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Jay Whitney Business Buyer Broker

Broker License # 247106

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I Help Business Buyers Not Make Mistakes (Valuation/Over Paying, Due Diligence, Financing)

Company

Business Development Solutions

www.BizAcquisition.com

Business Buyers often take significant risks when buying a business, yet, few buyers have ever bought a business before and they often make major mistakes.

Business Buyers don't know how to value a business (and sometimes overpay for a business), don't know enough about financing to secure the lowest interest rates, and don't know what due diligence is necessary when buying a business (and therefore, only after the acquisition happens does the Buyer discover that the business makes less profits than they were lead to believe!).

My advisory services to potential business buyers eliminates the potential for some major mistakes:
1) Valuation – To prevent overpaying for a business.
2) Due Diligence – The seller, and the income statement, says the business makes a certain level of profits, but, does it?... Or, are there problems with the financial statements?
3) Financing – Since I know which lenders make loans at low interest rates, I can typically save a borrower $60k in interest expense when a buyer is buying the business only (10 year loan), and $180k to $300k in interest expense when a buyer is buying a business and real estate (25 year loan). (This example of savings are over the life of a loan for a $1 million loan.)
4) In general, preventing mistakes that buyers make when buying an existing business.

Often, a Business Buyer is buying a business directly from a Seller, or the Buyer could be dealing with a Listing Broker whose goal is to get the highest price for the Seller. When this is the case, often, the Business Buyer doesn’t have an advisor who is very experienced in business acquisitions/sales to help prevent mistakes.

Do you, a Business Buyer, want a higher success rate than most buyers:
• The industry average is only 5% of all potential business buyers succeed in buying a company.
• Per business broker industry data, brokers sells, on average, 20% to 33% of their client companies. The reason is often that the asking price is too high, or problems are discovered during due diligence.

We generally provide our buy-side consulting services to:
• Business Buyers who have never bought a business before.
• Where the target acquisition business is a small or medium sized business.

Started in 1992. Jay Whitney has helped people buy or sell 100+ businesses.

Services Offered

How do I work to help business buyers?
• I work nationally.
• I provide hourly consulting to business buyers at $250 per hour.

I find that many buy-side clients often just need a few hours of advice on "What is a reasonable valuation and what should their initial offer to a seller be?" For others business buyers, they require assistance over the many phases of the acquisition process (structuring an initial offer, negotiating all the deal terms of an offer so that the terms are not overly advantageous to the seller, due diligence, financing, renegotiating the offer based on information discovered in due diligence,...)

Do you, as the business buyer, know what is the business’s reasonable valuation, and what your initial offer to a seller should be? For most small business buyers, our price and service for this is:
• $1,499 Professional Estimate of the Market Price and Terms of a typical small business – This includes everything you need to get ready to actually negotiating with sellers about the price. You may know that the Asking Price is, but, do you have a good idea as to what the business is worth?

The benefits to a buyer for this $1,499 Professional Estimate of the Market Price and Terms include:
• If the Seller’s asking price is too high (this is often because the seller doesn’t know how to value a business, or because the listing broker got the listing by promising to the seller a higher price than the business is worth.) – The Buyer should offer substantial discount from the asking price, or not buy the business.
• If the Seller’s asking price is reasonable or low – Sometimes, because Buyers expect to negotiate, a Buyer may offer a substantial discount from the asking price, and therefore lose out on buying a good business for a great price.

(Note: This $1,499 estimate of the market price and terms is NOT a valuation that should be used if it has the potential to go to court, or if this calculation of value needs to be reviewed by others, such as the IRS for tax implications because we are not coming to a “conclusion of value”, but merely a “calculation of market price and terms” based on a limited amount of investigation and due diligence. A business appraisal meeting the standard requirements for legal disputes will typically cost much more than $1,499.

My fee is well worth it:
• If I can prevent a client from over-paying for a business.
• If I can help a client from offering too low of a price and therefore, missing out on a great deal.
• If I can help a client secure a SBA loan at a lower interest rate than what they could get on their own.
• If because of my due diligence, a client does not buy the wrong business that they would have likely bought if the buyer had tried to buy the business without any experienced buy-side consulting.

About

4 MAJOR MISTAKES WHEN BUYING A BUSINESS:
The one common denominator that most millionaires have is that they own their own business. Owning your own business can be a very financially rewarding experience. The thrill of being the boss and having complete control over your own destiny are the primary reasons people leave the work force to operate their own company.

Owning your own business can easily turn in to a nightmare if you make mistakes. These mistakes are avoidable if you know what to look for in the business. You have a better chance of becoming a millionaire if you avoid these 4 major mistakes when buying a business.

1) Due Diligence, Due Diligence, Due Diligence:
Not everything is as it seems and that is especially true when buying a business. The owner can produce financial statements that show a business is thriving. The buyer needs to do due diligence to make sure the information presented in the financial statements and tax returns to the buyer is valid and shows an accurate picture of the condition of the business.

The financial statements should be cross checked, to identify discrepancies, with the bank statements, credit card statements, and the many more daily, weekly, and monthly management reports to identify potential problems.

You, as a buyer, you do not want to buy a business only to find out the profits you were expecting does not materialize. Doing a solid job of due diligence will help you avoid buying the wrong business or paying too much for the business.

2) Not Having Enough Cash Reserves:
Running a business requires capital because there is sometimes a several weeks or month(s) difference between when the revenue comes for a month and when the cash goes out for expenses.

Successful businesses are able to generate enough revenue to cover the cost of their expenses. In times when the revenue is less than the expenses then you need cash reserves to cover the shortfall. If you spend all your money in the acquisition of the business then you will not be able to cover shortages when they occur. This can be the quickest way to bankrupt your new business. Do not buy a business until you have the necessary funds to both buy the business and the necessary funds to keep it open after the purchase. We can help you get a SBA loan that gives you sufficient cash reserves in addition to buying the business.

3) Overpaying for Business:
For every $100,000 that a buyer over-pays for a business, the monthly bank loan will go up by about $1,200 for a 10 year loan. This is a fixed expense, so that if the variable expenses (labor and supplies) are 50% of revenue, then the buyer will need to increase average monthly revenue by $2,400 to pay for the increased debt service just to breakeven compared to what they should have paid for the business. When times are tough, a lower breakeven point may be the difference between surviving and closing the doors.

4) Getting a loan with the wrong lender at a high interest rate:
Not all lenders are created equal. Some charge high interest rates, and some charge low interest rates. Most lenders like certain industries and give low rates to those industries, while giving high rates to industries they don't like. Unfortunately, unless the buyer is using a loan broker, like Business Development Solutions, that knows the interest rate that each lender gives, their monthly loan payments may be much higher than it should be. We have a database of every single SBA loan ever issued since 1990 so to find the SBA lenders that will provide the lowest interest rates. This database includes information on: Amount of loan, interest rate, terms, borrower & industry, and bank name. We can help you get a low interest rate by using this database to identify lenders who have in the past few years given SBA loans at low interest rates to businesses in the industry you are looking to acquire a business.

For example, for a $1 million loan, the difference in monthly loan payment between a high interest rate and a reasonably obtainable, and low, interest rate may be $500 for a 10 year loan or $1,300 for a 25 year loan.

Owning your own business can be the quickest path to becoming a millionaire but you may never reach that goal if you don’t avoid these 4 major mistakes when buying a business.

Areas Served

  • Fulton County, GA
  • Orange County, FL
  • Mecklenburg County, NC
  • Dallas County, TX
  • Davidson County, TN

Licensed In

Florida247106
Georgia247106

Affiliations

  • • International Business Broker Association – IBBA University – Being a member of the International Business Broker Association since 1997, which is the educational association for Business Intermediaries, I have completed all of the course work applicable to the acquisition/sale of upper “Main Street” businesses as well as “Lower Middle Market” mergers & acquisitions. . . generally companies valued from $500,000 to over $20 million. • M&A Source – member since 1997 • Carolina Virginia Business Brokers Association – Board of Directors: 2015 – 2017 • Georgia Association of Business Brokers – member since 1994 • Georgia Association of Certified Public Accountants (CPAs) – member • Financial Planning Association of Georgia – member – Presented “How are Businesses Valued? & How to increase the Value of a Business? • Succession Planning Professional group – founding member – The group is for advisors who have clients who are considering leaving their business to their children. We address the many issues owner have. • Commercial Finance Association – member • Georgia Lenders Quality Circle – Southeast Small Business Lenders Association (for SBA Lenders) • Business Broker Press’ Business Reference Guide – listed as an expert for Daycare Centers (This resource guide is for Business Brokers) • Business Development Solutions LLC. We started in business in 1993 and are one of the most experienced business broker firms in Georgia. We have helped clients buy and sell many types of businesses from manufacturing, wholesale, business services, medical/dental practices, larger construction companies, childcare centers, and assisted living centers. • Jay Whitney has an MBA from Georgia State University and has successfully completed the Certified Public Accountant (CPA) Examination.

Agents

Serving:
Mecklenburg County, NC

This division specializes in Childcare Centers.

Sell Childcare Centers
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