Eleven Ga. Business Brokers Sell $58 Million Plus of Businesses

Eleven members of the Georgia Association of Business Brokers (GABB) helped business owners and entrepreneurs sell and buy more than $58 million worth of small- and medium-sized businesses in 2014.

GABB members represent owners of Georgia businesses in extremely important transactions: the sales of their businesses. GABB members help owners determine the asking prices of their businesses, create marketing plans and strategies for selling their businesses, and identify and qualify buyers while keeping the sale confidential from employees and customers.

“In 2014, not only did the economy continue to strengthen, but business owners became more confident in their optimism about the economy,” said GABB’s 2014 President C. David Chambless. “With that increasing optimism, we believe that 2015 will be a banner year in the sale of businesses. Members of the GABB are uniquely positioned to provide professional guidance to business owners and business buyers in successfully transacting the sales of businesses.”

Topping the GABB’s 2014 Million Dollar Club is Matt Slappey, owner of the Decatur branch of Murphy Business & Financial Corporation and past president of the GABB.

Rounding out the top-five producers are Jeff Merry, owner and founder of the BUSINESS HOUSE, inc. of Gainesville; GABB Treasurer Jon Merry, an associate of the BUSINESS HOUSE, inc. of Gainesville; GABB President C. David Chambless, president of Abraxas Business Services, Inc.; and Matt Wochele, president of Preferred Business Brokers, Inc.

Multi-Million Dollar Club business brokers include Eric Gagnon, founder of We Sell Restaurants, Inc; David Still of Capital Endeavors, Inc.; J. Snypp of Preferred Business Brokers, Inc.; Steven Josovitz, vice president of The Shumacher Group; GABB Secretary Kent Reed of Murphy Business & Financial Corporation; and Art Lennig, regional director of Murphy Business & Financial Corporation of Georgia.

Mr. Wochele was honored with the GABB’s Phoenix Award, signifying that he has been a Million Dollar Club member ten times.

The Georgia Association of Business Brokers (GABB) is the state’s only professional organization dedicated to buying and selling businesses and franchises.  The GABB maintains a web site that lists hundreds of businesses and franchises for sale throughout Georgia in a variety of fields, including automotive, business services, child care, cleaning, construction, electronics equipment, fitness, flooring, floral, food, gas stations, landscaping, manufacturing, medical, shipping, restaurants, retail, security, signs, and businesses related to the internet.

The Awardees

GABB Lifetime Multi-Million Dollar Club Member and 2013 GABB President MATT SLAPPEY is the owner of the Decatur branch of Murphy Business & Financial Corporation. Mr. Slappey has been the top broker in Murphy Business & Financial Corporation of Georgia from 2008-2013. Matt has a wide array of experience on transactions typically in the $1 million-$50 million range.  Mr. Slappey, a native of Decatur/DeKalb County has a Certified Business Intermediary (CBI) designation from the International Business Broker Association (IBBA); degrees in accounting, economics, and business from Presbyterian College; and twelve years of experience in management for a Fortune-100 healthcare company. A 7-year active duty veteran, Mr. Slappey was a pilot and military intelligence officer in the U.S. Army. He is an active member of Oak Grove United Methodist Church, the IBBA and M&A Source, and the Hall County Chamber of Commerce and enjoys spending time with his wife and three daughters, playing music, and enjoying the great outdoors

JEFFERY E. MERRY, SR., past president of the GABB, has been the GABB’s top producer numerous times, and has been a part of the Million Dollar Club since its inception in 1999. Mr. Merry, owner and founder of the BUSINESS HOUSE, inc. of Gainesville, is a member of the International Association of Business Brokers. For more than two decades, his firm has specialized in serving the manufacturing, distribution, veterinary and medical industries. As a business intermediary, Certified Exit Planner, and consultant, Mr. Merry has been involved in mergers and acquisitions that have ranged in acquisition price from $60,000 to more than $15 million. He has been an adjunct instructor for the MBA program at North Georgia College. Mr. Merry holds a bachelor’s degree from Mercer University, a Master of Business Administration from the University of Illinois Edwardsville, and a Juris Doctorate from Atlanta Law School. Mr. Merry, a resident of Dahlonega, is a licensed real estate agent in Georgia and Florida, a senior business analyst, and a member of the Exit Planning Institute. He has three children and five grandchildren, and enjoys travelling, reading and riding his motorcycle.

GABB Treasurer JON MERRY is a senior business broker with the BUSINESS HOUSE, inc. of Gainesville. Mr. Merry has a keen understanding for the buying and selling process, and is well versed in the industry handling a wide range of deal making activities for the firm and has assisted with numerous M&A transactions.  In 2012 and 2013, Mr. Merry received recognition as one of five brokers to join the Multi-Million Dollar Club for closed M&A transactions. In addition, Mr. Merry has been a Certified Machinery/Equipment Appraiser (CMEA) with the National Equipment Business Builders Institute (NEBB Institute) for more than 10 years. A CMEA is intensively trained in the legal requirements involving the USPAP standards, as well as the methodological approach employed in establishing fair market value, orderly liquation value, and force liquation value in any market condition.  Mr. Merry is owner of M&E Appraisals, Inc. of Dawsonville, Ga., and is a member of the International Business Broker Association (IBBA), the International Society of Business Analysts (ISBA), and the Georgia Lenders Quality Circle (GLQC).  A native of Georgia, Mr. Merry was a professional umpire for Minor League Baseball for 11 years. He and his wife, RaeLynda and their two sons, Jacob and Joseph, live in historic Dahlonega.

A lifetime member of the GABB Multi-Million Dollar Club and 2014 GABB President, C. DAVID CHAMBLESS is the president of Abraxas Business Services, Inc. Prior to Abraxas, he held various positions in sales, marketing, and executive roles in technology firms; as CFO for Aaron Rents as well as for private companies; and as a management consultant. A member of the International Business Brokers Association (IBBA), Mr. Chambless has a Master of Business Administration in Finance from the Wharton School of the University of Pennsylvania and a Bachelor of Industrial and Systems Engineering from Georgia Tech.  He is a certified public accountant (inactive). Active in community work, he has served as a board member of the Technology Association of Georgia, on the membership committee for the Atlanta chapter of Business Executives for National Security, and the Sporting Clays Tournament committee for the Atlanta Area Council of the Boy Scouts of America. Mr. Chambless is very involved in the All Saints’ Episcopal Church community. He was a fifteen-year board member of The Samaritan House of Atlanta and is on the Advisory Council of 24/7 Gateway, a homeless-services center under the auspices of the United Way of Atlanta. Mr. Chambless and his family live in historic Grant Park.

Matt Wochele CBI (Certified Business Intermediary) founded Preferred Business Brokers, Inc., in 1996 after a successful multi-year career as an investment banker. He is a life member of the Georgia Association of Business Brokers Million Dollar Club, a Phoenix Award recipient and a member of the International Business Brokers Association. Under Mr. Wochele’s leadership, Preferred has represented numerous private business owners in the sale of their businesses. As the managing broker, he has had the opportunity to guide and train a number of successful agents in the brokerage field. Having the experience in both public business sales and the private sector has been rewarding for his firm and their clients. This dual experience has positioned Preferred to handle both the smaller main street business purchases as well as middle market acquisitions. Preferred’s geographical scope stretches to many states. Recent transactions for Georgia listings have included buyers from Illinois and Iowa. Mr. Wochele resides in Sandy Springs with his wife, Kathy, a professional artist. Kathy and Matt have five daughters and two sons-in-law.

A GABB Million Dollar Club Member for the seventh consecutive year and a former GABB President, ERIC GAGNON is the president of We Sell Restaurants and wesellrestaurants.com. He has been designated an industry expert by Business Brokerage Press.  A radio personality, frequent speaker and writer, Eric co-hosts a radio show dedicated to the restaurant industry that is broadcast from the nation’s 7^th largest media market.  Mr. Gagnon expanded the We Sell Restaurants brand into a franchise in 2012 that is growing with offices across the country.  Mr. Gagnon is the co-author of Appetite for Acquisition, an award-winning book on restaurant brokerage that was named “Best of 2012” by Small Business Book Awards. In addition to GABB, Eric is a member of the International Business Brokers Association (IBBA) and has served as a speaker at its national meeting. He is also a member of the Business Brokers of Florida (BBF), the Southeast Franchise Forum (SEFF) and the International Franchise Association (IFA). Eric is licensed as a broker in Georgia, South Carolina and Florida. He holds degrees from major universities in the United States and Canada.

GABB Lifetime Multi-Million Dollar Club Member and former GABB President DAVID R. STILL is the founder, designated business broker, and lead business appraiser of Capital Endeavors, Inc., established in 1995 and located in Lawrenceville, Ga.  He earned a Bachelor of Business Administration from the University of Georgia. As a Certified Business Intermediary, he specializes in the mergers and acquisitions of privately held companies with gross sales between $1 million and $50 million. Mr. Still was a co-owner and publisher of the Gwinnett Post-Tribune newspaper. Mr. Still received the GABB Lifetime Achievement Award in 2002. Mr. Still is the Chairman of the Downtown Development Authority of the City of Lawrenceville and active in multiple non-profit organizations.  He is married and has two grown children, one daughter-in-law and two grandchildren.

J. SNYPP lives in Dunwoody, grew up in Atlanta, and graduated from Georgia Southern University with a degree in marketing. Mr. Snypp spent more than two decades in the office- furniture business before becoming a business broker and has been with Preferred Business Brokers, Inc. for eight years. He has found success selling businesses in a variety of industries, most recently selling day-care centers, a travel agency, and a cooking school. Mr. Snypp is married and has two sons. When he is not selling businesses, he is usually coaching a football or baseball team, camping, canoeing, water skiing, scuba diving, or involved in some other family activity.

STEVEN JOSOVITZ is vice president of The Shumacher Group, where he heads the restaurant business brokerage division and provides commercial retail and restaurant real estate site selection, sales and lease negotiation expertise. A former restaurant owner and trained professional chef, Steven has an extensive background in restaurant and hotel management. He also offers consulting and appraisal services. He has been retained by law firms for his expert opinion to help settle disputes. Mr. Josovitz, a resident of Norcross, earned a Bachelor of Science in Hotel/Restaurant Management from Florida International University in 1981. Mr. Josovitz is a member of the Georgia Restaurant Association, International Council of Shopping Centers, and the Retail Brokers Network.

KENT REED of Murphy Business & Financial Corporation has earned both of the prestigious designations of BCI (Board Certified Intermediary) and ABI (Accredited Business Intermediary). Mr. Reed is skilled in negotiations and an experienced advisor on management and financial issues. Mr. Reed holds a Bachelor of Science in Business Administration in Management and Marketing from Western Carolina University. His previous professional career included positions in Fortune-100 and smaller companies. His experiences as a business-development executive and retail-marketing specialist have given him the necessary skills to help maximize the efforts of motivated buyers and sellers. He enjoys spending time with his wife, Tracey, and their 10-year-old twin boys as well as traveling, fishing, music, and the North Georgia mountains. He is a member of Rotary International-East Cobb (currently president-elect), the Georgia Association of Business Brokers (2014 treasurer), and the International Business Brokers Association (IBBA). With thousands of businesses in Atlanta, Mr. Reed has access to a broad spectrum of business types and sizes and works closely with many of Atlanta’s top business leaders.

ART LENNIG is regional director for Murphy Business & Financial Corporation – Georgia, Inc. Mr. Lennig has served GABB as secretary, treasurer, vice president, and president. He earned a marketing degree from the University of Evansville. Art owned his own business for 20 years prior to becoming a business intermediary. He believes that his prior business experience has been very beneficial when representing business owners. His membership in the GABB has helped himself and also enabled him to assist other brokers as they start their careers. Mr. Lennig is a member of International Business Brokers Association (IBBA). Mr. Lennig has earned the prestigious Certified Business Intermediary (CBI®) designation. In 2003, he received the Senior Business Analyst (SBA) Award from the Society of Business Analysts. He is also a member of Institute of Certified Business Counselors (I-CBC). He is also a Life Member of the GABB Million Dollar Club. He resides in Acworth with his wife Pam, and they have two sons and five grandchildren.

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Former Gov. Perdue to Speak to GABB Tuesday

Sonny Perdue at GABB

Former governor to speak Tuesday

Former Georgia Gov. Sonny Perdue
to speak to GABB next Tuesday, Oct. 28

Sonny Perdue was sworn in as Georgia’s 81st Governor on January 13, 2003 and immediately went to work reforming the state budget, setting priorities, and cutting wasteful spending. His efforts helped stimulate the economy and turn the state budget deficit that he inherited into a substantial surplus.  During Perdue’s first term, Georgia created more than 200,000 new jobs and posted the highest graduation rate and SAT scores in state history. He dedicated his administration to attracting new businesses and jobs to Georgia, improving the quality of programs that touch the lives of children, and fighting for a comprehensive ethics reform package. His term ended in 2011.

Perdue’s appearance at the GABB will be shortly before the Nov. 4 general election in which his first cousin, David Perdue, is the Republican candidate for U.S. Senate. The GABB is the state’s largest professional organization dedicated to buying and selling businesses and franchises. The GABB meeting starts at 10:30 a.m. at the South Terraces Conference Center, 115 Perimeter Center Place, Atlanta, preceded at 9:45 a.m. by a free light breakfast and networking session.

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How Earn-Outs Impact the Sale of a Business

Earn-Outs and how they impact the sale of a business

By Matt Slappey CBI, BCI

Certified Business Intermediary; Mergers and Acquisitions (M&A) Advisor

Former GABB President Matt Slappey gave a presentation on earn-outs, what they are and how they can be used in the sale of a business. For those who missed this valuable presentation, the GABB gives you access to a recording of the speech and an outline of his PowerPoint presentation.

Earn-Out PowerPoint Presentation for the GABB

Earn-out:

Definition according to Google:

A provision written into some financial transactions whereby the seller of a business will receive additional payments based on the future performance of the business sold

Wikipedia defines it as:

Earn out refers to a pricing structure in mergers and acquisitions where the sellers must “earn” part of the purchase price based on the performance of the business following the acquisition. In an earn out, part of the purchase price is paid after closing based on the target company achieving certain financial goals

Reality of an Earn-out

• An earn-out is used in most cases to bridge what a seller thinks his/her company is worth to the price that a buyer is putting on that same business.
• When a business is full of “potential” that the owner has never actually realized (some of this is real and some is smoke)
• Keeps negotiations alive when the parties seem far apart.

Scenario

• You have a listing/engagement with a client.
• The client has $500K per year in cash flow.
• The market will tell you that a buyer’s offer of 3 x cash flow is not unreasonable.
• The seller wants $2,000,000+ or a 4x+ multiple

Things to understand

• Why does the seller think the company is worth more than the market rate?
• Is there a valid reason that the company is worth more?
• Is there true “unrealized potential”?
• Is the company about to land a large contract or opportunity?

Examples of Companies that lean towards an “earn out.”

• Consulting companies
• No sales reps other than the owner
• No management other than the owner
• Family members involved in the business
• Professional practices

SBA Deal?

• If you are going to seek financing via an SBA loan for your deal, do not pursue an earn-out because the SBA does not allow the use of earn-outs. They require a defined purchase price.
• This is not the SBA lenders in the room making the rule, it is the SBA.

Earn-out Structure

• Create an earn-out that is the most simple and effective way to measure company or owner performance.
• Complicated earn-outs must be clearly understood by all parties and all parties must be able to verify all the information required to create the payouts

Types of Structures

• Revenue Goal
• Gross Profit Goal
• EBITDA or SDE Goal
• Retention of current clients
• Acquisition of new clients

Tax Implications

• Most earn-outs are treated as an “Installment Payment” which allows taxation in the year it is actually received.
• Can use this technique to keep taxation of sales of smaller businesses under the top tax rates.
• It should also be noted that there may be situations in which a seller would choose to recognize the sale of a business currently and forego deferral treatment, such as when a business is sold at a loss, or when it is known or expected that tax rates will increase in the future.

Taking care of employees

It is possible for an owner to expense a portion of his earn out payments that are then paid to employees for retention or performance that leads to the seller receiving an earn-out payment.   Scenarios change as to how to legally do this based on differences in an asset or stock deal, so consult a qualified attorney and/or tax advisor.

This can really motivate employees to achieve the earn out goals, thus earning it for the seller!

Summary:

Earn outs are a powerful tool to bridge the gap in business values.

Both sides can benefit from using them effectively.

There are tax implications and advantages of earn outs.

Knowing how to navigate earn-outs can help you close more transactions.

Questions?

Matt Slappey, 404-486-0350, mslappey@murphybusiness.com

www.murphybusiness.com/decatur

 

 

 

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GABB Affiliates Discuss How to Reduce Risk in a Transaction

Those who attended the August GABB meeting got to hear an excellent panel discussion of how brokers can reduce risk in a deal.

GABB President C. David Chambless moderated the panel of GABB Affiliates.

The panel included:

Dan Browning, JD, of DB Consulting, Inc., has 20 years of experience as a business appraisal professional and holds the Master Analyst in Financial Forensics (MAFF) and Accredited in Business Appraisal Review (ABAR) designations from the National Association of Certified Valuators and Analysts (NACVA).

David Cross, Senior Vice President-Wealth Management and Wealth Management Advisor with Merrill Lynch, is a specially qualified Portfolio Manager in the Merrill Lynch Person Investment Advisory® (PIA) Program, and can build and manage customized investment strategies and implement proprietary model portfolios, as well as provide traditional advice and guidance.

Larry Domenico, JD, is managing partner of Mozley, Finlayson & Loggins LLP, and practices extensively in the areas of products liability defense, commercial and business litigation, and general litigation; he has extensive experience in assisting start up and existing businesses, including estate planning for business owners, and alternate forms of dispute resolution including arbitration and mediation.

Chris Fonzi, founder and principal of Logic Environmental, Inc., has performed environmental assessments and provided consulting services in more than 20 states during the past 15 years. He is a graduate of the University of Florida and the UF School of Law.

Brian Harper is Senior Vice President, SBA Group at Atlantic Capital Bank and has 25 years of business banking and lending experience, and is a member of the Rotary Club of Dunwoody, Junior Achievement, Georgia Lender’s Quality Circle and the National Association of Government Guaranteed Lenders.

Sarah Wheeler, JD, a senior associate at Moore & Reese, primarily works with corporate transactions, community association law, real estate law (including foreclosures) and estate planning.

Guests are welcome to attend the GABB’s monthly meeting which starts 10:30 a.m. at the South Terraces Conference Center and is preceded at 9:45 a.m. by a free light breakfast and networking session. The GABB is the state’s largest professional organization dedicated to buying and selling businesses and franchises. The South Terraces Conference Center is at 115 Perimeter Center Place, Atlanta. For more information about the GABB, contact GABB President C. David Chambless at dchambless@abraxas.biz or 404-627-4454.

 

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Things Small Employers Should Know about Health Insurance

The Wall Street Journal recently reported that insurance carriers dropped several thousand small business owners from their small-business plans earlier this year. HealthMarkets Insurance Agent Bob Smith, a GABB affiliate, offers this information about health insurance mandates.

• Companies with fewer than 50 FTE are not required to offer health insurance to employees.

The so-called “employer mandate” only impacts companies with 50 FTE (full time equivalents) or more. Note that this is 50 FTE, not 50 employees. The law specifies the calculations for converting part-time employees to FTEs. Note also that companies under common control have their employee counts added together for the purposes of qualifying for the employer mandate.

The potential penalties take effect in 2015 for companies with 100 or more FTE and in 2016 for companies with 50-99 FTEs who didn’t take certain actions with regards to their workforce (for those who took those actions, such as workforce reductions, the potential penalties take effect in 2015). Penalties are assessed if an employer either does not offer coverage to 95% of its full­time employees and their child dependents, if the plan is considered unaffordable, or if the plan does not meet a minimum value test.

• Companies with fewer than 25 FTE could be eligible for tax incentives for offering health insurance.

The tax incentive is available for employers with fewer than 25 FTE, average annual wages less than $50,000, and who contribute at least 50% of the cost of the group health premium. For those companies who qualify, the tax credit is available for two consecutive years. The amount of the credit ranges from 3-50% of the employer contribution (to a max of 50% of the premium) and varies according to average wages and number of employees. The maximum credit is available for those with 10 or fewer employees and average wages of $25,000 or less. The credit declines as either of those variables increase. Health insurance must be purchased through the government SHOP (Small Business Health Options Program) exchange in order to qualify for the credit.

• Your employees may be better off if you don’t offer a plan.

In many cases, the net cost of individual health coverage to employees after federal subsidies is less than the cost of a group plan to employees. Subsidy levels for individual employees vary with family composition and household income. Every company must evaluate their specific situation. The United States Department of Health and Human Services has announced that on average, enrollees through the exchanges are receiving subsidies totaling 76% of the insurance premium.  However, employees are precluded from pursuing that option if they are offered insurance through their employer (even if they do not participate in that plan). Note also that the elimination of an employer-sponsored plan is a qualifying event that creates a Special Enrollment Period for the employees, allowing the employees to enroll in an individual market plan without a break in coverage.

• Companies cannot contribute to employees’ individual health insurance premiums on a pre-tax basis.

There are two common sources of misinformation on this topic. The first source is headlines trumpeting that employers cannot “dump” employees to the exchanges. These articles were triggered by guidance from the IRS Notice 2013-54.

The key point is that employees may not use Section 125 “Cafeteria Plans” or HRAs to reimburse employees’ premiums for insurance purchased through the Health Insurance Marketplaces (or exchanges).

Working the other way, some advisors are suggesting that they have a plan design that allows for pre-tax contribution to individual health insurance premiums. Referring again to the IRS notice described above, it is clear that the intent of the regulation is to prevent such arrangements. The potential fines for non-compliance are $100/employee/day.

• Options exist for contributing to employees’ health care and insurance costs on a post-tax basis.

HealthMarkets has partnered with HealthEquity to provide a platform for Health Savings Accounts (HSAs) that covers qualified medical expenses to which employers can contribute on a pre-tax basis. In addition, our partner BASE offers a plan for administering defined contribution to individual premiums on a post-tax basis (conditional wage increases) to allow a method for reducing an employee’s individual health insurance premiums.

This article was prepared by HealthMarkets Insurance Agency, of which GABB Affiliate Bob Smith is a licensed agent. The HealthMarkets Benefits Optimizer can develop a customized solution for your company and your employees. HealthMarkets agents are neither tax nor legal professionals. For guidance regarding legal and tax matters specific to your business, please consult a qualified advisor in those fields. HealthMarkets Insurance Agency is the d/b/a or assumed name of Insphere Insurance Solutions, Inc. which is licensed as an insurance agency in all 50 states and the District of Columbia.

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