WESTLAKE VILLAGE, CA – In a rapidly changing economy, two powerful forces – mid-management corporate professionals caught in downsizing seeking cash flow, and business owners burdened by the fiscal strains of their companies – are converging to present unprecedented small to mid-size business opportunities, an area business brokerage specialist reports.
Randall J. Barondess, director of Troop Business Brokerage/Commercial Real Estate in Westlake Village, CA, says objectively evaluating the prospects for the sale or purchase of a business is critical to this process. Troop Business Brokerage helps companies package themselves for sale, and assists potential buyers find the right company to fit their needs.
“In the past year, there has been a major increase in mid-management corporate professionals who have lost jobs because of the economic downturn and need cash flow. Concurrently, there are numerous people who own businesses, are having trouble, or are burned out, many facing long leases. Acquiring businesses that are objectively evaluated can be a viable alternative for both parties,” Barondess said. He added that the influx of immigrants has intensified this demand.
Barondess emphasized that there are three key factors he uses to evaluate businesses. He calls them the “Three S’s’. They are:
° STEADY – Those businesses reflecting no more than 7%-10% variance in fiscal quarters from year-to-year, with no more than a 10%-12% annualized
change of gross revenue.
° SUBSTANTIAL – Changes in business conditions, employees, equipment, other hard assets, lease or options, cost of goods, and comparatives to industry
standards. Abnormalities in these areas must be viewed as red flag for further due diligence.
° SUSTAINED – Market share, continuity of product or services, personnel, methods of accounting, inventories, condition of premises and equipment are all
essential in establishing realistic values for a business.
Another area where Barondess helps small to mid-size businesses is realizing “phantom assets”. “These include under market rate leases, goodwill, location and pass-by traffic,” he said. He noted that if business real estate is part of a company’s assets, Troop Business Brokerage/Commercial Real Estate will handle the disposition or re-lease of the property to the new business owner.
“People need to understand that they need an objective view of their property. Many of them don’t realize that if they run their business to live on, the business is running them. But, if they run it to capitalize on it for retirement or to make money, then they’re running the business for the right reason. We analyze businesses in this light before we market them,” Barondess concluded.
He concluded by noting that Troop Business Brokerage represents many businesses in the small to mid-market arena. EBITDA and SDE (Sellers Discretionary Earnings) analysis “is part of our service and essential to successful transactions,” Barondess said. Troop also represents many qualified investors seeking good cash flow opportunities, he added. Barondess can be reached at (805) 990-9940.