October
2017
Ask the Expert!
 

We want to hear from you, our readers! Send in your questions to info@cbiteam.com
and we'll have your answers in our next newsletter.

Q: How is Accounts Receivable handled in a business sale?

A: When contemplating the sale of your business, one of the assets is almost always accounts receivable on the books. 

Seller, that's your money, already earned and paid for. 

How do you recoup that money?
 

Well, #1 collect as much as you can and keep your A/R as small and current as possible. That's just good business practice and it will make your business more attractive to a savvy buyer. They want to buy good customer relationships from you and that's a sign of good business. 

Whatever A/R
 on the books is negotiable and the Seller either keeps it and collects it after closing or the Buyer acquires it and collects it after closing. 

It may be better to offer to sell the A/R to the Buyer. 

Many times the Buyer wants A/R
 to help with cash flow. The Buyer's lender may require the A/R to transfer to protect the lender's lien. The Buyer probably wants to do his own collections to protect the customer relationship. The Buyer may be slow to pay but necessary to the ongoing success of the business. 

One of the issues to be worked out in negotiation is the value of the A/R. Current is worth more than 90 days. There is generally a formula worked out between Seller and Buyer with the help of an experienced Intermediary. The CBI TEAM can help with this negotiation to create a Win-Win scenario and a successful closing and transfer. 


Business Confidential is compiled from information picked up by Carl Grimes and other CBI Team members on the streets, in the offices and around Northwest and Central Arkansas, and Northeast Oklahoma. The names aren't being revealed to protect the innocent (and sometimes the guilty!).
 

 
Dateline: Central Arkansas

CBI Central Arkansas teams up with Blackmon Auction for their first Business Intermediary/Auction in the Central Arkansas area. The CBI TEAM sold Richardson's Plumbing last month and now has joined teams with Blackmon Auctions to sell the real estate. 

Date and Time: November 9th 9AM

Location: 7601 Counts Massie Road North Little Rock, Arkansas

For More Information visit: 
www.blackmonauctions.com

 
-30-
 
Dateline: Northwest Arkansas

Northwest Arkansas' National Car Rental franchise has been acquired by the parent company. It's apparently a part of a plan to consolidate all ownership back into the company. Mike Jones had operated the franchise for many years

www.nationalcar.com

The Resident Chef, a business purchased by Mark and Kathy Janus in 2016 through CBI TEAM has re-located to Northwest Arkansas from the original Little Rock facility. Mark and Kathy have moved the business to the Bethel Heights area.

www.theresidentchef.com
 

Want to reach hundreds of business owners and buyers?

Contact us to find out more!


BIG BUYERS!
 
About These Buyers:
The CBI TEAM has worked hard to cultivate a a contact list which includes more than 400 private equity groups, franchise business groups, as well as other large corporate buying entities. Collectively these are the CBI TEAM "Big Buyers" 

These buyers typically purchase and recapitalize businesses with top line revenue anywhere from five million to fifty million dollars, with interests in a multitude of different industries. If you've worked hard to build a business like this, and you're ready to retire don't trust the transition to just anyone. The CBI TEAM is the largest locally owned business intermediary firm in Arkansas and Oklahoma. Only the CBI TEAM has the experience and contacts, along with a little down home perspective to help you confidentially sell your big business. For more information  877-582-5200 or email confidential@cbiteam.com 

Connect With Us On Social Media:

Need some encouragement?
Contact us at 877-582-5200 or e-mail confidential@cbiteam.com for a no-obligation, confidential consultation.
(From right to left: Stephanie Tanner CPE Manager, and Robin Harris Communications Manager of the Arkansas Society of CPAs and John Green Business Intermediary for the CBI TEAM.)

CBI TEAM offices in Central Arkansas and Northwest Arkansas were represented at the recent Vern Hoeven Tax Course attended by CPAs in Arkansas in preparation for the upcoming tax season. 

Connor Grimes, Managing Partner for CBI Central Arkansas, and Carl Grimes, Chairman of the CBI TEAM sponsored the event which was held in Little Rock and attended by over 200 tax and accounting specialists from around the state of Arkansas.

Bob Baine of  CBI Central Arkansas and John Green of CBI Northwest Arkansas represented the company and met CPAs from around the state.

CBI is the largest full service business brokerage in Arkansas and Oklahoma with offices in Central, Northwest, River Valley, Arkansas and Tulsa, Oklahoma. 

TEST-Multiple Choice: Exiting My Business-What are my choices?

 
(This is the fourth in a series of articles by Carl Grimes, chairman of the CBI TEAM, in which he describes 5 business owners can exit their businesses). 

Smaller business owners (generally less than $1 million annual sales), are not merger targets. Mergers are generally used to create synergy between two companies that have similarities but there has to be enough value to create synergy. Under $1 million annual sales doesn't generally create enough value for the acquiring company. What are some of the characteristics sought by mergers? 
  • Similar but different customer base. Bringing your customers/clients to the table by a merger creates value for the buyer. Rather than having to find and earn the business of the customers/clients, they buy the relationships you have established with them. Big value to the buyer.
  • Technology acquisition. Your company may have developed technology that the buyer doesn't have and they are willing to pay for it. 
  • Manufacturing or distribution capacity. Buying rather than building can be less expensive and time consuming for the buyer. 
  • Your employees can often be a target of an acquisition but they are for sure a consideration for a buyer. They have helped grow your business and a buyer wants their help too. 
  • Operational expertise your company may have developed making it more efficient and attractive.
  • Vendor and buying relationships. You may have an exclusive agreement with a vendor that can reduce the costs of operation for the buyer. 
Every merger is different but the buyer is always looking for ways to create synergy and grow their own businesses. Smart buyers know that acquiring a business via merger is often much less expensive than organic growth. 

Pitfalls for you, the Seller:
  1. How you are paid...many times the buyer wants to pay in stock in the existing company or they will create a new company and issue stock in it and offer to pay you with stock. Be careful. The stock may or may not have longer term value and stock purchases can be tricky. This will require you to have an attorney experienced in these matters.
  2. Sometimes the buyer will offer to pay some cash and some stock. See #1 above. 
  3. Many Sellers think that merger buyers will pay a premium for their businesses. This may be true but sometimes the buyer is a bottom feeder and they will always try to get as much as they can for as little as they can. 
  4. Owner financing. This can be a good thing but only and always with a substantial cash down payment and a properly secured lien position on the business assets. 
  5. Non competes are always part of the buyer strategy and they must be carefully drafted and reviewed to make sure they don't restrict the Seller from having the right to protect the business if the buyer doesn't perform according to the merger agreement. 
  6. Performance based post-merger compensation. Often the buyer will agree to pay part of the price in an employment or consulting agreement. Make sure the agreement has reasonable and verifiable language.  
There are many other advantages and pitfalls you, the Owner/Seller, should be aware of in a merger. One of the biggest advantages can be that you can sell the stock and not the assets of your business. This can have big tax advantages for you, particularly if your business is a "C" corporation. The best thing you can do is to have a great team on your side to help find and negotiate a merger on the best terms for you and your family. The CBI TEAM has experience in this area and can help you protect the largest asset you have, your business. 

Next time: Selling to a third party. 

(This is what happened to Confidential Business Intermediaries in Tulsa)

Is Your Business Prepared For A Disaster?
by Roy Still Owner/Managing Partner for CBI TEAM Tulsa Area


On August 6th, 2017 when a Tulsa tornado touched down, we at the Tulsa CBI TEAM office learned first hand that a disaster can strike anywhere at any time. Nationally, when a disaster strikes, the average small business loses a little more than $3,000 per day. Microbursts, straight-line winds, tornadoes, fire, floods and ice storms are the more common events that can take place in our area. One third of all small businesses say that they have been affected by a major incident since opening their doors. Is your business prepared in the event it happens to you?
 

I can say in the case of Confidential Business Intermediaries of Tulsa, the answer is yes and no. On August, 6th of this year after a tornado struck midtown Tulsa damaging our office at the Remington Tower, we lost access to our desk space, documents, printer, etc., but our team; Brett Drumm, Hank Henningsen, Adam Noble, and I are set up to operate 100% virtually. We store copies of all of our documents on the cloud as well as keeping a hard backup. The VoIP
 telephone system we use is located off site and forwards all calls to our cellular phones. Websites, emails and faxes are all virtual. Our virtual Customer Relationship Management system stores vital buyer and seller information so we have the capability to work from anywhere without interruption. This allows us to seamlessly continue providing 100% service to all of our clients that are buying and selling businesses. 

However, when it came to preparedness, we fell short on one front, insurance. As with any responsible business, we carry adequate liability insurance, but, because we were so prepared to be able to work virtually anywhere and since we stock no valuable inventory and we don't have any valuable equipment, we opted not to carry business continuation/interruption insurance. On the surface, we didn't need this insurance coverage. The reality, we are obligated to pay lease payments until such time it is decided whether the building will be repaired or demolished. the continuation/interruption coverage would have paid to rent us temporary space to operate out of in the meantime. Hard lesson learned. 

How quickly a company is able to recover from a disaster, according to the Insurance Institute for Business and Home Safety, determines how successful they are in the future. Here are a few things to consider when preparing your disaster plan:
 

  1. Be sure that you have enough insurance coverage. Have your agent give your policy a check-up. Check to see if you are in a flood area and consider business interruption insurance. 
  2. Back-up ALL of your data and store it off site. Take time to scan and make electronic copies of your vendor contracts, leases, employee files, tax returns, etc. Be sure that you can access all documents in the event of a total loss. Back-up any programs you use like, CRM, POS, etc.
  3. Keep your inventory current.
  4. Keep Furniture, Fixtures, and Equipment list with current replacement value. Do not rely on your depreciation schedule for this list. 
  5. Determine a communication strategy with your clients and employees. When a disaster strikes, communication is vital to retaining your customers and employees. 

Online Marketing Activity

One of the many ways the CBI Team markets businesses is through buyer specific websites, places business buyers go to find businesses to buy. ​Below are figures that represent ​some online ​buyer activity on some (not all) of the websites used by Confidential Business Intermediaries/CBI Team to market businesses. This information displays the amount of views or "hits" that ​CBI business listing​s​ and websites ​got as well as the total number of ​emails​ to ​which ​our monthly newsletter​s are sent​.​ It costs hundreds of dollars per month to place the confidential "blind" ads on these websites. In addition to the websites, CBI prepares and implements a customized marketing plan for each business ​we list for sale.

​CBI also prepares a monthly report for each business owner we represent. The monthly report provides detailed information about each business listing.


Business ListingsLast MonthLast 12 Months
Total Number of Views11,032120,199
Avg. Views per Listing2262,241
Total Email Inquiries51642



cbiteam.comLast MonthLast 12 Months
Total Number of Visitors1,21712,657
Total Number of Views1,99530,062



Monthly NewslettersLast Month
Total Newsletters Sent12,416

Company Profile

The CBI Team is the largest business brokerage network in Arkansas and Oklahoma. Since 1994 we have helped people sell and buy businesses in one of the nation's fastest growing regions. Offices in Northwest Arkansas, Central Arkansas, Fort Smith, Arkansas, and Tulsa, Oklahoma, make the CBI TEAM is the only business brokerage firm with offices in each of the major Ozarks cities. 

The CBI TEAM manages the entire business sales process, from helping the seller arrive at a reasonable, market-driven price for the business, to helping the buyer to arrange financing so that the seller gets the most compensation at closing. 

The CBI TEAM is the one-stop intermediary for all business sellers and buyers.

Carl Grimes, Owner
Serving the Northwest Arkansas area
Contact us at (479) 770-8989 or carl.grimes@cbiteam.com

Connor Grimes, Managing Partner
Serving the Central Arkansas area
Contact us at (501) 404-4980 or connor.grimes@cbiteam.com

Mark Kincannon, Managing Partner
Serving the Fort Smith/River Valley Arkansas area
Contact us at (479) 784-9522 or mark.kincannon@cbiteam.com

Roy Still, Managing Partner
Serving the Tulsa, Oklahoma area
Contact us at (918) 940-6437 or roy.still@cbiteam.com