1. SELLING AND BUYING A BUSINESS JOHN POST Certified SCORE Mentor

2. The Sell Process Outline Three Years of IRS statements – 1065 or C Sellers Discretionary Earnings (SDE) – Recasting Analysis; Value/Listing Price Marketing Description – 3 levels Advertising - BizBuySell.com, etc. Qualifying Buyers – Experience, Resources NDA; Negotiations Purchase and Sales Agreement Due Diligence

3. The Buy Process Outline Research- BizBuySell.com, etc. Three Years of IRS statements – 1065 or C Sellers Discretionary Earnings (SDE) – Recasting Analysis The Opportunity? Offer; Negotiations Purchase and Sales Agreement

4. Recasting the P&L ITEM P&L ADJUST RECAST - - - - Operating profit 500,000 - 500,000 EXPENSES Payroll 300,000 - 300,000 Salary (owners) 65,000 65,000 0 Benefits 40,000 25,000 15000 Interest 5,000 5,000 0 Auto 25,000 10,000 15000 Telephone 4,000 2,000 2,000 Rent 18,000 - 18,000 TOTAL EXPENSE 439000 107000 PROFIT 61,000 SDE 168,000 (FULL CASH FLOW)

5. Purchase Components Buyer Deposit- 10 – 15 % $10,000 Buyer Cash – 10 – 15 % 10,000 Bank Loan – 40 – 60 % 50,000 Seller Loan* – 25 – 30% 30,000 Sale/Purchase Price $100,000 * 3-5 years @ 8%

6. TIPS Think like your buyer/seller Transition training and consulting Retain customers; get list Don’t trust the books Value the business at 30-40% revenue and/or 2X SDE Easier to buy than to start Buyer pro forma – what do you need to live on?