In this episode of the Steps To Sold podcast, Brandon Bourgeois and Chris Sater discuss significant changes to the SBA Standard Operating Procedures (SOP) with guest Huy Tran from Byline Bank.
In this episode of the Steps of Sold podcast, Brandon Bourgeois and Chris Sater discuss the essential steps and considerations for individuals looking to buy a business.
In this episode of the Steps To Sold podcast, hosts Brandon Bourgeois and Chris Sater delve into the complexities of business valuations.
In this episode of the Steps to Sold podcast, Brandon Bourgeois and Chris Sater delve into the critical process of due diligence in buying and selling businesses.
In this episode of the Steps to Sold podcast, hosts Brandon Bourgeois and Chris Sater discuss the common pitfalls when selling a business and how to avoid them.
The conversation highlights the risks of relying solely on AI for accurate business valuations and stresses the need for professional guidance.
The conversation highlights real-world scenarios, the flexibility of deals, and the associated fees and costs of SBA loans, providing valuable insights for potential business buyers and sellers.
Summary
In this episode of the Steps of Sold podcast, Brandon Bourgeois and Chris Sater discuss the essential steps and considerations for individuals looking to buy a business. They emphasize the importance of defining personal financial goals, understanding the key criteria for evaluating potential businesses, and avoiding common pitfalls in the acquisition process. The conversation also highlights the significance of operational fit and the role of a broker in facilitating successful transactions. Listeners are encouraged to create a buyer profile and approach the business buying process with clarity and preparation.
Takeaways
Chapters
00:00 Introduction to Business Acquisition
01:34 Defining Your Goals and Financial Capacity
08:09 Key Criteria for Evaluating a Business
14:13 Understanding Operational Fit and Transferability
19:38 Common Mistakes to Avoid in Business Buying
28:05 The Role of a Broker in Business Acquisition
Keywords
business acquisition, buying a business, financial goals, evaluation criteria, operational fit, common mistakes, business broker, SBA loans, buyer profile, investment
Summary
In this episode of the Steps To Sold podcast, hosts Brandon Bourgeois and Chris Sater delve into the complexities of business valuations. They discuss the various methods of valuation, the importance of financial preparation, and the impact of risk factors on a business's worth. Through real-life examples, they illustrate how different metrics like SDE and EBITDA are used in valuations and emphasize the need for accurate financial reporting to achieve a fair market price. The conversation highlights the significance of understanding one's business value before entering the market, as well as the nuances that can affect a sale's outcome. In this conversation, Brandon Bourgeois and Chris Sater delve into the complexities of business valuations, discussing the importance of historical trends, potential, and market factors. They explore the differences between asset and stock sales, the impact of interest rates on buyer purchasing power, and the significance of preparing a business for sale. The discussion emphasizes the need for clear documentation and a strategic exit plan to maximize business value.
Takeaways
Valuing a business involves understanding various metrics and methods.
Financial preparation is crucial for attracting the right buyers.
A strong valuation can significantly impact the sale outcome.
Different valuation methods apply to different business sizes and structures.
Risk factors, such as customer concentration, can drastically affect valuation.
SDE is commonly used for smaller businesses, while EBITDA is for larger ones.
Accurate financial reporting is essential for a fair valuation.
Market conditions and comps can mislead business owners about their value.
Preparation in advance can lead to better sale outcomes.
Understanding the nuances of valuation can help sellers maximize their returns. Location affects business valuation significantly.
Potential alone does not justify high valuations.
Historical revenue trends are crucial for buyers.
Asset value can sometimes outweigh cash flow.
Interest rates impact buyer purchasing power.
Market conditions can influence business valuations.
Proper documentation is essential for a successful sale.
Understanding deal structures is key for sellers.
Preparing for an exit should start early.
A business should be transferable to maximize value.
Chapters
00:00 Introduction to Business Valuations
03:24 Understanding Business Valuation Methods
09:02 The Importance of Financial Preparation
11:37 Common Valuation Metrics Explained
15:47 Risk Factors in Business Valuation
18:12 Understanding Business Valuations
20:02 The Role of Potential in Valuations
21:56 Asset Value vs. Cash Flow
25:56 Market Factors Influencing Valuations
29:49 Deal Structures: Asset vs. Stock Sales
34:13 Preparing for a Successful Exit
Keywords
business valuation, financial preparation, valuation methods, SDE, EBITDA, risk factors, business sale, market value, customer concentration, financial metrics, business valuation, potential, cash flow, asset value, market factors, deal structure, exit strategy, business sale, buyer pool, interest rates
Summary
In this episode of the Steps to Sold podcast, Brandon Bourgeois and Chris Sater delve into the critical process of due diligence in buying and selling businesses. They discuss the importance of thorough preparation, the roles of external advisors, and the necessity of building trust between buyers and sellers. The conversation covers various phases of due diligence, including document review, operational assessments, and market analysis, while highlighting common pitfalls and the significance of transparency. The hosts emphasize the value of a Quality of Earnings analysis and the essential role brokers play in facilitating smooth transactions. Listeners are encouraged to approach due diligence as a vital step towards successful business transactions.
Takeaways
• Due diligence is essential for building trust in transactions.
• Both buyers and sellers must prepare thoroughly for due diligence.
• External advisors like CPAs and attorneys are crucial in the process.
• Transparency in financials can prevent misunderstandings later on.
• A Quality of Earnings analysis can protect buyers and clarify business value.
• Disorganized financials can stall or kill deals.
• Understanding market conditions is vital for buyers.
• Sellers should be upfront about any issues to maintain credibility.
• Operational reviews help assess the strength of a business.
• Preparation for due diligence can significantly enhance buyer confidence.
Titles
• Mastering Due Diligence in Business Transactions
• The Essential Guide to Due Diligence
• Building Trust Through Due Diligence
Sound Bites
• "Time kills deals."
• "Be upfront with everything."
• "External threats can kill deals."
• "A Q of E can protect you as a buyer."
• "Don't be afraid of due diligence."
• "Preparation equals confidence."
Chapters
00:00 Introduction to Due Diligence
01:28 Understanding Due Diligence
03:20 The Role of External Advisors
04:40 Building Trust in Transactions
06:12 Phases of Due Diligence
10:01 Operational Review and Employee Involvement
11:04 Market Review and External Factors
14:20 Common Issues in Due Diligence
16:35 Quality of Earnings Analysis
19:26 Preparing for Due Diligence
25:36 The Broker's Role in Due Diligence
29:19 Final Thoughts on Due Diligence
Keywords
due diligence, business transactions, buying a business, selling a business, financial preparation, operational review, market analysis, quality of earnings, trust in transactions, business brokers
Summary
In this episode of the Steps to Sold podcast, hosts Brandon Bourgeois and Chris Sater discuss the common pitfalls when selling a business and how to avoid them. They cover key topics such as overestimating business value, the importance of clean financial documentation, the risks of relying on a single buyer, the necessity of involving key employees in the sale process, and the impact of time on closing deals. The conversation emphasizes the need for proper preparation and realistic expectations to ensure a successful business sale.
Takeaways
Chapters
00:00 Introduction to Business Selling Pitfalls
02:24 Overestimating Business Value
07:30 Importance of Financial Documentation
12:34 Relying on One Buyer
19:07 Involving Key Employees in the Sale
23:54 The Impact of Time on Deals
Keywords
business sale, pitfalls, overestimating value, financial documentation, buyer reliance, employee involvement, time management
Summary
In this episode of the Steps To Sold podcast, hosts Brandon Bourgeois and Chris Sater discuss the growing trend of using AI for business valuations. They explore the limitations of AI, emphasizing the importance of human insight in understanding the nuances of business value. Key topics include the significance of goodwill, financial adjustments, owner involvement, market dynamics, and the human element in valuation processes. The conversation highlights the risks of relying solely on AI for accurate business valuations and stresses the need for professional guidance.
Takeaways
Chapters
00:00 Introduction to AI in Business Valuation
00:54 The Limitations of AI in Valuation
03:57 Understanding Goodwill and Intangible Assets
06:59 Financial Adjustments and Owner Involvement
09:54 Market Dynamics and Location Factors
13:12 The Human Element in Valuation
15:59 Conclusion: Balancing AI and Human Insight
Keywords
AI, business valuation, limitations of AI, goodwill, financial adjustments, owner involvement, market dynamics, human element, business selling, valuation accuracy
Summary
In this episode of the Steps to Sold podcast, Brandon Bourgeois and Chris Sater delve into the complexities of financing business sales. They discuss various financing options, including conventional bank loans, seller financing, and SBA loans, highlighting the challenges and benefits of each. The conversation emphasizes the importance of understanding collateral requirements, the role of seller financing in deal structures, and the transformative potential of SBA financing for small business owners. The hosts provide insights into how these financing methods can impact both buyers and sellers in the business acquisition process. In this conversation, Chris Sater and Brandon Bourgeois delve into the intricacies of SBA financing, emphasizing the advantages of working with preferred lenders over conventional banks. They discuss the importance of selecting the right lender, navigating the SBA loan process, and maximizing cash flow and investment returns. The conversation also highlights real-world scenarios, the flexibility of deals, and the associated fees and costs of SBA loans, providing valuable insights for potential business buyers and sellers.
Takeaways
Chapters
00:00 Understanding Business Financing Basics
02:55 Navigating Conventional Bank Financing Challenges
06:11 Exploring Seller Financing as a Viable Option
09:09 The Role of Seller Financing in Deal Structure
12:00 The Importance of SBA Financing
14:58 Challenges and Opportunities with SBA Loans
18:48 Understanding SBA Financing with Preferred Lenders
22:07 The Importance of Choosing the Right Lender
25:16 Navigating the SBA Loan Process
26:37 Real-World Scenarios: Financing a $5 Million Deal
29:15 Maximizing Cash Flow and Investment Returns
32:04 Understanding SBA Fees and Costs
Keywords
business financing, seller financing, SBA loans, conventional bank loans, business sales, financing options, buyer seller dynamics, financing challenges, business acquisition, deal structure, SBA financing, preferred lenders, business loans, loan process, cash flow, investment returns, lender selection, SBA fees, business acquisition, financing options
Summary
In this conversation, Chris Sater and Brandon Bourgeois discuss the intricacies of business valuation, focusing on the concept of multiples. They explore how to set expectations for sellers, the importance of financial metrics like EBITDA and SDE, and the impact of industry standards and economic conditions on business valuations. The discussion also highlights common pitfalls in the valuation process and emphasizes the need for clean financial records and strong operational systems to enhance business value. Ultimately, they stress the importance of understanding market dynamics and preparing businesses for sale.
Takeaways
Chapters
00:00 Setting Expectations in Business Transactions
05:49 The Importance of Financial Metrics
12:14 Impact of Economic Conditions on Multiples
17:55 Common Pitfalls in Valuation
23:49 Final Thoughts on Business Multiples
Keywords: business valuation, multiples, financial metrics, industry standards, economic conditions, business brokers, seller expectations, buyer considerations, financial practices, market variability
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