Hello everyone I am seeking a bit of assistance. I have a meeting with my local SBDC next week but trying to be proactive. I have been looking to buy a business IT/soon to be MSP. Found a colleague/ vendor I worked with in past asked me for some consulting and discussed possible purchase. After a meeting and bottle of Bourbon I know have P&L, taxes, and other Financials for 3 days. Now part I need assistance with does anyone know how to get a company properly evaluated, and any SBA Banks to speak with. Thanks in advanced!!
A tech company is really hard to put a value on but one really important factor is going to be is do they have one year or longer contracts with clients that will guarantee revenue? If a company has some consistent revenue but no way to predict with a contract that the revenue will be consistent then you are buying that company on the goodwill that it will continue and the price becomes less a formula and more a feeling of what you want to pay for it.
Thanks Tom and totally agree. Finding finding has been a interesting experience.
@bobstertime My new office next door neighbor was a SBA guy and he and I are working on his IT systems and a few other things. Maybe I could connect you two as he has first hand knowledge from the inside.
I would find a regional CPA firm that is able to provide valuation services. Valuation can be a very complex topic and is worth hiring professional consultants.
You also want to think about the financials provided to you. Do you have assurance over these financials from a third party? I.e. are they audited or non-audited/internal financials?
Sounds great more info the better!!
Yeah a real one is 15k… I am working with SBDA currently guy is awesome Dr. In finance. Also called in a favor from college friend who is a CPA.
From my perspective 15k is a “well-worth-it” cost for some assurance on what you are purchasing, even more so if you plan to leverage an SBA loan.
I guess one question I would want to ask myself is the pros/cons of buying someone else’s existing business compared with starting your own and expanding the scope of the business as your top line grows, thereby providing the capital necessary for the expansions
Can confirm, my neighbor who was with SBA recommends this.
I agree just can’t afford to leave corporate America to jumpstart at the moment. I have a small side bit I do but I just didn’t have the time to do the sales portion to help it grow. While word of mouth was good and helped through Cov-19 furlough just didn’t cover all expenses. I had someone look over financials thank goodness for college friends, in addition the SBDC is doing the same. I get what your saying but if I can pay myself a salary and own my own business why not imho.
If you are a veteran the SBC will basically do everything for you. The V.A., D.A.V, American Legion, etc depending on area also have people that can help, at least with something here or there. Often guys in these organizations have day jobs like CPA and so forth with expertise who can show a fellow vet the ropes and fill in and jump through the loop holes.
Also, FYI if you are a veteran and own a business federal law (and most if not all states) gives you preference for governmental contracts and services, especially if you are disabled at any percent including 0%. VOSB - SDVO
The federal law is in regards to federal government contracts. But many state also have laws similar in regards to state contracts, and counties or cities often have laws that follow.
Many states have other exemptions for veteran owned business in regards to taxes, interest rates on loans, and rules/laws.