Do you want to learn more about Business Brokerage?
The Georgia Association of Business Brokers is offering a Spring Conference that will cover the basics of business brokerage including
- Reading a Profit & Loss statement to help determine business value
- Components of a Balance Sheet
- Qualifying Buyers
- Finding Seller’s Discretionary Earnings
- Basic Legal Issues in Business Brokerage
- Avoiding Legal Pitfalls
The Spring Conference will be held on April 30th at the Georgia Realtors Building at 6065 Barfield Rd. from 9 a.m. – 4:30 p.m. at the Georgia Association of Realtors Conference Center. The cost will be $125, but GABB members can register for $75 if they register by April 15. If you want to just take half a day of classes, that’s $75. Scroll to the bottom of the page to register.
The morning session will cover some basic business brokering skills, while the afternoon session will tackle legal issues. Attendees may register for the entire conference, or just the morning or afternoon session. The classes are offered through the Georgia Association of REALTORS school #271 and have been approved for six hours of continuing education credit towards renewing your Georgia real estate license.
AM: An Introduction to Business Brokerage: Business Profitability and Qualifying Buyers: (70542) Real Estate CE / 3 credits
DESCRIPTION: The student will be able to identify, understand and complete basic documents used to determine the potential sales value of a business, will learn how to identify key elements of a profit and loss statement, calculate a business’s profitability and value using the business’s tax returns, and determine a business’ discretionary earnings. At the conclusion of the session, attendees will be able to determine the profitability of a business and if a buyer can qualify to purchase it. 9 a.m.-12:30 p.m.
How to Read a P&L statement and Balance Sheet: Former GABB President Greg Defoor, Founder DeFoor Business Services, Inc.
OBJECTIVE: Upon completion of this segment of the class, students will be able to identify important features of profit and loss statements and balance sheets, and demonstrate how to determine the ways balance sheet items affect cash in the bank.
Determining Real Estate Loan Structure using Business Tax Returns: Ryan Stoll, SBA Banker at Cadence Bank
Objective: Upon completion of this segment, students will be able to determine whether a buyer can qualify or not to purchase a business based on their tax returns, as well as determine the profitability of a business and its value. Students will be able to use a tax return to determine CADA.
Discretionary Earnings and Business Valuation: Dan Browning
OBJECTIVE: Upon completion of this section of the class, the student will be able to demonstrate how a Seller’s Discretionary Earnings affects the value of a business. The student will be able to identify and explain private and bank valuations, how to determine owner’s compensation, and how to identify items that will not enhance the value of a business.
BREAK FOR LUNCH
GABB Spring Conference: PM Session: Business Brokerage Basics: Legal Issues (70543) Real Estate CE / 3 credits
DESCRIPTION: Participants will learn how to identify potential legal problems that could arise in the purchase or sale of a business such as identifying asset purchases versus stock purchases; how to verify a business’ legal status; identifying ownership structures; how to use the basic legal forms provided by GABB; identifying and understanding the steps in the due diligence process; and securing their commission and avoiding litigation
Basic Legal Issues in Business Brokering: Tanya Nebo
OBJECTIVE: Basic Legal Issues in Business Brokerage. After completing this hour, students will be able to identify and explain basic legal issues business brokers may encounter in the sale or purchase of a business, identify types of purchases, identify legal entities, and demonstrate how to verify the status of a business, and demonstrate an understanding of the due diligence process.
Legal Forms Used in Business Brokerage: Attorney Shannon Collier Stalvey
OBJECTIVE: The student will be able to identify and use common legal documents used in the purchase of a business, including how to obtain and use GABB Forms, identify legal problems that a broker may encounter when using a standardized forms, demonstrate the use of a standardized form, and identify situations in which a broker should consult an attorney.
Avoiding Legal Pitfalls in Business Brokering: Attorney Larry Domenico
OBJECTIVE: Students will be able to identify and explain legal pitfalls when selling a business, demonstrate ways they can avoid lawsuits, identify asset purchase agreements and non-compete agreements, and demonstrate how they can avoid problem clients
Register for the class.
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Contact GABB at firstname.lastname@example.org or 404-374-3990 for help if you have difficulty.
If you wish to pay by credit card, select the PayPal Option. If you are paying by check, please mail your payment to
4780 Ashford Dunwoody Road, Suite A-241
Atlanta, GA 30338-5564
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Every business has to be concerned about maintaining confidentiality. When business owners are getting ready to sell their business, they often become somewhat obsessed with confidentiality.
It goes without saying that owners don’t want the word that they are selling to spread to the public, employees or most certainly their competitors. Yet, there is something of a tug of war between the natural desire for confidentiality and the desire to sell a business for the highest amount possible. At the end of the day, any business owner looking to sell his or her business will have to let prospective buyers “peek behind the curtain.” Let’s explore some key points that any good confidentiality agreement should cover.
At the top of your confidentiality list should be the type of negotiations. This aspect of the confidentiality agreement is crucial because it stipulates whether the negotiations are secret or open. Importantly, this part of the confidentiality agreement will outline what information can be revealed and what cannot be revealed.
Also consider the duration of the agreement. Your agreement must clearly define how long the agreement is in effect. If possible, your confidentiality agreement should be permanently binding.
You will undoubtedly want to outline what steps will be taken in the event that a breach does occur. Having a confidentiality agreement that spells out what steps you can take if a breach does occur will help to enhance the effectiveness of your contract. You want your prospective buyers to take the document very seriously, and this step will help make that a reality.
Special considerations should also be clearly defined for the business in question. Patents are a good example. A buyer could learn about inventions while “kicking the tires,” and you’ll want to be quite certain that any prospective buyer realizes that he or she must maintain confidentiality regarding any patent-related information.
Don’t forget to include any applicable state laws, especially if the prospective buyer is located outside of your state.
A confidentiality agreement is a legally binding agreement. All parties involved must understand this critical fact. Investing the money and time to create a professional confidentiality agreement is time and money very well spent. An experienced business broker can help you navigate not just the confidentiality process, but also the entire process of buying and selling a business.
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Award-winning Atlanta Journal-Constitution economics and business writer Michael E. Kanell spoke to the Georgia Association of Business Brokers on March 26, 2019, about economic journalism. Hear a recording of his remarks here. He discussed how he covers economic trends, how newspaper journalists gather the news, and took questions. The GABB is the state’s leading association of professionals who facilitate the purchase and sale of businesses and franchises.
The meeting was sponsored by GABB affiliate Mark Jones of Franchise Systems Advisors. The association meets at the Georgia Association of Realtors conference room at 6065 Barfield Road, Sandy Springs, GA, 30328. The GABB meeting is free and open to the public; please register for the meeting at the form below.
Mr. Kanell has been an economics and business writer at the Atlanta Journal-Constitution since 2001. He has been a business and economics reporter for more than two decades. He has covered a wide range of issues, including the mortgage meltdown, the economic impact of immigration, the loss of American manufacturing jobs, the economics of the opioid crisis and the decrease in American mobility.
During the 1980s, he covered the wars and upheaval in Central America, reporting from the region. As a breaking news reporter, he was a member of two teams that won awards from the New England Press Association.
At the Journal-Constitution, he co-wrote a series in 2011 on the future of Atlanta that received the Society of American Business Editors and Writers’ award for best use of multimedia. In the past few years, he has appeared on a number of television talk shows, including CNBC, as well as on National Public Radio.
He is also the co-author of “Presimetrics: What the Facts Tell Us About How the Presidents Measure Up On the Issues We Care About,” a book on the economic performance of U.S. presidents. Before coming to Atlanta, he worked at a number of newspapers in New England and taught journalism at Boston University. Prior to that, he was an associate producer of radio documentaries for National Public Radio.
He also taught history and social studies at a Boston-area high school. His work has also appeared in The Washington Post, New York Times and National Catholic Reporter, as well as CFO, CIO and INC. magazines. He is a graduate of Princeton University with a degree in law from Boston University.
The GABB is the state’s largest and oldest association of professionals who specialize in brokering the purchase and sale of businesses and franchises. Broker members help owners determine the asking price of their business, create marketing plans and strategies for selling their business, identify and qualify buyers, and have the knowledge, experience and skills needed to help maintain the confidential nature of the process. The professionals of GABB relentlessly pursue professional development so they can provide superior, ethical services for all customers and clients. Affiliate members include bankers, lawyers, appraisers, insurers and other professionals who work closely with brokers to help owners and buyers get to the closing table.
For more information about GABB, please contact GABB President Dean Burnette at 912-247-3209 or email@example.com, or GABB Executive Director Diane Loupe at firstname.lastname@example.org or 404-374-3990.
Starting April 1, the SBA is changing its rules for financing partner buyouts, and GABB affiliate Susan Kite has provided a more detailed explanation of the changes. Kite, a Vice President and SBA Business Development Officer at Renasant Bank, says that the new SBA rules are designed to prompt borrowers to put more of their own cash money to finance partner buy-outs. SBA loans are frequently used in the purchase of businesses.
Victor A. Diaz, an attorney who is Managing Partner of Starfield & Smith’s Florida office, wrote in a recent client newsletter that the SBA tweaked its 7(a) lending program “as part of its overall goal of increased oversight and enhanced performance of its portfolio.”
The new rules “require greater use of cash (rather than debt) to finance partner buyouts.” In the regulation labeled SOP 50 10 5 (J), the SBA described “mandatory minimum cash equity injections from borrowers for loans used to finance changes of ownership.”
Earlier, the SBA issued a notice to prevent lenders from financing “more than 90% of the business purchase price or finance the acquisition of a partner’s interest who had not been sufficiently active in the business.” Under SOP 50 10 5 (K) effective April 1, 2019, the SBA has added two requirements before a borrower may finance more than 90% of the purchase price of a partner buyout. The two new requirements, according to Mr. Diaz:
(a) The remaining owner(s) must certify that he/she has been actively participating in the business operation and held the same ownership interest in the business for at least the past 24 months (Lender must include in the credit memorandum confirmation that the Borrower has made the required certification and retain such certification in the file); and
(b) The business balance sheets for the most recent completed fiscal year and current quarter must reflect a debt-to-worth ratio of no greater than 9:1 prior to the change in ownership.
Mr. Diaz writes that “in the event the Lender is unable to document that both (a) and (b) above are satisfied, the remaining owner(s) must contribute cash in the amount of at least 10% of the purchase price of the business, as reflected in the purchase and sale agreement. SOP 50 10 5 (K), page 185.”
Because of this change, “the need for additional cash equity will be assessed not on a forward-looking, pro-forma basis,” Mr. Diaz writes. “Instead, prior to the change of ownership, the business must demonstrate it is not over-leveraged. If the financial evaluation does not meet this threshold, additional cash equity will be required from the borrower in the amount of 10% of the purchase price, which reduces the possibility of the borrower utilizing debt rather than cash to finance the partner buyout.”
The SOP 50 10 5(K) will become effective April 1, 2019, and will apply to all applications received by SBA on or after that date. For more information on changes of ownership, please contact Victor at email@example.com or at 407.667.8811.
Thanks to Susan Kite for updating us on this rule.Read More
ATLANTA–Job additions in Georgia increased from 72,100 new jobs in 2017 to 103,500 job gains in 2018, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s Robinson College of Business.
But, job growth had a seesaw pattern, particularly in high paying catalyst sectors such as corporate, manufacturing and information technology, which lost 2,300 jobs in the first half of 2018 instead of adding its usual share of 15,000 new jobs.
“Was this apparent lack of job gains in the first half a data anomaly or was it reality?” Dhawan wrote in his “Forecast of Georgia and Atlanta” released Wednedsay, Feb. 27, 2019.
To find the answer, the forecaster looked at tax collections to form a complete picture of job quality and purchasing power in the economy.
“Georgia’s state tax revenues did not show a hiccup but continued to grow steadily,” Dhawan said. “The lack of catalyst job gains in the first half of 2018 is likely a data flaw, and the state employment picture completely turned around when corporate job gains rose by a stellar 26,900 jobs in the second half of 2018.”
Gains in the information and manufacturing sectors also drove job growth, with higher wage jobs producing stronger spending power and aiding future job growth in the domestic demand driven sectors of construction, retail trade and hospitality.
Transportation, which includes warehousing and distribution, posted strong gains throughout the year. Healthcare, which grew by 16,100 new jobs in calendar year 2018, is expected to continue to do well, with ongoing announcements and construction of medical centers across Georgia, such as expansions of Piedmont Athens Regional and Southeast Georgia Health System.
Dhawan expects the moderation trend of long-term growth apparent at the end of 2017 to return, as capital expenditures slow to a crawl.
“Advanced indicators of investment, such as commercial loan growth, show a rebound is unlikely. Continued strong growth would be hard to achieve in this mature stage of the investment cycle, because the low-hanging fruit of investment has already been picked,” Dhawan said. “Going forward, the momentum to push Georgia’s job growth onto a higher path is not there yet.”
Highlights from the Economic Forecasting Center’s Report for Georgia and Atlanta
- Georgia employment will add 78,600 jobs (15,600 premium jobs) in 2019, 64,300 jobs (11,700 premium) in 2020 and 56,500 (10,700) in 2021.
- Nominal personal income will grow 4.5 percent in 2019, 5.1 percent in 2020 and 5.2 percent in 2021.
- Atlanta will add 52,700 jobs (10,800 premium jobs) in 2019, 42,300 jobs (8,600 premium) in 2020 and 40,100 jobs (8,400 premium) in 2021.
- Atlanta housing permitting activity will fall 14.1 percent in 2019, decline 8.6 percent in 2020 and fall a further 3.4 percent in 2021.