Mantofa Articles Directory

I sit on the board of directors of the Midwest Business Brokers and Intermediaries (MBBI). An attorney from a small Chicago law firm was recently elected to the board. In his first meeting he introduced himself and said he was on the board at a Chicago attorney association. He stood up in front of our board and said, “You guys don’t have a very good reputation in the legal community.

That certainly got our attention and he went on to explain the reasons why. As I listened to him, it occurred to me that what he was describing was the behaviors of a few of the big national Middle market M&A firms that put on the Business Seller Seminars. Because these firms have so much marketing muscle, they effectively become the face of our profession. No wonder the legal profession does not embrace us.

I walked up to him after the meeting and asked him if I could meet with him and share with him another view of our profession. As our meeting date approached, I was contacted by a business owner who had located me through a Google search (we write a lot of articles) and told me his sad story.

This was a small company that I would describe as being in the pre-profit stage. This owner had received a series of solicitations inviting him to come to a seminar about selling his business. He signed up and was contacted by phone several more times by this company’s representatives to make sure he would attend. They were very specific that he should not bring any company logo items to the seminar for confidentiality reasons.

The presentations were very professionally orchestrated and this firm gave the attendees the impression that the M&A firm possessed this special skill to take these companies and write a powerful “Book” that would dramatically improve their value to the market. They actually used the words, “We will dress up the Pig.” They also said they had a big roster of foreign buyers and that they had an upcoming conference in Brussels where they would be presenting the seminar attendees’ companies to these qualified buyers that were just dying to get their hands on American companies.

In the Seminar’s question and answer period, this business owner asked, “Why am I here?” The presenter jumped all over that one. Everyone of you in this room was specifically selected because your industry is hot with M&A activity. Later in the presentation, one of the seminar presenters took this owner aside and said he would give him a break on the $37,000 up front fees.

They scheduled a follow-up meeting where this Seminar guy pounded on this poor business owner and below is a cut and paste from the email this seller sent me:

“Thanks a lot for the high speed education this morning. The man explained that because of the vast target market for the Product Name Confidential globally, it’s effectiveness and price etc. that Company Name Confidential in the right hands could generate $300,000,000 a year etc. blah blah blah. “It would also give the buyer enhanced stock value. We probably have about 200 qualified buyers right now for you…” He continues, “What you have is an oil well, what the buyer has is a derrick”. He’s from Texas thus, the oil analogy. “One owner no partners with all their attorneys this will be so easy to sell, so clean neat and tidy…”

Finally, “He left very angry because I told him I wasn’t gonna pay them $29,000. So.. I was left to believe that $29,000 was gonna stop his firm from reaping all that “easy money”. That just doesn’t sound real world enough for me. I don’t want to be stuck in their database. I don’t know what he was pissed about… They called me I didn’t call them. I’m not on any “I wanna sell my company” lists. Hell I just got the company phone number listed about two weeks ago. Honest to God I haven’t gotten the first Company Name Confidential phone bill yet.”

Wow. Where do I begin? How about what a sleazy, dishonest, outrageous load of bull.
Luckily this seller had talked to me before his meeting and I warned him about this approach. I had no idea it was quite this misleading. This business owner sent this guy packing and he was ticked off because he didn’t sell a $29,000 book.

As long as I have gone this far, I might as well expose the whole story. This approach works to sign up business owners with stars in their eyes for $37,000 books. What an awesome business. Write a book with industry boilerplate and some minor analysis compiled by some recent grad analysts sitting in a room at HQ that costs the seminar company a maximum of $2500 to produce. Enter these deals into their inventory database and send it out to the Private Equity Groups and present the list to the foreign buyers.

They lock up the seller with a long contract tail and effectively prevent a legitimate firm from actually working the sale process for 2 to 3 years. If the business is in the 2 in 10 that gets immediate interest, then the seminar firm will have a banker work on it. If you are in the unfortunate 8, you become a passive entry in their deal inventory.

Our bankers and the bankers of the 90% of M&A companies that provide a fair value for their services, can only handle effectively four to five simultaneous transactions. If you took this Seminar Company’s deal inventory and divided it by the number of bankers, you would find that they have over 25 live deals per banker. It is impossible to professionally represent these sellers who have paid an up-front fee of $37,000 for this service.

Foreign buyers are not stupid, they do not pay more for companies than American companies, and they are generally not interested in even looking at an acquisition under $25 million in revenue. A “book” never sold a company or made it more valuable. Making changes in your company to improve its performance will make it more valuable. A good M&A advisor or your CPA can provide you important input about that.

What really helps you maximize your company’s selling price is to have an M&A advisor directly contact the universe of most likely strategic buyers and to get several interested in your company. This results in a competition for your company, often called a soft auction. As these strategic buyers view your company as a must have acquisition, the price and terms are significantly improved.

Dave Kauppi is president of Mid Market Capital, Inc. MMC is an M&A advisory firm focused on middle market strategic business sellers. Dave a licensed business broker and a member of IBBA and the MBBI. Contact (630)325-0123 davekauppi@midmarkcap.com or http://www.midmarkcap.com

Are you living a life of excellence? Are you everything you aspire to be? Those are the questions life coach and mentor Terri Werner asks her clients, many of whom are chiropractors.

Werner, who has a background in marketing, financial planning and business development, recently spoke to a group of chiropractors at the Karl Parker Seminar in Dallas, Texas. Her message, in the words of one attendee was “tremendous.”

Werner does one-on-one coaching, public speaking and is the author of several books and recordings on building excellence in your life and business practices. Says Werner, “I help a lot of chiropractors market their practice, look at vertical marketing, and how to get their message out, but I do that after we first address the issues in their life.” Her vision is creating a culture of excellence, one life at a time.

When a business or individual engages Werner to assist them, she first looks at what is going on in their lives in general. She asks, “Are they living in excellence? Are they living in integrity? Have they forgiven?” All these things that have to do with the heart and head coming together to create a dynamic excellence in one’s life.

Werner feels that once a person finds what is lacking in their life, and what they could do better, then all things fall into place. “I really believe everything has to do with everything.” She recommends journaling as a way to discover areas where a person is lacking and can improve. Excellence, she says, comes once a person discovers these things and works to change them. “I don’t think excellence has to be difficult. I really define excellence as creating an environment where the propensity to excel is easy.”

Werner knows from experience that anything can be accomplished when you apply these principles. “I had gone through some really tough things in my life and I just decided to implement and do everything I could to create excellence. Doing so meant forgiveness and releasing judgments.”

Werner’s pursuit of excellence paid off in the form of a new book, Train Wreck to Triumph, as well as a partnership with Dr. Denis Waitley and NFL star Tim Brown to create a kid-safe web browser. She is currently working on a new project called A Question of Change. “The premise is that no matter where you are in life whether you’re in trauma or grand success requires focus on getting the right answers. In order to get the right answer, you must ask the right question.” This new book assists readers in asking the right questions to get the outcomes they desire.

Werner has been instrumental in helping many people enrich their lives, grow their businesses and become outcome driven by living lives of excellence.

You can hear Dr. Patrick Porter’s complete interview and In-depth information on the ICAME event mentioned in this article can be found at http://www.parkervegas.com. Dr. Porter’s chiropractic support program can be viewed at http://www.newreality.com.

More often than not, people feel overconfident and treat the approach a bit too casually. However, you should make sure that both the cover letter and the resume are well drafted, so that they make a lasting impression on the reader. They should be planned to stand out in content as well as presentation.

The Importance Of A Good First Impression

The First Impression is usually the Last Impression. In today’s highly competitive world, creating a good first impression is extremely important. This is where the resume plays a very important role in contributing towards success in landing a job. A resume is the most effective tool that can help you win a coveted interview opportunity.

How To Create A Good First Impression

Writing an impressive resume is an important part of your job search preparation. Keep in mind that your resume is indeed a catalog of your abilities. Here are a few steps on how to write a resume that will leave a lasting impression:

- It is very important to create your resume in a professional and appropriate format. There are two basic formats that are used – Functional and Chronological.
- When creating your resume, you can use the free resume forms that are posted on the Internet. However, be careful that your resume doesn’t end up looking like a cookie-cutter template.
- The two most important factors to keep in mind while creating your resume are correct grammar and proper punctuation. Using proper punctuation marks is vital for conveying clear and precise business messages. A resume that contains plenty of grammatical errors creates a bad impression. If you are unable to proofread your own resume, get another professional or a friend to do it for you.
- Make use of industry-oriented words that help you to come across as a highly knowledgeable and professional person.
- Most people think that a comprehensive resume that describes all their past and present achievements is the best way to showcase their skills and expertise. However, this is not true. As a rule, you only need to go back about 5-6 years. Unless you are a recent grad, that job you had in high school is probably irrelevant.

Whether or not you have a professional degree from a coveted institute and are on the lookout for an entry-level position, it is important to market yourself efficiently. Your main aim should be to display your abilities, skill, work experience, educational qualifications, projects, achievements and anything that might work to your advantage.

Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution’s Six Sigma Online ( http://www.sixsigmaonline.org ) offers online six
sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.

First, unless you are planning on going public or have hundreds of stockholders do not form a C Corp to begin with. Use an S Corp or an LLC. If you currently are a C Corp ask your attorney or tax advisor about converting to an S Corp. If you sell your company within a 10 year period of converting to an S Corp the sale can be taxed as if you were still a C Corp.

Here is what happens when there is an asset sale of a C Corp. The assets that are sold are compared to their depreciated basis and the difference is treated as ordinary income to the C Corp. Any good will is a 100% gain and again is treated as ordinary income. This new found income drives up your corporate tax rate, often to the maximum rate of around 34%. You are not done yet. The corporation pays this tax bill and then there is a distribution of the remaining funds to the shareholders. They are taxed a second time at their long term capital gains rate.

Compare this to a C Corp stock sale. The stock is sold and there is no tax to the corporation. The distribution is made to the shareholders and they pay only their long term capital gain on the change in value over their basis. The difference can be hundreds of thousands of dollars.

Secondly, keep all assets that may appreciate in value outside the C Corp and in an LLC. Your real estate, patents, intellectual property, etc. should be held in a pass through entity so you avoid the potential high C Corp corporate tax rate and the double taxation if you do an asset sale.

Let’s say that you are a C Corp and the buyer refuses to do a stock sale. If you can get the buyer to move as much of the transaction value to a covenant not to compete, you will be much better off. That will be taxed to you personally at the long term capital gains rate and not the corporate tax rate and the gain can be spread out over the non-compete period.

Another approach you can use is “Personal Good Will”. This is where the seller’s reputation, expertise, and relationships are in effect separated from the assets of the company and account for as much of the good will value as possible from the business. So let’s say that the company sells for $8 million dollars and the amount allocated to the hard assets is $6 million. That leaves $2 million that can be classified as good will. If that good will is assigned to the C Corp, it will be taxed at the 34% rate and then taxed again when it is distributed to the shareholders at 15%.

If you can move that amount to personal goodwill for the owner, it is paid directly to him and he gets taxed at the 15% rate only. The calculation looks like this: If the good will is $2 million and is allocated to the C Corp. They pay $680,000 in corporate income taxes. The $1,320,000 remaining gets distributed to the shareholders and an additional 15% tax is paid or $198,000 for a total tax on that $2 million of $878,000. Moving it all to personal goodwill results in a total tax on that $2 million of $300,000, a savings of $578,000. This approach was pioneered in a classic IRS case called the Martin Ice Cream Case.

There is a built in bias on the part of buyers with the advice of their attorneys to avoid doing stock sales because you buy everything including any hidden liabilities. You as the seller want to convince the buyer to do a stock sale by demonstrating that there are no hidden liabilities. Another argument you can use is that most contracts are not assignable without the consent of the other party. In an asset sale it could be problematic to get assignments of a large quantity of contracts. An example is if your company is in a favorable long-term property lease the landlord will never agree to an assignment of that lease. If you have a long-term contract with a government entity, a change in ownership can trigger a contract end. In a stock sale these are not issues.

There are many variables in a business sale negotiation. Price, Cash at close, Stock versus Asset Sale, and allocation of purchase price. The IRS does not allow the buyer’s allocation of purchase price to be different than the seller’s. It also must be noted that from a tax standpoint, something favorable for the seller is correspondingly less favorable for the buyer. An experienced buyer will structure the deal in the most favorable way for himself. Sellers must get good advisors to help them negotiate to achieve the maximum after tax proceeds.

Dave Kauppi is president of Mid Market Capital, Inc. MMC is an M&A advisory firm focused on middle market strategic business sellers. Dave a licensed business broker and a member of IBBA and the MBBI. Contact (630)325-0123 davekauppi@midmarkcap.com or http://www.midmarkcap.com