Before answering the question, it makes sense to first ask why people want to be in business for themselves. What are their motives? There have been many surveys addressing this question. The words may be different, but the idea behind them and the order in which they are listed are almost always the same.
- Want to do their own thing; to control their own destiny, so to speak.
- Do not want to work for anyone else.
- Want to make better use of their skills and abilities.
- Want to make money.
These surveys indicate that by far the biggest reason people want to be in business for themselves is to be their own boss. The first three reasons listed revolve around this theme. Some may be frustrated in their current job or position. Others may not like their current boss or employer, while still others feel that their abilities are not being used properly or sufficiently.
The important item to note is that money is reason number four. Although making money is certainly important and necessary, it is not the primary issue. Once a person decides to go into business for himself or herself, he or she has to explore the options. Starting a business is certainly one option, but it is an option fraught with risk. Buying an existing business is the method most people prefer. Purchasing a known entity reduces the risks substantially.
There are some key questions buyers want, or should want, answers to, once the decision to purchase an existing business has been made. Below are the primary ones; although a prospective buyer may not want answers to all of them, the seller should be prepared to respond to each one.
- How much is the down payment? Most buyers are limited in the amount of cash they have for a down payment on a business. After all, if cash were not an issue, they probably wouldn’t be looking to purchase a business in the first place.
- Will the seller finance the sale of the business? It can be difficult to finance the sale of a business; therefore, if the seller isn’t willing, he or she must find a buyer who is prepared to pay all cash. This is very difficult to do.
- Why is the seller selling? This is a very important question. Buyers want assurance that the reason is legitimate and not because of the business itself.
- Will the owner stay and train or work with a new owner? Many people buy a franchise because of the assistance offered. A seller who is willing, at no cost, to stay and to help with the transition is a big plus.
- How much income can a new owner expect? This may not be the main criterion, but it is obviously an important issue. A new owner has to be able to pay the bills – both business-wise and personally. And just as important as the income is the seller’s ability to substantiate it with financial statements or tax returns.
- What makes the business different, unique or special? Most buyers want to take pride in the business they purchase.
- How can the business grow? New owners are full of enthusiasm and want to increase the business. Some buyers are willing to buy a business that is currently only marginal if they feel there is a real opportunity for growth.
- What doesn’t the buyer know? Buyers, and sellers too, don’t like surprises. They want to know the good – and the bad – out front. Buyers understand, or should understand, that there is no such thing as a perfect business.
Years ago, it could be said that prospective buyers of businesses had only four questions:
- Where is the business?
- How much is it?
- How much can I make?
- Why is it for sale?
In addition to asking basic questions, today’s buyer wants to know much more before investing in his or her own business. Sellers have to able to answer not only the four basic questions, but also be able to address the wider range of questions outlined above.
Despite all of the questions and answers, what most buyers really want is an opportunity to achieve the Great American Dream – owning one’s own business!Read More
The March 2014 edition of the Georgia Real Estate Commission newsletter contains an article of particular interest to business brokers. The article covers key issues on licensing and commission-sharing with “consultants,” according to GABB past-president Kathryne Pusch, who is the Business Brokerage Industry Representative on the Education Advisory Committee to the GREC.
The article describes laws that require that persons performing real estate activities for another party for a fee, and who are not doing so as a full time employee of that owner, company, or individual, must obtain and maintain a real estate license in Georgia.
Many real estate professionals refer to their services as consulting, but the real estate consultant must be licensed by the Georgia Real Estate Commission. There are exceptions to this rule, but they do not apply to individuals holding an active or an inactive real estate license. The exceptions to licensure are detailed in License Law 43-40-29.
A consultant, business broker, or individual who provides services in anticipation of being paid in the sale of a business which includes the transfer of the lease on the property must be licensed as a real estate licensee.
A real estate licensee cannot legally share a commission in a transaction with an unlicensed person who is illegally practicing brokerage activities.
The Commission has authority to stop those practicing real estate without a license, including individuals practicing with an inactive license or a license that is not in good standing. The Commission issues a Cease and Desist Order to the individual practicing real estate without a license requiring him/her to Cease and Desist from any further activities that require a license issued by the Commission.
The Commission is authorized to impose a fine up to $1,000.00 for each transaction constituting a violation, and each day the party continues to act in violation is considered another violation resulting in an additional $1,000 per day. Clearly, the fines can be extensive.
To read the complete newsletter, please click this link.Read More
The GABB usually meets on the last Tuesday of the month. There will be no meeting in March of 2014.
Upcoming GABB Meeting Dates
April 29, May 27. June 24, July 29, Aug. 26, Oct. 28 and Nov. 25.
The GABB will sponsor a fall conference on Sept. 30.
The monthly meeting begins at 10:30 a.m. and is preceded at 9:45 a.m. by a free light breakfast and networking session.
The meeting is at 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 firstname.lastname@example.org or 404-627-4454.
Is everyone feeling lucky today?
According to one of the country’s most successful businessmen, “Luck is a dividend of sweat. The more you sweat, the luckier you get.” (Read to the end of the newsletter to find out who he was.)
But with the luck of the GABB, you don’t have to sweat to be successful. All you have to do is sign up for our 2014 GABB Spring Conference and you will get some valuable tools to help you market and grow your business more efficiently, while at the same time earning Continuing Education Credits.
The GABB Spring Conference
will be held NEXT TUESDAY, March 25, 2014 at the Atlanta REALTORS Center from 8:30 a.m.-4 p.m. The conference replaces the GABB’s regular monthly meeting. Leigh Milton, Senior vice President, SBA Lending, at Resurgens Bank, is providing lunch.
Gadgets and Gizmos:
Learn about the latest cloud-based tools, mobile apps, software and other gadgets that will help you better market and manage your business.
Ramping up the Referrals:
Learn and implement a powerful referral marking plan. Examine your referral network and plan activities that will motivate referral sources to refer you.
GABB Membership for 2014 is now due.
The GABB soon will begin inactivating the memberships of those who have not paid dues for 2014, so please renew now. All business brokers should renew as BROKER members, after the GABB board eliminated the associate membership category. All others renew as AFFILIATE members. Go to the GABB website to get information on applying for membership.
Proposed Georgia Real Estate Commission Rules Changes
The Georgia Real Estate Commission is proposing two changes to the current Rules of the Commission which affect the use of the internet and the number of continuing education credits required to keep a license. All GABB broker members must have a real estate license, and GABB conferences are eligible for CE credits.
Advertising – The purpose of this change is to address the use of the Internet to advertise real property. This proposed Advertising Rule is a revision of an earlier proposed Rule sent to real estate licensees previously.
Maintaining a License – The proposal is to increase continuing education hours from 24 to 36 over a 4 year license renewal period. Also, after July 1, 2016, continuing education shall include a mandatory 3 hours on the topic of License Law.
Note: This Rule will NOT apply to those individuals known as “Grandfathered Licensees” who were actively licensed prior to January 1, 1980. Grandfathered Licensees will continue to be exempt from continuing education requirements.
The proposed Rules are available for review and comment by going to www.grec.state.ga.us and following these steps:
1. On the left-hand column, under “Quick Links”, click on “Real Estate License Law.”
2. Click on “Proposed Rule Changes.”
Then click on the link to view proposed Rule 520-1-.09 Advertising and proposed Rule 520-1-.05 Maintaining a License.
M&A Brokers No-Action Letter
Earlier this year, the SEC issued a sweeping M&A Brokers No-Action Letter clarifying and simplifying the complex, overlapping and unduly burdensome regulations that can impact buyers and sellers of privately held businesses, and the professionals who seek to assist them.
In a nutshell, unregistered brokers and intermediaries operating within the bright guidelines of the No-Action Letter can now take some added degree of comfort that the SEC very likely will not pursue action against them, regardless of the size of the transaction. We have little doubt this was influenced by our legislative successes. Unfortunately, an SEC no action letter does not prevent attorneys or courts from tangling brokers in asserting the need for registration, and it can be withdrawn by SEC at will, and further does not obligate any state from following suit in contradiction to their state securities licensing laws.
The Alliance of Merger & Acquisition Advisors has posted the SEC letter and a response to it.
To urge support for legislation to codify this recommendation, Share this link with an urgent plea for support to the Brokers, Lenders, and other Transaction Professionals in your network to insure their clients, business owners are not put at risk in the event of an asset sale converting to a stock sale.
This site amaaonline.com will take an inquirer to a copy of the most recent SEC no action letter regarding M&A / Business Broker services dated 1/31/2014 along with the letter from the attorneys representing our profession in front of the SEC.
Excerpt from Request for No Action Letter- M&A Brokerage ActivitiesA long-standing issue in the area of broker-dealer regulation concerns the treatment of persons who help to facilitate the sale of operating businesses. For many years there was an open question as to whether a sale of all of or a controlling interest in a business was a securities transaction or effectively a sale of the assets of the company (and not a securities transaction). As a result, a person that is in the business of effecting the sale of operating businesses through the sale of securities generally could be viewed as falling within the meaning of the term “broker” as defined in Section 3(a)(4) of the Exchange Act. Absent an exception or exemption, that person would be required to register as a broker-dealer pursuant to Section 15(a) of that Act and become a member of a self-regulatory organization. If, however, the transaction were structured as an asset sale and did not involve the sale of securities, a person could engage in the same types of “brokering” activities without registering as a broker-dealer.
To read the letter and response, go to amaaonline.com.
Girl Scouts and GABB?
What do Girl Scouts and GABB have in common? Not a lot, except that your humble Executive Director is a Girl Scout volunteer and a freelance writer, and a story she wrote about Girl Scout dropouts was published today on the national Women’s eNews website. So, click the link and find out what this national organization founded in Savannah, Georgia, is doing to attract more girls. https://womensenews.org/story/traditions/140315/girl-scout-dropouts-want-camping-not-cookie-sales#.Uyb8p4Wa-No
Diane LoupeYou are receiving this email because you are or were a member of the GABB, or have requested to be put on our mailing list. Don’t want to hear from us any more? No problem, just email email@example.com and you will be deleted from our mailing list. Want more information about GABB membership? Contact GABB Executive Director Diane Loupe at firstname.lastname@example.org or 404-374-3990. If I don’t reply within 24 hours, that means there’s a technical glitch, so please contact me again.
“Luck is a dividend of sweat. The more you sweat, the luckier you get.” Ray Kroc, McDonald’s CEO.Read More