Business Brokerage Blog

This is a blog discussing the many intricacies associated with selling/buying a business.

Buying a Business??—What I recommend foreign buyers to do.

Posted by: Fernando Simo on Nov 10, 2009

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Many foreign nationals come to Central Florida to purchase a business in order to get visas into the US on a somewhat permanent basis—so long as the business is viable the visa holder may stay, if not, they may have to get back to their country of origin.  The two most common types of visas are the L1 and E2 visas. 
The L1 visa is normally available to foreign business owners who wish to acquire a business in the U.S. and assign a person-- on an inter-company transfer—to manage the business. The person managing the U.S. business gets the L1 visa. The good news is that normally the L1 visa can be converted into a green card within two to three years. 
 The E2 category of US visas is normally given to foreign nationals who have bought a company in the US and wish to manage it. To qualify, you must be a national of a country that maintains a treaty with the United States. Additionally, the foreign national needs to make a “substantial and non-marginal investment of no less than $100,000.” However, size and nature of the business may also be determining factors. I have sold and heard of many businesses being sold for E2 reasons which do not reach the $100K plateau.
Please understand that the above are generalizations and that you need to know more. However, now that I mentioned the types of visas, let me make some recommendations to foreign buyers. 
1.                  Get proper legal (immigration) advice.
2.                  Get an ethical and reputable Business Broker to broker the transaction.
3.                  Get good financial advice from accountants or CPA’s. By the way, normally one of the requirements for the visa is a five (5) year business plan.
4.                  Buy a business which has solid financial records. Audited Financial statements and tax returns are normally good when dealing with US immigration. 
5.                  Please do not buy “cheap,” buy good. It is better to pay more for a business that has long term potential than not. Remember, after a couple of years you will have to renew your visa and the financial results of your company may determine whether or not you stay in the country.
6.                  Perform a very detailed Due Diligence on this business. Your visa depends on it!! The due diligence will help you determine the viability of the business and verify that what you bought is what you are going to get.
7.                  Do not spend it all on the business acquisition; you may need more to run the business.
8.                  Understand your life style expense requirements and buy a business which supports it.
9.                  Buy a business with a very simple Business Model—they normally succeed.
10.              Talk to other foreign nationals with E2/L1 visas. Understand their successes and struggles.
Buying a business can be stressful enough without combining it with a transition to a different country. Please follow these recommendations and your stress would certainly diminish significantly.
Should you want to know more about buying or selling a business in Central Florida, please contact Fernando Simo at 407-361-8886, email me at fsimo@tworld.com or please Click here for more info.

Selling your Business??--Consider an Exit Strategy

Posted by: Fernando Simo on Nov 04, 2009

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In one of my recent articles, I discussed profitability (Owners Benefit) as one of the key elements in determining a business valuation. I mentioned that if a business generate limited or no cash flow, it normally can only sell its tangible assets—receivables, inventories, furniture and fixtures and equipment.—for a nominal amount. Yes, you may get more than the book value, but I find it very rare. Unfortunately, over and over again, sellers come to me wanting to sell their business at a point of no return—where the business generates no profit or negative cash flow.

Believe me, I certainly can not be too critical of those sellers—I have been there. I know how hard it is to let go of a dream. However, that is precisely why I feel obligated to write this article. That’s why I recommend an Exit Strategy.

So what is an Exit Strategy? The dictionary describes it as “a means of escaping one’s current situation, typically unfavorable,” or a method by which business owners intend to get out of an investment, cash out or sell off. Obviously, and exit strategy should be developed prior to entering into the business transaction, but if you have not, do it now!!
The strategy may include questions such as the maximum cash to invest prior to disposition; the total acceptable amount in total retained losses—normally called Stop-Loss in the stock market— and the trigger valuation for upside and downside sale of your business, among a few. In other words, establish trigger points under which you will take some action to dispose of your business—good or bad!!
Ok you ask, so what is the purpose of an exit strategy? The purpose of an exit strategy is to allow enough time to sell your business in good and bad times, knowing, to some degree what the outcome will be. 
Should you want to know more about buying or selling a business in Central Florida, please contact Fernando Simo at 407-361-8886, email me at fsimo@tworld.com or please Click here for more info.

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Contact Us

 

Fernando A. Simo, P.A.
O: 407-992-8487
C:407-361-8886
fsimo@tworld.com

Testimonial

“Fernando is a go getter! If you want something done and done right, ask Fernando. He quickly became a leader in our industry and a heavy hitter here at Transworld. If you are considering selling or buying a business, Fernando is your best bet!!” June 28, 2009 .  Andrew Cagnetta, CEO and President of Transworld Business Brokers, LLC

I have known Mr. Simo for approximately 5 months.  I met Mr. Simo through Business Networks International, a highly professional business development organization.   Throughout his tenure, he has exemplified the utmost professionalism.I feel very comfortable recommending Mr. Simo as a great resource for your business brokerage needs.

Stephan Boehringer
TOLS Multimedia

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