Are you thinking about starting a business of your own? Congratulations! It’s a huge step, and you’ll need to be prepared. That’s where SBA comes in: In this section, we have brought together the resources you need to get started. Whether you’re sitting down to write your business plan, wondering about your legal obligations, or researching your financing options, you’ll find the information you need right here. (more…)
Archive for the ‘Financing’ Category
Private companies are sitting on more than $1.9 trillion in cash, accounting for 7.4 percent of total business assets – the highest rate in more than 50 years, according to data released by the Federal Reserve last September.
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A number of recent studies from Thomson Reuters, PayNet and the National Venture Capital Association, among others, have found borrowing among small businesses to be up in recent months.
That includes venture capital, angel investment and bank lending and suggests that, along with gains in employment statistics, the economy is beginning to recover.
With the right financial backing, the acquisition of a franchise can be just as rewarding as starting a business from the ground up, with significantly less risk, according to Entrepreneur.com.
Unlike the high costs of beginning a new business, franchises can be acquired a much lower cost.
You won’t soon sell your business for an ideal asking price. Here are three strategies to help you get a better offer than you might expect
If you’re looking to sell your company, it’s time to get creative. While the small business mergers and acquisitions market is finally inching forward and deals are getting done, they better reflect seller motivation than attractive valuations. Bank involvement in acquisition financing deals also remains low. As long as buyers are forced to pony up bigger equity checks, sellers frustrated by anemic valuations are unlikely to see pricing snap back. Offers remain far from desirable. (more…)
U.S. investment banking firm Houlihan Lokey is expected to announce on Wednesday that it has branched out into India and Singapore through a strategic investment in Avista Advisory Group, a source familiar with the situation told IDD on Tuesday.
Avista, an investment bank and independent advisor based in Mumbai, India, has offices in Singapore. The Indian firm will partner with Houlihan Lokey to provide a wide range of advisory services, including mergers and acquisitions, financing, restructuring and valuations, according to the source who declined to be named.
Houlihan Lokey’s investment in Avista will provide capital for expansion efforts in India and Singapore, the source said.
Houlihan Lokey began expansion overseas in 2002 when it opened an office in London. Since then, Houlihan has opened offices in Paris, Frankfurt, Hong Kong, Tokyo and Beijing.
Avista’s key product expertise is M&A, financing and restructuring advisory, according to the Indian company’s website. It works within sectors such industrials, services, TMT & infrastructure. Avista specializes in middle market companies.
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Use several different methods to set a price that maximizes the value in your business.
Before you can put your business on the market, you need to figure out how much it’s worth. Price your business too high and you’ll scare off potential buyers. Price it too low and you’ll leave money on the table. But if you hope for precision, you’ll be disappointed. No pricing formula, expert estimate, or clairvoyant can provide a sales figure that’s exactly “right.” You won’t know how much it is really worth until the day a buyer writes you a check.
Even though setting the ideal price is next to impossible, you can arrive at a reasonable asking price, or a price range. Some approaches to pricing a business are:
• Income valuation approach. This analyzes the business’s revenue, assuming that the buyer is looking at a business as just one more type of investment competing with stocks, bonds, real estate, and so on. The question then becomes “What kind of return can the buyer expect?”
• Asset-based approach. This totals up the value of all of the assets, starting with tangible ones such a furniture and including intangible ones, such as trademarks or copyrights. This approach usually uses your assets’ resale value, not how much it would cost to replace them.
• Industry formulas and rules of thumb. There are formulas that may be used in your industry, such as three times your earnings averaged over a three-year period, or two times the book value of your company. These guides can give you a rough idea of the current market, but not much more.
• Comparables. The ideal approach is usually to see what other enterprises similar to yours have sold for — but it works only if such sales have occurred recently. Because small businesses tend to be unique, you’re unlikely to find a recently sold business whose location, sales volume, number of employees, and other factors are the same as yours.
Professional resources you can use in pricing your business include accountants, brokers, appraisers, and educational seminars. Accountants will help you organize and evaluate your financial data. Brokers, besides knowing about potential buyers, may also be able to track down elusive information about sales of comparable businesses. Appraisers can help you set a price for the business or just value your business’s assets.
Naming Your Price
Depending on your business, the low end of your price range will probably be little more than the liquidation value of the assets. The high end is likely to be based on income projections and on what an enthusiastic buyer might pay for the right to receive (and hopefully increase) those earnings in the future. If you have a healthy business — especially one with a well-established customer base and positive reputation — you’ll probably pick an initial asking price towards the top of your range and then, if necessary, be prepared to back off a bit in negotiating.
Several factors that don’t involve the business’s income, assets, or comparables also go into pricing a business. These include:
• terms of payment
• type of buyer
• market demand, and
• your personal needs.
You’ll need to take into account the general economic climate as well as trends in your industry — positive or negative. And, of course, if you have to sell quickly, you may need to settle for less.
Need More Help?
The Complete Guide to Selling a Business, by attorney Fred S. Steingold. guides you through the entire selling process, from setting and negotiating a price, to preparing a sales agreement and going to the closing.