A Buyer’s Quandary
Statistics reveal that out of about 15 would-be business buyers, only one will actually buy a business. It is important that potential sellers be knowledgeable on what buyers go through to actually become business owners. This is especially true for those who have started their own business or have forgotten what they went thorough prior to buying their business.
If a prospective business buyer is employed, he or she has to make the decision to leave that job and go into business for and by himself. There is also the financial commitment necessary to actually invest in a business and any subsequent loans that are a result of the purchase. The new owner will likely need to execute a lease or assume an existing one, which is another financial commitment. These financial obligations are almost always guaranteed personally by the new owner.
The prospective business owner must also be willing to make that “leap of faith” that is so necessary to becoming a business owner. There is also the matter of family and personal responsibilities. Business ownership, aside from being a large financial consideration, is very time consuming, especially for the new business owner.
All of these factors have to be weighed very carefully by anyone that is considering business ownership. Buyers should think carefully about the risks – and the rewards. Sellers should also put themselves in a buyer’s position. The services of a professional business broker or intermediary can help determine the relative pros and cons of the transaction.
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Top GABB Brokers in Oct. 27 Expert Panel
A panel of some of GABB’s most active and successful members highlighted the Oct. 27 GABB meeting. The panelists discussed issues that came up during or after due diligence that created a potential problem in getting the deal closed and how those issues were resolved. GABB President Greg DeFoor moderated the panel. Listen to a recording of the panel discussion here.
Panelists were:
Jeff Merry who has been GABB’s top producer in eight previous years, has been a part of the Million Dollar Club since its inception in 1999, and was honored with the GABB’s Phoenix Award denoting an individual who has earned Million Dollar Club status for 10 years. Jeff, 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 more than 300 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 Masters of Business Administration from the University of Illinois Edwardsville, and a Juris Doctorate from Atlanta Law School.
Kathryne Pusch, 
President of ConsultKAP, is a seasoned professional consultant and broker. She began her career consulting for a large international consulting firm in 1979. Since then, she has worked successfully within the framework of large corporations, and small enterprise, across a broad range of industries, private and public sector. Ms. Pusch has owned and managed two small businesses herself, in addition to her successful business enhancement, transitions, and brokerage practice. Her consulting work focuses primarily on preparing businesses for a successful sale, and exit and transition planning for owners. ConsultKAP intermediary services focus on helping individuals and companies who want to sell or acquire a business to do so with the greatest likelihood of success, as defined by the achievement of their unique objectives. Kathryne is the 2003 past President of GABB. She has a BS in Marketing and Marketing Research and an MBA. She serves on the Executive Advisory Network of the DBM International Center for Executive Options, is a published author, and a licensed Georgia real estate instructor.
Yasmine Jandali, 
owner and Managing Broker at Starwood Business Group, is the secretary of the Georgia Association of Business Brokers. Ms. Jandali founded Starwood Business Group in order to provide a boutique brokerage firm for clients seeking personalized service and specialized attention. As a certified Master Business Intermediary, she provides professional business intermediary services to both business sellers and buyers, including high-level business valuation services to business sellers. She has worked as a foreign exchange analyst at Wells Fargo, a marketing specialist at the Bank of America Corporation, vice president of Jandali Enterprises, Inc., and was managing broker and managing director of VR Business Brokers Mergers and Acquisitions. She has a B.A. in Business Administration Marketing from the McColl School of Business at Queens University of Charlotte, and also studied management at The Belk College of Business at University of North Carolina at Charlotte.
Eric Gagnon, 
former GABB president, became a Business Broker in 2001 after a successful career in the financial services industry for Bank of America, Bank of New York and KPMG. He founded We Sell Restaurants in the Atlanta marketplace. Mr. Gagnon is also a multi-year recipient of the GABB Million-Dollar Club recognition. Mr. Gagnon is a graduate of Francis Marion University and the University of Montreal. A frequent speaker and writer about the restaurant brokerage industry, he is co-author of the recently released book on restaurant brokerage, “Appetite for Acquisition.” Mr. Gagnon has been designated a Business Industry Expert by Business Brokerage Press and is a member of the International Business Brokers Association. He is a member of the Business Brokers of Florida (BBF), and is the preferred broker for Georgia Restaurant Consulting Group. Eric is a licensed Broker in both Georgia and Florida.
The meeting was held at 10:30 a.m. at the South Terraces Conference Center. The South Terraces Conference Center is at 115 Perimeter Center Place, Atlanta. Contact Diane Loupe at 404-374-3990 or diane@gabb.org for more information, or visit the GABB webpage.
Read MoreNine Steps to Better Due Diligence, Closing Deals
Third in a series on Business Brokering
Sarah Wheeler, an attorney with Moore & Reese
Buyer and seller strike a deal, but a thorough due diligence and either seal or sink that deal.
Georgia Association of Business Brokers Vice President Mike Ramatowski moderated a panel discussion at the July meeting on getting buyers and sellers through due diligence and to the closing table. Panelists were GABB Board Member Loren Marc Schmerler, CPC, APC, President and Founder of Bottom Line Management, Inc.; Kim Romaner, President of Transworld Business Advisors, who has 30 years of corporate and entrepreneurial experience in sales, marketing, operations and technology; and attorney Sarah Wheeler of Moore & Reese.
Miguel Alandete and Jon Kaye of Wells Fargo sponsored the meeting.
Hear the entire panel discussion at the GABB blog.
1. Find out if your clients REALLY want to buy or sell the business.
Have a heart-to-heart talk with your clients before putting the business up for sale, or making an offer on a business, to make sure the buyer and seller are really truly ready to do this. Cold feet will sink a deal, says Wheeler, who represents buyers, sellers or acts as a transactional attorney.
2. Make sure each side has realistic expectations.
Sellers must understand that they will be expected to sign a no-complete contract when they sell. Buyers must understand that if they need financing, they shouldn’t expect to get financing from seller with zero percent interest.
Kim Romaner, President of Transworld Business Advisors
3. Clarify the terms of a Letter of Intent.
A letter of intent, a.k.a. LOI, is typically the beginning of the buying process and signifies a meeting of the mind. Both parties should understand whether the LOI is binding or not, how earnest money will be handled, etc.
4. Take the skeletons out of the closet.
If something is wrong with the business, if there is a liability, it’s a bad idea to hide that fact from a potential buyer. If it comes up in comes up in due diligence, Wheeler notes, the buyer will assume the seller was trying to hide it, and that makes it a lot harder to deal with. Schmerler said he had a sale imperiled because a prospective buyer discovered that a major client was going to discontinue business.
5. Use a GABB lender.GABB-affiliated lenders have experience with business sales, and understand the process. Other GABB affiliates are familiar with the ins and outs of deal making and will make the process smoother.
6. Get franchisors, landlords on board.
If you’re selling a business with a lease, don’t leave the landlord out of the process. Ditto with a franchisor if a franchise is involved. These and other interested parties can make or break a deal.
GABB Board Member Loren Marc Schmerler, CPC, APC, President and Founder of Bottom Line Management, Inc.
7. Complete the lender checklist. Lenders typically send out checklists of items they need before a sale can be completed. Sellers should read them and get that information together as soon as possible. Try to educate your client that the money drives the ship, and the closing will happen when the lender is satisfied.
8. Leave enough time for proper due diligence.
Due diligence takes time. Count on at least ten days for a main street transaction, Romaner said, longer for bigger deals.
9. Clarify expectations after the sale.
Sellers often agree to stay on during the transition, but Schmerler said usually the buyer doesn’t want the seller there after the second or third week. The buyer wants employees to view him or her as the new owner.
Hear the entire panel discussion at the GABB blog.
The July 28 panel was the third in a 3-part series of discussions designed to help GABB members improve their businesses. In May, social media expert David Camp discussed effective ways to use quality content and technology to prospect for new clients. The June panel featured three experienced brokers with differing approaches to working with buyers and sellers. Read about the panel and hear a recording at the GABB blog.
GABB meetings begin with guest and member introductions. After introductions, we have a presentation by either a panel or a speaker and then some time for questions. After the presentation we’ll have a few items of association business and then adjourn the meeting at around noon.
There is no cost to attend and there are two parking decks available with free parking adjacent to the facility. For more information about the GABB, contact GABB President Greg DeFoor at gdefoor@defoorservices.com
Read MoreGeorgia Business Brokers Discuss Working With Buyers and Sellers
The collective wisdom of four brokers with 75 years experience was on stage Tuesday, June 30, as the Georgia Association of Business Brokers hosted a panel discussion on how to move buyers and sellers to the closing table.
Moderated by GABB Vice President Mike Ramatowski, the panel featured GABB Treasurer Jay Fenello, who specializes in helping people buy and sell small businesses and franchise resales; Kathryne Pusch, whose firm represents a wide spectrum of buyers and sellers; and J. Snypp, who works with both buyers and sellers of small to medium sized businesses in many different industries.
Listening, a lot of listening, to buyers and sellers, is a key aspect of how Pusch operates. “Each person we see has a different set of needs,” she said. “Each buyer and seller has different motivations, and so we’ve got to make that work. So in that sense we are problem solvers right.”
Be sure the buyer is prequalified for an SBA loan, and do due diligence, Pusch recommends. “You get financial statements, get a resume, get a bio. You look at that, and you say, ‘Can we fund this deal?’ So then we know that we have something that actually can work.”
“It’s great to have somebody who says I want to buy, but can that person actually buy the business?” Pusch asked. “Is there a way to make the deal work with the resources that they have with the experience that they have? For me getting prospective buyers and sellers together involves making sure I’ve got a true meeting of the minds.”
Kathryne Pusch
Pusch said brokers must avoid just displaying their knowledge while “trying to force people to do what we want,” and instead “we need to be listening to them to make sure we understand where they’re really coming from because I don’t believe there’s any real hostile takeovers in small business. You have to make it work, and they both have to really want it to work, and they both have to really feel like they’re winning.”
“The number one enemy we have in our in our business it’s the fear.” Money and time are also critical factors, “But for most people they will not do something if they can’t get over the fear hurdle, and they can’t do it if they can’t get over the financial hurdle.”
If brokers can help prospective buyers and sellers overcome anxieties about having a binding contract, they “can start to move that to the next stage we’re going to talk about next month, due diligence and getting that thing closed. which we all know takes lots of time and lots of tension,” Pusch said.
J. Snypp
Snypp says his current deals range from $150,000 to $3.5 million, and said he asks for an upfront engagement fee from buyers and sellers.
“In the past, I’ve worked for months and months with a buyer who ended up not buying a business at all, going back in the corporate world, and I figured my time’s worth something. So we’re charging a fee up front to work with those people.” This policy avoids those clients who “will let you work and get offers just for their ego,” or “to find out what their business is worth to sell it to their cousin.”
The up-front money, refunded when a deal is closed, insures that both sides are committed, Snypp said.
In some deals, a buyer and seller are just really on top of things, Snypp said, “and they’re driving the deal more than I am because they are focused and they know what they want.” Snypp enjoys those deals because a broker can sit back and just provide guidance on potential missteps.
Snypp said he enjoys working with GABB affiliate lending institutions who will give him an honest answer about the viability of a deal. “I would much rather have a backer saying, ‘no this was not right for us,’ right up front and then we can find alternative lending or make some kind of changes within the deal structures.”
GABB attorneys have been essential in certain complicated deals, such as those involving stock transactions, Snypp said.
Jay Fenello
Efficiency is the key to Fenello’s specialty: main street clients, for which he gets a lot of referrals from GABB colleagues.
“I find that doing a transaction is a lot like a dance,” Fenello said. “You start out with two parties who don’t know each other, and you have to tell us what your finances look like before we’re going to show you the tax returns. You have to show us that you can financially do this deal before we let you talk to our accountant. So if you have a very definitive back and forth, everything gets done and everybody’s comfortable.”
Communication is also key, Fenello said. “The number one complaint I hear about business brokers in the low end of the market is ‘I haven’t heard from my broker in six months. I don’t know what’s going on out there. I don’t think he’s doing anything.’ “
To combat, Fenello sends a weekly report to every client describing what is happening in their market. “In order to do that, you have to be very automated. So I use a lot of automation to make my life easy.”
Ramatowski says when deals are active, he makes it a policy to contact clients once every 96 hours. Psychologically, the client should be contacted every 70-96 hours to allay anxieties about the approaching deal, he said.
Michael J. Ramatowski, CBI, has been a business broker for 26 years. Mike 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 serves on three boards of directors where he provides marketing and organizational growth expertise. He has earned the Certified Business Intermediary professional designation by the International Business Brokers Association.
Fenello is principal and founder of BizPlacements.com, a full-service business brokerage firm that specializes in helping people buy, sell and improve small businesses and start-ups, especially owner-operated businesses and franchises. Jay, who is also associated with Keller Williams Realty, began his career in business brokerage in 1995 and has since worked for several brokerage firms, including one of the largest M&A firms in the country. Mr. Fenello began his career as a computer engineer for IBM in Boca Raton, Fla., where he worked on a new product called the IBM PC. After successfully designing a PC card and its supporting software, he left IBM for a small start-up called Core International. Mr. Fenello formed a company he called Iperdome, Inc in 1997, an internet venture that has turned into a world-wide process to establish internet governance. He has an engineering degree from the University of Florida, and an MBA in Entrepreneurship from the University of Arizona. Mr. Fenello is a member of the Atlanta Commercial Board of Realtors.
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 nine 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. He has 25 years of sales, sales management, and marketing experience. He often works with buyers to represent them and find them deals. He has been in the GABB’s Multi-Million Dollar Club twice, and the Million Dollar Club twice. He helps business owners with their exit plans by finding qualified buyers for their businesses while maximizing their proceeds.
Kathryne Pusch, President of ConsultKAP, is a seasoned professional consultant and broker who began her career consulting for a large international consulting firm in 1979. Since then, she has worked successfully within the framework of large corporations, and small enterprise, across a broad range of industries, private and public sector. For nearly 25 years, her firm has focused primarily on preparing businesses for a successful sale, exit and transition planning for owners, and assisting disputing partners or shareholders in reaching their differing transition goals.
For more information about the GABB, contact GABB President Greg DeFoor at 678-644-983 or gdefoor@defoorservices.com.
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Overcoming Five Buyer Objections to SBA Loans
By Susan Kite, Vice President, Signature Bank of Georgia, and
Kim Eells, Vice President, The Brand Bank
I. “This deal costs too much; I can’t get it financed.”
- SBA 7a Loans are guaranteed by the US Government, giving banks a higher comfort level to make a loan they may have denied as a conventional loan. SBA loan terms can be up to 25 years with no balloon. This means that your buyer only pays closing costs once.
II. “SBA Loans have too much paperwork.”
- All commercial loans require both business and personal financial information. SBA loans do have a few additional forms, but most of these just require a signature – and your lender may even help your buyer fill them out!
III. “I don’t have collateral to offer the bank.”
- SBA only requires that all available collateral be taken. Experienced business acquisition lenders understand that these loans have a high amount of goodwill. They look to the SBA guaranty to help offset that risk. There also may be other factors that help offset the risk such as your buyer’s experience, personal liquidity, and strong business cash flow.
IV. “SBA Loans take too long.”
- It may seem to take forever, but most SBA loans only take 6 to 8 weeks from term sheet acceptance to closing. An experienced lender will help you move things along.
V. “I tried to get an SBA loan, but the bank I went to said no.”
- While this could signal the end of your deal – all banks have a slightly different appetite for different types of loans. Suggest that your buyer not stop there. In fact, GABB’s Business Acquisition Lenders have a network of contacts. We can usually find someone interested in doing your deal!
Call us if you need a knowledgeable and experienced SBA lender who will work hard to get your deal closed.