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Keate Partners
Ltd.
August 2009 Newsletter Topics on Buying,
Selling and Valuing a Business Formatted for emails able to view html. To view as webpage click
here. |
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2003 Tax In 2003, the US Senate narrowly passed a tax relief bill. This
bill cut the Long Term Capital Gains Tax Rate to just 15%. Unless extended,
this rate reduction expires in 2010. |
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For Sellers While the likely increase in the capital gains rate is
not a reason to sell your business, if you have been thinking about selling
it could be a motivating factor to sell now. Many business owners think that due to the poor economy
they will not receive a fair price for their business. The poor economy can make buyers cautious;
however, low interest rates can make buying a business right now very
attractive. Buyers (and their financing source) look at how well their
loan payments are covered by the cash flow of the business being acquired. For the same principal borrowed, loan payments today are
about 15% lower than 3 years ago due to lower interest rates. So buyers can and will pay more right now
for businesses doing well, than what they may have offered 3 years ago. Businesses that are seeing a drop in their cash flow may
still achieve a value close to the level of several years ago simply because
of the lower financing costs that the buyer can obtain. We are in contact with many companies and individuals
who are highly qualified and interested in making an acquisition. |
For Buyers As part of the stimulus bill passed this year by
Congress, the SBA is waiving its upfront fees for guaranteeing acquisition
loans. As a buyer, this can save you about two points on your
loan ($2,000 upfront fee for every $100,000 of loan). With the prime rate currently at 3.25% (one of the
lowest levels in decades), business acquisition loans in the area of 5.25% to
6% are available with 10 year amortization. While it makes sense to be cautious on what business you
buy right now due to the uncertain economy, if you can find the right
business the cost of financing the purchase is at an historical low. Obviously a business purchased now that is producing
cash flow to support your acquisition financing costs, will likely turn out
to have been a great buy as the economy begins to improve. At Keate Partners we have not had any difficulty in
obtaining financing for buyers. How much can you finance? A general rule of thumb is you need a cash
investment of 15% to 20% of the purchase price; the remaining 80%-85% can be
financed. |
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Whether you are a buyer or a
seller, we can assist you in achieving your goal. |
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Click to visit these areas of our website: HomePage
For Buyers List of Businesses for Sale For Sellers
Businesses Wanted List of Businesses Sold Articles on Selling Articles on Buying Buyer Forms News About KPL & Our
Staff Map to our Office Contact Us |
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Keate Partners
Ltd. 7783
Five Mile Road Suite A
Huntington Bank Bldg. (513) 241-3700 (513) 852-8325 Fax www.keatepartners.com info@keatepartners.com Keate Partners has
sold more Greater |
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