Dan Loiacono & Associates

Dan Loiacono Sells Interest in ABMI

2011-01-08T05:34:00.000-08:00

For Immediate Release:

Contact Information:
Joe Bodine
(913) 341.6300

ABMI-Mergers and Acquisition under new leadership
Dan Loiacono sells his interest to partners
Overland Park (January 7, 2010) – ABMI-Mergers and Acquisitions, a 26 year icon in the Kansas City business community, 25 Under 25 recipient, and respected M&A firm recently announced a transition of leadership. Dan Loiacono has sold his interest in ABMI-Mergers and Acquisition to partners at the firm for an undisclosed amount. Dan has assumed a role as Senior Advisor with the company and continues to actively work on assignments as an advisor for the firm. Joe Bodine, CEO at ABMI said “Dan has been a huge part of the success of ABMI over the past 6 years. His passion for excellence and commitment to customer service has made a positive impact on the company and community in many ways.” Dan took over the company in January, 2004 and after nearly six years as President, he has chosen to apply his experience working directly with clients to help them prepare their businesses for an eventual transition of ownership. In speaking about the transition at ABMI, Dan said, “It has been an honor to work with this team of professional and help lead ABMI to this level. I am excited about what the future holds for the firm. We are in the midst of a trend that is unlike any we have seen in the small to mid-sized business marketplace. Over the next 15 years there is going to be an unprecedented transfer of wealth in our country, and much of that wealth is in the form of small and mid-sized businesses. I sense a strong need to help business owners prepare for a transition of ownership, maximizing the value and marketability of their business, creating value for their families and charities they may support. I am energized by working directly with clients to make a difference.”
About ABMI Mergers & Acquisitions
ABMI has been bringing buyers and sellers of businesses together in the Midwest since 1983.

ABMI-Due Diligence Checklist

2009-07-02T05:56:00.000-07:00

Due Diligence Checklist

DISCLAIMER
The following form is provided by ABMI-Mergers and Acquisitions, for informational purposes only and is intended to be used as a guide prior to consultation with an attorney familiar with your specific legal situation. ABMI is not engaged in rendering legal advice and this form is not a substitute for the advice of an attorney. If you require legal advice, you should seek the services of an attorney.

A. Organization of the Company
1. Describe the corporate or other structure of the legal entities that comprise the Company. Include any helpful diagrams or charts. Provide a list of the officers and directors of the Company and a brief description of their duties.
2. Long-form certificate of good standing and articles or certificate of incorporation from Secretary of State or other appropriate official in the Company's jurisdiction of incorporation, listing all documents on file with respect to the Company, and a copy of all documents listed therein.
3. Current by-laws of the Company.
4. List of all jurisdictions in which the Company is qualified to do business and list of all other jurisdictions in which the Company owns or leases real property or maintains an office and a description of business in each such jurisdiction. Copies of the certificate of authority, good standing certificates and tax status certificates from all jurisdictions in which the Company is qualified to do business.
5. All minutes for meetings of the Company's board of directors, board committees and stockholders for the last five years, and all written actions or consents in lieu of meetings thereof.
6. List of all subsidiaries and other entities (including partnerships) in which the Company has an equity interest; organizational chart showing ownership of such entities; and any agreements relating to the Company's interest in any such entity.
B. Ownership and Control of the Company
1. Capitalization of the Company, including all outstanding capital stock, convertible securities, options, warrants and similar instruments.
2. List of securityholders of the Company (including option and warrant holders), setting forth class and number of securities held.
3. Copies of any voting agreements, stockholder agreements, proxies, transfer restriction agreements, rights of first offer or refusal, preemptive rights, registration agreements or other agreements regarding the ownership or control of the Company.
C. Assets and Operations
1. Annual financial statements with notes thereto for the past three fiscal years of the Company, and the latest interim financial statements since the end of the last fiscal year and product sales and cost of sales (including royalties) analysis for each product which is part of assets to be sold.
2. All current budgets and projections including projections for product sales and cost of sales.
3. Any auditors (internal and external) letters and reports to management for the past five years (and management's responses thereto).
4. Provide a detailed breakdown of the basis for the allowance for doubtful accounts.
5. Inventory valuation, including turnover rates and statistics, gross profit percentages and obsolescence analyses including inventory of each product which is part of assets to be sold.
6. Letters to auditors from outside counsel.
7. Description of any real estate owned by the Company and copies of related deeds, surveys, title insurance policies (and all documents referred to therein), title opinions, certificates of occupancy, easements, zoning variances, condemnation or eminent domain orders or proceedings, deeds of trust, mortgages and fixture lien filings.
8. Schedule of significant fixed assets, owned or used by the Company, including the identification of the person holding title to such assets and any material liens or restrictions on such assets.
9. Without duplication from Section D below, or separate intellectual property due diligence checklist, schedule of all intangible assets (including customer lists and goodwill) and proprietary or intellectual properties owned or used in the Company, including a statement as to the entity holding title or right to such assets and any material liens or restrictions on such assets. Include on and off balance sheet items.
D. Intellectual Property
List of all patents, trademarks, tradenames, service marks and copyrights owned or used by the Company, all applications therefor and copies thereof, search reports related thereto and information about any liens or other restrictions and agreements on or related to any of the foregoing (without duplication from attached intellectual property due diligence checklist).
E. Reports
1. Copies of any studies, appraisals, reports, analyses or memoranda within the last three years relating to the Company (i.e., competition, products, pricing, technological developments, software developments, etc.).
2. Current descriptions of the Company that may have been prepared for any purpose, including any brochures used in soliciting or advertising.
3. Descriptions of any customer quality awards, plant qualification/certification distinctions, ISO certifications or other awards or certificates viewed by the Company as significant or reflective of superior performance.
4. Copies of any analyst or other market reports concerning the Company known to have been issued within the last three years.
5. Copies of any studies prepared by the Company regarding the Company's insurance currently in effect and self-insurance program (if any), together with information on the claim and loss experience thereunder.
6. Any of the following documents filed by the Company or affiliates of the Company and which contain information concerning the Company: annual reports on SEC Form 10-K; quarterly reports on SEC Form 10-Q; current reports on SEC Form 8-K.
F. Compliance with Laws
1. Copies of all licenses, permits, certificates, authorizations, registrations, concessions, approvals, exemptions and other operating authorities from all governmental authorities and any applications therefor, and a description of any pending contemplated or threatened changes in the foregoing.
2. A description of any pending or threatened proceedings or investigations before any court or any regulatory authority.
3. Describe any circumstance where the Company has been or may be accused of violating any law or failing to possess any material license, permit or other authorization. List all citations and notices from governmental or regulatory authorities.
4. Schedule of the latest dates of inspection of the Company's facilities by each regulatory authority that has inspected such facilities.
5. Description of the potential effect on the Company of any pending or proposed regulatory changes of which the Company is aware.
6. Copies of any information requests from, correspondence with, reports of or to, filings with or other material information with respect to any regulatory bodies which regulate a material portion of the Company's business. Limit response to the last five years unless an older document has a continuing impact on the Company.
7. Copies of all other studies, surveys, memoranda or other data on regulatory compliance including: spill control, environmental clean-up or environmental preventive or remedial matters, employee safety compliance, import or export licenses, common carrier licenses, problems, potential violations, expenditures, etc.
8. State whether any consent is necessary from any governmental authority to embark upon or consummate the proposed transaction.
9. Schedule of any significant U.S. import or export restrictions that relate to the Company's operations.
10. List of any export, import or customs permits or authorizations, certificates, registrations, concessions, exemptions, etc., that are required in order for the Company to conduct its business and copies of all approvals, etc. granted to the Company that are currently in effect or pending renewal.
11. Any correspondence with or complaints from third parties relating to the marketing, sales or promotion practices of the Company.
G. Environmental Matters
1. A list of facilities or other properties currently or formerly owned, leased, or operated by the Company and its predecessors, if any.
2. Reports of environmental audits or site assessments in the possession of the Company, including any Phase I or Phase II assessments or asbestos surveys, relating to any such facilities or properties.
3. Copies of any inspection reports prepared by any governmental agency or insurance carrier in connection with environmental or workplace safety and health regulations relating to any such facilities or properties.
4. Copies of all environmental and workplace safety and health notices of violations, complaints, consent decrees, and other documents indicating noncompliance with environmental or workplace safety and health laws or regulations, received by the Company from local, state, or federal governmental authorities. If available, include documentation indicating how such situations were resolved.
5. Copies of any private party complaints, claims, lawsuits or other documents relating to potential environmental liability of the Company to private parties.
6. Listing of underground storage tanks currently or previously present at the properties and facilities listed in response to Item 1 above, copies of permits, licenses or registrations relating to such tanks, and documentation of underground storage tank removals and any associated remediation work.
7. Descriptions of any release of hazardous substances or petroleum known by the Company to have occurred at the properties and facilities listed in response to Item 1, if such release has not otherwise been described in the documents provided in response to Items 1-6 above.
8. Copies of any information requests, PRP notices, "106 orders," or other notices received by the Company pursuant to CERCLA or similar state or foreign laws relating to liability for hazardous substance releases at off-site facilities.
9. Copies of any notices or requests described in Item 8 above, relating to potential liability for hazardous substance releases at any properties or facilities described in response to Item 1.
10. Copies of material correspondence or other documents (including any relating to the Company's share of liability) with respect to any matters identified in response to Items 8 and 9.
11. Copies of any written analyses conducted by the Company or an outside consultant relating to future environmental activities (i.e., upgrades to control equipment, improvements in waste disposal practices, materials substitution) for which expenditure of funds greater than $10,000 is either certain or reasonably anticipated within the next five years and an estimate of the costs associated with such activities.
12. Description of the workplace safety and health programs currently in place for the Company's business, with particular emphasis on chemical handling practices.
H. Litigation
1. List of all litigation, arbitration and governmental proceedings relating to the Company to which the Company or any of its directors, officers or employees is or has been a party, or which is threatened against any of them, indicating the name of the court, agency or other body before whom pending, date instituted, amount involved, insurance coverage and current status. Also describe any similar matters which were material to the Company and which were adjudicated or settled in the last ten years.
2. Information as to any past or present governmental investigation of or proceeding involving the Company or the Company's directors, officers or employees.
3. Copies of all attorneys' responses to audit inquiries.
4. Copies of any consent decrees, orders (including applicable injunctions) or similar documents to which the Company is a party, and a brief description of the circumstances surrounding such document.
5. Copies of all letters of counsel to independent public accountants concerning pending or threatened litigation.
6. Any reports or correspondence related to the infringement by the Company or a third party of intellectual property rights.
I. Significant Contracts and Commitments
1. Contracts relating to any completed (during the past 10 years) or proposed reorganization, acquisition, merger, or purchase or sale of substantial assets (including all agreements relating to the sale, proposed acquisition or disposition of any and all divisions, subsidiaries or businesses) of or with respect to the Company.
2. All joint venture and partnership agreements to which the Company is a party.
3. All material agreements encumbering real or personal property owned by the Company including mortgages, pledges, security agreements or financing statements.
4. Copies of all real property leases relating to the Company (whether the Company is lessor or lessee), and all leasehold title insurance policies (if any).
5. Copies of all leases of personal property and fixtures relating to the Company (whether the Company is lessor or lessee), including, without limitation, all equipment rental agreements.
6. Guarantees or similar commitments by or on behalf of the Company, other than endorsements for collection in the ordinary course and consistent with past practice.
7. Indemnification contracts or arrangements insuring or indemnifying any director, officer, employee or agent against any liability incurred in such capacity.
8. Loan agreements, notes, industrial revenue bonds, compensating balance arrangements, lines of credit, lease financing arrangements, installment purchases, etc. relating to the Company or its assets and copies of any security interests or other liens securing such obligations.
9. No-default certificates and similar documents delivered to lenders for the last five (or shorter period, if applicable) years evidencing compliance with financing agreements.
10. Documentation used internally for the last five years (or shorter time period, if applicable) to monitor compliance with financial covenants contained in financing agreements.
11. Any correspondence or documentation for the last five years (or shorter period, if applicable) relating to any defaults or potential defaults under financing agreements.
12. Contracts involving cooperation with other companies or restricting competition.
13. Contracts relating to other material business relationships, including:a. any current service, operation or maintenance contracts;b. any current contracts with customers;c. any current contracts for the purchase of fixed assets; andd. any franchise, distributor or agency contracts.
14. Without duplicating Section D above or the intellectual property due diligence schedule hereto, contracts involving licensing, know-how or technical assistance arrangements including contracts relating to any patent, trademark, service mark and copyright registrations or other proprietary rights used by the Company and any other agreement under which royalties are to be paid or received.
15. Description of any circumstances under which the Company may be required to repurchase or repossess assets or properties previously sold.
16. Data processing agreements relating to the Company.
17. Copies of any contract by which any broker or finder is entitled to a fee for facilitating the proposed transaction or any other transactions involving the Company or its properties or assets.
18. Management, service or support agreements relating to the Company, or any power of attorney with respect to any material assets or aspects of the Company.
19. List of significant vendor and service providers (if any) who, for whatever reason, expressly decline to do business with the Company.
20. Samples of all forms, including purchase orders, invoices, supply agreements, etc.
21. Any agreements or arrangements relating to any other transactions between the Company and any director, officer, stockholder or affiliate of the Company (collectively, "Related Persons"), including but not limited to:a. Contracts or understandings between the Company and any Related Person regarding the sharing of assets, liabilities, services, employee benefits, insurance, data processing, third-party consulting, professional services or intellectual property.b. Contracts or understandings between Related Persons and third parties who supply inventory or services through Related Persons to the Company.c. Contracts or understandings between the Company and any Related Person that contemplate favorable pricing or terms to such parties.d. Contracts or understandings between the Company and any Related Person regarding the use of hardware or software.e. Contracts or understandings regarding the maintenance of equipment of any Related Person that is either sold, rented, leased or used by the Company.f. Description of the percentage of business done by the Company with Related Persons.g. Covenants not to compete and confidentiality agreements between the Company and a Related Person.h. List of all accounts receivable, loans and other obligations owing to or by the Company from or to a Related Person, together with any agreements relating thereto.
22. Copies of all insurance and indemnity policies and coverage carried by the Company including policies or coverage for products, properties, business risk, casualty and workers compensation. A description of any self-insurance or retro-premium plan or policy, together with the costs thereof for the last five years. A summary of all material claims for the last five years as well as aggregate claims experience data and studies.
23. List of any other agreements or group of related agreements with the same party or group of affiliated parties continuing over a period of more than six months from the date or dates thereof, not terminable by the Company on 30 days' notice.
24. Copies of all supply agreements relating to the Company and a description of any supply arrangements.
25. Copies of all contracts relating to marketing and advertising.
26. Copies of all construction agreements and performance guarantees.
27. Copies of all secrecy, confidentiality and nondisclosure agreements.
28. Copies of all agreements related to the development or acquisition of technology.
29. Copies of all agreements outside the ordinary course of business.
30. Copies of all warranties offered by the Company with respect to its products or services.
31. List of all major contracts or understandings not otherwise previously disclosed under this section, indicating the material terms and parties.
32. For any contract listed in this Section I, state whether any party is in default or claimed to be in default.
33. For any contract listed in this Section I, state whether the contract requires the consent of any person to assign such contract or collaterally assign such contract to any lender.
NOTE: Remember to include all amendments, schedules, exhibits and side letters. Also include brief description of any oral contract listed in this Section I.
J. Employees, Benefits and Contracts
1. Copies of the Company's employee benefit plans as most recently amended, including all pension, profit sharing, thrift, stock bonus, ESOPs, health and welfare plans (including retiree health), bonus, stock option plans, direct or deferred compensation plans and severance plans, together with the following documents:a. all applicable trust agreements for the foregoing plans;b. copies of all IRS determination letters for the foregoing qualified plans;c. latest IRS forms for the foregoing qualified plans, including all annual reports, schedules and attachments;d. latest copies of all summary plan descriptions, including modifications, for the foregoing plans;e. latest actuarial evaluations with respect to the foregoing defined benefit plans; andf. schedule of fund assets and unfunded liabilities under applicable plans.
2. Copies of all employment contracts, consulting agreements, severance agreements, independent contractor agreements, non-disclosure agreements and non-compete agreements relating to any employees of the Company.
3. Copies of any collective bargaining agreements and related plans and trusts relating to the Company (if any). Description of labor disputes relating to the Company within the last three years. List of current organizational efforts and projected schedule of future collective bargaining negotiations (if any).
4. Copies of all employee handbooks and policy manuals (including affirmative action plans).
5. Copies of all OSHA examinations, reports or complaints.
6. The results of any formal employee surveys.
K. Tax Matters
1. Copies of returns for the three prior closed tax years and all open tax years for the Company (including all federal and state consolidated returns) together with a work paper therefore wherein each item is detailed and documented that reconciles net income as specified in the applicable financial statement with taxable income for the related period.
2. Audit and revenue agents reports for the Company; audit adjustments proposed by the Internal Revenue Service for any audited tax year of the Company or by any other taxing authority; or protests filed by the Company.
3. Settlement documents and correspondence for last six years involving the Company.
4. Agreements waiving statute of limitations or extending time involving the Company.
5. Description of accrued federal, state and local withholding taxes and FICA for the Company.
6. List of all state, local and foreign jurisdictions in which the Company pays taxes or collects sales taxes from its retail customers (specifying which taxes are paid or collected in each jurisdiction).
L. Miscellaneous
1. Information regarding any material contingent liabilities and material unasserted claims and information regarding any asserted or unasserted violation of any employee safety and environmental laws and any asserted or unasserted pollution clean-up liability.
2. List of the ten largest customers and suppliers for each product or service of the Company.
3. List of major competitors for each business segment or product line.
4. Any plan or arrangement filed or confirmed under the federal bankruptcy laws, if any.
5. A list of all officers, directors and stockholders of the Company.
6. All annual and interim reports to stockholders and any other communications with securityholders.
7. Description of principal banking and credit relationships (excluding payroll matters), including the names of each bank or other financial institution, the nature, limit and current status of any outstanding indebtedness, loan or credit commitment and other financing arrangements.
8. Summary and description of all product, property, business risk, employee health, group life and key-man insurance.
9. Copies of any UCC or other lien, judgment or suit searches or filings related to the Company in relevant states conducted in the past three years.
10. Copies of all filings with the Securities and Exchange Commission, state blue sky authorities or foreign security regulators or exchanges.
11. All other information material to the financial condition, businesses, assets, prospects or commercial relations of the Company.

It is Up to Us

2008-11-18T16:27:00.000-08:00

The last six months has produced a seemingly constant flow of negative data... Bear Sterns... AIG... FNMA... FREDDIE MAC... $700 Billion bailout... CitiGroup cuts 21,000 jobs... plans another 52,000... GM requested $20 billion bailout... Local companies including Sprint, Capital One, American Century, H&R Block, Cerner, and The Kansas City Star have either had significant layoffs in 2008 or have announced plans for significant reductions in their workforce. It is hard to believe that less than 12 months ago (December 31st, 2007) the Dow Jones Industrial Average was at 13,264. The DJIA closed on November 17th at 8,273... ouch. What’s next? When will this end? How will we recover?

In light of these challenging times I think it is important to remember a few fundamentals. Our economy is driven by small business. Let’s review some statistics published by the Small Business Administration Office of Advocacy www.sba.gov/advo.

There are approximately 27 million businesses in America.
Small businesses (Under 500 employees) represent 99.9% of all businesses in America.
Small business have generated between 60% and 80% of all new job creation annually over the last ten years.
Small business creates more than half of the non-farm Gross Domestic Product (GDP).

The way out of this economic mess is rooted in small business. The entrepreneurial spirit is the foundation from which this great country was built and it is without doubt the way to recovery.

It seems that our culture has slipped away from the fundamentals toward a mindset of entitlement. It is easy to put the blame on others... ”The lenders should never have loaned money to people who could not afford the house”... really? What level of responsibility should we take for our own actions and decisions? It seems that we took a turn at some point. While the government is certainly useful in many ways, it seems like our culture has started to view our government as responsible for the solution to all of our woes.

I think it is time for the entrepreneurs of this country to rise up and take back responsibility for our future. It will not be easy... it never was easy. It will take hard work, creative solution oriented thinking and collaboration. It will involve leaving our comfort zone and making things happen by using unconventional strategies. And here’s a novel concept... it might mean deferring personal gratification, delaying buying the new car or wave runner. Maybe we should start measuring our success based on what we are building as a community with our businesses and families as opposed to competing with our neighbors for the best looking toys.

I think Tom Peters hit it on the nose in his book “Brand You 50” that he wrote in 1999. If you have not read this unique book I recommend you pick it up. Mr. Peters writes, “Work-yours and mine-as we know it today will be reinvented in the next ten years. It’s as simple as that.” We are seeing how putting our future in the hands of corporate America is not working for us or our families.

The next five years in our lives will be written about in the history books. Our grandchildren will ask us what it was like to live through this period. We will have stories to tell. What will your story be?

Martin Luther (1483 to 1546) once said, “Great people and champions are special gifts of God, whom He gives and preserves; they do their work, and achieve great actions, not with vain imaginations, or cold and sleepy cogitations, but by motion of God.”

Now is the time to act on your dreams and follow your path to greatness. It is up to us to make a difference.

Six Things To Consider Before Selling Your Business

2008-11-06T17:33:00.000-08:00

You are a successful entrepreneur. After many years of hard work, sacrifice and dedication you’ve built your enterprise into a fantastic business. You’re now thinking about selling that business. Weigh your “exit” options with the same discipline and critical eye that have made you a success – but in the process, be brutally honest with yourself about your goals for the next chapter of your life. Thoughtful business planning, a little soul-searching and involving experienced advisors at this important juncture will maximize your exit payout and ensure that you achieve all of your goals. Your success is no accident. Your success at sale will require the same diligence.
Although you probably have many questions about the sale of your business, our clients typically ask similar questions upfront:

1. Is there anything I can do now to make my business more valuable?

You will (of course) want to maximize your return. However, owners often have unrealistic expectations about what their business is truly worth. Working with an experienced business broker will level-set you coming into the process about an appropriate sale range. Step back and try to look objectively at your business – as buyers certainly will.

Are there glaring operational or strategic gaps that would make your business more successful (and therefore more valuable) if addressed? If there are major gaps, consider fixing those issues to increase your fundamental value proposition. If the market timing is wrong, consider waiting and selling at some point in future.

Assuming there are no major gaps in how your business is run day-to-day and the market opportunity is good, turn your attention to the heartbeat of your business – your employees. Depending on the terms of your sale (perhaps you have a structured buy-out that pays over time), you may benefit directly from the business’ long-term viability so don’t expect to just hand over the keys and title and walk away. Besides, you’ve spent years building the business – you don’t want to see it to fall apart after you leave!

Identify your key employees and what they mean to the organization.

Develop a strategy to tie them to your organization.
- Your buyer will want to know that you’ve locked in key talent to run the business (who won’t flee to the competition as soon as ownership changes hands). Non-compete agreements are just one way to address this issue. Deferred compensation, shared rewards, equity with vesting over time, non-qualified plans and other methods can also secure key talent and keep them fully engaged in the success of the business therefore easing buyer concerns and increasing your business value.

2. How much will I net from the sale of my business after all closing costs, transaction and attorney fees and other expenses?

Owners sometimes fail to consider all the expenses and transaction costs associated with the sale of their business. Be practical. Build a realistic budget so you can make smart decisions and don’t have any unpleasant surprises.
If you own the building the business is housed in, you’ll also need to decide whether you want to include the sale of the building in the sale of the business. If you want to rent out the building, is the business owner to be a tenant? What are the lease terms?

3. What should I do with any large lump sum I receive from the sale of my business?

Receiving a lump cash sum is a heady thing – make sure you have a solid plan for what you’ll do with all that cash before it’s burning a hole in your pocket and your emotions are engaged.

Where should I invest this money?
How much income can I withdraw from these investments?
Can I grow my assets at the same time I am receiving income from them?
How can I guarantee that my income won’t run out?
Can I buy that boat/vacation home/golf membership/red convertible I’ve always wanted? (We can help answer that.)
Will my spouse mind that I’ve purchased that boat/vacation home/golf membership/red convertible I’ve always wanted? (You’re on your own with that question!)

4. Do I have a well-defined retirement/investment plan that will guide me throughout my lifetime?

Reassess your retirement and investment plans in light of your revised goals and your change of circumstances. Don’t assume your existing plan is adequate – this is an opportunity to look at your situation with fresh eyes and make necessary adjustments.

What are my cash flow needs going forward?
Have I taken into consideration all of my assets, liabilities and sources of income?
How will social security affect my retirement?
What about life, health and long-term care insurance?
Should I stay on my current group insurance plan?
What are my other obligations, such as, college expenses, special needs children, etc. that I need to protect?
Should I pay off my existing mortgage or keep it for the tax deduction?
Should or can I consult to my former company? For how long? Do I want to? Does my involvement for a certain transitional period add value for the new owner? What are the terms of this arrangement?

5. What if disaster strikes during the buy-out phase?

What if the new owner dies prematurely? Am I protected?
- If you are depending on the owner to complete certain payments to you, insurance can protect you if the new owner dies and therefore fails to make those payments. Collaterally assigned policies can ensure fulfillment of payment obligations to you, the seller.
What if I die? Is my family protected? How can they receive full and fair value from the sale?
- Your sale agreement should mandate where multi-year buy-outs should be paid in the event of your death. A comprehensive estate plan should address any multi-year buyout situation, including tax implications. You will want to work with an accountant who is well versed in the special circumstances created by the sale of your business, so you don’t create probate, tax or estate headaches for your heirs. Appropriate insurance coverage can provide additional protection.
What if the new owner runs the business into the ground while I’m on a vested payout schedule? Do I have recourse?
- To mitigate this risk – get as much value as you can for your business upfront! If you’re depending on the success of someone else for your payout, you’re taking a big risk. For that reason, you should screen the buyer along with the terms of the sale, especially if you have skin in the game for some time under a payout schedule.

6. What’s next for me?

Many business owners fail to answer this fundamental question before they sell their business, and find themselves disappointed in the end no matter how fair the financial settlement. Selling your business isn’t just another business transaction. Often entrepreneurs have poured their heart and soul into building a successful business. Even if you’re not emotionally attached to your business, you may be dissatisfied with the result of the sale if the final result doesn’t move you forward against your broader life goals. Whether this is your first business or your 50th – selling your business creates exciting new options for you. Consider those options upfront and know what you want before you begin the sale process. You’ll be happier with the end result.

Will selling the business help me achieve my new goals?
- Perhaps your goal is retirement. In that case, will the sale allow you to retire in the style you want? Perhaps your goal is to start an entirely new business, focus on another venture you already have, or head in a different direction entirely. Your sale should set you up for success as much as possible in whatever you want to do tomorrow.

Have I addressed my emotional attachment to the business and my employees?
- Your business has been a large part of your life. Don’t neglect this issue. Have you really thought through “what’s next”? Is this business your identity? What is your plan to manage your newly acquired free time and cash? Make sure that you are satisfied and are fulfilled with your new direction, so that you don’t mourn the sale of your business but instead celebrate it.

Congratulations! You’re selling your successful business at a nice profit. Today is the first day of the rest of your life. Where are you headed next?

If you have any questions, please call:

Edward J. Scanlon Jr.
Hadel Financial Advisors, Inc.
11900 College Blvd. Suite 315, Overland Park, KS 66210
913.825.2626

Securities and Investment Advisory Services offered through Woodbury Financial Services, Inc.,
Member FINRA, SIPC and Registered
Investment Adviser.

Hadel Financial Advisors, Inc. and Woodbury Financial Services, Inc.
are not affiliated entities.

Where do the presidential candidates stand on issues affecting small business?

2008-10-15T16:47:00.000-07:00

In light of the current events in the financial markets, the presidential campaign seems to be playing a back seat to other more dramatic financial news. We have all heard and read that this presidential election is perhaps one of the most important elections in our lifetime. While that may be true, many small business owners have less time today to study the issues and understand where each candidate stands on the issues. ABMI has summarized some of the issues relevant to small business and provided a few links to quick resources to help you research the issues in more detail.

We are in fact at a critical time in our country. Some of the fundamentals that seemed to work for the economy for so long have faltered leaving large holes in what appeared to be a solid foundation. The professional team at ABMI is tracking the economy in great detail and studying the impact on various market segments. One basic truth is that the backbone of our economy has always been small business. It is imperative for small business to be empowered with the tax structure and incentives to allow them to rebuild in a very challenging marketplace. It is unfortunate that the backbone of our economy (the small business owner) often falls into an earnings category that appears to be a target for proposed tax increases as opposed to incentives. Please take time to study the issues and how they impact small business…and make the commitment to vote.

While there are a number of issues to consider in your decision, ABMI has selected two issues relevant to small business for a brief side-by-side comparison.

Taxes
Obama proposes to raise taxes on small business owners that make more than $200K per year. These business owners are an important segment in our economy employing a significant portion of the work force.

Subject	John McCain	Barack Obama
Individual Income Tax	Keep two tax rates at 33% and 35%	Increase top two tax rates to 36% and 39.6%
Corporate Tax	Reduce tax rate from 35% to 25%	Reduce tax rate for companies that start operations in the U.S. and repeal tax breaks for companies that retain earnings overseas.
Capital Gains	Maintain 15% tax rate	Increase rate to 20% for individuals making more than $200,000 and eliminate tax on investments in small business and startups.
Estate Tax	Collect 15% tax on estates worth more than $5 million	Collect 45% tax on estates worth more than $3.5 million.
Source: Kansas City Business Journal October 10, 2008

Health Care
John McCain and Barack Obama have very different views on the employer’s roles in health care. McCain’s plan proposes to provide a refundable tax credit to pay for health insurance premiums that they buy on their own. Obama’s plan would require businesses to provide health insurance for their employees or pay additional taxes. Small businesses would receive a tax credit to help offset the additional cost of the insurance.

John McCain	Barack Obama
Would provide refundable tax credit of $2,500 to individuals and $5,000 to families for health insurance premiums. Employer provided benefits would be treated as income.	Would create national health insurance exchange for individuals to buy coverage including a government-sponsored plan similar to the one offered to federal employees.
Would allow individuals to buy health insurance nationwide across state lines.	Would provide small business with a tax credit to offset cost of health insurance premiums.
Would work with states to establish a guaranteed access plan for individuals who have been denied insurance because of pre-existing conditions or other reasons.	Would require businesses to pay additional taxes if they don’t provide health insurance.
Source: Kansas City Business Journal October 10, 2008

ABMI is not taking a position to endorse either candidate. There are a number of resources available to help make sense of the various issues. To access some of these resources follow this link. http://abmi.net/Politics08.html
We urge you to reference some of these resources to study the issues and form your own conclusions. Once you have made a decision, take the time to vote.

BUSINESS ESTATE PLANNING

2008-10-15T16:41:00.000-07:00

How to Preserve Your Life’s Work
You’ve spent a lifetime building your business. Now you need to take a few moments to make sure your hard work will survive after your death or the death of one of your partners.
As the owner of a closely held business, much of your wealth is probably tied up in the business. While returning earned income back into the business helps to finance growth, it can cause severe liquidity problems for your estate when you die. After paying probate and estate taxes, your estate and surviving family members may encounter liabilities that become payable soon after your death. They may also face the potential of decreased business earnings due to your absence.

There are ways to overcome these liquidity problems. Creating a business estate planning strategy may help reduce estate taxes and make the best use of the cash available. The most common business estate-planning strategies are buy-sell agreements, Section 303 stock redemptions, and Section 6166 estate tax deferrals. Business-owned life insurance can be used to fund each of these planning strategies.
Buy-Sell Agreements -Buy-sell agreements can establish the value of your business for estate tax purposes and improve your estate’s liquidity by assuring a ready market for your business upon your death. These agreements also protect business partners from sharing ownership with a deceased stockholder’s family.

There are two main types of buy-sell agreements: cross-purchase and stock redemption. In an insurance-funded cross-purchase arrangement, each business owner buys an insurance policy on the other, naming themselves as beneficiary. At the death of one of the owners, the surviving owner receives tax-free insurance proceeds to use in purchasing the deceased owner’s stock from his or her estate.

In an insurance-funded stock-redemption arrangement, the corporation purchases the stock of a deceased shareholder. The business is the owner and beneficiary of a life insurance policy on each shareholder. The life insurance death benefit is income-tax-free to the business if the business has met the requirements of Internal Revenue Code 101(j) at the time of purchase. These requirements include providing the insured with advance written notice, obtaining the insured’s prior written consent to be insured, and meeting the insured’s income requirements. A partnership developing a business continuation strategy may use a similar arrangement called an “entity purchase.”

A buy-sell agreement that is funded with life insurance has these benefits:
For Your Family
. Prevents conflicts with surviving owners
. Ensures that your family receives a fair price for your business
. May set the value of your business for estate tax purposes
. Provides needed cash

For Your Business
. Keeps new and/or unwanted owners out of the business
. Prevents disputes
. Ensures continuity and orderly transfer of ownership
. May provide tax-free cash to purchase stock

It also has these special considerations:
. For insurance-funded buy-sell agreements there are attorney’s fees for drafting the necessary legal documents.
. Life insurance premiums must be paid to fund the strategy. If an individual is unhealthy, life insurance could be costly or even unavailable.

Section 303 Redemptions
Section 303 of the Internal Revenue Code gives your estate a one-time opportunity to remove cash or other property from your business, at little or no tax cost, through a partial redemption of your stock. This can provide the liquidity your survivors need to pay funeral costs, estate and administrative expenses, and state and federal death taxes.
To be eligible for a Section 303 Redemption, the stock value must exceed 35 percent of your estate. The maximum amount that can be paid under such a strategy equals the total amount of the federal estate tax, state death taxes, and funeral and administrative expenses. Corporate-owned life insurance can be used to fund the redemption. Under this arrangement your business purchases an insurance policy on your life and at your death uses the tax-free proceeds to buy enough stock from your estate to cover death expenses and taxes.

Section 6166
An estate tax burden can force the liquidation of a closely held business. Internal Revenue Code Section 6166 was designed to prevent this liquidation. If the business interest constitutes more than 35 percent of your adjusted gross estate, the executor may elect to pay the estate tax attributable to the value of the business in 10 annual installments, beginning no later than five years after the date of the your death.
There are a number of requirements you must meet to be eligible for the Section 6166 extension. If your estate qualifies, life insurance offers an economical way to pay these installments.

Preparation
No matter what technique you choose for your company, determining the value of the business is a key step in the estate planning process. Why? Firstly, in the case of a buy-sell agreement, you need to know the value of the business to determine the price and fund the agreement. Secondly, because the business is part of your estate, the valuation is needed to estimate the estate taxes. This helps you calculate the cash or liquidity needed to administer the estate. Finally, the value of the business must be reported on the estate tax return when the owner dies.

This information is a general discussion of the relevant federal tax laws. It is not
intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax
penalties. This information is provided to support the promotion or marketing of ideas
that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal council.

Email: Howie.Fleischer@rfconline.com
Renaissance Financial
11300 Tomahawk Creek Parkway, Suite 350
Leawood, KS 66211
913-378-2900
Insurance products offered by Minnesota Life Insurance Company, 400 Robert Street North, St. Paul, MN 55101-2098
© 2007 Securian Financial Group, Inc. All rights reserved.
DOFU 6-2007 A04650-0607

How to Find a Great Business to Buy

2008-08-13T09:38:00.000-07:00

Buying a Business

Following your instinct into the world of being an entrepreneur can be an exciting yet intimidating feeling. There are literally no limits to the possibilities other than those self imposed. Once you have made the decision that owning a business is the direction you want to take, you start the challenging process of buying a business.

The process of buying a business can seem daunting and in many ways it is. ABMI has developed a best-in-class buyer representation program in which a seasoned advisor personally escorts you through the process. A process that we believe will positively impact your life.

First you need to decide what type of business is right for you. There are thousands of different types of businesses from which to choose. Selecting a business that you can be passionate about and will allow you to use your resources and talents effectively is an essential ingredient for long-term success as an entrepreneur.

Personal Resource Assessment
Many people forget to begin with an honest assessment of themselves before beginning the quest toward business ownership. Making the big decision that business ownership is your chosen path is just the start. Understanding yourself is a critical step to finding the right fit. Here is a very quick personal assessment checklist to start thinking about:

Personality Assessment

What are your schedule expectations? (Retail hours can be different than manufacturing hours)
What are your strengths/weaknesses?
What do you like to do vs. dislike?

There are a number of resources available to help with a personality assessment.

Financial Assessment

What financial resources do you have? Is this liquid capital?
Are you and your spouse comfortable with taking a second mortgage out on your house if needed?
Have you updated your personal budget?
What are your ongoing financial needs?

Family/Friend Support

How does your spouse feel about this decision?
How does your extended family feel about this decision?
How do your close friends feel about this decision?

It may seem irrelevant now, but during the emotional and sometimes uncertain times, the support (or lack thereof) from family and friends can have a big impact on your ability to persevere.

The Premier Buyer Program at ABMI begins with a thorough personal assessment to help you gain more clarity on important factors that can enhance your success. The personal assessment may bring up some issues that cause you to reevaluate the decision to buy a business. We believe that this is an important process and we will consider it an honor to help you firm up your decision even if it does not lead to you buying a business.

In addition to the personal factors of consideration, other factors should be included in your decision. The selection of a business is an evolving process and more of an art than a science. You should begin to look at businesses that make sense as preliminary targets based on the initial assessment. A good place to start is by looking at an industry with which you're both familiar and which you understand. Another point of consideration is the size of business you are looking for, in terms of employees, number of locations and sales. If you do not like to travel than a business that has a local customer base or the ability to handle functions requiring travel through alternative resources should be carefully measured.

Once you have decided on one or two industries to focus on, the size parameters that realistically fit your needs and financial resources, and the geographical preference, specific businesses should be identified.

Industry Analysis
ABMI will research the industry using up-to-date market data looking for trends and developments that could impact businesses in the industry. We will assess recently completed transactions to determine valuation metrics and review potential key success factors useful in assessing opportunities in the selected industry.

Preliminary Search
ABMI has extensive databases that contain information on companies and can be efficiently sorted by industry, size, etc. An initial search will be conducted to identify a group of businesses that meet the general criteria. The results of this search will be reviewed with you to discuss specific opportunities that should be considered or ignored.

Prescreen Businesses
Next we will prescreen the company to confirm that the information available supports the assumption that it is a fit. We will research recent activity on the business and confirm that the preliminary assessment is consistent with information available.

Create a Confidential Buyer Profile
Prior to approaching businesses owners, it is important for us to develop a Confidential Buyer Profile highlighting your qualifications, background, and resources. This will add credibility to our conversations with business owners and reduce unproductive communication to validate the legitimacy of our intentions.

Contact Business Owners
We personally contact the owners of the businesses identified in our preliminary search. Our communication style is very professional and succinct. This is not presented as a sales call. It is a serious inquiry from a qualified individual about buying their business, and we handle the conversation honorably. Some businesses owners are not interested in pursuing future conversations…and some are. We will provide the business owner with a Confidential Buyer Profile on you.

Confidentiality
Most business owners are very sensitive about confidentiality, and rightfully so. Once a business owner expresses an initial interest in talking to you about a possible sale, we always begin the second stage conversations with a signed confidentiality agreement to provide a comfortable foundation to begin exchanging potentially sensitive…and very important information.

Information Exchange
Each business owner has a slightly different preference in terms of providing detailed information on their business to allow us to further assess the fit. Some business owners will request a personal meeting with you to meet and begin the relationship prior to giving out financial data. Other businesses owners are comfortable providing financials electronically without a personal meeting. Still others will simply prefer a conference call to break the ice and talk through some general information as a first step. We do not use a “cookie cutter approach” to this process and believe that respecting the individual preferences of the business owners leads to a much more productive and trusting level of communication.

Business Assessment
Your team at ABMI will assist as you assess the information provided by the business owner. We will apply our expertise and offer our counsel as you analyze the historical financial performance, customer diversification, market dynamics, operating processes, and future opportunities. We will research completed transactions of similar businesses to assist in the assessment of value.

Negotiation
The negotiating process is where a number of very good opportunities are lost. Negotiation is much more that flipping an offer and counter offer back and forth and keeping fingers crossed that the parties can meet somewhere in the middle. Unfortunately that is the approach some brokers apply. The negotiation process should begin the intermediary understanding the objectives of both parties and work toward creating a structure that can demonstrate to all stakeholders how their objectives are being met. Of course we have a fiduciary responsibility as your representative to work diligently toward negotiating the best deal for you, with over 25 years of negotiating experience; we find that hammering a deal through to a bloody end is not an effective technique.

Due Diligence
Due diligence is the stage in which the information provided to date is verified and researched. Your team at ABMI will facilitate this process and assist in the document management as your advisors review detailed documentation. If there are any surprises or concerns we assist to find a resolution quickly and efficiently.

The Value Proposition
Buying a business can be a challenging and time-consuming experience. Industry statistics provided by the International Business Brokers Association (IBBA) state that less than five percent of all registered buyers (those that network with brokers, accountants, lawyers, bankers, etc.) ever buy a company within a year. That means more than ninety-five percent of the people that are interested in buying a business are not successful. Most buyers are qualified and talented and may even spend a good deal of time looking, yet, less than five percent actually achieve their goal.

The ABMI-Mergers and Acquisitions Premier Buyer program is designed to increase your chances of success significantly. Our refined process will save you time and wasted energy. Our experience will allow you to leverage your efforts resulting in substantial savings.
Contact ABMI to learn more about our Premier Buyer Program. 913-341-6300

Second-Stage Businesses Have Unique Needs

2008-07-11T15:13:00.000-07:00

Businesses that have navigated successfully the waters of identifying a viable market and product and that are no longer concerned on a day-to-day basis simply with survival, are classified as second-stage businesses. These businesses have special needs, unique from those of start-ups and large corporations. The leaders of these companies often find that their businesses are either stretched to the limit due to increasing sales that require perpetual increases in people, inventory, space and financing , or that they have reached a plateau and cannot do anything to change the status quo.

The challenges second-stage businesses face are no longer simply about survival. These companies are generating revenues of $2.5 to $50 million annually, but are facing organizational issues that must be considered if growth is to continue. Second-stage businesses frequently face some or all of the following issues:

People in different parts of the organization are unaware of what others in the organization are doing.
Many employees don’t understand the organization’s ultimate goals, and may even be inadvertently working against such goals.
A rapid growth in sales may precipitate a decline in product quality.
Employee turnover may increase due to increased organizational conflict and stress.
Leadership often finds itself performing operational tasks that others really should be handling.
Leadership finds itself daily without enough time to complete their workload, much less focus on planning for the future.
Lack of organizational infrastructure causes loss of files and paperwork, creating confusion and embarrassment.
Computer systems overwhelmed by growth may crash frequently, hindering the employees’ ability to function.
Meetings often accomplish little and are seen as a waste of time by many.

Second-stage business leaders often find that the very qualities and skills that helped them survive in the start-up stage may no longer be sufficient and are potentially a liability to sustained, long-term growth. In order to move past survival and into sustained and enduring growth, second-stage leaders have to transition their businesses into a professionally managed firm, while still maintaining the entrepreneurial creativity that drove the company’s original success.

Second-stage businesses are an extremely important component of today’s economy. According to YourEconomy.org, second-stage businesses are only 13.4% of the total business population in the Kansas City Metropolitan area, but supply 39.2% of the area’s employment. Knowing how important second-stage businesses are and the unique risks they face, the University of Missouri at Kansas City’s Small Business and Technology Development Center has created a program to specifically address the needs of second-stage business leaders.

The Growth Business Strategies program is the first in a series of programming being developed to meet the needs of second-stage entrepreneurs. “There are many great resources out there to help out brand new businesses, and there are numerous high-dollar consultants and training companies providing what large corporations need. The second-stage business leader tends to fall through the cracks,” according to Diane Scott, professional development program manager at UMKC’s SBTDC. The Growth Business Strategies program is designed to give the key leaders of second-stage companies the skills necessary to transition their companies into professionally managed ventures with the appropriate organizational structures in place to cultivate further growth, without creating innovation crushing bureaucracies.

The time of second-stage leaders is in high demand. Simultaneously, growth business leaders need dedicated time to work on their businesses, not just in them. The Growth Business Strategies course format is specifically developed to limit time away from the business, while simultaneously giving leaders focused time to grow the skills needed to further develop their companies. The program is presented in three monthly modules on Fridays and Saturdays at the Elms Resort and Spa in Excelsior Springs, MO (45 minutes from downtown Kansas City). The four weeks between modules allow students the opportunity to apply new skills and work on a plan for the strategic growth of their companies.

The program covers all the areas proven to challenge second-stage businesses from planning and budgeting to operational controls and organizational culture change. ABMI’s own Dan LoIacono will teach the session on Funding a Growing Venture. Second-stage leaders will get a chance to apply their new skills in a competitive and rigorous simulation of a second-stage venture.

Due to LoIacono’s association with the program, UMKC’s SBTDC is offering a 25% discount to leaders who learned of the program through ABMI. To receive the discount, applicants just need to refer to ABMI on the application. To view an informative flier on the Growth Business Strategies program click here. To download a program application click here. Applications must be received by August 1st and space is limited. For more information on this or other programs for second-stage businesses go to UMKC’s SBTDC’s site at: http://www.entrepreneurship.bloch.umkc.edu/sbtdc/secondStage.aspx

A Snapshot of the Economy, July 2008

2008-07-07T08:20:00.000-07:00

The state of the economy has been capturing our attention lately to say the least. It is hard to ignore the media and the seemingly never ending increases in gas prices. The effects of inflation are starting to be apparent in various places such as the grocery stores. While it is no doubt something is going on, how do we discern what is simply media hype and what is fact? And perhaps more importantly, what does it mean to us? How should we, as small business owners prepare or respond?
Let’s cover a few key statistics that seem to have the biggest impact on small business.

The Prime Rate
The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). It is used as a tool by the Federal Government to relieve pressure and stimulate spending in challenging economic times. The lower the rate…the cheaper the money…the more spending. In theory, more spending fuels investment and stimulates growth. The Prime Rate was at 8.25% in September, 2007…not that long ago. That was the highest rate since March 2001. The Fed started lowering the Prime Rate in September 2007 gradually. The last rate change was in May, 2008 when the rate was adjusted by a quarter of a percent to 5.0% (See table). The lower Prime Rate stimulates investment in business (equipment, assets, etc.), and can help businesses invest in new equipment or initiatives that can improve productivity. The lower rates also make business acquisitions more affordable.

Oil Prices
We see and feel the impact of rising oil prices every day as we drive down the road. The effect of this increase cost will be rippling through the marketplace throughout 2008 and arguably much longer. Oil prices impact so many factors in the production and distribution process in almost every industry the increased cost is impossible to ignore. The increased cost will impact profits for small business in the short-term. As the businesses are able to pass the increased costs to the end user the affect will be less dramatic. Ultimately, the rising oil prices will be reflected in higher prices to the consumer. On a slightly more positive note, domestic oil production and development of alternative fuel industries will be stimulated by the higher prices that can support previously unprofitable domestic investment.

The Housing Market
The housing market has taken a blow on the chin over the last year. New home sales have dropped on a national level in six of the last seven months. According to the Commerce Department, national new home sales dropped 2.5% in May compared to April, and the average price of a new home was down 5.7% from a year ago.
In the Kansas City area, the Realtors association reported that May’s sales of new homes were down 40% from sales in May 2007. The Kansas City Metro Area saw an 83.7% increase in the foreclosure rate between 2006 and 2007. According to RealtyTrac, 1.177% of all housing units in the region were in some stage of foreclosure throughout the past year. Kansas City’s 1.177% was less than the average for the 100 largest metro areas in the country (1.382%) but was higher than the nation as a whole (1.033%).

Unemployment
The national economy lost 62,000 jobs in June, the biggest loss in employment since March 2003. The grim outlook reflected six straight months of job cuts — a sustained slide that hadn’t occurred since 2001-02 — and an unchanged 5.5 percent unemployment rate, the highest level in four years. Nationally, the greatest level of national job losses occurred in construction.
Job seekers are becoming more and more disillusioned with the dependency on large corporate employers for their employment. Many are pursuing opportunities in small business to buy a business and have more control over their future.

Summary
This has been a very brief overview of some of the key economic indicators relevant to small business. There is no way we could adequately cover everything going on in the economy and how it could impact your unique industry. It seems apparent that the recovery is in the hands of the small business owner. The same entrepreneurial spirit that has built this country will need to come through as we dig out of this downturn. Paying attention to the marketplace and making adjustments to capture market share and profits will be critical as we navigate our way through the economic rapids. There are a number of reasons why buying a business could be the perfect move at the perfect time. Contact your advisor at ABMI to explore if the timing is right for you.

913-341-6300

Six Tips for a Successful Business

2008-05-06T09:07:00.000-07:00

Successful businesses come in all shapes and sizes. While there may be no magic formula or special sauce that can guarantee success, there are characteristics that many successful businesses share. Here are some tips to help increase the chances of building a successful business.

1. Choose an industry you can leverage previous experience and relationships. Do not rush into a business in which you have little or no experience. Lack of experience can lead to steeper learning curves. While entrepreneurs by nature can learn quickly, it helps to avoid reinventing the wheel.

2. Have a thorough business plan. Your business plan will inform potential investors and lenders about your business and (hopefully) entice them to invest. But it should also serve as a roadmap for starting and running your business. If your business plan is thorough, you will know if your business is viable and whether you can afford to fund it during the startup stage and beyond. Set realistic goals, taking into account worst-case scenarios and planning for these eventualities. See the SBA Business Plans center for more information.

3. Get an accountability partner. Many business owners go into business for themselves so that they can be their own bosses. What many fail to realize is that even CEOs of major public companies are accountable to a board of directors. Business owners who have a mentor, accountability partner, or business coach consistently outperform the competition. Getting another perspective is always valuable, and it may spare you from making costly miscalculations. Experience helps when looking for investors.

4. Differentiate your business. Consumers today are overwhelmed with choices. How will your product or service stand out? You may be able to remain meagerly profitable in a saturated market, but unless you give consumers a compelling reason to choose you over someone else, you will not thrive. You may have to close up shop if your revenue cannot meet all of your financial obligations and retain a reasonable profit.

5. Provide stellar customer service. Another way you can differentiate from the competition is through stellar customer service. When it comes to customer retention, business owners should always look for ways to improve their knowledge and skills, as well as those of their employees. Happy customers are paying customers, which keeps the cash flow positive.

6. Select a financing partner wisely. All lenders are not created equal. Most bankers will say they want to loan you money, but as the layers of the onion are peeled away, many potential lenders are not comfortable with small business or the potentially low fixed asset base (collateral). Identifying the credible lenders in your market that have a track record for providing financing for small businesses is an essential element for success. The wrong financing partner can result in under-capitalization or worse yet, passing on a great business opportunity based on the recommendation of an over-conservative lender.

Finding a Business to Buy

2008-05-05T14:27:00.000-07:00

Finding a business to purchase should be the final step in a process that begins with self-evaluation and a sound financial assessment. Before buying a business, you should determine what type of business you are qualified to run and would enjoy owning. Based on your own skills, technical knowledge, abilities, interests, and personality, you can determine which type of business will provide you with the best opportunity to use your talents most effectively and turn a profit. There are various assessment tools available to assist in this process. Finding a business that compliments your natural skills is an essential element to a successful journey.

A few questions to consider in your personal assessment include:

Are you technically oriented or do you fumble with manual tasks?

What hours are you prepared to work? Weekends? Evenings?

Do you enjoy interacting with people or are you somewhat shy around people?

Do you enjoy managing people or do you prefer to work alone when possible?

Along with answering questions about personal fit, you should know how much you can comfortably afford to spend, and how much you will need the business to generate in cash flow to fulfill your short-term financial needs. The process of finding the right business for you takes thoughtful consideration of a number of factors. The team of professional intermediaries at ABMI can help. When you are ready to start asking questions and begin the exciting journey, contact ABMI.

ABMI Mergers & Acquisitions
(913) 341-6300

Business Owner Transition Planning Workshop

2007-11-20T12:26:00.000-08:00

Business Transition Planning Workshop (Lunch and Learn)

Date: Wednesday, December 12th – Reservations required call (913) 341-6300
Time: 11:30 am to 1:00 pm (Box Lunch Provided)
Location: Building 40 Corporate Woods, 9401 Indian Creek Parkway, Suite 650, Overland Park, Kansas 66210

Whether you are nearing retirement or just starting out, it is never too early to think about the eventual transition of ownership. The topics to be covered will include:
· An overview of the transition planning process
· Business valuation
· Tips to increase the value of your business
· Preparing for a Strategic Buyer
· Ways to maximize the after-tax proceeds from a sale
ABMI is a full service Mergers and Acquisition firm specializing in small to mid-sized businesses. WWW.ABMI.NET. ABMI has been bringing buyers and sellers of businesses together in the Kansas City area since 1983 earning a reputation for their best-in-class approach and emphasis on consultative relationships. With a strong track record of success on both “buy-side” and “sell-side” engagements, the team of 11 professional intermediaries at ABMI handle transactions ranging from small or mid-sized businesses to middle-market mergers or acquisitions.
Speaker Profile
Dan LoIacono, CCIM, CBI, President, ABMI- Mergers and Acquisitions

Dan is the President of ABMI-Mergers and Acquisitions. ABMI has been bringing buyers and sellers of businesses together in the Kansas City area since 1983 earning a reputation for their best-in-class approach and emphasis on consultative relationships. With a strong track record of success on both “buy-side” and “sell-side” engagements, the team of 11 professional intermediaries at ABMI handle transactions ranging from small or mid-sized businesses to middle-market mergers or acquisitions.

Dan’s career has included over eighteen years of experience in brokerage, consulting, and management roles with an emphasis on commercial real estate. Dan has an undergraduate degree in Marketing and an Executive MBA from Rockhurst University. Dan is an active member of the International Business Brokers Association (IBBA), a Certified Business Intermediary (CBI), and a Certified Commercial Investment Manager (CCIM).

Dan is a recognized speaker in the Kansas City area speaking on topics including, “How to Buy a Business”, “How to increase the Value of Your Business”, and “Transition Planning for the Business Owner” at organizations including The Kaufman Foundation, Kansas Women’s Business Center, and many local chambers and professional associations. Dan has also been a regular correspondent on the morning radio show “Inside the Boardroom with Mike Shanin” on KMBZ sharing entrepreneurial insight.
Dan has served as a judge for the annual UMKC Institute for Entrepreneurship and Innovation New Venture Challenge Competition, and is a contributing author for the Kansas City Star, Small Business Monthly Magazine, and Entrepreneur’s Guide. Dan is on the Community Board for the Servant Christian Community Foundation (SCCF) and is an active volunteer for a number of organizations such as Junior Achievement, Operation Breakthrough, and Boy Scouts of America. Dan has earned a reputation for his high degree of integrity, passion for excellence, and giving back to the community.
Dan and his wife Sheri have been married for 21 years and have two wonderful children, Ryan (11) and Brooke (9). In his personal time Dan enjoys spending time with his family, camping, biking, attending his children’s sporting events, and helping out in the children’s ministry at church. Dan life is a reflection of his company’s vision statement, “To positively impact lives with a passion for excellence.”

Quick Guide

2007-10-18T14:31:00.000-07:00

Step 1- Planning START NOW! * Identify your objectives.* Assemble your team of advisors (CPA, Attorney, Tax Advisor, Estate Planner, Financial Planner and Business Broker).* Get your business appraised; update every 2-3 years. * Report all income. Business value is primarily based on documented cash generated.* Make your role easily replaceable for a new owner.* Document your processes to ease the anxiety of the unknown. * Diversify your customer base if more than twenty-five percent of sales come from one customer.
Step 2-Valuation* Prepare financial statements and other business information. * Review the latest appraisal and understand how operational and financial activities affect the value. * The business is worth what it can produce in current cash flow and future returns to the buyer.
Step 3- Marketing* Prepare a comprehensive marketing package to present information to qualified buyers. * Use various forms of advertising including local newspaper, Internet, trade publications, and direct mail. * Qualify buyers by asking them a few questions about their interests, background, income requirements, and resources. * Before providing any detailed information, have them to sign a confidentiality agreement.*Provide the marketing package and highlight the positives associated with your business.
Step 4- Negotiation* Negotiating could be emotional and uncomfortable. Remember that price is only one component of the negotiation.* Other very important factors include financing terms and contingencies, which can significantly impact the ultimate value to you.* Communicate offers and counter-offers in writing. * Request an earnest money deposit as a sign of buyer confidence.* Use an attorney to create or review any agreement before signing.
Step 5- Due Diligence* Allow the buyer to review documents and files to verify information you previously provided.* The signed offering agreement should provide the standards for the due diligence process. * Obtaining financing and an acceptable lease are two big challenges a buyer typically needs to overcome, so assist as necessary.
Step 6- Closing* Conduct an inventory immediately prior to closing.* Ideally, have a qualified third-party manage the closing process.* Sign all final documents including Settlement Statement, Purchase Agreement, Bill of Sale, Promissory Note and Security Agreement, if applicable. A notary should be present to notarize all signatures.* Exchange funds. As the seller, you should provide validation that all vendors are paid in full.

Business Owners Statistically Have More Wealth

2006-08-13T04:30:00.000-07:00

Business Owners As High Income Earners And Wealth Holders
WASHINGTON, D.C. - Business owners in the 1990’s were more likely than wage earners to be in households classified as high income earners and wealth holders, according to a study released today by the Office of Advocacy of the U.S. Small Business Administration. However, their comparative share of income and wealth fell during the same period.

“Business ownership has traditionally been a route to prosperity for Americans,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. “This study confirms that the 1990’s were no different. Nonetheless, with the market bubble of the 90’s, wage earners saw a greater increase in their income and wealth relative to business owners.”

The report, How Did Small Business-Owning Households Fare During the Longest U.S. Economic Expansion?, written by Dr. Charles Ou, Economist for the Office of Advocacy, and Dr. George Haynes is a follow-on to the study Wealth and Income: How Did Small Businesses Fare from 1989 to 1998?.

The study finds that in 2001 small business-owning households were more than twice as likely as non-owning households (57.1 percent to 25.5 percent) to be high income, and over eight times more likely (21.2 percent to 2.5 percent) to be high wealth households. However, from 1992 to 2001, the chance of being in the high income category for non-owning households increased 42.5 percent, and their chance of being high wealth increased 92 percent, whereas the chances for small business-owning households increased 24.7 and 61.8 percent, respectively.
The study also examines the changes in the demographic characteristics of high income and high wealth households over the 1992-2001 period.

The Office of Advocacy, the “small business watchdog” of the government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats and it funds research into small business issues.
For more information, visit the Office of Advocacy website at www.sba.gov/advo.

The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, interests of small business before Congress, the White House, federal agencies, federal courts, and state policy makers. For more information, visit www.sba.gov/advo, or call (202) 205-6533.

Exit Planning

2006-08-05T05:15:00.000-07:00

Exit Planning
By: Dan LoIacono

As business owners we learn, often by trial and error, how to operate our businesses in a way that generates a profit. Operating a profitable business takes a good deal of attention and effort for most business owners. Thinking about selling the business usually does not come into a business owners mind during the daily challenge to make a profit. The idea to sell our business too often tends to coincide with our need or desire to exit the business or retire within 12 months. For many business owners, a considerable amount of their net-worth is tied up in the value of their business, and selling the business is a method to access retirement funds.

Planning for the sale of your business will help eliminate potential surprises. Waiting until the last minute to consider the sale of your business can be setting yourself up for an unpleasant surprise. At ABMI we are honored to have the opportunity to work with a number of business owners who are considering selling their business. Unfortunately, sometimes the sellers have waited until the last minute to think about selling, and want to exit the business quickly. Some comments from surprised business owners this year have been. “I thought my business was worth much more than that.” “I can’t believe I will have to pay that much in taxes.” “I never kept good financial records, does that really matter?” We do what we can to help the business owners work through these issues and improve the outcome, given more time and planning the outcome could be much better.

Proper planning can help eliminate some of the painful and costly surprises. Here are a few things to consider as an “Exit Planning Roadmap”.

Exit Planning Roadmap

Step 1 - Set Your Exit Objectives
o When do you want to retire?
o What will it take- in cash- to generate the retirement income you need?

Step 2 – Prepare financial statements and other business information.
o Buyers will want to look at financial statements for at least three years, a list of assets, contracts with vendors, and other documentation related to the business.

Step 3 – Consult your advisory board
o Assemble a team of advisors to assist you with planning. This team should include a CPA/Accountant, Tax Advisor, Attorney, Estate Planner, and Business Broker.
o Explore strategies to minimize the tax impact of the gain.

Step 4 - Determine the Value of Your Business
o How much is your business worth today? Consider obtaining a third-party appraisal from a professional who specializes in business valuation.

Step 5 – Develop a plan for the company to function with minimal owner involvement if needed.
o Unfortunately, many business owners build their business to function around the owner. If the owner is not actively involved the business will no longer function. This creates challenges for a new buyer and reduces the marketability of the business.

Step 6 – Fine tune the business
o Put yourself in a potential buyers’ shoes. Make the business look appealing to a buyer by cleaning up the business as needed both from a physical and financial perspective.

Step 7 – Select a business broker to market your business
o Maximum market exposure handled in a professional and confidential manner is essential to capture the greatest value for your business. Your focus should remain on operating the business with minimal distractions. Engage a professional to market your business and keep your mind on your business.

2006-05-16T04:26:00.000-07:00

Increasing the Value of Your Business
Offered through the Greater Kansas City Chamber of Commerce
Business Brain Food Weekly Educational Series Wednesday, May 24, 2006 at 8:30 AM
In partnership with the UMKC Henry W. Bloch School of Business and Public Administration

Brief Program Description
As a small business owner, you probably focus much of your attention on building and operating the business (generating cash flow) rather than analyzing value. While a focus on the operation of the business is essential, understanding the valuation methodology for your business can help you make decisions that can increase the value of your business substantially. Attendees of this class will learn some basic techniques that can help increase the value of their business.

Learning Objectives
This session will introduce business owners to basic business valuation concepts and the specific variables that impact the value of a business. Examples will be reviewed to illustrate how variations in key business metrics can impact the value of a small business significantly. Attendees will learn how they can change basic components of their business to maximize the value.

Have you found yourself asking yourself questions like these?
· Who will buy my business?
· How much is my business worth?
· How is the value of my business calculated?
· What do buyers look for?
· How can I increase the value of my business today?
· When should I begin to prepare for a sale?
· What should I expect the process to be like?

These questions will be addressed along with many more in this class. This is a must for business owners to get a glimpse into the future and plan accordingly.

All class attendees will receive a coupon for 20% off a third party valuation from Gulf Coast Financial.

Cost: $15

Location:
Chamber Board Room at 911 Main Street, Suite 2600 Kansas City, MO 64105
Contact Information
brainfood@kcchamber.com
816-374-5472
Parking
PLEASE NOTE: The parking garages on 8th & Main, Commerce Tower parking garage (Walnut between 9th and 10th) and the valet service on 10th (between Walnut and Main) are available for validation by The Chamber. No other downtown lots can be validated. An easy way to remember this is; if you have to go outside of Commerce Tower to get to your car, your lot doesn't qualify.

Small Business Valuation

2006-05-16T04:20:00.000-07:00

Small Business Valuation

The concept of small business valuation has created challenges in the marketplace for years. Unfortunately, unlike publicly traded stocks, there has been little formal education offered in the business schools and accounting classes traditionally on the subject of small business valuation. While value can have a completely different meaning to various individuals based on perspective, there are some standard principles that are taught by respected organizations such as the International Business Broker Association (IBBA) and accepted by valuation experts around the world. In fact these principles that we will discuss below are practiced by the Small Business Administration (SBA) as the approved method to small business valuation.

There are a number of different ways to value a business including the Discounted Cash Flow Method, Market Multiple Method, and Asset Value Approach. Each of these different methods to approach the valuation of a small business can be appropriate for different applications however we will not cover these in great detail in this article. The most widely used method for valuing small businesses is the Market Multiple Method.

Understanding how to interpret cash flow statements for small businesses is an important first step in valuing a business. The IRS regulations related to small business expense guidelines allows a good deal of room for interpretation. The application of these regulations can vary significantly between one business owner and the next. As a result, the financial statements for small privately held businesses often reflect some expenses for items not traditionally considered business-related. In addition there may be other non-cash or other expenses such as depreciation that are not directly transferable to a new owner.

In order to review financial data in a consistent manner the industry has developed a standard process call Stabilization. This concept has been adopted by the appraisal industry, CPA’s, attorneys, the International Business Brokerage Association (IBBA), and the Small Business Administration (SBA) as the accepted approach to standardizing financial information.

Expenses that typically are adjusted out of the cash flow statement include owners salary, owners benefits (life insurance, health insurance, pension plan), debt service, depreciation (non-cash expense), and charitable contributions. Other expenses may be adjusted based the unique business owners accounting methods.

The adjusted (stabilized) expense information is applied to the original cash flow for the business to arrive at an adjusted cash flow. This is the actual net cash benefit to the business owner. This adjusted number is referred to as Net Owner Benefit (NOB) and/or Sellers Discretionary Cash Flow (SDC).

In a manner very similar to appraising a single family house, business appraisers continually solicit information on sold businesses across the country. Professionals are encouraged to submit transaction details (without disclosing the actual name of a business) to the database, and in exchange are awarded access to the database for professional reference.

Multiples (or ratios) can be derived by comparing selected variables such as annual sales, gross profit and SDC to the Sales Price. Due in part to the volume of transaction information, applied to businesses in similar industries, these multiples can provide a very accurate picture of valuation (as defined by the marketplace).

In practice, regardless of the formal approach to valuation, and the calculated value of a specific business, the business is only worth what it can produce in terms of current cash flow and future returns to the buyer. Buyers and lenders look at the ability to earn a realistic salary for operating the business while producing enough cash flow to comfortably cover debt service, and generating a fair return on invested capital (ROIC).

Operation Breakthrough

2006-03-10T05:43:00.000-08:00

I have been fortunate enough to be associated with the team at Operation Breakthrough for about three years. Over this time it has been wonderful to see how the loving staff and volunteers involved in the program have such a meaningful impact on the lives of so many children and families in our community.

Walking through the halls of the facility on 31st and Troost and seeing the eyes of the children light up is a reminder of how important Operation Breakthrough is. Every child deserves to grow up in a safe environment in which they can feel love and support. Unfortunately for many of the children in our community this seemingly basic necessity is not available through the existing family structure.

Operation Breakthrough provides a critical bridge for families who struggle with the basic necessities of life, and I am proud to be a sponsor for the Chiefs Charity Game again this year. It is my prayer that my humble contribution will make a difference in the life of a deserving child or family.

On March 29th from 7:30 a.m. to 8:30 a.m. we are hosting a breakfast for you to come and see the beautiful children and new facilities at Operation Breakthrough and learn more about the upcoming Chiefs Charity Game. We hope you can come and will consider offering your support. It will be welcomed with open arms and I assure you it will make a difference. Operation Breakthrough is located at 3039 Troost (31st and Troost) in Kansas City.

I thank the team at Operation Breakthrough from the bottom of my heart for what they are doing. I know you will be blessed by learning more about this program. I hope to see you on March 29th!

Buying a Franchise…is it for me?

2005-11-21T04:00:00.000-08:00

If you are receiving this article chances are you have recently thought about starting or buying a business. As you probably have figured out by now, the first step in the decision-making process is to decide whether or not to go into business at all. Each year, thousands of potential entrepreneurs in the Midwest are faced with this difficult decision and ABMI has the pleasure of working with many of them. One of the biggest mistakes you can make is to rush your decision and hurry into business, so it's important to understand your reasons for going into business, and to determine if owning a business is right for you.

According to the Small Business Administration (SBA), due to the inherent risk and work involved in starting a new business, many new entrepreneurs choose franchising as an alternative to starting a new, independent business from scratch.

If you are concerned about the risk involved in a new, independent business venture, then franchising may be the best business option for you. But remember that hard work, dedication, and sacrifice are essential to the success of any business venture, including franchising.

The SBA offers a great resource to help you sort through the pros and cons of buying a franchise and decide if it is a good alternative to buying an existing independently operated business. The resource is titled “Is franchising for me workbook” and is a free publication available at this link.
http://www.sba.gov/opc/pubs/fran.pdf

Additional information about franchising is available at our website www.abmi.net.

The History of Franchising
The concept of franchising has been around for decades. Franchising began to attract widespread market attention with the evolution of the McDonalds franchise system which was started by Ray Kroc in 1955. Since the opening of the first McDonalds in Des Plaines, Illinois, franchising has continued to gain popularity.

Franchising is one of the most popular systems for growing a business in the United States today. According to a recent government survey, franchising has experienced explosive growth since the mid-70s and is expected to continue phenomenal growth into the future. Here are a few facts about franchises:

In the United States , there are over 2,500 franchise systems.
These systems have in excess of 534,000 franchise units, which represent 3.2% of the total businesses in the United States .
Franchises represent over 35% of all retail and service revenue in the U.S. economy.
More than 7 million people work for owners of franchised businesses.
More and more people are making the decision to get involved with a franchise company with the hope of pursuing the American dream of business ownership.

An Overview of the Franchise Concept

The concept of franchising is simple. It is a method of duplicating successful business processes and building on systems proven to be effective for acquiring and keeping customers. Through replication of systems and processes within a franchise, a certain level of consistent performance can be achieved. This consistency helps to build a positive and reliable image in the minds of current and future customers which tends to provide franchise operators the luxury of quicker increases in sales as compared to non-franchise counterparts.

Benefits to Franchise Ownership

In addition to enjoying a quicker ramp-up in sales on the average, franchises offer other significant advantages over other entrepreneurial options.

Training
Most franchises offer extensive training for the franchise owner. This training is usually provided as an initial structure program (including a standard classroom-type format at the corporate location), and ongoing training through formal or informal methods. Training material often includes step-by-step guidelines for how to conduct every part of the business. Forms and other tools are usually provided to give the new franchise owner a clear roadmap toward replicating the successful process.

Leveraged Purchasing Power/ Performance Tracking

As a member of a larger organization of franchise owners, franchises typically have benefits associate with larger volume discounts with regard to buying goods or services. Performance metrics are normally provided by the Franchisor to provide franchise operators with benchmarks from which to gauge individual performance, and access to best-in-class ideas to help refine the operating performance.