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And so I like to say I learned quite a bit and I used to be a lot taller than I am now, having kind of gone through the acquisitions and then after we completed the 27th acquisition, which was a division of loosened, I moved into the COO or the chief operating officer and president role. And so my reward for doing all those deals was I had to integrate them all. And then we sold that business to Avaya, which was one of our main vendors.
That business was evaluated resell, or the one that we built. Our mission is to enable the entrepreneurial spirit. We believe so strongly in what entrepreneurs do for this country and for our communities. Not necessarily the buy, the sell side, the exit side. So, can you 100 dollar loan talk to us some more about that please?
The level of due diligence that buyers do today is significant. Even if you get your deal closed, the odds that that was the best deal you could have done are really low.
Meaning, if that owner left, the business would be in worse shape. So, how do we as business owners really know when it is the right time to sell? One is just personal timing, and that could be created by a health crisis, which is not predictable. It could be created by a desire to start another business. I think related to personal timing is if this is going to be your retirement, right? And how does my current business value compared to that?
Number one, the ability to actually time when your business is peaking is really difficult. And right after closing the business performance starts to deteriorate. J:You talked a couple times about the value of the business, and obviously for most entrepreneurs and business owners selling their business, the goal is to make as much money as possible. How do I take that information and kind of figure out what my business ez payday might be able to sell for on the market today? For example, a construction business is going to sell for a lower multiple on earnings than a software business, or even a consulting type business.
Typically, those more boring industries are going to sell for lower multiples?
So, what if the business is really just not in the greatest situation right now.
And maybe these businesses have a lot of assets or maybe intellectual property, customer lists, good employees. And if yes, what should they be thinking about or doing differently from the other where they are in a great growth mode? We had an online learning platform that exploded because people were doing that. And likewise for a business whose earnings have suffered during COVID.
Chris:Yeah, I would look at it in … We kind of go through a six step process on our end kind of from start to finish.
And the first personal loan providers one is really understanding how is my business situated today, right?
But as I go through those top risks in my business, are there things that I can be doing today that will eliminate or mitigate those risks? And if I can eliminate those risks from my business, can I start to build a story around them? We had a client that had big customer concentration problem. So what they did, obviously, one solution to a customer concentration is I got to sell more customers, but they were in the utility services business, so that makes it really challenging, right? What they did though, was I thought really clever, instead of having one contract with this large utility, they split that contract up into four contracts. Meaning, Hey, if the customer canceled one of those contracts they still had three left. It was the COO, the manager of operations and the people on the field building tighter connections with the folks at that customer.
And that allowed us to take that business back out and be very, very successful with the transaction. So, you understand where your business is, you know where you are personally, get to work on the risks in your business and advance money develop your plan around that. We got to gather all of our materials for diligence.
When you are talking to buyers, you need to understand that they see thousands of businesses every day or every year and as a result, you have to figure out, how do I make my business stand out?
And so what you want to do is think through, how am I going to tell that story so that somebody gets it and they get it quickly so that we can stand out and be attractive to them. And so I know you run a business that helps entrepreneurs and business owners through this process, I assume from beginning to end. What is the type of person that helps somebody with this? Chris:Yeah, there are really two kind of classes of folks in our industry that help business owners. And then what we do as an investment bank, so our deals are going to be a little bit larger than that. But I would leverage my contacts, the lawyers personal money loans that I know, the accountants that I know, folks that have seen the universe of advisors that may be appropriate for you and then make some recommendations.
Clearly, that you are able to provide that much more service and value and that much of an excellent experience and something that can otherwise be extraordinarily daunting.
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And that sounds like something that we in installment payday loans direct lender our businesses should be starting on from the very beginning. So, first and foremost is having a set of financials that is well put together, ideally, that those financials are audited by a third party outside the business and where you have support for each one of those line items. This became really relevant in 2020 when a lot of companies relied on manufacturing in China that for a lot of them got shut down. When do I get my lead for new business and when do I turn that into cash? We wrote a book a while back called Harvest: The Definitive Guide to Selling Your Company. In the back of that there is a due diligence checklist. But it lists all the documents that buyers typically want to see. Or maybe a not so good story that could have probably been avoided if the upfront work were done differently. Do you have anything like that you might be to share?
And this is really the prototype of how to do an exit really, really well.
It was a business owner, he ran a consumer products company in the pet industry. And so we worked with him, he needed a management team. After three years, he had executed so well that he had already met his valuation objectives. And so we took him out to market and he executed, did phenomenally well with his transaction. He ended up staying on with the business, it was a private equity company that bought his firm and they did the same thing and he made more money on the second sale than he did on the first sale. So, it was such a fun process to be a part of, and to watch him do that. Chris:Now, flip side, this is a typical scenario and my guess is that a lot of your listeners are going to identify with this. I feel like he could be a really good buyer for my company. I mean, are you going to tell me the things that are wrong with the company, or are you going to basically position your business in the best light you can? And this actually happened a year ago, this exact scenario, we got a call and the woman that ultimately became our client, she had signed us exclusivity in May and the installment payday loans direct lender deal was supposed to close in July. That would have been out on the table from the beginning.
Chris:I think, again, you compare and contrast those two stories, right? One of them business owners, very intentional, gave himself enough runway to plan, executed on the plan and got just fantastic results. And that deal, we ultimately got to close, installment payday loans direct lender but, I mean, she definitely left money on the table. We had a situation, Carol and I, with our partner were looking to buy a company last summer. And at the end of the day, six months into it, we started to see cracks of the story as we were doing our diligence, as we were looking at the financial documents, as we were looking at the customer records. So, the same thing can happen, not just with an overoptimistic or a naive seller, but you also have to be careful about dealing with unscrupulous or just not good advisers as well. I think just a big old takeaway from this whole part of the discussion is the absolute critiality, is critiality a word? I call it, do you want to be responsible for setting the table, or do you want somebody else to set the table for you? And tell me how much preparation you did and how much studying you did beforehand and how much energy you put into that pitch. And for all of our listeners that are listening to this right now, check out our show notes because we will link to that assessment. That Chris was able to full on quantify the number of hours it typically takes to prepare to sell your business, 1,500.
I knew, suspected, I guess, that it would be a lot, but the fact that Chris and his team have put together a solid quantifiable number that is achievable with a lot of productivity and installment payday loans direct lender planning was really awesome. The thing that interested me the most in that discussion was the reasoning for not wanting necessarily to sell your business at its peak. And I imagine that being able to still make a reasonable amount of money, but not have to take on that risk, it just makes perfect sense. Everybody, thank you so much for tuning in this week. And we look forward to talking to you again next week. Since 2007, PPR has managed Real Estate-backed investment funds that have bought and sold thousands of residential mortgages nationwide. With expertise in real estate finance, property management, and BRRR investing, they provide investors like you with passive income. The latest season of Business Wars brings you a story about the new age of space exploration, and two corporate rivals at the forefront.
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