- Neglecting the day-to-day running of their business with the reasoning that it will sell tomorrow.
- Starting off with too high a price with the assumption the price can always be reduced.
- Assuming that confidentiality is a given.
- Failing to plan ahead to sell / deciding to sell impulsively.
- Expecting that the buyers will only want to see last year’s P&L.
- Negotiating with only one buyer at a time and letting any other potential buyers wait their turn.
- Having to reduce the price because the sellers want to retire and are not willing to stay with the acquirer for any length of time.
- Not accepting that the structure of the deal is as important as the price.
- Trying to win every point of contention.
- Dragging out the deal and not accepting that time is of the essence.
© Copyright 2015 Business Brokerage Press, Inc.Read More
The Atlanta Braves decision to move to Cobb County puts the team closer to its fan base, and will ultimately be a significant economic boon to the region, Mike Plant, the Atlanta Braves’ Executive Vice President of Business Operations, told the Georgia Association of Business Brokers this week.
In a 45-minute speech and question-and-answer session, Plant described the planning for the SunTrust Park and development, new destination ballpark complex that will attract guests year-round. He estimated that 80 percent of the contracts let on the development were from Cobb County, and the county will receive $27 million in property and sales tax in the first year it opens.
Plants estimated a $270 million total value of ballpark and development benefits to Cobb County. The development will create 5227 construction jobs and 3141 ballpark jobs. Visitor spending will generate 873 jobs and $25 million in earnings. The return to Cobb taxpayers will be $132.3 million over first 10 years, he said.
The initial SunTrust Park and Development will encompass 57 acres, with a 1.1 million square foot ballpark and a 1.5 million square foot mixed use development. The project represents a $900 million investment and a “long term play” for 30 years for the Braves, Plant said.
This is a $1.3 billion project and a “very aggressive plan that no one has ever done before,” Plant said.
Politicians don’t understand ROI—return on investment, Plant told Georgia business brokers on Feb. 24. In a detailed presentation, he described the development of the complex, which will include a multi-user entertainment center, retail partners and a public street with a walkable environment. He estimated $700 million in private investment.
The heart of the ballpark will be the plaza area with water features where programs will run 270 days a year. The Braves are close to announcing a deal with a 4-star hotel partner, Plant said.
The stadium will go to 41,000 from the current from 50,000 seats to create more intimate viewing and comfort. The suite number will go from 63 to 37, and the amenity group seats will drive revenue so that the other 37,000 seats can be more reasonably priced. Plant said the club understands that half of its fan base are families with kids.
There are plans to connect via bike paths to the Silver Comet Trail and the Chattahoochee River bike trail. The team is discussing connecting to the Cumberland depot and working on shuttle services from Smyrna and Marietta.
Plant says the Braves have considered potential parking problems, noting “I’m in the parking business every day. I hate it.” He described negotiations with nearby businesses to lease some parking spaces after most of their employees are gone by 6 p.m.
At Turner Field, there are primarily two ways to access parking from the interstate, while there will be 17 different access points to the new park, Plant said. He said the team would soon announce another round of enhancements and improvements in Cumberland area to improve the traffic flow.
The Braves also have a significant fanbase outside of metro Atlanta. Plant noted that 21 percent of audience comes outside of Atlanta.
Plant’s PowerPoint Presentation:
Plant’s responsibilities include overseeing stadium operations, security, finance, personnel, special events and the operations of the minor league clubs. He is currently the Braves Project Leader of the new $672 million stadium and mixed use development in Cobb County.
Since joining the Braves, Plant has implemented more than $50 million of improvements at Turner Field including the installation of the largest high-definition display in the world, and the upscale SunTrust Club. He also oversaw enhancements to Turner Field concessions, parking and traffic patterns. Plant also led the successful relocation of two Braves minor league teams to new stadiums in Pearl, Mississippi and Gwinnett County, Georgia.
GABB members represent owners of Georgia businesses and help them establish the sales price of their business, create marketing plans and strategies for the sale of their business, identify and qualify potential buyers, and work to protect the confidentiality of the entire process. Many of today’s business buyers are individuals who have decided not to re-enter corporate America, but are ready to control their own destiny by purchasing and operating a Georgia business.Read More
Putting a price on privately-held companies is more complicated than placing a value or price on a publicly-held one. For one thing, many privately-held businesses do not have audited financial statements; these statements are very expensive and not required. Public companies also have to reveal a lot more about their financial issues and other information than the privately-held ones. This makes digging out information for a privately-held company difficult for a prospective purchaser. So, a seller should gather as much information as possible, and have their accountant put the numbers in a usable format if they are not already.
Another expert has said that when the seller of a privately-held company decides to sell, there are four estimates of price or value:
- A value placed on the company by an outside appraiser or expert. This can be either formal or informal.
- The seller’s “wish price.” This is the price the seller would really like to receive – best case scenario.
- The “go-to-market price” or the actual asking price.
- And, last but not least, the “won’t accept less than this price” set by the seller.
The selling price is usually somewhere between the asking price and the bottom-dollar price set by the seller. However, sometimes it is less than all four estimates mentioned above. The ultimate selling price is set by the marketplace, which is usually governed by how badly the seller wants to sell and how badly the buyer wants to buy.
What can a buyer review in assessing the price he or she is willing to pay? The seller should have answers available for all of the pertinent items on the following checklist. The more favorable each item is, the higher the price.
- Stability of Market
- Stability of Historical Earnings
- Cost Savings Post-Purchase
- Minimal Capital Expenditures Required
- Minimal Competitive Threats
- Minimal Alternative Technologies
- Reasonable Market
- Large Market Potential
- Reasonable Existing Market Position
- Solid Distribution Network
- Buyer/Seller Synergy
- Owner or Top Management Willing to Remain
- Product Diversity
- Broad Customer Base
- Non-dependency on Few Suppliers
There may be some additional factors to consider, but this is the type of analysis a buyer should perform. The better the answers to the above benchmarks, the more likely it is that a seller will receive a price between the market value and the “wish” price.
© Copyright 2015 Business Brokerage Press, Inc.Read More
- Risk minimized. A reputable franchise is a proven business method. They’ve been through the ups and downs and know what works and what doesn’t work. That keeps the new business owner from repeating the same mistakes.
- Name recognition. A well-known name can bring customers into the business and provide a competitive advantage for the franchisee.
- Training. A franchisor can provide a regimented training program to teach the franchisee about the business operation and industry even if the franchisee has no prior experience. Training is usually done at the office of the franchisor and at the local location.
- Support. A franchisor can provide managerial support, software support and problem-solving capabilities for its franchisees. This support is there during the start up phase, but also continues for the term of the franchise; usually 10 or 20 years.
- Economies of scale. Cost savings on inventory items can be passed on to the franchisee from bulk purchase orders made by the franchisor.
- Advertising. Cooperative advertising programs can provide national exposure at an affordable price.
- Financing. A franchisor will generally assist the franchisee in obtaining financing for the franchise. Lenders are more inclined to provide financing to franchises because they are less risky than businesses started from scratch. In fact, the SBA keeps a list of the “approved franchises.”
- Site selection. Most franchises will assist the franchisee in selecting a site for the new franchise location. Having the right location is all powerful and most franchises have a connection to a local real estate professional to assist in site selection.
- Vested Interest / Royalty. Most franchises charge a royalty. This fee, charged for the use of the name and the ongoing support given to the franchisee, is usually around 5% of the franchisee’s sales. In other words, for every dollar the franchisee makes, the franchisor gets a nickel. This gives the franchisor a direct interest in the success of the franchisee. The more successful the franchisee, the more successful the franchisor. In simple terms, the more money the franchisee makes; the more money the franchisor makes. Thus, the commonly heard phrase; “In business FOR yourself, but not BY yourself”.
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