Learn How to Prepare Your Business to Sell-Feb. 26 GABB Meeting
UGA Small Business Development Center Consultant Daniel McCoy
Just before retirement is not the best time to prepare your business to sell for an attractive price. Savvy business owners spend years thoughtfully preparing to transition out of business ownership.
UGA Small Business Development Center consultant Daniel McCoy discussed ways that small businesses can prepare for the day when they want to sell their business.
Here’s a link to an audio recording of Mr. McCoy’s remarks.
His PowerPoint Presentation is here. How to Prepare a Business to Sell
The Tuesday, Feb. 26 meeting was preceded by a free networking breakfast sponsored by GABB Board member Kim Eells, Vice President of SBA Lending at Renasant Bank and Susan Kite, Vice President of SBA Lending at Renasant Bank.
Mr. McCoy was an SBA Lender from 2014 to 2017. He joined the University of Georgia Small Business Development Center (SBDC) in September of 2017, after starting his own business of tax preparation and loan packaging. His business experience consists of several years in retail upper management, 19 years in commercial lending, three years in insurance, and four yuears as a small business owner. He holds an MBA in Accounting from Benedictine University, a B.S. in Organizational Management from Covenant College and an Associates degree in Arts from Reinhardt University. His specialties include human resources, financial management, customer service, and business planning and forecasting.
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 dean@b3brokers.com, or GABB Executive Director Diane Loupe at diane@gabb.org or 404-374-3990.
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New SBA Loans on Hold During Government Shutdown
Business Buyers and Sellers and their Brokers may face an unusual stall on closing their deals due to the federal government shut down.
GABB President Dean Burnette says, “I’m in the final stages of closing a deal right now. Fortunately, our SBA Lender got an authorization number the night before the shut down so we will receive our funds.”
The Small Business Administration halted its program supporting 7(a) loans for working capital and 504 loans for commercial properties on December 22, the day the government shutdown began, The Washington Post reports. Usually, the SBA manages about 200 loans for working capital and 120 loans for commercial properties per day, amounting to roughly $200 million worth of loans every day for small and midsize businesses, according to a report on Inc. Currently, only funds for disaster-related loans remain active. The Post also reported that Linda McMahon, head of the Small Business Administration, has plans in place to expedite loans as soon as the government opens again, citing and unnamed source.
SBA Loans usually take at least four weeks to process, Burnette said. “Chances are if you are just at the stage of applying for the loan, and you’re working with a Preferred SBA Lender, you may not experience any delay.”
Susan J. Kite, vice president and SBA Business Development Officer of Renasant Bank, said an experienced Preferred Lender (PLP) does not need to go to the SBA until just prior to closing to get a loan number. Most lenders went ahead and got the loan numbers for their approved loans prior to the shutdown, so those loans will not be affected, said Kite, a GABB affiliate member. It is not unusual to take 60 to 90 days for an SBA request to be processed and closed. Depending on where your deal is on that spectrum, you may or may not be delayed, Kite said.
Claudia Wilson, Senior Vice President of SBA Lending for First Landmark Bank, said it’s “business as usual, unless you need a SBA loan number (SBA approval) to close a loan. We are accepting applications, can process them and prepare them for closing.”
Suggestions from Kite for Business Brokers during the shutdown:
- Work with an experienced PLP lender.
- Set realistic expectations with the Buyer and Seller as to when their deal would normally close and the implications if the shutdown drags on past that date.
- Let Sellers and Buyers know that they will need to keep their financial information updated, especially in regards to Seller and Buyer’s Affiliate interim business financials and Buyer personal financials.
- If a short-term loan is mandatory, work with your lender on the best alternative – since this changes the SBA loan to a debt refinance with different rules.
GABB member Leigh Milton, senior vice president of CenterState Bank, said brokers should “treat this shutdown like you still have a hard closing date. Moving towards the goal of getting all the docs ready to close always seems to preserve momentum. Be ready to go when this turns around.”
- prepare the buyer and seller to get updates sent dated within the last 60-90 days if possible to give yourself some cushion.
- While you can close with an SBA loan number issued prior to the shutdown, if there are any changes or corrections to the authorization, you will probably have to wait until the shutdown ends to get these changes approved and close. PLP changes made under the guidance of the “loan matrix” are allowed.
- Don’t forget to finalize items like life insurance during the delay as these items can hold up closings and but having them in place takes them off the checklist. Work your checklist and it should pay off when things finally get back to “normal”!
Wilson said a “bridge” or “interim” loan may be made available by PLP lenders only but it is up to the lender’s discretion. “I think this would be permitted under limited circumstances since the loan would be made at the lender’s risk of not receiving the SBA guaranty. The lender would have 90 days from approval of the interim loan to obtain a SBA loan number,” Wilson said.
“Although the Government shutdown is certainly not ideal, for those of us who have been in SBA lending for a while, we have weathered this storm before,” said David K. Brindley, Vice President, Business Development Officer of SBA Lending at United Community Bank. “So my advice to lenders, Brokers, Buyers and Sellers is to stay calm, don’t panic, hang in there and keep moving forward with business as usual.”
Two Ways to Buy a Business without Collateral
Banks love collateral and for a very simple reason. If you have collateral, then the bank has something it can take if you fail to repay your loan. At its heart, collateral is a remarkably simple concept. However, unfortunately, many people who want to start a business lack it, and it can be difficult to finance a business without collateral. All of this leads us to the simple question, “Can I start a business without collateral?”
1. Try the SBA
There are ways that you can start a business without collateral, but you will need some amount of money. The larger the business, obviously the more money you’ll need. Those interested in the zero collateral route will want to take a look at the SBA’s 7 (a) program. This program incentivizes banks to make loans to prospective buyers. Through this program, the SBA guarantees an impressive 75% of the loan amount.
Of course, the buyer still has to put up 25% of the money in order to buy the business, but for those looking to own a business without having to put up collateral, the SBA’s 7 (a) program is an impressive option. Perhaps best of all, the cash buyers used can come from investors or even a gift, helping to make this program a potentially great one for first time business owners.
2. Think about Seller Financing
Another option is seller financing. Sellers frequently get involved in financing. When a seller is motivated to sell, due to retirement or some other factor, things can get interesting. Most sellers do agree to offer some degree of financing, so asking for selling financing is not unheard of or insulting to a business owner. Prospective business owners may even be able to combine seller financing with the SBA’s 7 (a) program. Correctly used, this path could provide a powerful and useful option.
Speaking of retiring, according to The International Business Brokers Association (IBBA), M&A Source and the Pepperdine Private Capital Market Project, 33% of deals now take place when owners are retiring. This clearly demonstrates why many sellers should consider seller financing.
While the SBA’s 7 (a) program is potentially very useful to buyers, it is important to note that under the program, the seller cannot receive any payments for two years. Working around this potential problem may very well require some creativity and effort on the part of the prospective buyer. In the end, it may be necessary to offer the business owner some incentive in order to justify waiting two years for his or her money.
Attempting to buy a business without collateral may, at first, sound like too large of an obstacle to overcome. However, these kinds of purchases really do happen all the time. By staying focused, persistent and understanding your options, you will increase your odds of success. Finally, get as much professional help as possible. Prospective business owners should consult with S.C.O.R.E., experienced business brokers and others to learn the best way to buy a business without collateral.
Copyright: Business Brokerage Press, Inc.
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SBA Lenders Talk About Change of Ownership
Georgia’s SBA loan professionals will lead a panel discussion at the Feb. 27 GABB meeting about SBA lending rules and change of ownership requirements.
The Georgia Association of Business Brokers, the state’s only association of professionals who work to facilitate the purchase and sale of businesses and franchises, meets at 10:30 a.m. at the Atlanta Realtors Center at 5784 Lake Forrest Dr. NW, Atlanta, GA 30328. The meeting will be preceded by a free breakfast and networking session sponsored by Mark Jones of Franchise Systems Advisors.
Brian Harper
Carolyn Robinson
The Feb. 27 SBA panel will discuss “SBA’s SOP for Change of Ownership,” led by Carolyn Robinson, Vice President of Acclivity-Citizens Bank and Brian Harper, Senior Vice President of Atlantic Capital. After their presentation, several other GABB affiliate members will join Kim Eells, Vice President and business development officer at the Brand Bank, for a question and answer session. If you have any questions at all about SBA financing for the purchase or sale of a business or franchise, this session is for you.
The GABB is the state’s only association of professionals who work to facilitate the purchase and sale of businesses and franchises. The group includes business brokers as well as lenders, attorneys, business appraisers, insurance agents, environmental specialists and other professionals. GABB’s member business brokers work with businesses of all sizes to help them through all steps of selling their company: valuation, marketing, financing, and closing. Aspiring business owners also work with business brokers to purchase existing businesses at a fair price.
Kim Eells
GABB meetings are free and open to the public, but we ask that you let us know you are coming by filling out this form.
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Brand Bank Chairman to Speak Jan. 30 to GABB
Michael Coles
Michael Coles, chairman of Brand Bank and namesake of the Kennesaw State University College of Business, will speak on Jan. 30 to the state’s business brokers about principles for success in business.
His Jan. 30 speech to the Georgia Association of Business Brokers, the state’s professional group for buying and selling businesses, will start at 10:30 a.m. at the Atlanta Realtors Center at 5784 Lake Forrest Dr. NW, Atlanta, GA 30328. The meeting will be preceded at 9:45 a.m. with a free networking session with coffee and pastries sponsored by GABB Affiliates Susan Kite and Kim Eells, both Vice Presidents of Government Guaranteed Lending with the Brand Bank.
Deeply involved in the community, Michael Coles is a transformational leader, accomplished entrepreneur, education advocate and motivational speaker. He is living proof that there are no limits to what we as individuals can accomplish. His GABB presentation is “The 10 Lessons That Have Guided My Business Life.”
After a successful 19-year career in the clothing business, Michael tested his entrepreneurial skills in 1977 when he co-founded Great American Cookie Company with an investment of only $8000. Shortly after starting the company, he was involved in a near-fatal motorcycle accident and was told by doctors he would never walk again unaided. As Michael recovered thru a self-designed rehabilitation program he took the Company from its first store in Perimeter Mall in Atlanta to hundreds of stores nationwide and at the same time set 3 coast-to-coast cycling records. When Michael started the Company there were three major cookie companies in business; one had almost 100 stores and the other two had fifty each. When he sold the Company in 1998 with sales over $100 million, Great American Cookie Company was the largest franchisor of cookie stores and the other three companies no longer existed.
Michael’s commitment to community service led him to run for public office in 1996 as the Democratic nominee for the House of Representatives in the Sixth District and in 1998 he won the Democratic nomination for U.S. Senate, challenging Senator Paul Coverdell.
In 2003 Michael accepted the corporate reins of Caribou Coffee Company as Chairman, CEO and President. Over the next five years Michael more than doubled the size of the company extending the brand reach domestically and internationally. In September 2005, he successfully took the company public on NASDAQ under the symbol CBOU.
Coles was one of the founders of Charter Bank & Trust and served as its Chairman, taking the bank public and selling the publicly traded company to Synovus Bank.
Appointed by Governor Roy Barnes in 1999 to chair the Georgia Film, Video and Music Advisory Board, during his four years as Chairman, Michael took it from $170 million to over $1.5 billion in economic impact.
Having contributed much of their time and resources to education, the arts, environment and philanthropic organizations, Michael and his wife, Donna were honored as the Georgia Philanthropists of the year in 1995.
Michael was appointed by Governor Roy Barnes in 2001 to serve on the Board of Regents of the University System of Georgia.
Michael now serves as Chairman of Brand Holding Company and Chairman of Brand Bank.
In recognition of Michael’s success, leadership and benevolence, Kennesaw State University, under the authority granted by the Board of Regents of the University System of Georgia, declared that the institution’s School of Business be named and known in perpetuity as the Michael J. Coles College of Business at Kennesaw State University. In 1999 Michael received the Honorary Doctor of Human Letters Degree from Kennesaw State University.
As Entrepreneur in Residence for the Coles MBA 2013 Spring Semester, Michael led a class entitled “Concept to Counter”, allowing students to grasp the concept of taking their creative thoughts and ideas to the marketplace.
Michael received the National Women’s Political Caucus Good Guy of the Year Award for his work on behalf of women’s issues. He joined the ranks of past recipients, including Ed Asner, Alan Alda and former Vice President and U.S. Ambassador to Japan, Walter Mondale.
Michael continues to serve on numerous non-profit boards. He lives in Atlanta with his wife Donna and they are the parents of three adult children and seven grandchildren.
The GABB is the state’s only association of professionals who work to facilitate the purchase and sale of businesses and franchises. The group includes business brokers as well as lenders, attorneys, business appraisers, insurance agents, environmental specialists and other professionals. GABB’s member business brokers work with businesses of all sizes to help them through all steps of selling their company: valuation, marketing, financing, and closing. Aspiring business owners also work with business brokers to purchase existing businesses at a fair price.
GABB meetings are free and open to the public, but we ask that you let us know you are coming by filling out this form.
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