The Do’s and Don’ts of Selling Your Business
Selling your business can takes as much planning and careful consideration as starting it does. The Atlanta Small Business Network recently interviewed former GABB president Michael Ramatowski, Managing Partner at RamBizGroup Business Solutions, in the ASBN studios.
Considering the most common reason for selling a business is due to retirement, Michael says it’s important that a business owner get the most out of selling their business. He said that’s why members of the Georgia Association of Business Brokers make sure that business owners are getting the most out of their business and not leaving any equity on the table.
Michael also shared with ASBN exactly how much work goes into selling a business. Business brokers generally follow certain steps to determine the value of a business. He says for GABB specifically they will begin their process with a no-cost meeting with the business owner before they begin to work towards determining the price at which the business would sell for. From there they will be able to determine how they are going to fund it and whether or not the business is ready to be taken to market.
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Georgia: Top State For Business
Georgia has been ranked the top state in the nation for business for the past five years by at least two business ranking companies, according to Emily Poole, metro Atlanta project manager for the Georgia Department of Economic Development.
Poole spoke to the Georgia Association of Business Brokers on June 25 at their weekly meeting. Site Selection, an internationally circulated business publication covering corporate real estate and economic development, ranked Georgia tops in the nation for business from 2013 through 2018. Area Development, a leading executive magazine covering corporate site selection and relocation, ranked Georgia tops in the nation from 2014-2018, Poole said.
In her presentation “Georgia: A Profile in Economic Development,” Ms. Poole described how her department works to develop business in Georgia, how they track trends and how varying factors converge to make local projects happen. The GABB is the state’s largest association of professionals dedicated to buying and selling businesses and franchises.
Among the items that make the Peach State favorable for business:
- Unchanged 6% corporate income tax rate for over 50 years; lowered to 5.75% effective January 1, 2019.
- Consistent AAA credit rating from all three credit agencies for the past 20 years
- First Southeastern state to adopt single-factor apportionment
- Certain tax credits applicable to payroll withholding
- Top 10 for lowest effective tax rate
Georgia many economic incentive programs include job tax credits, a port tax credit bonus, a quality jobs tax credit and mega project tax credits. The state also has discretionary grants for land acquisition, site preparation, building construction and equipment costs. Community incentives include the potential for property tax abatement, buying land at a reduced cost, waivers of permitting fees, site preparation and cash grants.
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The Georgia Association of Business Brokers meets at conference room hosted by the Georgia Association of Realtors at 6065 Barfield Road, Sandy Springs, GA, 30328. The monthly GABB meeting is free and open to the public and is preceded at 9:45 a.m. by a free light breakfast and networking session. Thanks to Christopher J. Cowart, CFP®, CTFA, CRPC®, Vice President, Private Wealth Management for SunTrust Bank for sponsoring the meeting. The meeting will last from about 10:30 to somewhere between 11:30 and noon. Please fill out the form below if you are not a GABB member but wish to attend our meeting.
Emily Poole serves as the Region 3 (Metro Atlanta) Project Manager for the Georgia Department of Economic Development. Prior to joining the Department, Emily worked for the City of Fayetteville as their Director of Economic Development, as well as the Fayette County Development Authority as Vice President of Economic Development.
Awarded Fayette County Young Professional of the Year for 2011, Emily has an impressive record of community service and partnership. The 2012-2013 President of Young Professionals of Fayette County, Emily has served on the board of the Fayette Chamber of Commerce and Main Street Fayetteville. Currently, she serves on the Board of Directors for Bloom, AV Pride, and Fayette Senior Services. Additionally, she is a 2013 graduate of the Atlanta Regional Commission’s Regional Leadership Institute, and a 2014 graduate of Leadership Fayette.
A native of Fayette County, she graduated from McIntosh High School in Peachtree City. She received a Bachelor’s degree in Psychology & Human Services and an MBA in International Business from Clayton State University where she was recognized with the “MBA Service & Leadership” Award for the Class of 2016.
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. 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 dean@b3brokers.com, or GABB Executive Director Diane Loupe at diane@gabb.org or 404-374-3990.
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Federal Reserve Pauses Rate Actions, More Rate Cuts Predicted
ATLANTA–The U.S. economy is transitioning to a new growth path and production-level shocks in the system can derail its momentum, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s Robinson College of Business.
One shock, the indefinite grounding of all Boeing 737 MAX planes, is domestic in nature and bad news for parts suppliers, especially in the face of already weakened corporate capital expenditures over the past six months. The other shock, stress on the world oil supply from geopolitical issues (warlord activity in Libya, unrest in Venezuela, U.S. sanctions on Iranian oil exports), is global.
“Shocks become a problem when the economy transitions to a new equilibrium, as it is now,” Dhawan wrote in his “Forecast of the Nation” released May 22, 2019.
2018’s strong growth rate was set in motion with the Tax Cuts and Jobs Acts of 2017, which, Dhawan said, “provided a type of fiscal stimulus, a positive change in the investment climate and job growth one-third higher in the first half of 2018 than the normal monthly job creation pace of 2017.”
The boost to investment spending petered out in the second half of 2018 because of numerous factors, chiefly stock market volatility from trade skirmishes and softening global growth. But other factors changed as well. The Federal Reserve undertook four rate hikes in 2018 but has paused further action since December. The length of the pause, and whether the Fed’s next action is a hike or a cut, will depend on how uneventfully the economy transitions to its new growth path. So far, the transition has been more eventful than not.
Retail sales were hit hard by a steep decline in the stock market. After growing 6.1 percent in the second quarter of 2018, retail sales moderated to just 1.0 percent by the fourth quarter.
As a result, “the positive income effect from rising job growth got wiped out by negative wealth effects emanating from stock market carnage,” the forecaster said.
Dhawan expects the Fed to begin rate cuts in December 2019, with a total of three by mid-2020.
As for tariffs on China, Dhawan said “The immediate impact is minor. Future impacts, especially reduced corporate desire for investment, will not be apparent for some time.”
Highlights from the Economic Forecasting Center’s National Report
- GDP growth of 2.9 percent in 2018 will moderate to 2.6 percent in 2019, moderating further to 1.9 percent growth in 2020 and 2021.
- Investment growth will moderate from 6.9 percent in 2018 to 3.7 percent in 2019, then to 3.4 percent in 2020 and rise to 3.6 in 2021. Monthly job gains will moderate to 179,100 in 2019, drop to 121,000 in 2020 and gain a similar 129,900 jobs in 2021.
- Housing starts will average 1.221 million in 2019, 1.239 million in 2020 and 1.262 million in 2021. Vehicle sales will be 16.5 million in 2019, 16.0 million in 2020 and 15.9 million in 2021.
- Even in the face of expected Fed rate cuts, the 10-year bond rate will average 2.7 percent in 2019, rise to 2.9 percent in 2020 and rise further to average 3.3 percent in 2021.
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Georgia Economy in 2019 Started Strong Due to One-Time Factors
ATLANTA–Strong employment gains during the first quarter of 2019 – particularly in hospitality, retail trade and temp employment – were most likely due to one-off factors, such as hosting Super Bowl LIII on top of other championship games, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s Robinson College of Business.
“Georgia’s first quarter headline job gains were stellar, but there were one-time factors at play,” Dhawan wrote in his “Forecast of Georgia and Atlanta” released May 22, 2019. “Since there is not another equivalent big event on the horizon, the momentum created is already moderating as evident in April’s job loss numbers, which were concentrated in these hospitality and retail sectors.”
Annual employment benchmarking performed by the Bureau of Labor Statistics in March revealed Georgia’s job additions were downgraded from 103,500 in previously reported data to 89,000 in the benchmarked numbers. Analysis also revealed that globally connected sectors (such as corporate, manufacturing and information) showed continued moderation in job growth.
“Job growth moderation in globally connected catalyst sectors will trickle down into domestically demand driven sectors, (retail trade, hospitality) and result in a continuation of moderation of overall employment growth,” Dhawan said.
Metro Atlanta is expected to experience moderation similar to the state overall, according to the forecaster, especially because Atlanta contains most of the state’s Fortune 1000 companies.
“One continuing concern is where to find all the tech jobs we read about in the media,” Dhawan said.
His hypothesis is that some technology jobs are being counted in other sectors.
“Georgia is home to many technology companies in healthcare, particularly in the Atlanta area (GE Healthcare, Intermedix and McKesson Technology Solutions) and finance companies (Global Payments, NCR and TSYS),” Dhawan said. “Tech jobs may be counted in those sectors instead.”
Looking beyond Atlanta, recent job manufacturing announcements have brought positive news. The state announced groundbreaking on the Georgia International Trade Center in Effington County, and Plastics Express, a resins manufacturer, announced two new facilities in Savannah.
Highlights from the Economic Forecasting Center’s Report for Georgia and Atlanta
- Georgia employment will add 76,600 jobs (14,700 premium jobs) in 2019, 61,700 jobs (11,200 premium) in 2020 and 53,500 (9,700) in 2021.
- Nominal personal income will grow 4.4 percent in 2019, another 4.9 percent in 2020 and 5.0 percent in 2021.
- Atlanta will add 54,400 jobs (8,900 premium jobs) in 2019, 40,600 jobs (8,000 premium) in 2020 and 36,300 jobs (7,400 premium) in 2021.
- Atlanta housing permitting activity will fall 21.2 percent in 2019, decline 8.8 percent in 2020 and fall another 3.5 percent in 2021.
Middle Georgia Businesses Expect Strong Year
Businesses in Middle Georgia experienced a very positive 2018 and expect an even better 2019, according to the results of Mercer University’s 2018 Middle Georgia Economic Outlook Survey.
During 2018, businesses in Middle Georgia added more employees than they expected to add at the beginning of the year. Businesses were also very optimistic about adding employees during 2019.
Interestingly, businesses show strong optimism about adding employees despite believing that average employee compensation was higher during 2018 than expected at the beginning of the year, and that this average will further increase in 2019.
The BB&T Center for Undergraduate Research in Public Policy and Capitalism and partner chambers received responses to their electronic survey from 125 individuals. Dr. Antonio Saravia, associate professor of economics and director of the BB&T Center, compiled the results, which can be viewed online.
“In general terms, businesses in Middle Georgia seemed to have experienced a very strong 2018 and expect an even stronger 2019,” said Dr. Saravia. “The indices for net earnings, sales and hiring were all up for 2018 and are predicted to continue to increase in 2019, which is very good news. The report shows absolutely no recessionary concerns. While companies in Middle Georgia still struggle finding the right talent in the area, the economic sentiment continues to be positive as the economy continues to expand.”
The most significant obstacles to business identified by the respondents for both 2018 and 2019, as evidenced by intensity indices, were the quality of labor, the cost of labor, government regulations and/or red tape and taxes.
Respondents represented considerable variety in terms of company size, geography and industry. Most were small businesses under 10 employees, which accounted for 48 percent of the total number of respondents. The majority had principal offices located in Bibb (49 percent), Houston (29 percent) and Monroe (11 percent) counties. Respondents represented a wide range of industries, led by retail trade (14 percent) and professional and technical service (14 percent).
The survey, released in March 2019, was conducted by the BB&T Center for Undergraduate Research in Public Policy and Capitalism in Mercer’s Eugene W. Stetson School of Business and Economics, in partnership with the Greater Macon Chamber of Commerce, the Robins Regional Chamber of Commerce, the Forsyth-Monroe County Chamber of Commerce, the Milledgeville-Baldwin Chamber of Commerce, the Jones County/Gray Chamber of Commerce, the Roberta-Crawford County Chamber of Commerce and the Wilkinson County Chamber of Commerce.
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