing listings and references. Some will claim to sell more, others claim to have been in business longer, still others brag on price or number of locations. What counts is the ability to sell your business – seek drive, integrity, recent reputation, trustworthiness. Confirm in writing that they Co-Broker their listings 50%-50% and subscribe to the Multiple List for Business Brokerages!!!

20. does such a good job.my taxes don’t show all my business value. It is normal for all businesses to reduce the taxable amount of their earnings. To get the best price for your business, you must be able to show the full earning benefit of your business. Buyers will want to know your business’s Seller’s Discretionary Earnings (SDE) generated over the last three years. SDE or Owner Benefit is the net profit before taxes and any compensation to owner - plus amortization, depreciation, interest, other non-cash expense and non-business related expense – normally to one working owner.

21. How do I put a price on my business? My CPA says that it should be worth a lot? Proper valuations are ‘defendable estimates of value’. As valuations will vary from valuator to valuator, it is important to rely on more that just some “rule of thumb’. Look at multiples of Sold Price to Gross Sales and Sold Price to Owner Benefit (SDE). It is important to determine an accurate Owner Benefit but a Buyer will also look at trend of sales, available financing, key business ratios, and current overall marketplace events.

22. can the sba or a bank finance my business? Buyers generally prefer, and some require, businesses with financing. Financing helps Buyers leverage their investment and some consider a bank’s approval of a loan as a positive indicator of the business’s worth.

23. SBA does not make the loan It guarantees loans with some banks for some businesses. The standards are fair but require solid documentation and a healthy business cash flow (check www.SBA.gov for more details). Some banks have Preferred Lender status with the SBA and can efficiently process and approve such a loan. SBA Loans are usually written for ten years at the Prime Rate plus approximately two percent. The Wall Street Journal and http://www.bankrate.comare two great resources for determining the Prime Rate.

24. Do I have to finance the sale myself? You will generally get more money for your business if you offer Seller financing (records show generally 15 to 25 percent more). You will also avoid the lengthy and intense scrutiny of a bank, SBA lender or third party lender. If a Buyer has to obtain outside financing, it may add months to the process while not guaranteeing success.

25. Do I have to finance the sale myself? (cont) Buyers like businesses with financing. If a Seller is willing to finance a business, it emphasizes the Seller’s confidence in the business’s future. Financing may also significantly increase the number of potential Buyers since less upfront capital is required and many Buyers have less than $100,000 to invest. Finally, even with good cash flow, the business or your records may not pass the scrutiny of a bank’s rigorous loan approval process.

26. Do I have to finance the sale myself? (cont) Most Sellers would rather not worry about the hassle and fear of not being paid - or that the business is allowed to run down. Most Buyers care a great deal about doing well and do not want to lose their investment. If you choose to finance a Buyer, make sure you qualify the Buyer just like a bank. Conduct a credit check, run a background check, verify their resume and insist that they submit a short business plan. You have the right to accept or reject their offer. While monies are still outstanding, insist on periodic updates on the books or pay to have independent audits. Insist that part of the loan agreement is keeping to the controllable part of their business plan such as marketing plan or expense controls.

27. some cash earnings might not be on the books and taxes? Do your best to record all your earnings. Buyers like a business with strong earnings but they require convincing evidence to compel them to pay you a fair price. Especially in the last two full years prior to your sale, be careful to make sure the records of earnings are accurate. If a business sells for 2.5 times SDE or Owner Benefit, imagine the impact of $1,000 in cash that is not recorded. The Seller may have saved a maximum of $400 on taxes if they paid a straight 40% with no off-sets or tax breaks, but at 2.5 times SDE, that same $1,000 (if reported) would have yielded another $2,500 to the Seller. Remember that the bank is going to want to see a strong cash flow to support the loan. Show what you can on your records, and if you have a business with hidden cash, be prepared to help with financing the business and possibly take less than you could.

28. Do I sell the stock along with the business? Usually your business will be sold as an Asset Sale, as opposed to a Stock Sale. An Asset Sale sells the business and certain assets, including all furniture, fixtures, equipment, inventory, accounts receivable (where applicable), goodwill, and general intangibles – the tangible assets are set out in a form often referred to as a Schedule "A". There are times where a Stock Sale makes sense but consult your attorney and CPA for more understanding of which is correct for your business. Some bars and businesses with certain licenses and permits are sold as Stock Sales, but always check with qualified, trusted advisors.

29. How long does it take to sell a business? The timing depends on factors related to your business, its price, and the economy. Some businesses can stay on the books for six to nine months. Some don’t sell for years. Once in a while, one sells within weeks. Even after agreeing on a price, the process for getting SBA financing or the visa process for an international Buyer may add a few months to the process.

30. What should I look for in a good business broker? Look for someone who respects you and your business. Understand their experience, background and current listings. See if they invest in ongoing training to sharpen their skills and add value to their service offering. Find a broker who works with other professional confidential brokers (co-brokers) and actively participates in state or global multiple listing (MLS). Make sure they split their fees 50%-50% and that they post your listing on the MLS site immediately to expedite the accessibility to other brokers. We like the distinction of a Certified Business Intermediary (see www.IBBA.org for details of distinction) and believe all brokers should have a written code of ethics.

31. What should I look for in a good business broker? (cont) Confidentiality - keeps your business secure Integrity – honest about things like expected price or having buyers (as opposed to inquirers)… Educational – shares information about process Team Work – co-brokers, works with you… Innovation – markets all the traditional ways but also applies current and new marketing

32. What does a Business Broker typically charge? There is no set rate and charges vary depending on the size of the business (some percentage discounts are given for multi-million dollar companies. Some brokers charge a large up-front fee as well. Some advance fees can be acceptable but be wary of large fees paid in advance. Typically a professional business broker will charge 10% 15%. Usually there is a minimum cash amount too. Some will change a separate fee for valuations. If you only need a valuation to determine a reasonable price to market your business, fees should be under $5,000 and are sometimes included in the listing agreement. Most brokers collect the bulk of their fee based on successfully finding a Seller who buys your business.

33. I got a postcard in the mail from a broker saying they already have a buyer for my business? If that is the case, have them come out and sell the business with a one-time showing agreement. Many brokerages may have potential Buyers looking for some kind of business – but that is not the same thing as a Buyer who is actually going to buy your business. Be careful of unsolicited ads and consider that if s broker stretches the truth to get you to list, this reflects on their integrity. Be careful.

34. How do i advertise my business and Keep it a secret at the same time? Although it is essential to get the word about your business to as many potential buyers as possible, preventing certain groups of people from knowing it is for sale will help maintain your business’s value and integrity.

35. Those who should not know of your business being for sale include: Employees They may worry about job security and look for work elsewhere, leaving you high and dry They might have a different commitment to you and your business Customers They may immediately start taking their business somewhere else They may feel they are being abandoned or that your business is not doing well since you are leaving Creditors They may start calling in debts early or stop extending credit Vendors They may be reluctant to offer you breaks or special offers, saving up for the new owner to curry favor or get orders They are in a unique relationship with your competitors and may not be committed to confidentiality Competitors They may use the rumor of your sale to woo over your customers They may try to hire your employee

36. Confidentiality is a Get absolute assurance from your Broker that they will maintain confidentiality and make a serious effort to get Buyers to understand it is also their responsibility to maintain confidentiality. Brokers should use only blind ads written discretely so that they do not give away identity of your business Insist all Potential Buyers are educated on confidentiality and has sign a Confidentiality Agreement (CA) or Nondisclosure Agreement (NDA)

37. How much does it cost at closing? Fees can vary but most are under $2,000. Ask what your closing agent will charge. These fees are typically split equally between the Buyer and the Seller.

38. I see other businesses for sale like mine? Where do find reliable records of sold businesses? The listed price of a business is often not the same as the sale price. It is good to check comparables of businesses that have actually sold. Although most business sales are private transactions (where there is no public access to sales information), there are private records that will give you this information such as Pratts Stats or IBA (www.IBA.org). Your local broker should have access to multiple databases to share this information with you..

39. There is still more, isn’t there? There is much more to consider but this should get you started. Call or come by with your questions. We will do our best to serve your needs. Good luck in your decision.

40. Sell a business… share a Legacy/

41. Legacy Venture Group, Inc813.571.7700info@buybizusa.comwww.BuyBizUSA.com