Professionals in transfers of ownership of companies
Since 2003 B.A. Boss S.L. has been assisting owners and buyers of companies in transferring the ownership of businesses.
We have participated directly and indirectly in hundreds of transfers, helping business owners to retire and helping hundreds of entrepreneurs realizing their dream of becoming independent business people.
And along the way, we helped hundreds of suppliers by keeping their clients in business, thousands of employees to keep their jobs and ten thousands of customers by keeping their favourite shops, restaurants, clinics, manufacturers, distributors and service providers open for business.
Professionals in Business Transfers
Thursday, January 29, 2009
Owning your business in Spain!
There is little mystery as to why Spain has become such a popular destination for those seeking a new life. For many Spain is the perfect choice with year round sunshine and a better quality of life overall. But the biggest dilemma facing most potential émigrés is finding work abroad and the one dream most of them share is to own and run a business in the sun.
Buying your own business is probably the best option for those wishing to move abroad and ´do their own thing´.Following this dream can be a hugely rewarding and exciting experience, but beware, owning your own business is a little like a relationship. Your business needs constant love, attention and care. It’s a long term commitment and if you neglect your business, then just like a partner, it will quickly lose it’s charm!
One of the major problems that we see on a regular basis here in Spain is that historically many agents here will tell you (prospective buyers of companies and businesses) as little as possible about the life and laws associated with their chosen business, then pocket their commission and walk away, leaving the unsuspecting buyers with a wide range of potential problems. Running a business ( like marriage ) is hard work so to avoid the dream turning into a nightmare.Consider the following points before taking the plunge!
Are You Committed?
It is important to be realistic about the amount of work involved in running your own business, especially a small, owner operated company. Many people who have been to Spain on holiday dream about owning a small hotel, bar or restaurant , sipping beer or cocktails on the beach, sunbathing and chatting with friends, but somehow overlook the amount of hours that are involved in setting up the business, stocking it, creating and serving the customers, organizing entertainment and managing part- and full time staff etc. The main thing to remember is that as long as your expectations are realistic everything will be fine, and don’t forget: running your own company is a very rewarding experience!
Negotiating: The Legal Minefield
The laws relating to buying and running your own business in Spain, such as licensing for example, vary dramatically from region to region, town to town and even street to street. Dealing with the complexities can be daunting but don’t let this put you off. The most important thing is to take advice from someone reputable, honest and knowledgeable in this area, and to ensure you have expert advice and help every step of the way. Speaking Spanish is useful especially if you are planning on buying inland, but don´t be put off it you don´t speak the language, there are plenty of teachers on hand to help once you´re here and as the Costas are multi cultural communities, it´s not essential to speak Spanish from day One …. Although it’s always nice to learn when you get the time!
Mañana Mañana
There is one huge difference between Spain and the Northern countries of Europe, the UK or USA. Overthere things will get done today and in Spain it will get done tomorrow! It is important to allow yourself time when making the move to Spain. Time to move and time to settle in a new country and time to find and complete all the legalities involved with your business. Don’t be frustrated by the ´´Manana Manana Syndrome´´, it is actually well loved here by many and has it’s plus points, but remember Spain’s laid back attitude to time can take some getting used to, especially if you are used to efficiency! The working day here still operates very much on the Siesta system, so you need to remember you´ll need to do all your administration before 2pm when most offices close for the day. The shops tend to open again in the evening, but the middle of the day is largely for family and friends. Of couse for bar owners this is a massive plus point, especially if you´re planning on serving lunch!
Setting Up Home
Don’t forget buying your business is just one part of your new life. It’s important to allow time for relocation of your family and home as well. Selling your home can be a lengthy process, and then there is the whole logistical process of moving your family, pets, belongings, cars and possessions overseas. For some, a useful option is to rent furnished accommodation while setting up their new business and ensuring all is going to plan. Once you´ve settled, got used to the Spanish way of life and chosen the right area to live long term, you can find a property to buy in your own time and then move your possessions over at your own pace.
Living And Working Together
You may be considering buying something as a husband and wife team, perhaps two families or friends buying and running a business together for the first time. Romantic as this sounds, successful businesses need bosses and do not run so well based on democracies…..but who will be the boss? If both partners have worked independently before and are used to running a business serious thought must be given to ´who wears the trousers´. Similarly, if as according to the saying ´the man is the boss at work and the woman in the home`…. who is the boss when work and home merge?
While for some couples running a business together will be a harmonious bonding experience and will strengthen the relationship, for others the marriage could turn into a battleground. Living and working together needs serious thought before making the move and it is important any decision to move country and buy a business is unanimous and that careful thought is given to what and who you are leaving behind and how you and they may feel in a few months time. Don’t be put off though, living and working together ultimately proves to strengthen rather than weaken most relationships. Just make sure you put aside a little time for yourselves and ban shop talk!
Plan Ahead
A little bit of forward planning can make all the difference to a new business. Take some time to really prepare. Make a business plan, it doesn’t have to be a work of art but prepare something you can work too. Take advice from friends and talk to those who have already made the move. Do a little research into how much money is going to be required long term and what the timescales are for meeting your objectives. We recommend that if possible clients have sufficient reserves to cover their living costs for at least six months after the move…twelve months is even better! Remember unless you´re really lucky you won´t start making a profit on day one, and many clients like to spend money on redesigning or restructuring their business, ordering new equipment and hiring new staff. When looking at businesses in Spain, try to do something that you have some experience in or try to get some experience before making the move. Perhaps working in a similar business in your home town for a short while would provide you with valuable insight into running a business yourself, or perhaps come out to Spain, rent or lease for a while, get a feel for the different areas, the people, the weather, the work and the language before making a final commitment.
Buying your own business is probably the best option for those wishing to move abroad and ´do their own thing´.Following this dream can be a hugely rewarding and exciting experience, but beware, owning your own business is a little like a relationship. Your business needs constant love, attention and care. It’s a long term commitment and if you neglect your business, then just like a partner, it will quickly lose it’s charm!
One of the major problems that we see on a regular basis here in Spain is that historically many agents here will tell you (prospective buyers of companies and businesses) as little as possible about the life and laws associated with their chosen business, then pocket their commission and walk away, leaving the unsuspecting buyers with a wide range of potential problems. Running a business ( like marriage ) is hard work so to avoid the dream turning into a nightmare.Consider the following points before taking the plunge!
Are You Committed?
It is important to be realistic about the amount of work involved in running your own business, especially a small, owner operated company. Many people who have been to Spain on holiday dream about owning a small hotel, bar or restaurant , sipping beer or cocktails on the beach, sunbathing and chatting with friends, but somehow overlook the amount of hours that are involved in setting up the business, stocking it, creating and serving the customers, organizing entertainment and managing part- and full time staff etc. The main thing to remember is that as long as your expectations are realistic everything will be fine, and don’t forget: running your own company is a very rewarding experience!
Negotiating: The Legal Minefield
The laws relating to buying and running your own business in Spain, such as licensing for example, vary dramatically from region to region, town to town and even street to street. Dealing with the complexities can be daunting but don’t let this put you off. The most important thing is to take advice from someone reputable, honest and knowledgeable in this area, and to ensure you have expert advice and help every step of the way. Speaking Spanish is useful especially if you are planning on buying inland, but don´t be put off it you don´t speak the language, there are plenty of teachers on hand to help once you´re here and as the Costas are multi cultural communities, it´s not essential to speak Spanish from day One …. Although it’s always nice to learn when you get the time!
Mañana Mañana
There is one huge difference between Spain and the Northern countries of Europe, the UK or USA. Overthere things will get done today and in Spain it will get done tomorrow! It is important to allow yourself time when making the move to Spain. Time to move and time to settle in a new country and time to find and complete all the legalities involved with your business. Don’t be frustrated by the ´´Manana Manana Syndrome´´, it is actually well loved here by many and has it’s plus points, but remember Spain’s laid back attitude to time can take some getting used to, especially if you are used to efficiency! The working day here still operates very much on the Siesta system, so you need to remember you´ll need to do all your administration before 2pm when most offices close for the day. The shops tend to open again in the evening, but the middle of the day is largely for family and friends. Of couse for bar owners this is a massive plus point, especially if you´re planning on serving lunch!
Setting Up Home
Don’t forget buying your business is just one part of your new life. It’s important to allow time for relocation of your family and home as well. Selling your home can be a lengthy process, and then there is the whole logistical process of moving your family, pets, belongings, cars and possessions overseas. For some, a useful option is to rent furnished accommodation while setting up their new business and ensuring all is going to plan. Once you´ve settled, got used to the Spanish way of life and chosen the right area to live long term, you can find a property to buy in your own time and then move your possessions over at your own pace.
Living And Working Together
You may be considering buying something as a husband and wife team, perhaps two families or friends buying and running a business together for the first time. Romantic as this sounds, successful businesses need bosses and do not run so well based on democracies…..but who will be the boss? If both partners have worked independently before and are used to running a business serious thought must be given to ´who wears the trousers´. Similarly, if as according to the saying ´the man is the boss at work and the woman in the home`…. who is the boss when work and home merge?
While for some couples running a business together will be a harmonious bonding experience and will strengthen the relationship, for others the marriage could turn into a battleground. Living and working together needs serious thought before making the move and it is important any decision to move country and buy a business is unanimous and that careful thought is given to what and who you are leaving behind and how you and they may feel in a few months time. Don’t be put off though, living and working together ultimately proves to strengthen rather than weaken most relationships. Just make sure you put aside a little time for yourselves and ban shop talk!
Plan Ahead
A little bit of forward planning can make all the difference to a new business. Take some time to really prepare. Make a business plan, it doesn’t have to be a work of art but prepare something you can work too. Take advice from friends and talk to those who have already made the move. Do a little research into how much money is going to be required long term and what the timescales are for meeting your objectives. We recommend that if possible clients have sufficient reserves to cover their living costs for at least six months after the move…twelve months is even better! Remember unless you´re really lucky you won´t start making a profit on day one, and many clients like to spend money on redesigning or restructuring their business, ordering new equipment and hiring new staff. When looking at businesses in Spain, try to do something that you have some experience in or try to get some experience before making the move. Perhaps working in a similar business in your home town for a short while would provide you with valuable insight into running a business yourself, or perhaps come out to Spain, rent or lease for a while, get a feel for the different areas, the people, the weather, the work and the language before making a final commitment.
Monday, March 17, 2008
Business Sellers: Avoid these misakes!
Selling your business is the most important business transaction you will ever make. Mistakes in this process can greatly erode your transaction proceeds. Do not spend twenty years of your toil and skill building your business like a pro only to exit like an amateur. Below are common mistakes to avoid.
Selling because of an unsolicited offer to buy –
One of the most common reasons owners tell us they sold their business was they got an offer from a competitor. If they previously were not considering this business sale, the owner has probably not taken some important personal and business steps to exit on his terms. The business may have some easily correctable issues that could detract from its value. The owner may not have prepared for an identity and lifestyle to replace the void caused by his separation from his company. If you are prepared, you are more likely to exit on your own terms.
Poor books and records –
Business owners wear many hats. Sometimes they become so focused on running the business that they are lax in financial record keeping. A buyer is going to do a comprehensive look into your financial records. If they are done poorly, the buyer loses confidence in what he is buying and his perception of risk increases. If he finds some negative surprises late in the process, the purchase price adjustments can be harsh. The transaction value is often attacked well beyond the economic impact of the surprise. Get a good accountant to do your books.
Going it alone –
The business owner may be the foremost expert in his business, but it is likely that his business sale will be a once in a lifetime occurrence. Mistakes at this juncture have a huge impact. Do you understand the difference in after tax proceeds between an asset sale and a stock sale? Your everyday bookkeeper may not, but a tax accountant surely does. Is your business attorney familiar with business sales legal work? Would he advise you properly on Reps and Warranties that will be in the purchase agreement? Your buyer's team will have this experience. Your team should match that experience of it will cost you way more than their fees.
Skeletons in the closet –
If your company has any, the due diligence process will surely reveal them. Before your firm is turned inside out and the buyer spends thousands in this process and before the other interested buyers are put on hold - reveal that problem up-front. We sold a company that had an outstanding CFO. In the first meeting with us, he told us of his company's under funded pension liability. We were able to bring the appropriate legal and actuarial resources to the table and give the buyer and his advisors plenty of notice to get their arms around the issue. If this had come up late in the process, the buyer might have blown up the deal or attacked transaction value for an amount far in excess of the potential liability.
No understanding of your company's value –
Business valuations are complex. A good business broker or M & A advisor that has experience in your industry is your best bet. Business valuation firms are great for business valuations for gift and estate tax situations, divorce, etc. They tend to be very conservative and their results could vary significantly from your results from three strategic buyers in a battle to acquire your firm. When it comes to selling your company, let the competitive market provide a value.
Giving away value in negotiations and due diligence –
When selling your business, your objective is to get the best terms and conditions. I know this is a shocker, but the buyer is trying to pay as little as possible and he is trying to get contractual terms favorable to him. These goals are not compatible with yours. The buyer is going to fight hard on issues like total price, cash at close, earn outs, seller notes, reps and warranties, escrow and holdbacks, post closing adjustments, etc. If you get into a meet in the middle compromise negotiation, before you know it, your Big Mac is a Junior Cheeseburger. Due diligence has a dual purpose. The first is obviously to insure that the buyer knows exactly what he is paying for. The second is to attack transaction value with adjustments. Of course this happens after their LOI has sent the other bidders away for 30 to 60 days of exclusivity. If you don't have a good team of advisors, this can get expensive
As my dad used to say, there is no replacement for experience. Another saying is that when a man with money and no experience meets a man with experience, the man with the experience walks away with the money and the man with the money walks away with some experience. Keep this in mind when contemplating the sale of your business. It will likely be your first and only experience. Avoid these mistakes and make that experience a profitable one!
Selling because of an unsolicited offer to buy –
One of the most common reasons owners tell us they sold their business was they got an offer from a competitor. If they previously were not considering this business sale, the owner has probably not taken some important personal and business steps to exit on his terms. The business may have some easily correctable issues that could detract from its value. The owner may not have prepared for an identity and lifestyle to replace the void caused by his separation from his company. If you are prepared, you are more likely to exit on your own terms.
Poor books and records –
Business owners wear many hats. Sometimes they become so focused on running the business that they are lax in financial record keeping. A buyer is going to do a comprehensive look into your financial records. If they are done poorly, the buyer loses confidence in what he is buying and his perception of risk increases. If he finds some negative surprises late in the process, the purchase price adjustments can be harsh. The transaction value is often attacked well beyond the economic impact of the surprise. Get a good accountant to do your books.
Going it alone –
The business owner may be the foremost expert in his business, but it is likely that his business sale will be a once in a lifetime occurrence. Mistakes at this juncture have a huge impact. Do you understand the difference in after tax proceeds between an asset sale and a stock sale? Your everyday bookkeeper may not, but a tax accountant surely does. Is your business attorney familiar with business sales legal work? Would he advise you properly on Reps and Warranties that will be in the purchase agreement? Your buyer's team will have this experience. Your team should match that experience of it will cost you way more than their fees.
Skeletons in the closet –
If your company has any, the due diligence process will surely reveal them. Before your firm is turned inside out and the buyer spends thousands in this process and before the other interested buyers are put on hold - reveal that problem up-front. We sold a company that had an outstanding CFO. In the first meeting with us, he told us of his company's under funded pension liability. We were able to bring the appropriate legal and actuarial resources to the table and give the buyer and his advisors plenty of notice to get their arms around the issue. If this had come up late in the process, the buyer might have blown up the deal or attacked transaction value for an amount far in excess of the potential liability.
No understanding of your company's value –
Business valuations are complex. A good business broker or M & A advisor that has experience in your industry is your best bet. Business valuation firms are great for business valuations for gift and estate tax situations, divorce, etc. They tend to be very conservative and their results could vary significantly from your results from three strategic buyers in a battle to acquire your firm. When it comes to selling your company, let the competitive market provide a value.
Giving away value in negotiations and due diligence –
When selling your business, your objective is to get the best terms and conditions. I know this is a shocker, but the buyer is trying to pay as little as possible and he is trying to get contractual terms favorable to him. These goals are not compatible with yours. The buyer is going to fight hard on issues like total price, cash at close, earn outs, seller notes, reps and warranties, escrow and holdbacks, post closing adjustments, etc. If you get into a meet in the middle compromise negotiation, before you know it, your Big Mac is a Junior Cheeseburger. Due diligence has a dual purpose. The first is obviously to insure that the buyer knows exactly what he is paying for. The second is to attack transaction value with adjustments. Of course this happens after their LOI has sent the other bidders away for 30 to 60 days of exclusivity. If you don't have a good team of advisors, this can get expensive
As my dad used to say, there is no replacement for experience. Another saying is that when a man with money and no experience meets a man with experience, the man with the experience walks away with the money and the man with the money walks away with some experience. Keep this in mind when contemplating the sale of your business. It will likely be your first and only experience. Avoid these mistakes and make that experience a profitable one!
Thursday, January 31, 2008
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