A CBI (Certified Business Intermediary) is an experienced business intermediary who has the required knowledge and experience to prepare business valuations, develop marketing plans, facilitate terms sheet negotiations and the multitude of complex issues that result in business for sale transactions. The CBI credential is a professional designation earned by Business Brokers who are members of the International Business Brokers Association (IBBA) that have achieved the academic, work experience, and ethical requirements of the International Business Brokers Association.
Achieving a CBI involves the following requirements:
1. Education – CBI’s must complete a rigorous advanced study curriculum involving a minimum of 68 class hours of business brokerage courses in addition to attending IBBA Conferences for professional development, continuing education, and periodic re-certification
2. Experience – A minimum of three years full-time business brokerage experience within the prior ten years, and must be actively involved in the deal-making process, or management of the process.
3. Ethics – A thorough understanding and commitment to uphold the Association’s high Code of Ethics.
4. Examination – Once all requirements are met, CBI’s must pass a difficult and comprehensive examination.
Buying and selling privately held businesses is highly specialized and requires a successful track record of experience and solid understanding of the financial, legal, and accounting fields, in addition to having a competency in the due diligence, negotiating, and marketing disciplines. Selling a privately held company is often the most important financial event a business owner will experience and they will need to obtain the most competent representation. A privately held company often represents a significant amount of family wealth and the owner is incentivized to maximize the value when the company is either succeeded to a family member or sold to an outside third party. The specialized services provided by a Certified Business Intermediary and the expertise they offer, should provide the necessary framework and resources that help to demystify a rather complicated process to achieve a win-win transaction.
There are a number of unique qualifications that a CBI has to offer, including:
- The most up-to-date industry data related to valuation, financing, contracts, taxes, legislation and other areas with respect to business transactions.
- Affiliation with hundreds of other intermediaries and professional partners (Attorney’s, CPA’s, Wealth Managers, etc) on a local, regional, national, and international basis.
- A higher level of experience, training, and education necessary to handle the marketing, negotiations and complex details involved in the purchase or sale of privately held business.
Applicants that have an established work experience in the industry and knowledge of the M&A industry can achieve the CBI designation (which has been awarded to less than 800 individuals internationally) based upon completing a comprehensive curriculum and testing by the International Business Brokers Association. Not all states here in the US require licensure of business brokers and therefore it is imperative that company owners look for the credentials of the representatives and firms being considered as a trusted advisor in a business acquisition or sale transaction. The purchase or sale of a privately held enterprise can be one of the most critical financial events in a person’s life. Retaining a CBI will provide an enormous amount of assistance and value in navigating the myriad of complex issues related to selling or buying a privately held business and achieving a win-win transaction.
About the Author:
Michael Fekkes is a Senior Broker at Enlign Business Brokers in Nashville, TN. Michael is a Certified Business Intermediary CBI®, a member of the International Business Brokers Association IBBA®, as well as a former business owner. He can be reached at 615.535.1150 or mfekkes@enlign.com. Enlign Business Brokers (www.enlign.com) is a Professional Services Firm serving the Southeast that is headquartered in Raleigh, NC with regional offices in Nashville, TN and Atlanta, GA. providing business intermediary services ranging from valuation and sale to exit & succession planning strategies.
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Certified Business Intermediaries are trained and experienced business brokers that possess the expertise and knowledge to assemble business valuations, business-for-sale marketing programs, contract negotiations, and facilitating many other complex details involved in a privately held business transaction. The CBI designation is a credential earned by Business Intermediaries from the International Business Brokers Association. These professionals have satisfied the work experience, academic requirements, and ethical standards of the IBBA.
CBI’s have three distinct qualifications:
- A higher level of experience, training, and education necessary to handle the marketing, negotiations and complex details involved in the purchase or sale of privately held business.
- The most up-to-date industry data related to valuation, financing, contracts, taxes, legislation and other areas with respect to business transactions.
- Affiliation with hundreds of other intermediaries and professional partners (CPA’s, Attorney’s, etc) on a local, national, and international basis.
Business brokerage is a specialized field that requires a good knowledge of the finance, legal, and accounting disciplines, as well as a proficiency in marketing, negotiating, and due diligence. Selling a privately held company is often one of the most important financial events in the life of a business owner, who should make sure that the best and most professional representation is retained throughout the process. In most cases, a small business represents a significant component of family wealth and the owner will be keenly interested in maximizing this value when the business is sold to an outside 3rd party or key employee, or transferred through an orderly succession to a family member. The special skill set and expert guidance offered by a CBI will bring peace of mind and security to a process that can be complex and challenging. A CBI professional can help both buyers and sellers navigate the acquisition and sale process in a smooth and methodical fashion and assist in achieving a win-win transaction.
CBI Requirements:
· Work Experience – A minimum of three years full-time business brokerage experience within the prior ten years, and must be actively involved in the deal-making process, or management of the process.
· Professional Ethics – A thorough understanding and commitment to uphold the Association’s high Code of Ethics.
· Industry Education – CBI’s must complete a rigorous advanced study curriculum involving a minimum of 68 class hours of business brokerage courses in addition to attending IBBA Conferences for professional development, continuing education, and periodic re-certification
· Testing/Examination – Once all requirements are met, CBI’s must pass a difficult and comprehensive examination.
Buying or selling a business is one of the most crucial financial transactions in an individual’s life. Engaging a Certified Business Intermediary (CBI) will greatly assist both buyers and sellers in optimizing the transaction and navigating the myriad of complex issues related to selling or buying a closely held business. The CBI designation is awarded following rigorous education, testing and demonstrated superior working knowledge of business brokerage skills. This difficult to obtain designation has been awarded to less than 800 recipients internationally. In states where there is no licensure of business brokers, it is even more important that business owners look for the credentials of the individuals and firms being considered to represent them.
About the Author:
Michael Fekkes is a Senior Broker at Enlign Business Brokers in Nashville, TN. Michael is a Certified Business Intermediary CBI®, a member of the International Business Brokers Association IBBA®, as well as a former business owner. He can be reached at 615.535.1150 or mfekkes@enlign.com. Enlign Business Brokers (www.enlign.com) is a Professional Services Firm serving the Southeast that is headquartered in Raleigh, NC with regional offices in Nashville, TN and Atlanta, GA. providing business intermediary services ranging from valuation and sale to exit & succession planning strategies.
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By: Michael Fekkes, CBI – ENLIGN Business Brokers
Three of the more popular methodologies used to value a business are the Asset, Market, and Income approaches. This article will focus on the different types of earnings used within the income methodology and how they are used to value privately held small businesses. Under the income approach, businesses are valued based the earnings the company generates. The prospective buyer is typically focused on the amount of income that would be available to them should they purchase the business. The net ordinary income, calculated for tax purposes, does not depict the accurate earnings of the company based on the non-cash, discretionary, & non-recurring items expensed by the company owner. Earnings are intentionally kept low to mitigate income taxes. Therefore, to determine the true earning capacity of the company, the P&L needs to be re-casted to derive either SDE or EBITDA during the valuation process. Re-casting standardizes (or normalizes) the business earnings through the elimination of non-recurring, variable and discretionary components, allowing an objective and accurate comparison to be made between two businesses. The company value is then computed by applying a multiple, consistent with the industry and a weighting of the factors affecting the business, to the EBITDA or SDE amount.
Seller’s Discretionary Earnings:
Seller’s Discretionary Earnings is generally utilized for businesses with under $1,000,000 in adjusted earnings. These businesses typically have the owner operating and receiving a salary through the company. With these small businesses it is important to determine what the ‘owner benefit’ is as opposed to the ‘earnings’ of the business. This is accomplished through a series of P&L adjustments termed ‘add-backs’ that are made to the pre-tax business earnings. In certain circumstances, there are negative add-backs as in the case with a business that owns the building where the owner is paying himself a below market rent or a family employee performing a critical business function who is receiving a below market wage. In both of these cases, an adjustment is made to normalize the expense to a fair market value. The most common adjustments in the re-casting process are as follows:
1. Add-back one owner’s total compensation
a. Salary
b. Payroll Taxes
c. Perquisites (Health Club or Golf Memberships etc)
d. Insurance
e. 401K / Retirement Contributions
2. Add-back Non-recurring expenses
a. Bank Penalties or Fines
b. Attorney fee’s (e.g. related to sale of business)
3. Add-back interest expense
4. Add-back discretionary expenses (not necessary in the operation of business)
a. Owner’s Vehicles
b. Donations
c. Travel & Entertainment
d. Non-Essential Cell Phones
5. Adjust Lease or Rent to current market value
6. Add-back non-cash expenses
a. Depreciation
b. Amortization
Earnings Before Interest Taxes Depreciation Amortization:
EBITDA is used to define the earnings for larger companies, with adjusted income in excess of $1,000,000. In most cases, the business owner does not actively direct the company operations and must remunerate a general manager to perform that function. Therefore, the EBITDA formula will differ from SDE as it incorporates the manager’s compensation in the earnings calculation as an expense. EBITDA is a non-GAAP measure that is used to determine profitability and to make comparisons between businesses and sectors because it eliminates the effects of accounting and financing decisions. An effective means to determine EBITDA is to subtract the owner’s compensation and benefits from SDE. While the EBITDA number will be lower than SDE, the multiple used in the valuation is typically higher, often 2-2.5 times the SDE multiple. Thus, as one would expect the fair market value of the same business calculated using either method should be close to one another. If this is not the case, a determination as to why and which (or what other method(s)) must be undertaken.
Michael Fekkes is a Senior Broker at ENLIGN Business Brokers in Nashville, TN. Michael is a Certified Business Intermediary CBI®, a member of the International Business Brokers Association IBBA®, as well as a former business owner. He can be reached at 910.691.2202 or mfekkes@enlign.com. ENLIGN Business Brokers (www.enlign.com) is a Professional Services Firm that is headquartered in Raleigh, NC providing confidential business intermediary services to buyers and sellers throughout the United States.
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By: Michael Fekkes, CBI - ENLIGN Business Brokers
Business brokers assist sellers and buyers of privately held companies in the acquisition and sales process. A competent and experienced business intermediary can be an invaluable resource to sellers and buyers alike. Traditionally, business brokers have almost always represented the seller but buyer representation is becoming more frequent. While there is a wide range of services provided to business owners the most commonly provided, specific to a sale, are as follows:
1. Preparation of a business valuation
2. Creation of a detailed offering/marketing package
3. Development of a targeted marketing plan
4. Implementation of the marketing plan
5. Qualification of buyers
6. Negotiation of Letter of Intent (LOI) & Definitive Purchase Agreement (DPA)
7. Assistance in the buyer’s due diligence process
8. Securing financing for the buyer
9. Collaboration with the seller’s & buyer’s transaction team (CPA’s, Attorney’s etc.)
10. Post sale transition and follow-up assistance
Over the last twenty years, I have met some incredibly intelligent, successful and talented business owners and have a true admiration for the significant amount of work, time and sweat equity that was devoted to building their business. The majority of these business owners were able to maximize the market value of their company, upon sale, through the proactive implementation of an exit strategy. Historically, a business owner sells only 1 business in their lifetime and it is the 2 or 3 years prior to selling the business that are the most critical. Ensuring that the financials are well organized in a format which complements the business enterprise and maximizes the value of the company, is a process that, when adopted early, can offer significant financial rewards upon the sale.
Traditionally, a business owner does not contact a business intermediary company until immediately prior to selling the business. In some instances, as with the case of divorce or illness, this is unavoidable and an experienced M&A advisor can assist with a timely valuation and sale of the business. Selling a closely held enterprise is very complex with many variables involved and it is important to seek expert advice for your succession planning at an early stage. By creating a strategic exit plan and detailing a specific timetable of actions to be taken, you will have a clear plan of action and know exactly when and how you will be leaving the company. Determining the worth of one’s business and how that value is computed, is very important. In some instances, there are a few changes that an owner can make that would dramatically increase the transaction value of the company. Detailed and methodical planning coupled with a proven merger and acquisition team can produce thousands of incremental dollars when it comes time to sell the business.
Michael Fekkes is a Senior Broker at Enlign Business Brokers in Nashville, TN. Michael is a Certified Business Intermediary CBI®, a member of the International Business Brokers Association IBBA®, as well as a former business owner. He can be reached at 910.691.2202 or mfekkes@enlign.com. Enlign Business Brokers (www.enlign.com) is a Professional Services Firm serving the Southeast that is headquartered in Raleigh, NC with regional offices in Nashville, TN and Atlanta, GA. providing business intermediary services ranging from valuation and sale to exit & succession planning strategies.
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By: Michael Fekkes, CBI - ENLIGN Business Brokers
Many business owners are re-assessing their exit plan as a result of the 33% increase in the long term capital gains rate that will take effect on January 1, 2011. Owners and management teams have been challenged these past two years and have seen a decline in revenue and profit as a result of the sluggish economy. For many, the expectations are for a brighter future and improved financial performance in the years ahead. Since most valuations are largely derived by the earning power of the business, the general consensus is that a higher value will be achieved should the business sale be delayed to the future. In many cases, the owner is solely focused on achieving the highest business valuation with little thought given to the net after tax dollars. Most business owners are reassessing this methodology given the significance of the tax increase and the impact it will have on the net after tax dollars received.
The Jobs and Growth Tax Relief Reconciliation Act of 2003 was signed into law on May 28, 2003 and created lower capital gains and dividend rates for investors. The maximum net capital gains tax for assets held for more than one year, under this Act, was lowered from 20% to 15% (and from 10% to 5% for taxpayers in the 10% or 15% tax bracket). The 15% capital gains tax rate was later extended under the Tax Increase Prevention and Reconciliation Act of 2005, but the reduced rates are scheduled to “sunset” on January 1, 2011. The term sunset is a time phase-in provision which means that without further Congressional action, the previous law, including the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), will go back into effect. The result of this sunset, on January 1, 2011, will be an effective 33% increase as the top 15% capital gains rate will revert to its former pre-May 6, 2003 level of 20%..
While there are a multitude of factors considered in a privately held business sale, the capital gains tax increase, has rose in prominence for any owner considering a sale in the near term. For those management teams and owners who do not plan on selling for 5 or more years, this event should not be interpreted as a catalyst to rush out and sell the company. For those owners that are considering a sale over the next 1-3 years, the impact that this tax increase has, on the after tax dollars received in a sale, could be significant, and, therefore, a detailed evaluation should be initiated by the owner to assess the specific impact that it has on the bottom line, between selling a business now or after 2011. By analyzing the net after tax proceeds from a business sale in years 2010 through 2013, the business owner will recognize that even with a 10%-15% annual growth, and maintaining consistent earnings with a constant exit multiple, the additional value realized by the growth in income, in most cases, would be negated by the increase in the capital gains taxes. Therefore, while the value of the business is anticipated to be higher in 2011, 2012, & 2013, the net after tax proceeds from a sale, could be less. While not all issues driving a small business sale are financially related, this topic will be one of many issues to consider when developing the exit plan. The goal of this article is create an awareness of the impending increase and the affect that it will have on many business sale transactions. Business owners are encouraged to fully understand the impact of the upcoming capital gains tax increase so that informed decisions can be made in maximizing the net after tax dollars in the sale of their company. It is recommended that a business tax advisor be consulted as the tax impact will vary for every business based upon the structure of the transaction and the type of assets being sold.
Michael Fekkes is a Senior Broker at Enlign Business Brokers in Nashville, TN. Michael is a Certified Business Intermediary CBI®, a member of the International Business Brokers Association IBBA®, as well as a former business owner. He can be reached at 615.535.1150 or mfekkes@enlign.com. Enlign Business Brokers (www.enlign.com) is a Professional Services Firm serving the Southeast that is headquartered in Raleigh, NC with regional offices in Nashville, TN and Atlanta, GA. providing business intermediary services ranging from valuation and sale to exit & succession planning strategies.
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By: Michael Fekkes, CBI® | ENLIGN Business Brokers
Many business owners have not properly planned for the ownership and control transfer of their privately held company to ensure that they exit the company with the amount of funds necessary to support their retirement. Whether the goal is to exit the business in six months or ten years, it is critical that a business owner recognize that succession planning is the single most important way to take control of the terms and conditions of exiting their business. At some point in time every business owner will exit their business, which, in most cases, represents a significant component of family wealth. Taking a proactive approach to maximize this value and plan for the day when the business is either sold to an outside 3rd party or key employee, or transferred through an orderly succession to a family member, is the primary goal behind the exit planning process. The purpose of this article is to briefly review the exit/succession planning process and highlight the importance that these plans have for every business owner.
An exit plan is a written road map that is implemented over a period of years, designed to maximize the value an owner receives when exiting the business. Proper exit planning will reduce the variability of the business ownership and control transfer, and will secure a solid financial future for owner. Exit planning, also commonly referred to as “business succession planning,” is a methodology that addresses three critical questions a business owner will face at some point in time:
1. Who will succeed the owner when the business is transitioned or sold?
2. How much income is needed from the business transition/sale for retirement?
3. What is the timetable the owner seeks to exit the business?
A properly prepared exit plan will be developed in conjunction with legal, financial, and accounting professionals. Based on the size and scope of the business, exit planning can be a fairly complex process which could take many years to properly implement. Fortunately, the process can be broken down into individual deliverables and action items whereby value can be recognized very early in the process. A professional team will bring tremendous efficiency to the process by developing the basic structure for the steps to be followed ensuring that the experience will be a financially rewarding and a personally gratifying endeavor for the business owner. An exit plan is fairly easy to initiate and in most cases could be started at a nominal expense.
The key steps involved in developing an Exit Plan include:
1. Establishing Exit Objectives
· Determining the retirement timetable, long term income needs, and financial requirements necessary to reach them.
2. Identify the key drivers of business value
· What is the fair market value of the business if it were sold today?
3. Plan to build & preserve business value and reduce risks
· Activities that can be implemented to leverage best practices and maximize the business value.
4. Transfer of ownership, management, & control
· Determine the anticipated buyer (outside 3rd party, key employee, family member) and develop the structure for ownership transfer that maximizes financial security while minimizing taxes.
5. Contingency Planning
· Protect the continuity of business operations should an unexpected event occur.
6. Wealth management/preservation
· Secure financial independence by developing a financial plan to manage the income from the business sale.
7. Successful Exit
An experienced business intermediary firm will be able to streamline the exit planning process significantly by taking the lead in the planning structure and tapping the necessary resources (accounting, law, wealth management) over time as they are required. This team concept is very cost effective for the company owner as they are only paying for the required services at the time of use. A business owner is now able to initiate the plan and establish the basic framework for the exit plan at minimal cost. By establishing the fair market value of the company in conjunction with a determination of the owner’s exit timetable and the income needs for retirement, the Business Intermediary will have the necessary elements to build the foundation of the exit plan.
The most successful and rewarding succession plans are those that are initiated years in advance of the anticipated business transition. Implementation should be viewed as a process versus a one-time event. The more time that a business owner has available to implement the exit plan, the greater the opportunities will be to maximize the business value, avoid key employee turnover, minimize tax liabilities, and eliminate emotionally charged family issues.
Michael Fekkes is a Senior Broker at Enlign Business Brokers in Nashville, TN. Michael is a Certified Business Intermediary CBI®, a member of the International Business Brokers Association IBBA®, as well as a former business owner. He can be reached at 615.535.1150 or mfekkes@enlign.com. Enlign Business Brokers (www.enlign.com) is a Professional Services Firm serving the Southeast that is headquartered in Raleigh, NC with regional offices in Nashville, TN and Atlanta, GA. providing business intermediary services ranging from valuation and sale to exit & succession planning strategies.
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RALEIGH, N.C. – Jeff Snell, principal broker for ENLIGN Business Brokers (www.enlign.com), has announced that the firm has been retained by a wine shop located in Raleigh to represent them in the sale of the business. The business retails wine, beer and related accessories with 1,200 wines in stock with over 400 priced under the popular $10 price point. Extensive upfit and upgrades have been installed over the past year to racking, point of sale as well as a new gift card management system. ENLIGN will provide business valuation and appraisal services, business marketing services and represent the represent the seller in purchase negotiations.
Related Links:
www.enlign.com
News Facts:
· ENLIGN Business Brokers has announced that the firm has been retained by a wine shop located in Raleigh to represent them in the sale of the business.
· The business retails wine, beer and related accessories with 1,200 wines in stock.
· Over 400 wines are priced under the popular $10 price point.
· Extensive upfit and upgrades have been installed over the past year.
· ENLIGN will provide business valuation and appraisal services, business marketing services and represent the represent the seller in purchase negotiations.
· For listing details, visit www.enlign.com.
Quotes:
“We have developed a bit of a specialty with main street retailers such as this wine shop.” said Snell. “This business is perfect for the sociable person who enjoys traveling and owning an established and profitable business.”
About ENLIGN Business Brokers:
ENLIGN Business Brokers, which has its headquarters in Raleigh, N.C., provides seller and buyer services, professional negotiation, and valuation and marketing services to small- and medium-business sellers and buyers in the Southeast and nationally through the ENLIGN Business Brokers Affiliate program and ENLIGN Professional Partners Program (EPPP). ENLIGN provides business owners wishing to sell their businesses with discrete, objective counsel and valuation advice, and an innovative, comprehensive approach to marketing businesses for sale. Complete confidentiality is offered throughout the process. ENLIGN, which is a member of the International Business Brokers Association (IBBA), M&A Source and the American Business Brokers Association (ABBA), requires that its agents and affiliates have owned a successful business of their own, hold an advanced degree and be members of IBBA working towards or having completed the Certified Business Intermediary (CBI) accreditation. For more information about buying or selling a business or becoming an ENLIGN affiliate broker, contact Jeff Snell at jsnell@enlign.com or visit the Web site at www.enlign.com.
Keywords:
ENLIGN, Business Brokers, Jeff Snell, CBI, business, seller, services, buyer, negotiation, valuation, marketing, North Carolina, NC, Raleigh, Wake County, retail, wine, premium, for sale
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UK Based Custom Plastic Injection Molding Manufacturer for Sale
RALEIGH, N.C.
ENLIGN Business Brokers (www.enlign.com) has been retained by an established, profitable and custom injection molding manufacturer in the United Kingdom to represent them in the sale of the business.
The company provides pre-production services including comprehensive design and tooling services, manufactures a wide range of precision engineered plastic finished products as well as components as parts and sub assemblies used in final assembly by a variety of manufacturers worldwide in the medical, military, transportation and electronics industries. The firm is also capable of completing subassembly on an out sourced basis. This multi-plant specialty firm maintains ISO as well as other quality assurance certifications. Additionally, the sale includes several patented products with worldwide clientele.
ENLIGN will provide business valuation and appraisal services, business marketing services and represent the seller in transaction negotiations. For listing details, visit www.enlign.com.
“ENLIGN is excited about assisting with this cross border engagement.” said Jeff Snell, CBI, ABI and Principal Broker for ENLIGN. “While we anticipate that the eventual buyer will be UK or European based, the opportunity exists for a US based firm to cost effectively expand into the European Economic Community (EEC).
For more information, visit www.enlign.com
About ENLIGN Business Brokers:
ENLIGN Business Brokers, which has its headquarters in Raleigh, N.C., provides seller and buyer services, professional negotiation, and valuation and marketing services to small- and medium-business sellers and buyers in the Southeast and nationally through the ENLIGN Business Brokers Affiliate program and ENLIGN Professional Partners Program (EPPP). ENLIGN provides business owners wishing to sell their businesses with discrete, objective counsel and valuation advice, and an innovative, comprehensive approach to marketing businesses for sale. Complete confidentiality is offered throughout the process. ENLIGN, which is a member of the International Business Brokers Association (IBBA), M&A Source and the American Business Brokers Association (ABBA), requires that its agents and affiliates have owned a successful business of their own, hold an advanced degree and be members of IBBA working towards or having completed the Certified Business Intermediary (CBI) accreditation. For more information about buying or selling a business or becoming an ENLIGN affiliate broker, contact Jeff Snell at jsnell@enlign.com or visit the Web site at www.enlign.com.
Keywords:
ENLIGN, Business Brokers, Jeff Snell, CBI, business, seller, services, negotiation, valuation, marketing, injection, molding, moulding, plastic, thermoplastic, precision engineered plastic, custom, specialty, UK, United Kingdom, EEC, European Economic Community, business for sale
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