All About Austin

If you’re searching for a business broker in Austin, Texas, you may want to bookmark this page for future reference. For your convenience, we have gathered a list of Austin business brokers and related resources. We hope this page saves you some time and energy!

What is a Business Broker?
Before we leap off to the websites of various business brokers in Austin, let’s talk about what exactly a business broker does. (If you already know, feel free to go straight to the listings below.) In a lot of ways, a business broker is similar to a real estate agent. But instead of matching a home buyer with a seller, the business broker works with businesses, helping owners sell their businesses to interested buyers.

The main reason to use a business broker is to get top-dollar when selling your business. Brokers can also save you a lot of time and hassle, but this is usually a secondary consideration to the price factor.

Business Brokers in Austin:

Corporate Investment
This Austin business broker specializes in business sales, mergers and acquisition. They have been in operations since 1984 and are located on Research Blvd. in Austin.

USABizMart
This website claims to offer a “comprehensive list of business brokers in Austin, Texas. It seems that the list is frequently updated for accuracy, so you might want to bookmark this website for future reference.

CTX Business Brokers
According to their home page, this Austin business broker’s mission is to “educate, inform and empower you so that selling or buying your business provides you with the rewards you deserve.” They are located on South View Road in Austin.

Capitol Business Advisors
I could not find much information about this company, aside from the usual “integrity” statement. It seems to be run by Jim Pringle. The company is located on San Felipe Blvd. in Austin.

Sunbelt Business Brokers
This is the Austin location of a national franchise. They are located on Dickson Drive in Austin, TX.

Texas Association of Business Brokers
This is the official website for the Austin Chapter of the Texas Association of Business Brokers. In addition to a list of brokers, the website offers information for buying or selling a business.

Find a business in Cedar Park, Texas at:  www.CedarParkToday.com

Helpful Articles:

Selecting a Business Broker - Look Out for These Red Flags

by Dave Kauppi

Last week I got a call from a business owner who had decided to sell his business. He and his partners were beginning the beauty contest phase of selecting a firm to represent them in the sale. His partners had begun discussions with a merger and acquisition advisory firm. He had followed up with this firm prior to calling us and had questioned them on several issues. He shared his findings with me and asked my opinion. Generally I subscribe to my old IBM training and will not disparage a competitor, however, some of the answers were alarming to me so I elected not to withhold my opinions.

The first red flag was that this competitor required a large up-front engagement fee. I certainly have no problem with Merrill Lynch or Goldman Sachs charging their up front fees to their fortune 1000 clients. These firms are a proven commodity with a proven process. Their clients feel confident that a liquidity event will result from their work. A monthly fee is a more accommodating approach for smaller clients whose cash flow would be strained by a large up-front payment.

We have had many prospective clients approach us after unfortunate experiences with these big up-front fees. In one recent case, we were brought into a holding company who had acquired one of our sell side clients. Another division had engaged an M&A firm to sell one of their subsidiaries. After a $40,000 up-front payment and over four months, not one prospect had been contacted. Another common result for clients of these up-front fee firms is a beautiful, bound, 40-page book of boilerplate compiled by a junior level analyst. Unless this is accompanied by a concerted sales and marketing effort, this book will become a very expensive coffee table book.

Think of evaluating the performance of your M&A firm like you were evaluating a salesman selling your company’s product. If you are not getting status update reports or pipeline reports indicating who has been contacted and what progress was made, you are not managing your business sales process.

Another red flag we see with these up-front fee firms is a 4 or 5-year exclusivity period. Our firm will not take an engagement unless it is exclusive, however, locking a seller in for 5 years is unconscionable. Here’s what that says to me. Some of the less honorable firms are marketing machines who target business owners with their 6 letters per year mailing campaigns. These campaigns are designed to get the business owners to their beautifully orchestrated seminars for potential business sellers. The presenters are very polished speakers. I doubt that these wonderful presenters have actually closed a business sale. Their objective is to lock up 3 or 4 businesses per seminar with a $40,000 book and to put them into their growing inventory of 5-year exclusive engagements. These businesses are not actively sold, but are passively presented in mass mailers and on Internet sites. I can’t tell you the number of times we have been contacted by firms that are unfortunately the victims of this approach.

I am just getting warmed up. Let me expose, forgive my French, the biggest load of crap presented at these seminars. “We have foreign buyers.” Some unscrupulous moron in our industry discovered that this phrase was particularly alluring to unsuspecting business sellers. If your business selling price is less than $30 million, you will not be a candidate for foreign buyers. Ask any law firm that does transactions. Check with BV Resources, the number one database of completed transactions. You will find it a rare occurrence to have foreign buyers at the small end of the market. The transaction costs are just too high to make a small purchase economically viable. The buyer will have to fly teams of people with potential language barriers, new sets of laws, new accountants and attorneys, etc.

What is the allure of these alleged foreign buyers? Are they going to pay you a huge premium over a U.S. buyer? Are they going to be duped into a poor investment decision for your benefit? Pleasssssse! If you are a smaller business, you are not a target for a foreign buyer. If you are presented with this line, run for the exits.

Another classic red flag is when a potential business seller asks to talk to references and the business broker tells his prospective client, “That’s going to be tough. They are sitting on a tropical island drinking umbrella drinks.” Come on. Our firm is in regular contact with the majority of our sellers. They are very valuable to us as references in our business development efforts. We absolutely protect them from frivolous contact, however. Our firm is contacted by over fifty potential sellers annually. We have to go pretty far down the mutual discovery process before we connect a potential client with our references. If we have not pre-qualified a prospect, we are not going to waste our references’ time. However, if the major issues on fees, qualifications, approach and chemistry have been satisfied, do not hire an M&A firm without talking to two references.

The final issue I would like to discuss, I would not call an official red flag, but maybe a “nice to have.” Have you sold any companies in my industry? Sometimes, your business is unique and there has not been much M&A activity and you will have to weigh other factors more heavily. The advantages in using business broker or merger and acquisition firm that has industry experience are that it both speeds up the sale process and it increases the likelihood of a completed transaction. An M&A firm that has your industry experience will already have their database of potential buyers established. They know the right contact person and these prospects know them and actually take their calls. This alone can reduce the sales cycle by as much as 90 days. Another big advantage of industry experience is your advisor will understand valuation multiples and deal structures unique to your industry. That can be invaluable when the buyer is attempting to grind down your selling price. Industry credibility is very important when your advisor gets the CEO of a targeted buyer on the phone and has exactly 30 seconds to establish buyer interest. It really helps if you speak his language. Our clients in information technology and healthcare have found industry specialization to be of significant value.

Our industry is misunderstood at the lower end of the market. The fortune 1000 companies would not consider a capital event without engaging an investment banking firm. Smaller companies seeking a sale need the same kind of services, but with a fee structure that is more size appropriate.

When I see a couple of firms with a powerful marketing reach engaging in practices that hurt our industry, it ticks me off. Most of the firms that service the lower end of the market are hardworking, honorable people seeking to provide excellent value. Many of these firms are members of the International Business Brokers Association, IBBA. This organization sets standards for business practices and ethical behavior. They also have established an industry certification, the CBI, Certified Business Intermediary.

So as you consider the company you want to engage to sell your business, he is what you look for:

1. No big up-front fees, but monthly fees.

2. No promises of foreign buyers for companies under $30 million.

3. A period of exclusivity from 12 to 24 months, not 5 years.

4. A firm that actively sells your company using direct calling into targeted buyers, and not simply posting on business for sale Web Sites and mass mailings.

5. A firm that tracks and reports their sales progress to you bi-weekly with a status or pipeline report.

6. A firm that is a member of a professional association like IBBA or M&A Source or a local or regional business broker network like MBBI.

7. A firm that at the appropriate time will introduce you telephonically to two of their reference clients whose business they successfully sold.

8. A firm that has a principal that has passed their industry testing and has been issued a CBI designation.

9. An Advisory firm that has experience selling companies in your industry and understands who the targeted buyers are, the right contact, and the industry nomenclature. Finally they should understand your industry’s unique valuation metrics and deal structures.

This is the most important contractor or vendor you will ever hire for your business. Your economic future depends on the success of this engagement. Think of other major purchase decisions you have made for your company. Be every bit as rigorous in making your selection of an M&A advisor.

Dave Kauppi is a business broker and President of MidMarket Capital. We help business owners with all aspects of Mergers and Acquisitions.

Article Source: http://EzineArticles.com/?expert=Dave_Kauppi

Business Broker Versus Merger and Acquisition Advisor

by Dave Kappui

Most business owners only sell one business in their lifetime. The results of that sale can have a major impact on the financial future of the family. For most business sales we recommend that the seller engage a professional specializing in business sales to assist. There are two broad categories of professionals that engage in business sales business brokers and merger and acquisition advisors.

What should the seller be looking for? This article will discuss the type of services offered by both groups and help the business seller decide which professional to use.

The first criteria is type of business. Generally, business brokers specialize in “Main Street” types of businesses such as dry cleaners, gas stations, restaurants, and convenience stores. M&A advisors specialize in more B2B types of businesses such as manufacturers, distributors, information technology firms, etc.

Size of Business BB’s specialize in businesses under $1.5 million in revenues and M&A’s represent larger businesses or smaller businesses with a high component of technology or intellectual property.

The Targeted Buyer BB’s are generally targeting individual buyers while M&A’s are seeking to locate corporate buyers.

Business Valuation BB’s specialize in commodity type businesses that have “rule of thumb’ valuations that are consistently applied to arrive at a business selling price. There is usually a pretty narrow range of valuations applied to these businesses. M&A’s are recommended where there can be a broad interpretation of “strategic value” and rules of thumb do not apply. A high component of Intellectual Property, a unique niche, a hard to penetrate customer base are characteristics that can demand strategic value and purchase prices can vary widely.

Complexity of Transaction BB’s are generally selling to individual buyers that have a finite approach structuring the transaction. The contracts are usually fairly straight forward and the negotiations focus on price, financing, and seller notes. For the M&A’s the targeted audience is the corporate buyer with vast experience in acquiring businesses. They employ both an internal legal team and outside council and make the purchase contracts quite complex. The number one goal is protecting the corporation. The contracts are 35 pages of complex legal language and schedules of reps and warranties. The seller will need someone that is familiar in navigating in that environment. Corporations generally send in a due diligence team that is well versed on finding every little wart in a seller company and will attempt to reduce transaction value during the process. The seller will need good advisors to offset these pros.

Exclusivity because the BB’s are targeting individual buyers, their audience is vast so exclusivity is sometimes required and sometimes not required. Business sellers often engage multiple non exclusive BB’s to insure the broadest coverage in presenting their business to the buyer audience. BB’s are often part of a network of BB’s to help broaden this exposure. Sunbelt Business Brokers and BBN are two very good networks.

M&A’s require exclusivity because they are targeting corporate buyers and the audience of potential buyers is finite. These corporate buyers have M&A departments or sometimes the president handles the process. If a target is presented to a corporate buyer by more than one professional the credibility immediately drops and the chance of serious interest drops significantly.

Number of Clients Represented BB’s want to represent as many business for sale as they can. When contacting their vast network of individual buyers it is a real benefit to have a vast inventory of companies. Because on this, their approach is more of a mass mailing, mass email, post the business on a business for sale Web site, type of approach and their attention is spread over 25 or more simultaneous clients.

M&A’s usually limit their number of engagements to 3 or 4 per professional at a time. Their approach is very hands on and labor intensive. M&A’s usually rely on a direct selling approach of calling the buyers and talking with the M&A department or the president. Often M&A’s will have specific industry niches and will have a customized data base of contacts. They often have had several prior contacts with the buyers and are able to penetrate the call screening that is set up to protect these individuals. A corporate buyer does not buy through a posting on a business for sale Web Site. A corporate buyer will open 2% or less of letter solicitations. A corporate buyer will read less than 1% of unsolicited and unknown emails. Corporate buyers demand personal and professional contact to get their interest.

Up Front or Monthly Fees BB’s generally will charge a minor up front fee to begin the engagement or have a simplified valuation completed. Generally there is no monthly fee charged. M&A’s generally charge either a substantial up front fee or a monthly fee in the $3500 to $10,000 per month range depending on the size of the business.

Success Fees BB’s generally charge a success fee of 10% of transaction value. M&A’s generally have a sliding scale based on the anticipated size of the business. The known Wall Street firms that sell the mega businesses will not touch a transaction where they are not guaranteed $1 million in fees. The big regional firms require at least $750,00. The M&A firms that deal in the lower end usually charge considerably less than that with a minimum or $150,000 cash at close. If your transaction value is in the $10 million range, count on paying your M&A firm $300K to $400K.

Conclusions The deciding factor is in cost benefit. An M&A firm is going to cost a lot of money and you are going to be paying either an up front or monthly fees without a guarantee of success. If your business is smaller and is a commodity type business or Main Street business where the target buyer is an individual, an M&A firm will not add much value and is not worth the fee.

If your business is larger, complex, unusual, strategic, with a high component of intellectual property or technology and subject to a broad interpretation of value in the marketplace, an M&A firm is the right choice. In the final analysis, is a swing of 20% in your company’s selling price worth $5,000 per month for 8 months?

Dave Kauppi is a business broker and President of MidMarket Capital. We help business owners with all aspects of Mergers and Acquisitions.

Article Source: http://EzineArticles.com/?expert=Dave_Kauppi

We hope this guide to business brokers in Austin (and business brokers in general) will help you find the right company to represent you. Good luck!