American Stock Exchange

American Stock Exchange

The American Stock Exchange (AMEX) is the third-largest stock exchange by trading volume in the United States. AMEX was acquired by the New York Stock Exchange (NYSE) Euronext in 2008, at which time its name was changed to NYSE Alternext US. In 2009 it became the NYSE...
Seller Note

Seller Note

A seller’s note receivable is an alternative form of business capital.  This type of debt financing is often used in small business acquisitions, where the seller agrees to accept a portion of the purchase price in a series of deferred payments. This occurs when the...
Business Financing Live Event

Business Financing Live Event

One of the hardest parts about starting a new business is finances. How do you get the business financing you need? Which option is the best for your business? How do you handle those finances responsibly? What’s a P&L statement?   If you’re thinking of...
Business Goodwill

Business Goodwill

Business goodwill is defined as an intangible asset that increases a business’s value above and beyond its current market value. Business goodwill arises when one company is acquired by another at a premium, above market or book value price. Goodwill can be attributed...
Deal Structure

Deal Structure

In any business acquisition, a deal structure must be formed to specify the financial terms, conditions, and process for successfully completing the transaction. The deal structure outlines a set of terms that will help guide a smooth transfer of business ownership,...
Amortization of Goodwill

Amortization of Goodwill

Goodwill is defined as an intangible asset that is created as the result of an acquisition of one company by another, at a premium price over its fair market value. The willingness of a buyer to pay a premium for a given business may be due to value built up over time...
FF&E

FF&E

Furniture, fixtures, and equipment (or FF&E) is an accounting term used in the process of valuing, liquidating, or selling a company or building. FF&E refers to any fixture, piece of furniture, or piece of equipment that is moveable and is not permanently...
Enterprise Value

Enterprise Value

Enterprise Value, also sometimes called “EV,” is a measure of a company’s total business value. EV is the theoretical price for a company if it were to be bought, and because EV accounts for a company’s debt and cash, it is considered a more accurate representation of...
Data Room

Data Room

A Data room may be a physical room or a virtual room and are used for a number of reasons – including data storage, document exchanges, financial transactions, file sharing, and legal transactions. Often, data rooms are used for the sale of a business or when raising...
Lifestyle Business

Lifestyle Business

A lifestyle business is created and run by its founder to serve the purpose of sustaining a particular level of income, and no more. Often founded by an individual, lifestyle businesses creates a foundation for enjoying a particular lifestyle, bringing in just enough...
Registering a Business Name

Registering a Business Name

Registering a Business Name requirements in a given state is a subject many business owners (startups and veterans alike) may find surprising. When a business owner starts their business and chooses to form an entity, registering a business name occurs alongside the...
ESOP vs. 401K Plan – Definition and Benefits to Business Owners and Employees

ESOP vs. 401K Plan – Definition and Benefits to Business Owners and Employees

The method chosen to transfer ownership of a business for sale is one of the most important factors to consider as a business owner. And the reason for its importance is related to the wide differences in the amount of cash received (net of taxes) by the business owner across the various methods of transfer or sale. An ESOP or Employee Stock Ownership Plan is one method of ownership transfer or sale many business owners consider when they decide it’s time to retire. That said, let’s explore the ESOP as a potential method of transfer or sale from both the business owner’s and employees’ perspectives.

Raising Capital: Understanding the Options for Your Business

Raising Capital: Understanding the Options for Your Business

There are several types of loans available to business owners — so many, in fact, that the options can seem overwhelming and confusing, especially to smaller business owners without a lot of experience raising capital. This guide will help educate you on the options so you can make a more informed decision about financing your growing business while limiting added risk.

3 Steps To Increase Your Business Selling Price

3 Steps To Increase Your Business Selling Price

When a business owner begins to negotiate the sale of his or her business with buyers for the first time, he or she will inevitably face a difference between the buyer’s offer price and the desired selling price. It’s at this point when a lively debate between the parties will occur over the underlying reasons for the business’s asking price being what it is. At this time a seller will be well-served if able to offer justification for an increased business valuation and a higher business selling price.

Latest Forbes Post: Small Business Owner Retirement Strategies

Latest Forbes Post: Small Business Owner Retirement Strategies

According to the Chief Actuary of the Social Security Administration, “Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits.” This bleak reality is not of great concern to the successful entrepreneur who may not need to rely heavily on social security benefits retirement. Yet, any potential reduction in social security benefits in the future is a serious threat to the well-being of the 28 million small business owners in America.

Escrow Agent in the Sale of a Business

Escrow Agent in the Sale of a Business

When a business is about to be sold, the parties to the sale may find it beneficial to establish an escrow agent to handle the transfer of certain assets and cash between the buyer and seller. Many times the parties agree to use the escrow account held by one of the party’s business attorneys. However, in many cases the parties prefer to hire an independent escrow agent to handle the assets and cash that will change hands.

Important Agreements When You Sell Your Business

Important Agreements When You Sell Your Business

When working through a business sale, an inordinate number of resources on both sides of the table are dedicated to drafting and negotiating the Stock Purchase or Asset Purchase Agreement. This is true especially in the last one-to-two weeks before the closing. In fact, I’ve had clients remark that during their entire tenure as an entrepreneur, they never spent as much time speaking to their advisors as they did during the last week of their business ownership journey!

Mezzanine Debt Definition

Mezzanine Debt Definition

In its purest form, Mezzanine Debt is a business debt instrument that carries along with it certain rights to convert debt into equity (stock, common shares, partnership interests, LLC membership units, etc.). Mezzanine debt financing is not a pure debt or a pure equity instrument. It is something in the middle. In fact, the word ‘mezzanine’ is derived from the Italian word ‘mezzano’, meaning middle, and is used to describe how this particular form of business capital combines elements of both debt and equity financing into one instrument.

Lehman Formula Definition

Business Brokers and M&A Intermediaries may use or reference the ‘Lehman Scale’ when discussing their compensation method with a business owner contemplating the sale of their business. The Lehman Scale was originally developed in the late 1960’s and used by the Lehman Brothers when raising business capital for their clients.

DBA vs. LLC

When the entrepreneur decides it is time to start a new business, they often explore all of the various business structures available and discover there is much confusion related to the various options. One of the most common questions we are asked as advisors to...

Latest Forbes Post: ACA Grandmothered Plans Help Small Business

Obamacare was promoted to the approximately 5.8 million small business owners in the U.S. as a mandate which would not apply to them, nor result in a penalty if they chose not to offer health insurance to employees. Unfortunately, for those same small business employers who previously offered health insurance coverage as part of an employee’s total compensation package there is no place to hide. Premiums are skyrocketing.

How to Calculate Debt Service Coverage Ratio [Tool]

Debt Service Coverage Ratio compliance often is required or necessitated by covenants in a bank loan agreement. A bank loan covenant regarding the debt service coverage ratio will specify the amount of income a business and/or its guarantor must generate relative to the debt principal and interest payments on an annual basis to remain in compliance with the covenant. The business owner, or his or her CFO or Controller, should monitor this ratio carefully on a monthly basis so the covenant is not unintentionally broken.

What is a Debt Service Coverage Ratio?

The debt service coverage ratio is a measurement used by lenders to determine if a business is able to meet its debt servicing obligations through its operating income during a given period of time. In most cases, a lender wants the operating income to exceed the debt servicing costs by some measure. This ratio defines the extent to which a business’s operating income (or other defined measure of cash flow) exceeds the cost to service its bank loans.

Latest Forbes Post: Bank Loan Alternatives in 2014

Finding money to grow a business has changed tremendously since the great recession. Whether sourcing capital in the form of debt, equity, or something in between, also known as mezzanine, it’s safe to say entrepreneurs have more multiple options than ever to pursue. That doesn’t make the task an easy one to accomplish. Unfortunately for the entrepreneur, the additional options have only served to increase the confusion surrounding their need for cash.

Non-Solicitation Agreement | How to Keep Your Best Employees

If you’ve grown a valuable business, there is no doubt your employees are a big part of your success. You also know that hiring, training, and managing a great team of productive employees is a difficult task. And keeping your best employees is yet another accomplishment! But the painful truth is your competition would be very pleased to hire away your best employees.

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