Questions & Answers

• Why should I buy a business instead of starting a new business?
• Why should I use a Business Broker?
• How are businesses priced?
• What happens when I find a business I want to buy?
• What does Lennig & Associates do for me?

• Why should I use Lennig & Associates?
• Why is seller financing so important?
• What can I do to help sell my business?
• What happens when there is a buyer for my business?

The failure rate in small business is enormous in the start up phase and the first three years. The existing business has demonstrated that there is a need for that product or service in a particular location. Financial records are available along with other information on the business. Most sellers will stay and train a new owner and most will supply financing. Finding someone who will teach you the intricacies of running a business and who is willing to finance the sale can make all the difference.

Selecting the right, experienced broker is one of the most important decisions in the process. Your broker will carefully study your strengths and shortcomings, experience, needs, likes and dislikes, and will provide you with a selection of different and, in many cases, unique businesses, including many that you would not be able to find on your own, that better suit you.

Business brokers are also an excellent source of information about businesses and the business buying process. They are familiar with the market and can advise you about trends, pricing and what is happening locally and nationally. Your business broker will handle all the details of the business transfer. He will do everything possible to guide you through the process.

The ultimate price comes down to what the market will bear –or what the buyer is willing to pay. The best method of pricing a business is for the seller to have an independent third party perform a business valuation. The Valuation Company will have databases to pull information of what companies are selling for in the market today. They use many forms of information:

• The value of the hard tangible assets
• The amount of re-casted cash flow (under a normalized earnings scenario)
• The value of the intangible assets (licenses, trademarks, etc.)
• Application of industry and/or company specific discounts (as well as premiums, sometimes)

When you find a business, your business broker will be able to answer many of your questions immediately or will research them for you. Once you have your initial questions answered, the typical next steps that your broker will guide you through are:

• Submit an Offer to Purchase.

• Receipt of seller’s acceptance or counter offer.

• Negotiations to firm a contract for sale and purchase.

• Recommend professionals to assist you performing your "due diligence".

• Guide you to professional to prepare documentation for the proper lease assignment for the premises, when applicable.

• Organize preparation of closing documents.

• Review closing documents.

• Closing the transaction.

Lennig & Associates affiliation with Business Brokers Network^SM gives the buyer the advantage of being placed in BBN’s buyer database. Your confidential profile will be entered into the database along with your preferences. This database is looked at by over 450 affiliates throughout the United States and Canada.

Lennig & Associates will help you understand everything they can so you can make your most informed decisions regarding each company you look at. They will search the BBN^SM database of business’ to find you a company that best suits your criteria. They will be able to search nationally, not just locally, or on a state level.

Lennig & Associates will work with you through every step in the Business transfer process. This will allow you to understand what is needed to proceed to the next step in the selling process. You will be kept abreast of what you can expect to occur next. You will be advised what information will be needed in order to present your company at its best.

Our Business Business Brokers Network^SM affiliation gives the seller the benefit of having their company placed on the World Wide Web in a confidential profile format. This enables Lennig & Associates to market your company through more than 450 BBN^SM affiliates throughout the United States and Canada. This gives Lennig & Associates a much larger market than the local or regional markets most brokers work in. Many buyers want to relocate to places they enjoy; others will go where they can find a suitable business to purchase.

In many cases, businesses listed for all cash down payment simply do not sell. Today’s buyers want to leverage their money to their maximum. With reasonable terms, the chances of a sale increase dramatically. Seller financing may be the only way to sell your business. You will also receive interest from the note, which can greatly increase the total amount received. Seller financing tells the buyer emphatically that the seller believes the company can make the payments.

We will assist in the preparation of an offer. BBN^SM’s standard asset Offer to Purchase will spell out the buyer’s offer in detail. The offer may contain several contingencies and will specify the "due diligence" the buyer will perform. We will need tax returns for the last 3 years, current financial statements, current Profit & Loss statements, and any other documents necessary to prove the financial performance of the business. The buyer will want to review the lease, franchise agreement, employee contracts, and any other contracts that will effect the business after the sale.

Understand the tax implications before setting the selling price. This may very well require the assistance of a specialist in this field. Your company accountant is an expert at keeping the records of the company but may not be completely up to date on some of the latest structures that can be employed to reduce your total tax burden. An effective tax plan can allow you to price the business much more attractively without sacrificing your total return. This is a critical step in developing a win-win transaction.

All offers will be presented to you for your consideration. You always have the right to accept an offer, issue a counter proposal or reject the offer. It is important to know that if you don'’ accept the offer, a buyer can withdraw at any time. Be prepared to do some work at this point in the process. People from all over the world are seeking business opportunities in our area. Different nationalities and cultures approach negotiations in far different ways. You should take the time to consider all offers carefully and seriously. There may be some definite positives in the offer and the negatives may be offset with careful negotiations. Often the first buyer turns out to be the best buyer.

First and foremost, continue to run the business in an aggressive growth oriented manner. Do not let up on business operations during the marketing period. You should make most decisions in the best interest of the long-term objectives of the company.

Maintain up to date financial information. Work with your accountant to provide monthly statements with year to date numbers. Real buyers want real up to date data.

You too should be prepared to close quickly. Once an agreement is reached between buyer and seller, buyers generally want to close as soon as possible. It is important to keep all maters pertaining to the sale confidential until the closing so the business operations are not altered by employees, competitors or clients.