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Internet Business Articles Internet home based business ideas FINANCLALS
Sales /Profitability: income statement, historical and 2, 3, 5-year pro forms, growth (sales, costs, profits, EPS, sustainable growth rates), quality of earnings (accounting, pension funding, depreciation, write-offs, earnings segments, earnings patterns, earnings sensitivity), Internet home based business ideas analysis (compared to competitors and industry averages, gross margins, ROS, ROE, P/E comparables)
Leverage and liquidity: balance sheet, historical and performs, examination of equity and debt composition, ratio analysis (current and quick ratios, debt as percentage of total capitalization, assets /equity, days receivable, days payable, days inventory)
Funds flow: statement of changes, historical and pro formats, analysis of sources and uses of cash Assets: composition and type, quality, bank ability, book and market values, obsolescence, age.
VALUATION
Terminal value; FCF perpetuity /annuity, book value, liquidation value, P/E value Components of value (i.e., investment lax credits, depredation, energy cost savings, etc. Sensitivity analysis Expected returns analysis
Industry
Technology _
Financial
Internet home based business ideas Product / company ability
Employee / supplier / customer response
Seller's desire to do the deal
Is value appropriate?
Prohibitive terms?
Value to be added
The second Internet home based business ideas critical issue concerns the timing of the approach (o a given company: before it hits the market, as soon as it hits the market, or after it has been shopped. There are advantages and disadvantages to each stage. Being the first person to see a deal may give you the inside track. Yet, at this early stage, the seller may not have developed a realistic perspective on the asking price, terms, provision of desired information, willingness to part with the Internet home based business ideas, and so on. Discussions may be futile, or you may end up paying a high price. At a later stage, the seller may be more eager to sell, but you will need to be wary of a Internet home based business ideas that has been on the market for a longtime.
Once you understand these basic timing issues, you can prepare a schedule and work plan and begin the search by setting up an introductory meeting with potential members of your search team. A persuasive presentation at this first meeting might include a demonstration of your industry research or experience, a well-thought-out preliminary Internet home based business ideas plan, a realistic assessment of your financial resources, and Internet home based business ideaslike dress and demeanor. Academic credentials and referrals from mutual acquaintances will help you make these initial contacts. You may want to meet with many attorneys, CPAs, bankers, or other resource people before committing yourself to work with particular individuals. You might also schedule screening sessions with some of the professionals before meeting with your highest priority contacts.
At the preliminary meeting resources will be interested in qualifying you as a realistic potential buyer and as someone they want to work with. You should attempt to determine their expertise, willingness to help, any conditions they may place on the relationship, and their likely fee. The basis of fees ranges from hourly rates to contingent fees and may vary substantially from one lawyer to another—another reason to meet with many professionals before arranging to work exclusively with any one in particular.
The issue of exactly what cards to show often arises during preliminary discussions. While this is a personal decision, it is probably best to be frank about your financial resources and backing, level of commitment, and objectives. You may want to be more vague if you are dealing with an intermediary -representing a potential seller or if you have reservations about the person you are meeting. Backers' insistence on remaining anonymous may also induce you to be somewhat guarded. It is always prudent to check out the reputations of such individuals before divulging any private information.
The average time required to find the right Internet home based business ideas runs about one year—significantly longer if the search is more casual or if the target is more elusive. Depending on your degree of commitment, financial flexibility, and time schedule, you may elect to manage your own search and call on search resources only periodically; or, conversely, you may choose to retain an individual or firm to conduct the search for you. Attorneys, for example, could make cold calls and write letters to industry sources on your behalf, and their personal and professional contacts WM/unearth your dream Internet home based business ideas. On the other hand you could easily do much of the research you pay them for from industry directories and Yellow Pages. Thus, if time permits or your budget requires, and you are sophisticated about basic Internet home based business ideas and legal issues, you may choose to undertake much of the basic research. This has the additional advantage of providing firsthand contact with the marketplace. The industry-specific knowledge you pick up may be invaluable to you later on, when you need to demonstrate expertise and commitment to financing sources or a seller.
In some industries, acquisition opportunities rarely reach the marketplace because the industry is essentially closed. To enter such an area, you must network your way in—meeting owners or executives of firms in the industry socially, attending industry-association meetings or trade conferences, and in general becoming more of an insider.
You will want to touch base with individuals in your new network periodically lo see if they have any ideas for you and to reiterate your interest A brief phone call every three or four weeks is appropriate, but more frequent contact may be annoying. You should also keep them informed about your progress. Keep in mind that people are more likely to pass on information or leads if you share your ideas and findings with them.
Once underway, you may come across a potential acquisition candidate and need to do some preliminary research. Dun & Bradstreet reports contain financial and operating information on the company and biographical backgrounds of owners or officers. The information, however, is provided by the company and is not independently verified.
When meeting the owner(s) and visiting the Internet home based business ideas it is important to evaluate the seller's psychology—his or her financial or psychological needs as they pertain to the Internet home based business ideas. A few owners have no real attachment to a Internet home based business ideas and are simply open to the highest bid. More often, especially in small operations, much of the seller's life is tied up in the firm and there is a high degree of emotional involvement. Such factors as the seller's age, marital situ a lion, health, or family situation may also need, to be reflected in the form and terms of the deal. In such cases you may need to "sell" the seller.
Such selling includes more than a generous financial package (e.g., insurance, provision for the family, etc.); it may require you to demonstrate commitment to the original character, quality, and spirit of the enterprise. Occasionally an owner may indicate a willingness to sell but balk when it comes to actually closing the deal and transferring control. Understanding the owner's psyche early on may help avoid such an outcome by structuring a more mutually satisfying deal.
Your professional resource people may be able to provide valuable insight and advice if they know the seller or have dealt with similar situations in the past. In some cases you may want to have your agent handle the negotiations in order to preserve your own rapport with the seller, neutralize personality clashes, and retain decision options.
If after preliminary research and meetings with the seller, you decide to pursue the opportunity, you will need to review confidential operating and financial statements and interview key employees and customers. But "getting the numbers" is often difficult. Many small Internet home based business ideas owners are reluctant to share operating and financial data with outsiders for tax and competitive reasons. Most buyers receive no meaningful financial details until after signing a purchase agreement and putting down a deposit, although a good understanding of the industry may give you increased credibility and leverage with the seller. The owner of a distressed Internet home based business ideas may be willing to pro vide numbers earlier in the process; in the case of bankrupt firms, the numbers may be in the public domain. Confidentiality agreements are usually signed before the prospective buyer is allowed to review financials.
At this point you are well advised to retain counsel to ensure that you are protected and are covering ail legal bases, especially if you are signing documents or agreements. An accountant may also be useful, especially in a complex situation, in analyzing financial reports, tax returns, inventory records, and so on; other experts can investigate leases and contracts.
It is often useful before performing any detailed analysis to collect information together into a thumbnail sketch of the deal's financial attractiveness. This preliminary check can screen the candidate for company size, profitability, and attractiveness of the balance sheet. Some deals may be thrown out at this point, while others will merit a more thorough examination of the numbers.
Method used Discounted Cash Flow Asset Valuation Multiples
There are several ways to estimate the value of a company, and it is most often useful to employ more than one method. Different types of analysis will be needed to determine how much to pay, how much debt will be assumed and from what sources, and potential harvest values. Each will play an important role in the overall assessment of the opportunity at hand. Three types of analysis useful for establishing price estimate are:
Valiant the results indicate underlying operating value of the Internet home based business ideas and ability to service debt Liquidation value and/or adjusted book value of assets Multiples of cash flow, P/E ratios, sales, or Internet home based business ideas help establish some sense for market value relative to other firms in the same industry and offer an indication of harvest potential. Each type of multiple has its own merit, but must be consistently applied.
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