Author: Diane Loupe

Business Broker Marketing: Virtual GABB Class on June 15

Learn how business brokers can identify their market, find clients and market businesses for sale in this class taught by one of Georgia’s most successful business brokers. The June 15 class will be held online and will qualify for the Georgia Association of Business Brokers’ Board-Certified Broker certification.

JEFFERY MERRY, Sr., MBA, J.D.

The class will be taught by Jeff Merry, MBA, J.D., owner and founder of the BUSINESS HOUSE, inc., of Gainesville. He is a lifetime member of the GABB’s prestigious Multi-Million Dollar Club and was the first Georgia broker in the GABB to receive the Phoenix award for being in the Multi-Million Dollar Club for 10 consecutive years. Jeffery has been a member of GABB for more than two decades, is a former GABB president, and is currently a GABB board member.

The class (GREC# 73188) will be held online via Zoom from 9 a.m. until noon, and students who arrive promptly and are on camera for the entire class are eligible to earn three hours of continuing education credit through the Georgia Real Estate Commission and the GABB’s Real Estate School, GREC #8074. 

The class will cover setting up a business brokerage practice, identifying your market and potential clients. Mr. Merry will discuss the advantages and disadvantages of practicing business brokering solo or in a group.  He’ll also address two different approaches to business brokering: horizontal and vertical business brokers. In the horizontal model, the broker works with a spectrum of businesses; in a vertical model, the broker specializes in one or two industries, such as restaurants, child-care centers, convenience stores.

The class will also teach students how to market yourself as a business broker as well as marketing your listings, including legal and ethical issues of documenting your work. Mr. Merry will cover basic marketing methods to market your business brokerage practice and listings:

• Post Cards
• Social Media
• Letters
• Cultivate Referral Base
• E-mail Campaigns
• Networking
• Trade Magazines
• Newspapers
• Billboards
• TV
• Radio
• Coupons – Should Business Brokers use coupons?
• Effective strategies when using different marketing media.
• Special considerations when marketing businesses for sale
  • Confidentiality
  • Due diligence

In the final hour of the class, Mr. Merry will teach students how to work effectively and ethically with other brokers, business buyers and sellers.  He will discuss the GABB Code of ethics, including ethical issues with working other brokers, co-brokering; ethical issues in working with both buyers and sellers and ethical issues in closing a deal.

The class fee is $49 for GABB members WHO REGISTER BEFORE MIDNIGHT on FRIDAY, June 11; $75 for non-members and any members who register late, and $225 to register for the BCB program and one class. Note that the BCB program is only open to GABB members. Contact GABB Executive Director Diane Loupe at diane.loupe@gabb.org or text her at 770-744-3639 for more information.

INSTRUCTOR: Jeff Merry, MBA, J.D., owner and founder of the BUSINESS HOUSE, inc., of Gainesville. After employment by a Fortune 100 company, Mr.  Merry, began the BUSINESS HOUSE, inc.^SM. Since its inception more than 20 years ago, the BUSINESS HOUSE, inc. ^SM has become one of the most successful business brokerage firms in the Southeast. As a Business Intermediary, Jeff has been involved in over 200 mergers and acquisitions that have ranged in acquisition price from $60,000.00 to over $15,000,000.00. Jeffery specializes in serving the manufacturing, distribution, veterinary, service, and medical industries. He is a lifetime member of the Georgia Association of Business Brokers (GABB) prestigious Multi-Million Dollar Club and was the first Georgia broker in the GABB to receive the Phoenix award for being in the Multi-Million Dollar Club for 10 consecutive years. Jeffery has been a member of GABB for 20 plus years and has held the Presidency and Board of Directors positions many years. Jeff holds a Bachelors Degree from Mercer University, a Masters of Business Administration from the University of Illinois, and a Juris Doctorate from Atlanta Law School. Jeffery is also a licensed real estate broker in Georgia and Florida. Further, he is an Adjunct Professor of strategic management, accounting, and finance in MBA programs.

GABB to Meet in Person June 29: Registration Required

After a year of virtual meetings, the Georgia Association of Business Brokers is thrilled to host an in-person meeting at 10 a.m. June 29.

However, due to capacity limits set by the venue, all attendees must register at the form below. We will give priority to GABB members for the in-person meeting, and we will stream the meeting via Zoom for those who may prefer that option. Please register at this link to attend the meeting via Zoom. NOTE, this does NOT register you for the in person meeting. The GAR says masks are voluntary in all areas of the building. 

The sponsors of the June meeting will be GABB Affiliate Board representative Kim Eells and Susan Kite, both of whom are Senior Vice President and Small Business Administration (SBA) Business Development Officers for Georgia Primary Bank.

The primary focus of the meeting will be networking, but the GABB Board may discuss the results of the recent member survey and upcoming classes planned for the GABB’s Board-Certified Broker program.

The meeting will begin at 10 a.m. with coffee and light breakfast snacks, followed by a brief meeting and then more networking. Register at the link below. The meeting will be held in the classrooms at the Georgia Association of Realtors at 6065 Barfield Road, Sandy Springs, GA, 30328.  The GAR headquarters building is a two-story building located in Sandy Springs near the intersection of Hammond Drive and Barfield Road.

The GABB is Georgia’s largest and most respected association of professionals who help in the purchase and sale of businesses and franchises. Our association includes business brokers, lenders, appraisers, attorneys, business consultants and others who help business owners and entrepreneurs in many ways. Please review our directory if you are seeking a business broker or other professional.

For more information about the GABB, contact GABB President Judy Mims at 404-918-3666 or judy@childcare.properties, or GABB Executive Director Diane Loupe at diane.loupe@gabb.org or text her at 770-744-3639.

GABB Class: Business Broker Models, July 13

Business brokers will learn how to set up their practice, identify and define their market, identify clients, conduct feasibility studies; recruit, supervise and train staff, and the ethics of different broker models, in this July 13 class presented by the Georgia Association of Business Brokers.

Business Broker Models will be offered both in person and via Zoom on July 13, and is part of the GABB’s Board-Certified Broker credential program. Students who successfully attend all three hours of the class and pass the test will be eligible for credit through the Georgia Real Estate Commission.

The class will be taught by former GABB president Michael Ramatowski, CBI, chief executive of RamBizGroup Business Solutions, a specialty M&A business brokerage firm. Mr. Ramatowski’s business brokerage profession began in 1992. 

Michael Ramatowski, CBI

Mr. Ramatoswki’s clients include general brokerage and candidates for merger by acquisition from manufacturing, distribution, and service businesses. A longtime member of the GABB, he has owned and managed businesses that included a real estate master franchise, a property management networking company, and a service business. As COO of a banking conglomerate, he managed brokerage operations, title companies, home and service warranty programs, and a relocation company. Mr. Ramatowski has served on the board of directors of eleven different organizations with diverse specialties including real estate brokerage, mortgage companies, title insurance, banking, health care, and office supply operations. He served as an Electronic Specialist in the U.S. Navy Submarine Service. He attended Cleveland State University and Baldwin Wallace College. He has been awarded the Certified Business Intermediary professional designation by the International Business Brokers Association.

The class (GREC number pending) will be held from 9:30 a.m. until 12:30 p.m. at the classroom of the Georgia Association of Realtors at 6065 Barfield Rd, Sandy Springs, GA 30328. Per GREC rules, students arrive promptly and stay for the entire class are eligible to earn three hours of continuing education credit through the Georgia Real Estate Commission and the GABB’s Real Estate School, GREC #8074. Students who prefer to attend via Zoom must remain on camera; the link will be sent after you register.

The class will cover the sole proprietorship and enterprise business models of business brokering; market analysis; defining business buyer and seller clients; defining business types; and defining the overall market. Students will learn how to conduct a feasibility students of the financial health of a prospective business to be sold, including examining the income statement, as well as identifying areas where the prospective business could build wealth. In the final hour of the class, Mr. Rawatoswki will teach students how to conduct a feasibility study of the financial health of a prospective business to be sold, including examining the income statement, as well as identifying areas where the prospective business could build wealth.

The class fee is $49 for GABB members, $75 for non-members, and $225 to register for the BCB program and one class. Note that the BCB program is only open to GABB members. Contact GABB Executive Director Diane Loupe at diane.loupe@gabb.org or text her at 770-744-3639 for more information.

Using Retirement Funds to Buy a Business, May 25 GABB Meeting

Larry Carnell, ABI, CBI, CFB, CFE, Vice President of Business Development with Benetrends Financial

Gathering enough cash for a down payment for an SBA loan to buy a business or other business needs can be a challenge. Larry Carnell, ABI, CBI, CFB, CFE, Vice President of Business Development with Benetrends Financial, spoke to the Georgia Association of Business Brokers about how entrepreneurs can use their 401(k), IRA or other qualified retirement account to acquire capital to get approval for an SBA Loan to purchase a business. He also talked about an instant buyer engagement program on how to use cash or retirement funds to help exempt buyers from future capital gain taxes (and proposed increases) and potentially double net inheritance for spouse/children/family.

View a video of the entire meeting on the GABB YouTube channel.

Larry Carnell is a national award- winning entrepreneur and management consultant, as well as a respected business and funding expert at Benetrends. Carnell’s company has programs that allow investors to use part or all of their existing retirement accounts to fund a required down payment for an SBA Loan.

By using long-standing provisions of the Employee Retirement Income Security Act of 1974 (ERISA), Carnell’s company uses a corporate capitalization strategy that enables 100% of the gain on the sale of the company to be tax free. To use this strategy, the business owner rolls over a portion of the funds from a qualified plan or IRA to start a business. When it’s time to sell the business, you may be able to pay no Federal and State tax on any gain from the sale of the business.  Up to 100% of the gain can be invested to grow tax-free, including making an investment in another business, according to Carnell.

Carnell also discussed Rollovers as Business Startups or ROBS plan, first introduced by Benetrends Financial as The Rainmaker Plan® in 1983. A ROBS plan is a debt- free funding solution that allows a person to draw from  their retirement funds without incurring upfront taxes or early withdrawal penalties. A ROBS plan allows business owners to use their retirement funds, tax-deferred and penalty-free, for the purchase or startup of their business, using a four-step   process.  He also discussed a Roth Advantage Plan, or RAP.

Advantages of ROBS and RAP plans and similar strategies, according to Carnell, include:

• Increases client engagement (including spouse)
• Superior wealth accumulation & protection (retirement assets cannot be seized by creditors)
• Superior tax benefits (capital gain, income and payroll taxes on retirement contributions)
• Reduces debt and interest payments, Improves cash flow
• Investment NOT a loan – NOT subject to credit rating
• Does NOT adversely impact debt ratios or credit scores
• NOT subject to business profitability
• SBA approved as down payment / equity injection OR used alone
• Improves loan approval rates
• Improves debt ratios Debt free money (SBA approved)
• Improves post close liquidity
• Can be used to leverage BIGGER deal – (Business AND Land) & Broker Fees
• IMPROVES CLOSE RATE

Traditional ROBS features:

• PRETAX use of retirement funds to invest or purchase company stock
• C CORP retirement plan adoption [401(k), hybrid or custom options]
• Retirement Plan BUYS common stock in company
• Company GROWS. Revenues are used to run business. From Profits:
• 401(k) contributions are made NET of payroll taxes (currently 15.3% and rising)
• Rainmaker retirement contributions are EXEMPT from payroll taxes
• Company is SOLD – ‘pretax’ proceeds go into retirement plan
• Proceeds are taxed in the future at future tax rates (expected to rise)

Benetrends offers a NEW Rainmaker/Roth Advantage Plan: 

This plan allows business owners to realize the full appreciation of their business tax-free upon the sale of the business, given certain circumstances following the Tax Reduction and Job Creation Act of 2018 (TRJC).

• Cash (minimum of $10k) OR Retirement Funds to invest in company stock
• C CORP creates & adopts 2 CUSTOM retirement plans
• Rainmaker [not a traditional 401(k)] & Rainmaker Roth 401(k)
• Use custom plans to create structure that invests money POST-TAX to BUY common & preferred stock (Taxes due NEXT Year OR 5 year option)
• Company GROWS. Revenues are used for operating expenses
• Retirement contributions are often payroll tax EXEMPT (currently 15.3% and RISING)
• Company SOLD – proceeds forever TAX-FREE & Lifetime protection (no RMDs)

View the PPT presentation of this plan.

CARNELL Rainmaker Advantage Program GABB CLIENT Outline LC

Lenders are finding that these resources are creating enhanced motivation for business ownership, according to Carnell. The perceived security of a job often discourages people from assuming the risks associated  with buying or starting a business. When presented, these resources are proving to be effective in helping to engage more borrowers, improve lending approval rates, reduce defaults and leverage larger loans by providing greater access to liquid capital for injection needs, thereby reducing borrowers’ fears while creating dramatic benefits for both the borrower and lender.

Ministerial or Not? News from the GREC

From the Georgia Real Estate Commission’s May 2021 newsletter.

Typically a real estate licensee represents either the seller or the buyer (or the landlord or the tenant) in a real estate transaction. By entering into a brokerage agreement, the licensee establishes an agency relationship with that party as a client. However, a licensee can participate in a transaction without representing anyone by acting as a transaction broker. When acting as a transaction broker, a licensee can only perform ministerial acts.

The Georgia Real Estate License Law 43-40-1 (5.1) defines “Ministerial acts” as those acts related to real estate brokerage activities which a licensee or a licensee’s employee performs and which do not require discretion or the exercise of the licensee’s own judgment.” This means that a licensee cannot provide opinions or advice to a customer. If a licensee does provide an opinion or give advice, he/she could unintentionally create an agency relationship.

BRRETA, The Brokerage Relationships in Real Estate Transactions Act, also includes Definitions in Section 10-6A-3 as follows:

(12) “Ministerial acts” means those acts described in Code Section 10-6A-14 *(see page 2) and such other acts which do not require the exercise of the broker’s or the broker’s affiliated licensee’s professional judgment or skill.

(14) “Transaction broker” means a broker who has not entered into a client relationship with any of the parties to a particular real estate transaction and who performs only ministerial acts on behalf of one or more of the parties, but who is paid valuable consideration by one or more parties to the transaction pursuant to a verbal or written agreement for performing brokerage services.

BRRETA Examples of Ministerial Acts

1. Identifying property for sale, lease, or exchange;
2. Providing real estate statistics and information on property;
3.  Providing pre-printed real estate form contracts, leases, and related exhibits and addenda;
4. Acting as a scribe in the preparation of real estate form contracts, leases, and related exhibits and addenda;
5. Locating architects, engineers, surveyors, inspectors, lenders, insurance agents,attorneys, and other professionals; and
6. Identifying schools, shopping facilities, places of worship, and other similar facilities on behalf of any of the parties in a real estate transaction.

(b) A broker acting as a transaction broker shall do the following:

1. Timely present all offers to and from the parties involving the sale, lease, and exchange of property;
2. Timely account for all money and property received by the broker on behalf of a party in a real estate transaction; and
3. Timely disclose the following to all buyers and tenants with whom the broker is working:
   1. (A) All adverse material facts pertaining to the physical condition of the property and improvements located thereon including but not limited to material defects in the property, environmental contamination, and facts required by statute or regulation to be disclosed which are actually known by the broker which could not be discovered by a reasonably diligent inspection of the property by the buyer; and
   2. (B) All material facts pertaining to existing adverse physical conditions in the immediate neighborhood within one mile of the property which are actually known to the broker and which could not be discovered by the buyer upon a diligent inspection of the neighborhood or through the review of reasonably available governmental regulations, documents, records, maps, and statistics. Examples of reasonably available governmental regulations, documents, records, maps, and statistics shall include without limitation: land use maps and plans; zoning ordinances; recorded plats and surveys; transportation maps and plans; maps of flood plains; crime statistics; tax maps; school district boundary maps; and maps showing the boundary lines of governmental jurisdictions.

Focus on Terminology:

Rule 520-1-.02 Definitions.

There is an agency relationship with the client, and there is a non-agency relationship with the customer. The transaction broker has a non-agency relationship.

“Customer” means a person who has not entered into a brokerage engagement with a broker but for whom a broker may perform ministerial acts in a real estate transaction.

“Client” means a person who has entered into a brokerage engagement with a real estate broker.

Discretion & Judgment

Discretion & Judgment are not objective but involve opinions and counsel. Therefore, if a licensee gives his/her opinion or advice to a party, he/she is not acting as a transaction broker. Providing opinions and advice may create an agency relationship.

• Discretion is defined as “individual choice or judgment; the quality of having or showing discernment or good judgment.”
• Judgment is defined as “the process of forming an opinion or evaluation by discerning and comparing; an opinion or estimate so formed.”