A good business broker, or broker, he is a kind of psychoanalyst who must penetrate the most intimate corners of his clients' subconscious to determine which business best suits their particular circumstance. That's why I usually start my interviews with potential buyers with two questions. The first is, how much do you think you need to live? and the second, how much capital do you have?
With these two answers, it is already possible to outline a list of companies for sale that are generating a cash flow that satisfies the following conditions: 1) That it covers the operating costs and expenses of the business; 2) That it covers the subsistence expenses of the owner's family; 3) That it covers the financial expenses derived from the debt contracted with the seller of the business; and 4) That for the initial amount invested, the buyer obtains a rate of return equal to or greater than what he would obtain in the financial market.
On the basis of these premises, the search is narrowed and, in the end, it must conclude in the selection of two or three companies worthy of a detailed analysis by our potential buyer. As they say that "paper holds everything" it is important at this level to scrutinize the realities of the business, starting with an initial meeting with the owner to learn the details of the business firsthand. If this meeting is satisfactory to our buyer then he will wish to make an offer to the owner in which he states, together with the payment conditions that he would be willing to meet, the contingencies to which the agreement would be subject; Once the offer is accepted by the owner, it will go to the documentary, supplier and market analysis stage known in English as "due diligence”. Here it is important to be accompanied by a Certified Public Accountant (CPA) to examine the accounts, and verify the validity of the company's permits and authorizations.
After the "due diligence” a specialized lawyer will be given the green light to prepare all the necessary paperwork for the closing of the operation. The attorney must keep a portion of the price in a trust account to pay off outstanding obligations of the seller such as taxes and contingent utilities. On the day of closing, the buyer delivers his check and the buyer receives the keys to the business.
If the buyer adjusts to this formula that identifies the company with a good cash flow and follows the steps stipulated for the purchase, he will know perfectly well what he is acquiring and, while minimizing his investment risk, he will be solving his problem. life problem.
UndertakingUSA2003. The Seminar sponsored by the Venezuelan American Chamber of the United States was held last Saturday at the Weston Hills Country Club. Excellent presentations by Alfonso Cordero in Taxes, records and insurance; Ileana Arias de Tovar in Legal Affairs, Incorporation and Organization of Companies; Miguel Davidov in Marketing and Sales; Aileen Rubio on credit aspects of the Small Business Administration and Werner Glass on Franchises. The organization fell especially on the shoulders of Victoria Azpurua, President of the Chamber, José Gregorio Tovar, director, and Shalom Kivilevick, a luxury executive director; The egg or the chicken? This week I received a concerned Venezuelan businessman because more than a month ago they stamped the L1 visa in his passport and he still hasn't decided what business to set up. Within 11 months the immigration authorities will review his performance and if he has not made reasonable progress on the schedule stipulated in his Business Plan, it is likely that his visa will not be renewed. I insist that it is necessary to identify the business first and then proceed to manage the visa. The ideal formula in these cases would be to link, in the same offer contract, the purchase of the business with the approval of the visa. Remember that what remains of the race is fatigue...; Quote of the Week: "Always forgive your enemy, there is nothing that infuriates him more" (Oscar Wilde)
by
Alfredo Gonzalez Amare