A Story of why Bankers Don’t Make Friends Easily

September 13th, 2009

We’re Slow, But We’re Expensive!

Why do bankers have a bad rep? Sometimes it’s their own fault.

A south Florida-based distribution company found itself in the position of having excess inventory at December 31, 2008. Their products have a long shelf life so the company did not see it as a major problem. They knew that within 60 days inventories would probably be back to normal levels.

During their annual review the company’s auditors identified that the inventory levels caused a breach of one of their bank’s loan covenants. The key point is that the bank didn’t identify the problem to the company. Instead, it was the company that told the bank of the breach when it asked for a letter for a temporary release of the covenant (the request was made so that the audit could be issued without qualifications).

The bank sat on the request for approximately six months. They finally agreed to issue the letter in exchange for a fee of $5,000 even though inventories had been within the covenant’s guidelines for many months.

It was only after the fee had been paid and the letter issued that the audit could be finalized. Caveat Emptor.

Howard Schulman
Transworld Business Brokers, LLC
Business Sales, Mergers, Acquisitions & Financings
754 224 3137 — Direct Line
954 449 7899 — Fax
howard@tworld.com

Top ten and a half ways to get better grades without studying harder.

September 2nd, 2009

I wrote a letter to my godson many years ago like this as he left for college.    I cleaned it up and made it appropriate for grade school.   I have college versions, one for males, and one for females.  Email me if you want those versions.

1)     Be a student.  Get it in your head! Realize you’re at school to go to school (sounds dumb, but some of us thought we were there for different reasons).  Treat it like a 9-5 job.  Up in the morning, go to school all day, and between classes work on your homework.  8 hours of class and studying, you’ll have plenty of time for fun later.

2)     Act like a student- It’s way to easy to dress and act like a slob or be the class clown.  And it’s even easier for a teacher to give the slob looking and chatty person in the class (yeah you the chatty one with her shirt not tucked in) a lower grade.  If you don’t think looks matter with grades, you are sorely mistaken.  Teachers are humans and they behave like the rest of consumers.  The nice packaging wins.  Also, first impressions are huge.   At least dress smart the first month, then taper off to respectable.

3)     Go to class and pay attention.  This is huge.  Sounds stupid but it is true.   Take your tuition and divide it into the classes held.  It’s quite costly to daydream.  Plus, teachers love to test on what’s in class.  Reading the book won’t help.   By the way, you need to listen and take neat notes.   If you hear it, write it, I guarantee it will be way easier to recall it test time.  Cramming doesn’t work.

4)     Sit up front in class.  You will get better grades.  I promise.  Plus it’s easier to see, hear and to do the next tip.

5)     Make sure your teacher likes you personally!  This can very helpful.  And it will help your grades if they know you and like you.    They will give you the benefit of the doubt to those they know…and like (guess you should dress well).  Ask questions, after class if need be.  Go see them during office hours for the next tip.  And be nice.   Not cheesy, but respectful.

6)     Ask for information.  Ask what to study for exams.  If you ask, they will tell you.  MAKE SURE YOU PAY ATTENTION IN THE CLASS BEFORE THE EXAM.  They will give hints.  You cannot rely on others to take notes for you! (It doesn’t work)

7)     Make sure they know you care about your grades.  If you care, they will hesitate to give you a lower grade, and it will bump you to the next grade.  Plus you can always ask for extra credit, if you mess up an exam.    Tell them you care.   Tell them you want to do better and ask them how.   This is huge.  A teacher once made up an entire class for me to help me graduate.  I met with him once over the summer, read a book, wrote a report, and viola, four major credits toward my degree.

8)     Neatness and partial credit counts!!!!  Teachers love organized, well written papers with no misspellings, neat handwriting, and good organization.  Well-written reports with misspellings that look messy will get you bad grades.

9)     Start strong and keep up!  I fell behind early and barely recovered.   You need to set the pace and stay with the pack (as a runner you get the idea).Stay in physical shape and get plenty of sleep.   If you keep in shape, you’ll be able to keep your energy up for both for your studies and play dates.

10)  Stay safe and away from people who drag you down or misbehave for fun.   They may be fun in the short run, but they lose in the end.  Small stupid decisions can change the rest of your life.

10.5) Have fun.  Every once in awhile stop and look around and smell the roses.  Realize you’re in school and this is a great time in your life

Andy Cagnetta
ac@tworld.com

Time to help! Charity update!

August 30th, 2009

Well, the kids are back in school and it’s that time of year here in South Florida. Time for loads of charitable events!

  1. Join me and our friends Friday October 23, 2009 aboard the Sun Dream Luxury Yacht Catalina. Tickets are only $100. Includes drinks, dinner, and great music. The event is super casual, live band (Jimmy Stowe playing Buffet!), and always a great time!   Email me now if you want to buy a ticket, sponsor, give a live or silent action item. ac@tworld.com There are sooo many hungry people that need your help!
  2. Save the date!  February 21, 2010 for the 6th annual.   Andy’s Family Pasta Dinner. Anyone who is interested in being involved please email me. We had a huge turnout last year (over 300) and we are expecting more this year. We are planning a meatball contest at the event with local professional and amateur chefs. More kid friendly activities also. Interested?
  3. JA Bowl a Thon! Please Help me NOW! School’s back! Time to raise money for the kids! This year 40,000 kids will visit JA World.   Please give a few bucks in order to help me reach our goal!   http://www.firstgiving.com/andrewcagnetta
  4. Want to win a car?  Buy a $100 ticket and you will have a 1 out of 300 chance to win this 2009 Ford Focus! (Courtesy Maroone)

I appreciate all the support you have shown the charities that I care about.  I hope to see you at one of our events soon.

Andy Cagnetta, CEO
Transworld Business Brokers, LLC
ac@tworld.com

The Recession’s Impact on the Business Sale Marketplace- Is it a Buyer’s Market? by Fernando Simo

July 27th, 2009

Like the majority of businesses, the recession has negatively impacted the business sales.  As the recession took hold on the economy and business revenues began to recede, so did business profits.  Most sellers found themselves selling at less than one third its original business value—just like in Real Estate, it became a “Buyer’s Market.”

Although one would think that buyers would greatly benefit from this recession, the recession had an impact on their ability to buy a business.  With the failure of the financial markets and major banks, leveraging a business purchase became very difficult, indeed, due to the lack of financing availability.  In normal economic times, one could purchase a business with 20% Equity and 80% Debt, normally based on a ten (10) year term.  Although it is still possible to get this level of financing, the requirements have become a lot more stringent.  The Small Business Administration (SBA), the financing program of most small business purchases, became a lot more stringent in providing loans.  As a result, sellers have taken on the financing burden.  Today, sellers that want to sell their businesses quickly normally are required to finance up to 50% or more of the transaction.

Although the world markets have suffered through this recession, the shrink in the dollar value has created opportunity for many foreigners to purchase business properties in the United States, while taking advantage of Visa permits.  Note:  Foreign investors who invest a substantial amount of capital in a US enterprise and who will develop and direct the enterprise, may apply for an E-2 Visa if their country of citizenship has the required treaty with the U.S.  The holders of the E-2 Visa may reside in the United States as long as they continue to maintain their status with the enterprise.  With the sterling latest surge over the dollar, many from the U.K bought (and continue to buy) businesses in the U.S., primarily looking for the E-2.  Normally, these buyers go after “cash cow” businesses such as low overhead Service Businesses which required minimal capital investment in fixed assets—such as Property Management, Lawn and Pool Services, and Painting services.

All in all, yes, the recession has slowed the business sales market.  But savvy buyers can take advantage of the situation.  And with all indicators showing the tide is turning, buyers should take note and perhaps jump in while the market conditions favor them.

Fernando Simo is an agent for Transworld.

Build vs. Buy by Dan Younkins

July 26th, 2009

Every year, thousands of people consider entrepreneurship.  The two routes are either to buy an existing business or start one from scratch.  Each course has advantages and disadvantages that one should consider.

Starting your own business can be very rewarding but needs to have a unique product, technology, or service.  Let’s face it, there are very few “new ideas” out there that have not already been tried.  One would need to complete a thorough evaluation of the marketplace, competition, need – in other words a Business Plan.  If you start your own business, you will not be paying for Goodwill or Bluesky.  Perhaps you can start from your home with no employees and greatly reduce the initial capital requirement.

However, you will need to support yourself (and family) from personal savings.  There may be months or years before profits are sufficient to provide the level of income needed.  Obtaining financing may be very difficult as there is no track record and no customers.  The chances of survival of a start-up business is low – a 75% failure rate according to the Bureau of Labor Statistics.

Buying an existing business may be a more efficient way to business ownership, but it is frequently more costly.  Existing business owners will expect a premium for providing you with an existing customer base and location.  The advantages of buying an existing business generally outweigh the disadvantages.  Existing businesses can normally obtain financing from financial institutions because they have established history, assets, and a proven idea.  The seller will quite often provide a portion of the financing in the form of a loan.

Established businesses are less risky because they have an existing customer base, relationships with suppliers, an operating process, a known location, and employees that are hired and trained.  In addition, there is an existing cash flow which can provide immediate income to the buyer.  Experts generally agree, in most cases, that paying the extra cost for an existing business will outweigh the risks of starting one from scratch.

Dan Younkins is an agent at Transworld and a CBI.

Deciding How to Sell Your Business. By Peter Berg

July 26th, 2009

You’ve done all the preparations to get your business in great shape to sell. Now what? At this point, the most important choice you will make is whether to sell your business on your own or get professional help.

Selling Your Business Yourself

Selling a business is much more complex than selling a house. The value of a house is fairly easily determined. Not so for a business. Also, everyone knows your house is for sale when you put up your sign; but that’s the opposite of what you want when selling your business. If your employees, vendors, and customers know you are selling, you could lose key people and accounts, and your vendors may cut back on credit terms if they fear they may not get paid.

When selling a house, the due diligence usually entails a roof and termite inspection. With a business, however, you have to prove your income and expenses, negotiate a lease assignment, and deal with complex contracts.

If you don’t care who knows your business is for sale, you may be better off trying to sell it on your own. You can use the local classified Business Opportunity section of the paper, and look to some of the national Web sites that market businesses for sale. You may end up spending a few thousand dollars, but you could save more than that by not paying any commissions.

The problem with the do-it-yourself approach is that you will be asked to give away your confidential financial information to people who may not be qualified. Potential buyers will ask for your address so they can drop by, and they may ask your employees questions and otherwise interfere with your business operations. And just like a house that is for sale by owner, buyers are looking for bargains from business owners selling independently.

Finally, you’ll face many landmines that could blow up the deal once you agree on a price. Those include getting an asset purchase agreement with all the schedules signed, proving your numbers in a lengthy due diligence process, and assigning the real estate lease, to name a few.

Using a Broker to Sell Your Business

Most business owners hire a business broker to sell their business. You can find brokers on the Internet, through the International Business Brokers Association or by referral from your accountant, attorney, or colleagues.

The first and foremost advantage of using a broker is confidentiality. A broker will market your business generically and require prospective buyers to sign a confidentiality form and show proof that they have the necessary funds to buy your business. This helps prevent the disruption of your business while it’s for sale.

You will also get the most money for your business if you have multiple prospects. Brokers market on a variety of Web sites, in the multiple listing services in their states, in the newspaper, by direct mail and e-mail, and through their various contact networks. With a larger pool of buyers, you stand a better chance of getting your business sold sooner and for more money.

Using a broker lets you continue to do what you do best, which is run your business. Many business owners take their eye off of business profitability while they try to sell it. The drop-off in business ultimately causes a drop in the value of the business.

Finally, getting from the point of finding a potential buyer to having a check in the bank is an arduous process that is fraught with potential points of failure. You’ll need all the help you can get to ensure a successful sale. Along with your accountant and attorney, your business broker will complete your dream team of professionals, all working together to help ensure a successful sale.

Peter Berg is an agent at Transworld and Managing Director.  He is also a CBI.

Open listings…They are extinct…and plain stink!!

June 17th, 2009

Open listings are passe.   Not just because I like to have an exclusive on deals, but because they plain don’t work!!

If I were to take an open listing from you here’s the drill:

Open Listings:

  • You give me an open listing.
  • I cannot take the time to package or create a deal book.
  • I might take the time to tell my staff of 85 about the deal.
  • They may have one or two people on their desk that may qualify.
  • Beyond the one day I tell everyone, the listing is off the radar and no one thinks of it.
  • Even if you tell every broker you can, it doesn’t even come close to matching with and buyers worldwide beyond the one day you may contact the brokers
  • You probably never sell and absolutely won’t sell to the best buyer at the highest price.
  • You have no control over the confidentiality, buyer qualification, or how your listing is marketed.

If you let me take an exclusive listing based on our mutual goal of being committed to the sale fo your business.  Here is the process:

Exclusive Listings:

  • You give me (Transworld) a 12 month exclusive listing.
  • I create a CONFIDENTIAL and comprehensive package for buyers.
  • The deal is available to my 85 brokers, the 1200 plus in our state association, the 2000 plus nationwide. (Not through the Realtor MLS, through the BBF business brokerage MLS)
  • We cobroke with almost all business brokers and sometimes realtors who bring a qualified buyer. So you are not missing any buyers.
  • Your confidential listing is available through our website, 2000 brokers websites, Wall Street Journal, Inc magazine, and many many more business sale websites that attract buyers worldwide!
  • Thereby creating COMPETITION for your deal and significantly increasing your chances of finding the right buyer at the highest price.
  • There is a lot of NOISE out there these days.  Your deal needs to be polished and complete to get attention these days.

So if you really want to sell a business, you have to eventually list it with someone who knows what they are doing.   If you call a few brokers, post it online yourself, you then need to get very lucky.

Bottom line.  You need a professional committed to selling your business, and they need to have assurances they are on your team.

Andy Cagnetta
ac@tworld.com

I Hate MLM’s.

May 31st, 2009

Sorry, strong word “hate”. But I refuse to recant it….I HATE MLM’s! It might seem odd to people that a serial entrepreneur like myself would think MLM’s are the scourge. It’s not the people, I even like Rich DeVos (founder of Amway), but every time I meet a newly minted MLM devote…my skin crawls. Here’s a few reasons why.

1) MLM’s usually make money by over charging for a service or product. It’s the only way to pay all those people on your down line.
2) Most MLM participants shouldn’t be there. If you think that a mother of three will have time to sell WHATEVER (travel, soap, grape juice, adult toys) and be successful, I have a bridge to sell you. Most people are not cut out for sales, and a MLM is sales. Don’t say it’s not…it is!!!
3) I have joined MLM’s in the past and regretted the waste of time and money. And I have plenty of people who have garages full of water filters that feel the same way.
4) If you go to a meeting and they are giving away cars, and you are selling beaded necklaces, juice, cheap travel, or online websites….do the math! They are making money by signing your butt up for the deal. Thousands of people making pearl necklaces…anyone ask where they are selling thousands of pearl necklaces???
5) Name 10 people you personally know who have retired in two years from their MLM involvement. You cant… so then name 5…still no eh? Ok name one. And not some friend of a friend either. Name 10 that failed miserably….(if they’ll admit it) Point made.
6) MLM’s will be out in force during this downturn and prey on people’s fear and greed. Fear and greed the oldest sales tactics in the book. If you get the high powered sales job. RUN!
7) There’s always a time pressure tactic. Must do it now, I’ll get a raise if I bring you in this week, you’re in this early, blah blah blah. If there’s a time pressure tactic or its too good to be true! Leave the meeting!!!
8) Think about it, you’re gonna make millions selling WHAT??? Do the math how many beads, juice, vitamins, soap, online websites, adult toys do you think you and your downline can sell, make a margin on, and get profit to you? Hand me the smelling salts.
9) MLM’ers act like they slept with the pods (Invasion of the Body Snatchers reference) They would sign up their grandmother if she could sign the initial check. Don’t worry Grandma, get 3 of your assisted living buddies to do it and you’ll have your money back next week. Plus this product will make you feel 20 again. Really, someone at the meeting has an Aunt who is now 90 and jogging again.
10)Face it, it’s not a real business (except for the owners/creators). In the end you’ll have nothing to sell, nothing to build, nothing to show except for 400 of the 500 business cards you had made.
11) You look like a fool trying to promote your real business and then when they don’t bite on that sale….reloading with the lobotomized speech about your MLM dream.     Best was a respected dermatologist promoting his MLM travel business.    Yeah…I’ll trust him with my skin cancer screenings.

I know…the self serving business broker is just trying to get you into a traditional business that makes money that old fashion way and he can sell. Guilty as charged. I guess I am wrong for thinking business relies on providing something of value that the marketplace can support at a margin that makes you money.

So bring on the emails POD people…..BTW, only complain if you have been in your MLM for 3 years or more…and make money.

I hear crickets…
Andy Cagnetta
ac@tworld.com

Change…new buzz word or as old as time?

May 30th, 2009

Probably both! At Transworld we manage change every day in our client’s lives. Effective change in our client’s lives is our business and we get paid to do it.

But are you in your own life an agent of positive change? Do you embrace change, even cherish it? I do.

The definition of change agent “is someone who engages either deliberately or whose behavior results in social Change, cultural change or behavioral change.” I’ll add corporate and organizational change to the list.

President elect Obama ran a successful campaign based on the promise of positive change. Will it be as sweeping, positive, and impactful as promised? Probably not and it will probably will not be his or the new administrations fault, for there are many who resist or actually sabotage change.

Do you resist change, even positive change? In these times, you either embrace change or get run over by it. There is no doubt that you life in our business (and your 401k) has experienced, and will continue, to experience change.

So how will you handle change? Can you and your organization adapt and profit from it?

Buchanan & Boddy performed a study on the perceived effectiveness of change agents. On that basis, they compiled the fifteen most important competencies of change agents.

When reading through the noted skills, I can’t help but think of how these apply to my roles as new Chairperson of my association (IBBA), as CEO of my company, as a board member of a few charities, as an effective intermediary, and finally as a family man. Also, I can’t help but think how applicable these skills are to our world today. (Note that Bucanan & Boddy publish this list in 1992)

Note some of the traits of a good change maker. Sensitivity, goal setting, flexibility, team building, networking, tolerance, patience, communicative, enthusiasm, motivational, planning, visionary, conflict resolver, politically aware, influencer, global thinker.

Sounds like the perfect successful business person, and the kind of skills that will navigate you and or your company through any economic or political change. How do you acquire these skills? Simple, education!

But filling your head with ideas is not enough, you need to learn how and when to apply them. How do you do that, same way you get to Carnegie Hall? Practice, Practice, Practice!

Where can you practice these change agent skills? Everywhere. But you must get involved. And there are many ways to get involved in positive change in your home, community, business, and industry. From things like home projects with family, joining a board or volunteering at a charitable event, strategic planning or simply surveying your own agents/employees in your own business, and lastly rolling up your sleeves and just doing it!!

I dare say have learned more from being a community volunteer, committee member, and board member than any schooling or class time ever taught me. It’s sometimes easier to be a leader of those who want to be led, than to be a leader amongst a group of leaders.

I challenge all of you to join me in being a positive, effective, educated and skilled change maker. We all need to take a role in our family, business, community and industry to assure our future.  Above all you need to change YOUR life and take control of your future.

Buying  or selling a business could be a great first step!

Andy Cagnetta
ac@tworld.com

Should you buy a business now?

May 28th, 2009

The answer is a resounding yes!!! If you have cash and have the ability to work a business for a small return, then BUY NOW!!

I know…you think this is self serving. The business broker wants you to buy a business. While that is absolutely true, I am giving my own family members this timely advice to jump into the entrepreneurship pool!

Business valuations are down. Valuation multiples and the income used in the calculations are at historic lows. We will all be looking back at this time and remark “I should have bought ____ in 2009″.

Imagine buying a business now that used to make say $500K that currently makes $100k. If you buy it for 2 or 3 times, you would pick up a great business for very little money!!

There are many more reasons the time is right.

  1. Financing rates are LOW!! That’s if you can get any financing, but things are starting to loosen up out there.
  2. Sellers are financing the deals since there is very few sources of capital for buyers to choose from.
  3. Small businesses will drive the recovery. They always have and always will be the bedrock of our economy.
  4. To be small and nimble is the order of the day.
  5. Competition is gone or at least weakened.
  6. Once again the small guy with capital can win in today’s price sensitive marketplace.
  7. You have time to learn the business while it is slow. Many time the learning curve can take the better part of a year.
  8. With business being slow, you can focus on quality not quantity.

I am happy to answer any questions or concerns. Email me anytime for valuation, buying, selling business advice.

Andy Cagnetta
ac@tworld.com