River's Edge Alliance Group

Why Would I Buy a Business That's Losing Money?

Posted on: 08/17/07 by: Scott Mashuda

Don’t be too quick to pass off a company in the red as a bad investment.  Not all businesses that show a loss are truly cash negative.  In fact, unless you’re acquiring a publicly held company, chances are the company’s tax returns will show a loss.   For most private and closely held businesses showing a paper loss is merely a tax planning strategy. 

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Remove Yourself From Day-to-Day Business!

Posted on: 07/14/07 by: Scott Mashuda

It is difficult to sell your business if YOU are the business.  As you begin to consider an exit, it is imperative to train key employees to take over the duties with which you or the other owners may have been responsible.  

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Banks Will Evaluate a Company’s Debt-Coverage Ratio

Posted on: 07/06/07 by: Scott Mashuda

When evaluating a company’s ability to repay debt, a bank typically evaluates the company’s debt-coverage ratio.  This ratio divides the company’s net cash flow from operations by the total debt payments (principle plus interest) to determine the number of times operating cash flow can service or repay the debt. 

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Banks Evaluate Borrowers on the Five C's of Credit

Posted on: 06/20/07 by: Scott Mashuda

Lenders typically look for multiple sources of repayment to satisfy any business loan.  These sources may range from the cash flow of the business, to the liquidation value of the fixed assets, additional sources of revenue to the buyer not attributable to the business and personal guarantees from the buyer and the buyer's spouse.   

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If you don’t intend to sell it, remove it.

Posted on: 06/15/07 by: Scott Mashuda

In preparation for a buyer visit or walkthrough, it is imperative to remove from the business any personal items or assets that are not included in the proposed transaction.    

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