Better Than All Cash

Today, banks pay greater attention to cash flows and debt to equity ratios. Before, it wasn’t uncommon to see equity ratios of 4:1 or 3:1; however, banks now require a bank debt to equity ratio of about 2:1, and some are even using a 1:1 ratio. Another ratio we see the banks using is cash … Read more →

Plan for Business Succession

I would estimate that handing down a family business fails at least 50 per cent of the time. There are a number of reasons why: The owner forgets how much he or she knows based on years of experience – experience the next generation doesn’t necessarily have; The owner has run the business in a … Read more →

Why Would Someone Buy Your Business?

A potential buyer looks at a business to see what he can do with a combination of money (resources), motivation (goals) and management (skills). Once he estimates how profitable he thinks it could be under his ownership, the buyer can determine what he thinks the business is worth. The idea that the value of a … Read more →

What is My Business Worth?

The reality is that determining the value of a business is anything but a simple question. There are many ways to estimate the value of a business . . . and “off the top of my head” is one that I generally will not use! There are many commonly used rules of thumb, which can … Read more →

Mum’s the Word When Selling a Business

You could have an exclusive arrangement with a supplier who, if he became aware that you were contemplating selling, might be encouraged to transfer the supplier agreement to a competitor. Customers, who are concerned about the ongoing source of supply and continuity of both quality and delivery, might be inclined to search for another supplier … Read more →